Australian Government funding for schools

There is much anticipation about the future of school funding with the Australian Government’s proposed new arrangements for school funding expected to be presented to the Council of Australian Governments’ meeting in April this year. The proposed changes will follow on from the recommendations of the final report of the Review of Funding for Schooling (the Gonski Review).

The Labor Government took its first steps towards reforming school education funding when, in 2009, it transformed a funding structure that in essence had been in place since 1974. It created a single National Schools Specific Purpose Payment (SPP), which provides most of the Australian Government’s funding for schools. The National Schools SPP for government schools combined previous recurrent and capital funding for government schools, with some additions, into the one payment. The recurrent and capital programs funded by the non-government school component of the National Schools SPP remain as before, including the Socioeconomic Status (SES) system for determining the amount of per student general recurrent funding for non-government schools. Additional funding for both government and non-government schools is provided by a number of National Partnerships (NPs), including NPs targeting literacy and numeracy, teacher quality and socioeconomic disadvantage.
Except for the temporary stimulus of the Building the Education Revolution programs, the underlying historic pattern of ongoing government funding for schools has remained, with the Australian Government providing most of its school funding to non-government schools and state and territory governments providing most of their funding to government schools. 
A new Background Note from the Parliamentary Library shows that, as the funding system is currently, from 1999–00 to 2013–14, Australian Government funding for schools will increase in real terms (2011–12 dollars), by an estimated 74.0 per cent, from $7.5 billion to an estimated $13.0 billion. Government school funding will increase in real terms by an estimated 46.2 per cent and, for non-government schools, by an estimated 92.6 per cent. As Budget Paper No. 1 (p. 6-17) shows, non-government schools are scheduled to receive an estimated 64.6 per cent of Australian Government funding for schools in 2013–14.
The Background Note explains that most of the ongoing funding increase for schools is the result of indexation. The remainder is from increases in student enrolments and new money as the result of government policy initiatives. The indexation formula is based upon a measure of the average cost of educating a child in a government school (with different amounts for primary and secondary school students). From 1999 to 2012, the weighted average (primary and secondary) Average Government School Recurrent Costs (AGSRC), increased by 28.5 per cent in real prices.
The 2012–13 Budget forward estimates for the National Schools SPP were based upon a weighted growth factor of 6.0 per cent. However, as also explained in the Background Note, the AGSRC increases for 2012 were lower than expected, resulting in a fall in the average weighted increase from 6.0 per cent to 3.9 per cent. Hence, as revealed in the Mid-year Economic and Fiscal Outlook 2012–13 (pp. 75–6), the Government adjusted the growth factor downwards for the forward estimates, from 6.0 per cent to 5.6 per cent.
The Australian Education Bill is the first phase of a major reform of Australia’s school education system that will also see fundamental changes in how governments fund school education. The Bill currently includes the Government’s National Plan for School Improvement that has overarching goal for Australia to be ranked as one of the top five highest performing countries (based on the performance of Australian school students in international tests in reading, science and mathematics and the quality and equity of Australian schooling) by 2025.
The new national school funding model and increased funding will be tied to implementation of the National Plan. The Government’s broad plan, as outlined in its formal response to the final report of the Gonski Review, is to implement the report’s major recommendations for recurrent funding. These include a new per student Schooling Resource Standard and various loadings for disadvantage that will, if implemented, result in new expenditure of about $6.5 billion per year.
The Background Note updates a previous version. It explains the system of Australian Government funding for schools and examines expenditure trends in detail. It also provides a brief history of Australian Government funding for schools and an overview of the final report of the Gonski Review and the Government’s response to date. 
Source: M Harrington, Australian Government funding for schools explained, Background note, Parliamentary Library, Canberra, 8 March 2013.
Other Parliamentary Library publications about school education and funding:


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