Numbers don’t lie: Public schools underfunded by $60bn; private overfunded by $6bn

Feb 18, 2021

The Morrison Government has abandoned all pretence at funding private schools according to need and has washed its hands of ensuring that public schools are fully funded. 

The current school funding arrangements are heavily biased against public schools. Private schools will be over-funded by $6 billion from 2021 to 2029 under current funding arrangements while public schools will be under-funded by nearly $60 billion.

These estimates, based on official figures, show that the Morrison Government has abandoned all pretence at funding private schools according to need and it has washed its hands of ensuring that public schools are fully funded. To make matters worse, the Morrison Government has conspired with state governments through bilateral funding agreements to under-fund public schools indefinitely.

The outcome is that private schools will be lavishly funded for the rest of the decade while public schools are starved of funds needed to make a difference for the vast majority of disadvantaged students.

The over-funding of private schools will occur because they will be funded at more than 100% of their Schooling Resource Standard (SRS) from 2021 until at least 2029. The sources of the over-funding are:

  • $2.4 billion from funding at over the Commonwealth target of 80% of the SRS;
  • $2.5 billion from funding at over the States target of 20% of the SRS;
  • $1.2 billion through the Commonwealth’s Choice and Accountability slush fund (from 2020).

Under changes to the Australian Education Act in 2018 by the Turnbull government, the Commonwealth committed to funding private schools to 80% of their national Schooling Resource Standard by 2023, with the remaining 20% to be funded by state governments.

However, the new measure of assessing the financial need of schools introduced by the Morrison Government has ensured that private schools will be funded at more than 100% of their SRS until at least 2023. The over-funding is due to reduce progressively to 2029, but it remains to be seen whether this will occur given the historical influence of private school organisations over Coalition and Labor governments to retain their special funding privileges.

‘Intruders’ not welcome: Coalition to decide who is worthy of education funding

This estimate of Commonwealth over-funding is just the tip of the iceberg. It does not include over-funding built into the new Direct Measure of Income (DMI) method of calculating the financial need of private schools. The DMI ignores income provided by grandparents and untaxed capital gains income as well as donations to private schools. This means that the financial need of schools is over-estimated and they receive even more funding than warranted.

In addition to Commonwealth over-funding, all states except Victoria and the Northern Territory currently fund private schools at more than 20% of their SRS. Some states have committed to gradually reducing their over-funding by 2029 but others have not.

Private schools also benefit from a slush fund called the Choice and Affordability Fund, which will provide $1.2 billion over 10 years from 2020 to 2029. As the former prime minister Malcolm Turnbull said in his memoirs, the Fund was introduced by the Morrison Government “without any particular rationale, other than as a way of buying some peace” with private school organisations and the Catholic Church.

Although the Fund is supposed to expire in 2029, the agreements between the Morrison Government and private school organisations on the distribution of the Fund state that it will be reviewed in 2027. This indicates that the Fund is likely to be maintained indefinitely and that the extent of future funding is up for negotiation.

In contrast to the over-funding of private schools, public schools will remain severely under-funded indefinitely according to the current funding agreements between the Commonwealth and state governments. Under the agreements, the Commonwealth will fund public schools to 20% of their SRS by 2023 and state governments will fund them to 75% by 2027 (2028 in the case of Victoria, 2032 in Queensland and 80% in the ACT by 2023).

However, the total target share of 95% for public schools is a deception. The Morrison Government has allowed all state governments except the ACT to claim other expenditure not included in the calculation of the SRS as part of their target. States can claim expenditures of up to four percentage points of the SRS. This means that the states will only ever have to fund public schools to 71% of their SRS while the Commonwealth funds 20%.

Thus, public schools will only be funded at 91% of their SRS by 2029. The total under-funding from 2021 to 2029 will amount to $57.9 billion. They will be under-funded by $6-7 billion annually over the period.

In another stark contrast between funding for public and private schools, the same accounting trick is not applied to state funding of private schools. State governments are committed to funding private schools to 20% or more of their SRS without any allowance for expenditures not included in the formal definition of the SRS.

The funding policies of the Commonwealth and state governments will dramatically increase the already large resource advantage that private schools hold over public schools. The learning needs of disadvantaged students and schools are being subordinated to the funding of already well-resourced private schools. Public schools enrol more than 80% of all disadvantage students – low SES, Indigenous, disability and remote area students – and 95% of all disadvantaged schools are public schools.

The blatant favouring of privilege over disadvantage is unconscionable. Australia has one of the most inequitable education systems in the OECD. Achievement gaps between rich and poor are huge because preferential funding of private schools gives them a massive human and material resource advantage.

Public schools are as good as private schools

The vision of the Gonski report to re-direct education policy and funding to reducing inequity in education has been extinguished. The Gonski funding model was progressively dismantled by the Abbott and Turnbull governments and the Morrison Government has completed the demolition with the complicity of Coalition and Labor state governments.

There is now no option other than to return to the drawing board and design a new funding model to tackle disadvantage and improve equity in education.

This article is a summary of a new Education Research Paper published by SOS.

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