A new report by the National School Resourcing Board reveals that public schools lost more than $2 billion in funding in 2023 because of accounting tricks used by state governments under the Commonwealth-State funding agreements operating at the time.

The accounting tricks are continued under the new funding agreements signed this year. They mean that public schools will remain underfunded for the next ten years.

The report reviewed compliance by state and territory governments with requirements of the funding agreements for 2023. The agreements outline funding transition pathways for each year from 2018 until 2023, later extended to 2024. Each state and territory must meet a minimum funding requirement based on the relevant Schooling Resource Standard shares specified for their agreed transition pathways for public and private school sectors.

Under the agreements, all states except the ACT could claim expenditures specifically excluded from how the SRS is measured as part of their share of funding the SRS of public schools. They could 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 could only claim this as part of its 4% allowance.

The NSRB reported that the states claimed $2.34 billion for these expenditures in 2023. It represents a loss of funding for public schools because the states have used non-SRS expenditures, instead of eligible SRS funding, in meeting their share of the SRS of public schools.

The biggest funding losses were incurred by public schools in NSW, Victoria and Queensland – $641 million, $628 million and $568 million respectively. Public schools in Western Australia lost $237 million and those in South Australia lost $171 million.

Prior to amendment of the Education Act in 2024, Commonwealth Government funding of public schools was limited to 20% of their SRS and state and territory governments were responsible for the other 80%. However, the previous funding agreements failed to ensure full funding by state and territory governments. The funding shares for the states and the Northern Territory for 2023 were all less than 80%. The specified shares failed to take account of the accounting tricks. In reality, state governments except the ACT were funding public schools at far less than 80%. For example, while the reported NSW Government share met the 80% target, the actual share was only 76%.

The data provided by the NSRB report allows estimation of the full extent of this underfunding in 2023. Based on the report’s figures, it is estimated that public schools were underfunded by $5.1 billion in 2023. Public schools in Victoria were underfunded by $2.1 billion, $1.4 billion in Queensland and by nearly $600 million in NSW.

By contrast, all governments except Victoria and the Northern Territory were funding private schools at the level required by the agreements or were overfunding private schools. The level of underfunding for private schools in Victoria and the Northern Territory was negligible compared to that of public schools. The NSW Government overfunded private schools by $209 million. The total overfunding of private schools by state governments in 2023 was $242 million.

It should be noted that the Commonwealth Government also overfunded private schools in 2023 by an estimated $766 million. Total Commonwealth and state overfunding amounted to $1 billion.

The refusal of state governments to fully fund public schools, which are their primary responsibility, while continuing to overfund private schools, is deplorable. it is another indication of the extent to which the school funding system is biased against public schools.

But the discrimination in favour of private schools runs even deeper. State governments defrauded public schools by claiming non-SRS expenditures such as depreciation, school transport and expenditure on regulatory authorities as part of their share of funding public schools. However, they did not claim such expenditures as part of their share of funding private schools. Private school students also receive school transport subsidies and private schools are also regulated by state government authorities.

The new NSRB report is official confirmation that the previous Commonwealth-state funding agreements were heavily biased against public schools. Under the agreements, public schools incurred major losses of funding each year because of accounting tricks in the agreements.

Incredibly, the new funding agreements signed earlier this year continue the underfunding of public schools for another 10 years. The agreements do provide for the removal of the 4% allowance on capital depreciation, but it will not be fully removed until 2034. Governments can continue to claim expenditure on regulatory authorities and they have a new separate allowance to claim expenditure on school transport for public school students.

SOS estimates that public schools will still be underfunded by over $1.7 billion in 2034. The underfunding estimates are NSW – $888 million; Queensland – $425 million; South Australia – $120 million; Western Australia – $192 million; Tasmania – $37 million; and Northern Territory – $53 million (2029). The cumulative underfunding over 10 years is $34.6 billion. These estimates exclude likely underfunding of Victorian public schools because the funding agreement is not published.

It is scandalous that there is still no Victorian agreement when the school year is nearly over. Commonwealth Government officials told Senate Estimates earlier this month that no agreement had been signed to date. The Victorian Government is notorious for its neglect of public schools. It has long underfunded public schools and they are likely to be underfunded by at least $1.5 billion in 2025. The claim by the Victorian Government that Victoria is the “education state” is a complete misnomer. The government continues to fail public schools.

By 2034, it will be 23 years since the Gonski Report recommended that public schools be fully funded according to a schooling resource standard. The continuing underfunding of public schools represents lamentable and egregious failure by governments to support greater equity in education. The situation demands that the funding agreements be revised to ensure public schools are fully funded by 2029.

The views expressed in this article may or may not reflect those of Pearls and Irritations.