The New School Funding Plan

The new National Plan for School Improvement (NPSI) consists of a new funding model for government and private schools, increased funding over six years and a range of new education policies. The new funding model is based on the framework recommended by the Gonski report, but there are some significant differences.

The new funding model
As recommended by the Gonski report, the new funding model consists of a base resource standard and additional funding (called funding loadings) for disadvantaged students, school location and school size. Separate base resource standards are set for primary and secondary schools and are specified as per student amounts. The disadvantage funding loadings and the location loading are specified as various percentages of the relevant base resource standard while the size loadings are specific dollar amounts.

A Schooling Resource Standard (SRS) per student will be estimated for each school combining the base resource standard and the disadvantage, location and size funding loadings. The SRS will differ between schools according to their enrolments of various categories of disadvantage students, location and size.

The base standard is based on the estimated cost of educating a child at high performing schools, known as ‘reference schools’. It is the minimum level of funding (from government and private sources) that should be available to every school.

Reference schools are determined by their NAPLAN performance. They are schools where 80 per cent of students are achieving above the national minimum standard at each year level in reading and numeracy over the three years 2008 to 2010. The reference schools consist of about 1600 government and private schools across the country according to a brief prepared by the Federal Parliamentary Library.

The base resource standard for primary schools in 2014 will be $9,271 per student and for secondary schools $12,193 per student. These amounts will apply to government schools. The level of government funding for private schools will vary according to parental capacity to contribute school resources as under the current SES funding model. All schools will be funded to at least 95 per cent of their base SRS by 2019.

Schools will also be eligible for a range of disadvantage loadings based on a percentage of the base amount per student:
• Low socio-economic status (SES): a) Sliding scale from 15 to 50 per cent for the 1st SES quartile; b) Sliding scale from 7.5 to 37.5 per cent for the 2nd SES quartile;
• Indigenous students: sliding scale from 20 to 120 per cent;
• English as a second language: 10 per cent;
• Students with a disability: current funding will be maintained in 2014 and a new loading introduced from 2015;
• Location: a) Inner Regional schools will receive up to 10 per cent of the loading amount (the total of the base amount plus any school size loading). b) Outer Regional schools will receive between 10 per cent and 30 per cent of the loading amount. c) Remote schools will receive between 30 per cent and 70 cent of the loading amount. d) Very Remote schools will receive between 70 per cent and 80 per cent of the loading amount.

In addition, primary schools of between 15 and 200 students will attract a loading of $150,000, reducing to zero for schools with 300 student enrolments. Secondary schools of 100 to 500 students will attract $240,000, reducing to zero for schools with 700 students. These amounts are added to the base amount.

The base resource standard will be indexed at 3.6 per cent a year. This implies that the disadvantage loadings (as a percentage of the resource standard) will also be indexed at 3.6 per cent a year.

Not all schools will be immediately funded according to this model. Whether a particular school attracts funding under the model will depend on comparing their old (current) funding per student with the SRS (base + loadings) estimate. Commonwealth Government funding for schools whose funding under the old scheme is less than their SRS per student amount for 2014 will be increased by at least 4.7 per cent a year until they reach their SRS.

Schools whose old per student amount for 2013, increased by 3 per cent, is more than their estimated SRS for 2014 will continue to receive the old per student amount, plus indexation of 3 per cent per annum until their new per student amount catches up.

Under agreements between the Federal and participating state/territory governments, state/territory education authorities will have flexibility to distribute funds according to their own needs-based funding systems, but every system will have to be approved by the Federal Government to ensure it is consistent with the SRS. The different approaches will be evaluated for their consistency in addressing student need. School systems will have to publish how they have calculated their funding allocations and what every school actually gets each year. The distribution to each school will be published on the My School website.

Government funding for private schools will depend on their assessed capacity to contribute. They will receive a proportion of their base SRS according to their assessed socio-economic status (SES) score. Their SES score is determined in the same way as under the current SES funding model introduced by the Howard Government, that is, according to the SES of the ABS statistical area in which students are resident.

Government funding for private schools with an SES score of 93 or less will be 90 per cent of the total per student funding and for schools with an SES score of 125 or more it will be 20 per cent. Government funding for schools with an SES score of between 93 and 125 will range along a sliding scale of between 90 and 20 per cent. In contrast with the current funding model there are separate funding scales for primary and secondary schools. Primary schools have higher government funding rates (as a percentage of their base SRS) than secondary schools [see Chart 1 below].

The SRS for each Catholic school will be aggregated and distributed to Catholic systemic school systems which will administer the distribution of funds to individual schools. Independent schools will be funded directly based on the SRS estimates and their assessed capacity to contribute. The Catholic systems will have flexibility to implement their own needs-based funding systems. As in the case of government school systems, needs-based distribution in Catholic systems will have to be approved by the Federal Government to ensure it is consistent with the SRS. The distribution to each school will be published on the My School website.

Funding increases
The original plan proposed a $14.5 billion increase in school funding over the six years from 2013-14 to 2018-19. It was expected that the Federal Government will contribute $9.4 billion of this increase and state/territory governments will contribute the remaining $5.1 billion. The total funding amount has been increased as a result of agreements with the ACT, NSW, SA and Tasmanian governments and could be increased further if the other states and the Northern Territory sign on. On the basis of what has been agreed so far and what is on offer to WA, the estimated increase now stands at $15.2 billion.

On the basis of the original proposal, government schools would receive 83 per cent of the total increase. Government schools would receive $12.1 billion compared to $1.4 billion for Catholic schools and $1 billion for Independent schools.

The total increases over the six years range from $4-5 billion for NSW, Victoria and Queensland to $380 million for Tasmania and less for the Northern Territory and the ACT. Based on 2012 enrolments, NSW, Victoria, Queensland and Tasmania would get increases of $4,000-5,000 per student over the six years and the Northern Territory an increase of about $7,500 per student [Chart 2]. Western Australia and South Australia would get increases of about $2,500 per student and the ACT an increase of $605.

The large part of the funding increase will go to schools that are currently funded at less than the national base standard. According to information released by the Federal Government, 82.7 per cent of the increase will go to these schools and 17.3 per cent will be allocated to the various funding loadings. Low SES students will receive 7.4 per cent of the increase, students with disabilities 5.4 per cent, students in regional and remote locations 2.1 per cent and Indigenous students 0.9 per cent.

The Federal Government has announced the details of its funding contribution to the new funding arrangements. The 2013-14 Budget papers show that the large part of its contribution to the increase in school funding is postponed until the last two years of the transition period. The Federal Government component for the next four years is estimated at $2.8 billion, or 29 per cent of the original proposed Federal contribution, leaving $6.6 billion to be provided in the two years 2017-18 and 2018-19.

The large part of the Federal contribution to the NPSI increase is to be financed by the termination of existing programs. Five national partnership programs are to be terminated over the next four years and their funding re-directed to the NPSI. The partnership programs are the Low Socio-economic Status Communities, Literacy and Numeracy, Empowering Local Schools, Rewards for Great Teachers and Rewards for School Improvement. According to the 2013-14 Budget Paper No. 2, the total funding to be re-directed from these programs over the forward estimates to 2016-17 is $2.1 billion.

Thus, very little new funding will be allocated to the NPSI over the next four years. The new funding beyond what was already committed over the forward estimates period is $0.7 billion [Table 1]. There is a net increase of $333 million in 2013-14, declines in expenditure in 2014-15 and 2015-16 totalling $265 million and a net increase in 2016-17 of $630 million.

School improvement
The new funding model will be accompanied by a range of education policies designed to improve student results. These policies focus on five main areas:
• Quality teaching;
• Quality learning;
• Empowered school leadership;
• Meeting student need; and
• Transparency and accountability.

It is a condition of Federal funding that state/territory governments implement the agreed national education policies. They incorporate a large number of measures.

The Quality Teaching measures include:
• Higher entry standards for teaching and better training for teaching students;
• Teachers will need to be in the top 30 per cent for literacy and numeracy before they can graduate;
• Annual performance reviews for every teacher;
• Access to ongoing training for all teachers throughout their career.

The Quality Learning measures include:
• Implementation of the Australian Curriculum in all subjects by 2016 for Foundation to Year 10 and by 2018 for Years 11-12;
• An early years reading blitz to focus on improving literacy skills in Foundation to Year 3;
• Access for every student to learning an Asian language by 2025;
• Inclusion of science in the NAPLAN tests.

Under the Empowered School Leadership plan:
• Principals will have more power to make decisions for their schools including choosing staff and managing the budget;
• Principals will receive extra training in leadership skills and ongoing professional development.

The Meeting Student Need measures include:
• A school funding system based on the needs of every individual student;
• Additional funding for schools and students that need more support – low SES students, Indigenous students, students with disability, students with limited English skills, small schools, and rural and remote schools;
• The extra funding will be able to spent on things like specialised equipment and teachers, and programs like breakfast clubs and literacy programs;
• Every school will have a Safe School Plan to prevent bullying;
• Schools will be encouraged to engage parents and the broader school community to improve student outcomes.

Trevor Cobbold

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