Budget 2017: Getting your head around school funding

The federal government has announced its 10-year school funding plan. But how will "Gonski 2.0" work?

Billions promised now, but no spending strategy until end of the year

This week the federal government unveiled its school funding plan for the next decade, in an attempt to arrest declining education standards. The plan is an extension of the needs-based funding model first proposed in 2011 by the Gonski Review of school funding.

Developed by the former Labor Government, the original Gonski plan struggled to get off the ground as some states refused to sign up, and after the 2013 election the Coalition government declined to pitch in the full six years' worth of funding.

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Now the federal government has decided to reboot the funding model, with $81.1 billion of Commonwealth money to be poured into primary and secondary schools over the next four years. This will grow to $242.3 billion over the next decade.

The mechanisms for allocating the funding will be the largely the same as those in the original Gonski plan, leading Prime Minster Malcolm Turnbull to call it "Gonski 2.0". However, the government has announced it will do away with the compromise deals and carve-outs originally negotiated by Labor to secure state support.

It has also ditched the Labor ideal that no school should be worse off, meaning that independent schools that are currently "over-funded" will see public funds withdrawn. Labor has claimed the plan is a "smoke and mirrors" trick that will leave schools $22.3 billion worse off compared to their funding arrangements.

Despite Australia's comparatively high level of investment in education – increased markedly with this announcement – our students' performance in science, mathematics and reading has been declining over the last decade.

Explaining the Schooling Resource Standard

Each school has a target funding figure called its Schooling Resource Standard (SRS) – this is the dollar level that needs to be met before a school can be said to be properly funded.

The SRS is calculated on a per-student basis, with additional loadings being added to meet the needs of disadvantaged schools and students. The size and remoteness of schools are taken into account, as are the number of students who have a disability, low English proficiency, are indigenous or come from a low socioeconomic background.

Most non-government schools also have a socioeconomic status score, which affects the per-student SRS amount. School communities with a greater "capacity to contribute" receive less of their per-student funding from the public purse.

Gonski 2.0 will shuffle funding allocation around so that every school in each sector receives an equal proportion of its SRS from the Commonwealth. By 2027, all public schools will receive 20% of their SRS from the Commonwealth. Independent schools, which traditionally get the majority of their public funding from Canberra, will get 80% of their SRS from the federal budget.

This is an increase on the current average for each sector, although it does mean that some independent schools will see their funding reduced. Their funding will be cut by 2% per year for four years until it reaches the 80% mark.

Smarter spending for smarter kids

OECD research has shown that in rich countries like Australia, how money is spent on schools is more important than how much is spent. Now that the government has outlined how much it's willing to invest to improve education standards, it just needs to figure out how to do it.

The architect and namesake of Labor's plan, David Gonski, has been brought back to head a review into the "evidence-based initiatives" required to improve student outcomes. The results of the review, due at the end of the year, will inform how all this new Commonwealth funding will be spent.

States will have to implement the recommendations of this review as a condition of receiving Commonwealth funding. Once the details have been figured out, the government will negotiate individual agreements with the states on how they will implement the reforms.

Although states won't be forced to front up the rest of the money to meet their schools' SRS levels, they will be forbidden from reducing their current per-student funding levels.

Catholic schools not happy

Under the new system the way funding is determined for Catholic schools will change. Rather than funding individual schools, the Commonwealth provides funds to each state's Catholic education commission, which can determine how resources are distributed among its schools.

Many of the "overfunded" private schools tagged for funding decreases are in the Catholic system. Currently, the socio-economic score for Catholic schools, which affects their SRS benchmark, is calculated on a "system weighted average" – that is, on a state-wide basis.

This means the SRS reduction for Catholic schools in wealthy suburbs isn't as great as for non-Catholic independent schools. The government will seek to do away with this method, and determine each Catholic school's "capacity to contribute" individually, just like other independent schools. The National Catholic Education Commission says this will undermine the "efficient and equitable" functioning of the system.

Reforms to disability funding

Currently there is one flat loading rate for students with disabilities, regardless of each student's actual level of need. However, the system relies on the states' differing definitions of disability, which means a student that qualifies for a disability loading in one state might not in another.

This is to be replaced with a national disability definition, with three loading levels to account for that fact that children with disabilities do not all have the same support needs. $20.6 billion over the next 10 years – 8.5% of total expenditure – will go toward disability loadings.

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