Media Release: Private School Funding Model is Inherently Flawed

An Education Policy Brief published by Save Our Schools shows that the new funding method for private schools introduced this year by the Morrison Government is inherently flawed and will result in massive over-funding of schools. National Convenor of Save Our Schools, Trevor Cobbold, said the model is littered with flaws and should be replaced by a new approach.

“One glaring flaw is that the model assumes that parents of children pay the school fees. Yet, there is widespread evidence that many grandparents pay at least part of the fees.

“Surveys show that almost one-third of grandparents draw down on their superannuation to pay school fees for grandchildren and about 60% of private school students have their fees at least partly paid by their grandparents. Income received from grandparents is not included in the assessment of parental capacity to pay.

Mr. Cobbold said several other flaws in the model also result in the capacity to pay of families to be severely under-estimated.

“It under-estimates the income of families because it excludes the non-taxed component of capital gains as only 50% of the gain is taxable. Many high income families with children in private schools are likely to be recipients of this non-taxed income because 80% of the tax concession goes to the top 20% of income earners.

“The model ignores non-disclosed income in Australia or held in overseas bank accounts and tax havens. The use of overseas bank accounts and tax havens to hide income is widespread among high income earners.

“It also ignores the wealth of families which is a significant factor in capacity to pay. Assets such as shares, securities and other investments are just as much part of capacity to contribute as direct income.”

Mr. Cobbold said that the new funding method also ignores the income that many schools receive from private donors and foundations.

“Private donations are a significant source of income for private schools, especially high fee schools who receive millions in donations including donations from overseas foundations. The assets of schools which run into billions for elite private schools are also ignored.”

“All these flaws mean private schools will receive much more government funding than warranted. The Morrison Government model will provide an additional $3.5 billion to private schools over the next ten years compared to the previous method of funding.”

Mr. Cobbold said there are insuperable problems associated with assessing the capacity to pay of families which mean it should be abandoned in determining government funding of private schools.

“The concept of capacity to pay is a dead end. All measures of it are inherently flawed because many sources of family and school income are ignored as well as family and school wealth.

“The basic principle behind government funding of private schools should be that no school operates with less total resources than a community standard necessary to provide an adequate education for all students. Governments have the responsibility to ensure that children should not be deprived of an adequate education because their parents enrol them in under-resourced schools.

“Government funding for private schools should only fill the gap between the community standard and income from fees and other sources of income. Schools with private income above the community standard are not entitled to baseline government funding because it would extend their resource advantage over public schools.”

The alternative funding model proposed by Save Our Schools has three main features:

  • A baseline component that varies between schools to take account of income obtained from private sources such as fees and donations;
  • A discount factor applied to the baseline funding which varies according to the extent to which private schools meet the same social obligations of public schools; and
  • Funding loadings for disadvantaged students and locations

Mr. Cobbold said that this alternative model would provide a genuine needs-based funding model that eliminates the vast over-funding of private schools under the current approach.

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