Growing numbers of students with disability to cost $1.1 billion more in school funding

The growing number of students with a disability will force the federal government to fork out an extra $1.1 billion in public school funding, raising the stakes in tense negotiations with the states over spending on schools and the National Disability Insurance Scheme.

Tuesday’s budget revealed federal funding for public schools would blow out over the five years to 2027-28, largely because more children than expected were becoming eligible for special “student with a disability” loadings that the Commonwealth pays to the states.

Education Minister Jason Clare.Credit: Alex Ellinghausen

But the budget also indicated that growth in the NDIS – which has spiralled after becoming the main support system for 232,000 children under 14 with autism and developmental delay – was starting to stabilise.

Total NDIS plan payments and participant numbers are still rising above projections. The federal government’s second-most-expensive program cost $44.3 billion this financial year: $2.4 billion more than forecast in last year’s budget, and 21 per cent more than the year before.

It is forecast to cost $56.5 billion in 2026-27, with the latest forward estimates blowing out by $3 billion from the last budget.

But agency chief executive Rebecca Falkingham on Wednesday said there were “green shoots” that growth was stabilising. New data showed the high proportion of Australian children on the scheme, which includes 13.4 per cent of all six-year-old boys, remained steady in the latest quarter.

“Participation rates at ages up to 4 are slightly lower than last quarter’s results, decreasing by up to 0.3 percentage points,” the latest NDIS quarterly report said.

“Participation rates at ages 5 and above are similar to last quarter’s results, with the exception of the participation rate at age 6, which is 0.3 percentage points higher than last quarter.”

Falkingham also pointed to easing rates of NDIS plan growth and a higher number of children leaving the scheme – up from 3 per cent a year ago to an annual rate of 6 per cent in the past two months – as positive signs that overall growth would be pared back to national cabinet’s 8 per cent target by mid-2026.

New measures in the federal budget are also aimed at tempering unpredictable costs. These include an NDIS evidence committee to provide advice to the government on the most cost-effective services it is providing, and funding to develop a pricing strategy.

But there will be further hurdles as the federal government seeks to pass the first stage of its NDIS changes through parliament in the coming weeks, with state governments baulking at a potential cost time bomb when they take on more responsibility for disability services.

As the NDIS tightens eligibility to focus on Australians with the most severe disabilities, the states will be expected to enhance their support for disabled children in particular, through both their school system and new “foundational supports” in the community.

It is one reason states are pushing for more Commonwealth money as they negotiate a new five-year school funding agreement with the federal government.

Education Minister Jason Clare is demanding states account for every federal dollar spent on students with disabilities in exchange for almost $6 billion more in public school funding. But NSW and Victoria want double that amount and claim that more data collection will only add to the pressure on teachers.

The additional pressure being placed on the school system from rising numbers of students with disabilities was made clear in Tuesday’s budget papers.

“Payments relating to government schools are expected to increase by $209 million in 2024-25 and $1.1 billion over five years, from 2023-24 to 2027-28, largely reflecting an increase in the number of students eligible to attract a ‘student with a disability’ loading,” the budget said.

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