Public Schools are Defrauded by Billions Under New Funding Agreements

Feb 11, 2019

Public schools are being defrauded by billions under school funding agreements finalised at the end of last year between the Commonwealth and state/territory governments (“the states”). Public schools in all states except the ACT will be under-funded indefinitely while private schools in all states except the Northern Territory will be fully funded or more by 2023. Private schools also get more favourable phase-in arrangements than public schools.

Public schools will be defrauded of some $60 billion over the period 2018 to 2027, an average of $6 billion a year. The funding loss is due to two features of the agreements.

First, public schools in all states except the ACT will only ever be funded at 95% of their Schooling Resource Standard (SRS) at best and more likely less because the states have only committed to funding them at 75% of their SRS while the Commonwealth will only fund them to 20%. The extent of under-funding at present is extensive in several states – public schools are funded at less than 95% of their SRS in all states except Western Australia and the ACT and less than 90% in NSW, Queensland and the Northern Territory. The 95% target will not be achieved until at least 2027 and the cumulative loss until then is estimated at about $41 billion.

Second, the states can claim expenditures not included in the SRS measure as part of their SRS target share up to 4% of their SRS. This represents a loss of funding required to meet state target shares. If the states take advantage of this special deal, the cumulative loss over the next decade is estimated at about $19 billion.

The additional expenditures allowed to be counted towards the achievement of the 75% target for public schools are depreciation, school transport, regulatory authorities, pre-school and early childhood. These expenditure items are explicitly excluded from the nationally agreed definition of the SRS which is measured by net recurrent income per student as compiled by the Australian Curriculum, Assessment and Reporting Authority.

In contrast to the indefinite under-funding of public schools, private schools are guaranteed to be fully funded to 100% of their SRS or more by 2023. Indeed, they are already funded at 100% of their SRS or more in NSW, Queensland, Western Australia and the ACT while those in South Australia and Tasmania are funded at nearly 100% of their SRS.

The Commonwealth will fund all private schools to 80% of their SRS by 2023 and it is expected that the states will fund private schools at 20% of their SRS. However, private schools are currently funded at above 20% of their SRS in all states except the Northern Territory and possibly Victoria. There are caveats in the NSW, Queensland, South Australian and Western Australia agreements that allow these governments to continue to fund private schools at above 20% of their SRS.

In addition, the states cannot claim expenditures not included in the SRS measure as part of their target share for private schools. Consequently, they cannot reduce their funding commitments to private schools as they can for public schools.

Yet, private schools benefit from capital funding by state governments, school transport funding and regulatory and standards authorities funded by the states. If there is case to include these expenditures in the definition of the SRS, it should also apply to private school funding. The selectivity with which this new arrangement is applied suggests that it is designed to reduce the funding commitments to public schools by state governments while continuing over-funding of private schools.

The phase-in arrangements for the new funding model overwhelmingly favour private schools. The Commonwealth has guaranteed that private schools currently funded below 80% of their SRS will achieve the target by 2023 while the states do not have to achieve the smaller 75% funding target for public schools until at least 2027.

The Commonwealth Government had previously stated that the states would be required to achieve 75% of the SRS by 2023. However, under the agreements NSW and Tasmania do not have to achieve the target until 2027, Queensland not until 2032 and there is no commitment that the Northern Territory will ever achieve the target.

Contrasting provisions also apply to schools currently funded above the respective targets. Private schools currently funded at over 80% of their SRS by the Commonwealth have until 2029 to adjust to the lower level of funding. Public schools in Western Australia will have their funding share reduced from 84.4% to 75% by 2022 and those in the ACT will have their funding share reduced from 92.9% to 80% by 2023.

Over-funded private schools also get $40 million in special assistance to adjust to lower levels of funding. Since it was announced by the Turnbull Government it has been incorporated into the Morrison Government’s Choice and Affordability Fund. Over-funded ACT private schools have a special deal worth $58 million to adjust to reduced funding and, astonishingly, some get assistance to adjust to higher levels of funding. Public schools facing reductions get no adjustment assistance funding.

In addition to these special benefits for private schools, the Morrison Government set up a $1.2 billion slush fund only available for private schools which will ensure that private schools, on average, will be even more over-funded.

The new arrangements established under the bilateral agreements have put more nails in the coffin of the Gonski funding model. It has been progressively dismantled by the Abbott and Turnbull Governments and the Morrison Government has almost completed the demolition.

There is no longer an integrated national funding model as envisaged by the Gonski report. The effect of the agreements signed is to further fragment and undermine what is left of the national funding model. They destroy the integrity of the national measure of the SRS by selectively changing what is included in the measure. They give favourable treatment of private schools while reducing state funding commitments to public schools. They deceive the public about the level of state government funding of public schools and the extent of progress in meeting target funding shares by the states for public schools.

It will be up to a Labor Government fully implement the Gonski vision and provide the funding necessary to support public schools and disadvantaged students. The Labor Party should undertake to re-negotiate the funding agreements to ensure public schools are fully funded by 2023. It should end the special deal whereby the states can claim additional expenditures outside the SRS measure as part of their SRS share and require the states to increase their funding for public schools. It should also require over-funded private schools transition to their SRS by 2023 and terminate their special adjustment funding.

Trevor Cobbold is National Convenor of Save Our Schools.

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