State Govts Evade Commitments to Public Schools

Public schools have suffered a double blow in the last fortnight. The Morrison Government announced a $4.6 billion appeasement deal for private schools with no increase for public schools. Last week The Guardian exposed how Labor and Coalition state governments are trying to evade commitments to increase their funding of public schools through a subterfuge. If successful, public schools, which enrol over 80% of disadvantaged students, could lose up to $2.6 billion a year. Public schools need and deserve better than this.

Under the terms of the new funding model announced last year by the Turnbull Government, the states are responsible for funding 80% of the Schooling Resource Standard (SRS) of public schools. However, the Commonwealth Government only requires the states to increase their funding of public schools to 75% of their SRS by 2023 as a condition of Commonwealth funding. In 2017, state funding was below 75% of the SRS in most states: NSW – 71%; Victoria – 66%; Queensland – 73%; South Australia – 72%; Northern Territory – 67%. Public schools in Tasmania, Western Australia and the ACT were funded by their respective governments at above 75% of their SRS, and over 80% in the latter two.

It will require a significant increase in the funding effort by governments to get public schools to the 80% target. It presents a major challenge because they have long been substituting increased Commonwealth funding for public schools for their own funding. Between 2009-2016, they cut recurrent funding per student adjusted for inflation by 5.4%. Even during the Gonski period (2013-2016) they cut funding per student by 1.6%.

According to The Guardian, the states are pushing for changes to the way measuring progress towards the public school SRS funding target is calculated. Some education ministers have argued, for example, that early childhood education, capital spending on school buildings and school transport costs should be included.

Adding in these items would undermine consistent national application of the SRS. The SRS is based on net recurrent income per student in schools as compiled by the Australian Curriculum, Assessment and Reporting Authority (ACARA). It is a measure of what is actually spent on schools and central support of schools. It excludes the items that some states now want included in the way their funding is defined for the purpose of meeting the SRS target. It would be contradictory to measure progress towards the SRS target by including items in the measure of state funding that are excluded from the SRS. It would be particularly egregious to include capital funding in a recurrent funding measure.

Inclusion of these items in the measure of whether states are progressing their funding to 75% of their SRS would artificially inflate their current funding as a percentage of their SRS. It would mean that the gap between their current funding and the SRS target would be reduced and therefore reduce the funding required to get to the SRS target.

If pre-school, transport and capital expenditure were included in the measure used to indicate progress towards 75% of the SRS of public schools it would likely result in no state currently below the 75% target being required to increase its recurrent funding. Rough calculations indicate that expenditure on these items exceeds the shortfall between their current funding and 75% of their SRS.

For example, current funding of public schools in Victoria is at 66% of their SRS. The shortfall between this and 75% of their SRS is approximately $716 million based on 2016 figures, the latest available. Funding for pre-school education, school transport for public schools and capital expenditure in 2016 totalled about $802 million, the actual figure depending on what is included in pre-school education. In other words, if the Victorian Government was allowed to include these items it would immediately exceed the 75% target without any additional funding for public schools.

In the case of NSW, the shortfall between current state funding of public schools and their 75% SRS target is about $404 million compared with total expenditure on pre-school education, school transport for public schools and capital expenditure of $1.1 billion in 2016.

In fact, inclusion of the proposed items could allow every government except Victoria to immediately achieve the longer term target of 80% of their SRS without any increase in funding. For example, in NSW the shortfall between current funding for public schools and 80% of their SRS is about $972 million which is still less than the expenditure on pre-school education, school transport for public schools and capital expenditure of about $1.1 billion.

In the case of Victoria, the shortfall between current state funding of public schools and their 80% SRS target is about $1.1 billion compared with total expenditure on pre-school education, school transport for public schools and capital expenditure of $802 million. To get to the 80% target, the Victorian Government would have to increase funding by only about $318 million instead of $1.1 billion.

Overall, inclusion of the items would deny public schools in NSW, Victoria, Queensland, South Australia and the Northern Territory about $1.4 billion a year that would be needed to meet the 75% target and about $2.6 billion a year for the 80% target.

A further danger in the negotiations with the Commonwealth is that the states may also seek to include other items not included in the SRS measure such as the book entry items of user cost of capital and depreciation which have no impact on what happens in schools. Although they are included in figures on school expenditure published by the Productivity Commission, these items are excluded from the ACARA measure and therefore from the SRS. They account for nearly one quarter of state government expenditure on public schools. In 2015-16, they accounted for 22% of their current dollar expenditure and about 25% of the increase in their current dollar spending on public schools between 2008-09 and 2015-16. Payroll tax is another item included in the Productivity Commission figures but not in the ACARA figures.

These book entry items are so large that their inclusion in the SRS measure would give the states leeway to actually reduce their funding for public schools while giving the misleading impression they are progressing towards meeting the target of 75% of SRS. It would be a huge financial con-trick at the expense of public schools and disadvantaged students.

Negotiations between the Commonwealth and the states about meeting the target SRS are being conducted behind closed doors. It opens up the very real possibility of more political fixes which further undermine the Gonski funding model and deny public schools the resources needed to improve learning for disadvantaged students. While the states are right to cry foul about the special and unjustified deal done by the Morrison Government to appease private schools, we have to be alert for more fudges in state government commitments to funding public schools.

After initially appearing to countenance the states fudging their commitments to public schools, the new Commonwealth Minister for Education, Dan Tehan, appears to have ruled it out. However, this may be a negotiating tactic. There is no guarantee that a compromise deal won’t be reached which allows the states to pretend they are meeting their commitments when they are not.

One option for the states to increase their funding of public schools is to cut their funding of private schools. In contrast to their cuts to public schools, the states increased inflation-adjusted funding for Catholic schools by 4.1% between 2009 and 2016 and by 4.4% for Independents schools. Under the terms of the new Commonwealth funding arrangements, the states are expected to fund private schools to 20% of their SRS. Yet, state funding of Catholic and Independent schools was already at or above this target in every state in 2017, except for Catholic schools in South Australia and the Northern Territory. For example, Independent schools in NSW were funded by the state government at 27% of their SRS and Catholic schools at 22%. So, there is room to cut funding and divert it to public schools.

However, this will not be enough to achieve the target of 75% of the SRS of public schools, let alone get them to 80%. Everyone concerned about the future funding of public schools and gaining better support for disadvantaged students should be pressuring Labor and Coalition state governments to deliver the necessary funding.

Trevor Cobbold

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