The Integrity of the Schooling Resource Standard is Subverted by Accounting Tricks

It is supremely ironic that having agreed to a national approach to estimating the Schooling Resource Standard (SRS) over ten years ago, the Commonwealth and state/territory governments have subverted that process to swindle public schools out of billions in funding. The integrity of the SRS has been undermined by including non-SRS expenditures as part of the SRS funding shares of public schools contributed by the states.

The integrity of the SRS is subverted in the current funding agreements because they allow all states except the ACT to claim expenditures specifically excluded from how the SRS is measured as part of their share of funding the SRS of public schools. They can claim two types of non-SRS expenditures:

  • Up to 4% of the total SRS for school transport, capital depreciation as well as pre-school in Western Australia and early childhood education in the Northern Territory;
  • Expenditures by regulatory authorities such as curriculum and standards bodies but not in the Northern Territory. NSW can only claim this as part of its 4% allowance.

Public schools have been denied over $13 billion in funding since 2018 because of these accounting tricks which were negotiated with the Morrison Government. They will lose another $13 billion over the next five years if they continue in the new funding agreements between the Commonwealth and state/territory governments. This seems likely if the new in principle agreement between the Commonwealth and Western Australian Governments is any indication because it retains the accounting tricks included in the previous agreement.

The SRS is estimated based on financial data collected by the Australian Curriculum Assessment and Reporting Authority (ACARA) for the My School website. The system was agreed to over ten years ago by the Commonwealth and state/territory governments and private school organizations.

 The methodology for estimating the SRS was developed by the Allen Consulting Group in a technical report for the Gonski Review of Funding for Schooling in April 2012. It was not published until 2019 by the Department of Education following an Freedom of Information application by Save Our Schools. The methodology is based on Net Recurrent Income per Student (NRIPS) of schools published on the My School website. This has remained the case ever since, as evidenced by successive technical reports to the Department of Education on the SRS such as one provided to Senate 2017-18 Budget Estimates in June 2017 (Answer to Question on Notice SQ17-000688).

As outlined in fact sheets on interpreting Financial Data published by ACARA the school financial data collected for My School website is compiled using the data collection methodology agreed by its Finance Data Working Group (FDWG). The FDWG includes representatives from ACARA, the Australian Government, each State and Territory Government, the National Catholic Education Commission and Independent Schools Council of Australia. The FDWG is assisted by an independent accounting firm whose reports are regularly published on the My School website, the latest report being in 2022.

Most of the school expenditure in the public sector is incurred centrally at the departmental level. This System level expenditure for “umbrella services” is allocated as a notional income per school in determining their NRIPS as explained in Letters of Accounting Advice to ACARA. This expenditure includes teaching, administrative and support staff salaries. They exclude other non-school central office expenditures such as those on TAFE or early childhood education. Despite this, the Western Australian Government can claim pre-school expenditure as part of its contribution to the SRS of public schools in the state and the Northern Territory Government can claim early childhood expenditure as part of its share.

There are several other exclusions from the notional allocation of department expenditure to NRIPS. These include, amongst others, payroll tax, user cost of capital, transport to and from school and what are referred to as Type 1 umbrella services which include school registration board funding, curriculum testing, board of studies, registration/qualification authority costs, grants to non-government school accreditation boards, NAPLAN, non-government school registration boards, etc.

All this is reflected in ACARA’s My School: Key Principals and Methodology (2023). It states: “These funds have been deemed to be outside schools’ recurrent operations” [p.13]. These items are excluded from the NRIPS of both public and private schools and are therefore excluded from the estimation of the SRS.

Clearly therefore, the provisions in the current funding agreements that allow the states to claim non-SRS expenditures as part of their share of funding the SRS of public schools are in breach of the national agreement on the financial data used to estimate the SRS. They are an easy way the states can avoid their funding responsibilities for public schools.

Once these accounting tricks are embedded in funding agreements between the Commonwealth and the states, public schools will never be fully funded to 100% of their SRS. Claims to be fully funding public schools will be a lie as is the claim that Western Australian public schools will be fully funded under the new agreement.

The Albanese Government must reject inclusion of the current swindles in the new agreements, and it must reject expanding the swindles. It is imperative the integrity of the SRS must be maintained in the new agreements to ensure that public schools are fully funded in the future.

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