Economic disadvantage feeds into the funding formula

FOR schools uncertain about the level of funding they will receive from government next year, the question is not how much they will get. Rather, it is how much more they will get. And when.

The school funding system proposed by the Gonski review provides a standard base payment for every student supplemented by loadings, a percentage of the base payment added for the size and location of the school, disadvantaged students, indigenous students, disabled students and students with poor English.

The base amount plus the loadings comprise the Schooling Resource Standard, which will differ for each of the 9500 schools across the nation based on the types of students enrolled. At present schools are assigned a socioeconomic score based on their students, and schools on the same score receive the same level of funding.

Under the model developed by the Gillard government, schools receive a base payment of $9271 for every primary student and $12,193 for every high school student. On top of this, small schools are eligible for a size loading worth $150,000 for primary schools with up to 200 students, falling to zero for schools with 300 students. For high schools, the loading is worth $240,000 for schools with up to 500 students, falling to zero for schools with 700 students.

A location loading is applied to the base for schools outside metropolitan areas, based on the classifications used by the Australian Bureau of Statistics, ranging from 10 per cent to 80 per cent for inner and outer regional, remote and very remote areas.

The biggest supplementary payment comes from the loading for students from low-income families, applied to the lowest half of socioeconomic status.

For students in the lowest quarter of socioeconomic measures, the loading rises from 15 per cent to 50 per cent, and for students in the second lowest quartile, from 7.5 per cent to 37.5 per cent.

Every indigenous student receives a loading from 20 per cent to 120 per cent, and students who speak English poorly receive a loading worth 10 per cent.

A loading for disabilities will be added in 2015 after national definitions are finalised; extra money has been provided in the interim.

The additional funding will be phased in gradually across the six years of the school funding agreement, with only an extra $600 million a year allocated in the next two years and not approaching the $6.5 billion extra funding required until 2019-20.

To secure agreement with state and territory governments, Julia Gillard offered $2 from the commonwealth for every extra $1 invested by the states. To date, only the NSW and ACT governments have signed a deal.

Part of the deal is a set level of growth for government school budgets, with the federal government committing to increase its budget 4.7 per cent a year and requiring the states to raise their budgets 3 per cent a year.

Some schools already receive more than their schooling resource standard under the new model, and in the six-year transition period these schools have been guaranteed their 2013 recurrent funding, which includes any targeted or National Partnership funding they now get, plus an extra 3 per cent a year.

Schools now funded at about their resource standard will receive an indexation rate of 3.6 per cent, while schools funded below the standard will receive varying rates of indexation to catch them up by 2019.

Under the existing federal funding model, which applies only to non-government schools, indexation is determined by the amount state governments spend on schools, which has been falling in recent years, with teachers' salaries generally capped at 2.5 per cent and state cuts in spending.

In the mid-year economic and fiscal outlook, Treasury assumed an indexation rate of 5.6 per cent, which is the 10-year average, but the federal and state heads of treasury subsequently gathered more up-to-date data on school funding showing the real indexation rate next year is 2.9 per cent.

The budget last month revised the forward estimates to take account of the lower-than-forecast indexation rate, explaining the apparent cut in recurrent funding.

While the dollar amounts for non-government schools will not fall, some affluent schools will receive less funding across time than under the existing system, which is the point of the Gonski review: to fund schools on need. These schools will gradually lose their relative funding advantage, with poorer schools drawing nearer to their resourcing levels.

The government's attitude is that schools worried about losing money can enrol more disadvantaged students, which would increase their level of public funding.

By cutting side deals to entice school sectors to the new model, Gillard is throwing away the principle of a needs-based funding model and entrenching the advantage of the privileged.