I am pleased to release the report of the independent review into how socio-economic status (SES) scores are calculated for non-government schools, which informs the base level of taxpayer funding they receive.
The report recommends technical changes to one element of the formula used to distribute funding for non-government schools and systems, based on previously unavailable data collection methods.
Under the existing SES score methodology, parents’ capacity to contribute towards their children’s schooling is calculated on the average SES score for the census districts in which the students at the school reside.
The report identifies that with recent data-collection improvements, a direct measure of parental income would now be a more reliable way to determine a school community’s capacity to contribute to the recurrent costs of the school.
The report makes it clear this direct measure of parental income can now be used without breaching privacy or requiring the collection of tax file numbers by a school.
The report recommends the current system remain in place for 2019 and any changes to the SES model begin no earlier than 2020. This would provide schools certainty to plan and time for consultation and a considered government response later this year.
This review builds on the Turnbull Government’s sweeping schools funding reforms, which were announced last year. The reform package ended special deals and for the first time introduced consistency to the application of federal funding formulas across states and territories and across all non-government schools or systems.
In delivering on David Gonski’s recommended funding model, the Turnbull Government also implemented the recommendation to establish an independent National School Resourcing Board. The Board’s first review has been to assess the strengths and limitations of the current SES score methodology and to recommend possible refinements or alternative methodologies.
I thank the Board, especially the chair Mr Michael Chaney AO, for its thorough analysis and stakeholders for their constructive engagement with this process. As promised, I will consult with non-government school sectors and states and territories before formally responding to the Board’s recommendations.
The Turnbull Government’s focus has always been to deliver a fair funding system for schools that is transparent, consistently applied, needs-based and aligned with the firm belief that every student deserves at least some level of support. We remain committed to these principles.
The report’s recommendations offer the potential to achieve a clearer picture of the capacity of families at non-government schools to contribute to the costs of their children’s education.
That would mean a more accurate way to distribute our record and growing levels of funding.
Commonwealth funding is increasing by an average of 4.4 per cent per student each year for non-government schools, and by 6.5 per cent for government schools.
An effective measure of a school community’s capacity to contribute is essential to ensure the greatest taxpayer support is allocated towards those school communities with the least capacity to pay school fees. This approach puts school choice within reach of as many parents and families as possible.
The current SES methodology was introduced by the Howard Government and it is right for it to be reviewed and improved.
The report found current and recommended SES calculations were largely similar, underlining that using direct parental income data would be an evolution, not a revolution in the way non-government schools’ funding is distributed.
The report makes it clear that more work needs to be done to further test and refine the recommended SES methodology. The next stages of this work will be done following consultation with educators, school systems, representative bodies, states and territories and policy makers regarding long-term arrangements and any transitional measures.
Although the vast majority of projected school funding is unaffected by these recommendations we are mindful of the importance of certainty for schools and school systems and we will respond as quickly as possible following appropriate consultations.
The Board’s recommendations are:
- Adopt the following definitions: ‘capacity to contribute’ is a function of the school community’s income and wealth; and ‘school community’ is the parents and guardians of the students at the school.
- That the capacity to contribute for a school be determined based on a direct measure of median income of parents and guardians of the students at the school. School fees are not an appropriate measure of capacity to contribute.
- Consult further with the non-government sectors and experts on the development of, and transition to, a new direct measure of capacity to contribute for implementation from 2020.
- Undertake an annual residential address collection and data matching with income tax data to enable the calculation of a rolling average for a stable direct measure of median parent and guardian income for a school.
- Continue existing arrangements for determining capacity to contribute for 2019, with application of updated 2016 Census data.
The final report Review of the socio-economic status (SES) score methodology can be found at: https://www.education.gov.au/national-school-resourcing-board.
To ensure continual refinement of the school funding model, the Board will shortly commence its next review, into matters related to the disability loading, as well as work that will inform its future compliance functions.