School funding reform: three certainties make change to the existing system fraught for Catholic and independent schools


PUBLISHED ON THE ABC, September 6, 2012.

Julia Gillard has promised that no school will be worse off under proposed education reforms.

But Liberal MP Alan Tudge says that any change to the school funding model will result in winners and losers.


The Prime Minister's response to the Gonski review on Monday revealed little about how Catholic and independent schools will fare in the future.

Targets for school improvement were announced and the need to work with state governments confirmed. But on the key federal responsibility of funding non-government schools, the Prime Minister could only repeat her intent to implement some of the Gonski recommendations.

It has been five years since Labor promised to review non-government school funding, and two years since Gonski started his work. With legislation due to be introduced into Parliament this year, time is running out.

Regardless of the Prime Minister's intent, there are three certainties that make change to the existing funding system fraught for Catholic and independent schools.

First, any change to the school funding model will result in winners and losers, unless significant funds are used to pay off the losers. This is not a political assertion but a statement of mathematical fact.

Leaked modelling by state governments and non-government schools finds that 3,254 schools – about a third of all schools – would be worse off under the Gonski recommendations.

Schools across the fee spectrum would lose funds. For example, there are dozens of small primary schools that charge fees of less than $1,500 that will lose up to $750 per student. Many families will struggle to afford these schools when fees rise to make up the funding shortfall.

The second certainty is that which schools win and which schools lose under a new system cannot be predicted with any accuracy.

A government may intend to achieve a certain outcome – to say give more money to lower fee schools in certain areas – but designing a formula to achieve this is difficult because of the diversity of schools across the nation.

Hence, the modelling on Gonski shows that low-fee Catholic primary schools will be particularly disadvantaged. On the other hand, many of the most expensive independent schools are expecting to gain considerably. Scotch College in Melbourne, for example, would be a large beneficiary.

The third certainty, which is acutely understood by schools, is that the indexation method for annual funding increases is what really matters.

The Government might reform the model to give an immediate boost to some schools, but if the indexation method is reduced, any gain will be quickly lost.

Over the last 12 years, schools have had their funding indexed and increased by about 6 per cent per annum. This matches the increases in school costs. Gonski recommends a different indexation method that the Coalition believes will see increases as low as 2 to 4 per cent a year.

This will have a dramatic impact over the medium term. For example, an average school receiving $5,000 per student in public funds could get an immediate $500 per student boost. But if the indexation rate is reduced to 2 per cent, the school would be worse off within four years (and every year thereafter) than if the school received the current indexation increases on the existing base.

This is one of the reasons why the Coalition firmly supports the existing indexation mechanism. The Prime Minister on Monday confirmed that the indexation rate is to change.

When John Howard introduced the Socio Economic Status (SES) System for funding non-government schools in 2001, he was acutely aware of these three certainties. Consequently, and at much expense, he instituted "funding maintenance" – a blanket rule that held that no school would go backwards in real terms. Schools could only gain.

Julia Gillard does not have this option as she has made the funding maintenance provision her central critique of the SES funding model. Unless she backflips on this provision, many schools will lose funding and it won't just be the wealthy ones. It will be Mark Latham's 2004 hit list all over again.

The Prime Minister's reticence to unveil her school funding plan is telling. Despite non-government school funding being the primary responsibility of the Federal Government (with state governments running government schools), the Prime Minister says very little about it.

When she does finally unveil the detail, let's hope that it brings an end to divisive school funding debates. More likely is that it will start a new round of debate and that Catholic and independent schools will be the losers for it.

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