The NSW government announced a cap on funding government and no-government schools along with significant cuts to bureaucratic staffing levels in the education department and other price increases to TAFE courses saving an estimated $1.7 billion over four years in an effort to address the state's fragile financial position.
Funds to the non-government sector will be capped around the current expenditure of $800 million annually saving the government $116 million to 2016. The state budget for public schools will be cut by $210 million over the next four years.
The funding freeze created the inevitable public outcry with calls for rallies, protests and teacher strikes although the cuts will be felt hardest in administrative education services as no front-line teacher positions in public schools will be axed.
Independent schools should have been on notice that government funding may not be so assured as a right rather than a privilege. That funding privilege is now subject to change although most school leaders believed any potential funding reduction would have originated from the commonwealth and not the states.
Some of the consequences from this funding freeze include the following.
i) For some time the NSW government has forecast significant fiscal restraint, one of which emanated from a $5.2 billion fall in GST revenue over the next four years because of declining receipts federally. Anecdotal information given to the writer indicates NSW remains in a parlous financial situation with numerous government departments being forced to implement severe cost cutting measures. Given the state's overall financial circumstances it appeared inevitable that schools would not escape necessary cost cutting measures. Many people are surprised the move was initiated by a liberal government which historically has viewed the non-government school sector favourably because parental tuition fee payments offset government expenditure that would otherwise be spent on schooling.
ii)Freezing state funding for four years amounts to a 3% support reduction annually which is below the current national cost increase affecting all Australian schools for primary and secondary students as measured by the Average Government School Recurrent Costs (AGSRC) index. This index increased by 6.9% in 2011 over 2010 for primary students and 4.8% for secondary students in the same period. Although national CPI costs have been held to less than 3% in the last twelve months for the last four years the AGSRC index has always risen higher than CPI measures. This means NSW non-government schools will need to budget for at least a 4-5% effective income reduction each year, compounded over the next four years, as a result of the government's funding freeze.
iii) In the face of this inevitable income reduction independent schools will be faced with three options:
a) Accept the income loss but attempt to operate under existing cost parameters without disproportionate tuition fee increases. This seems an unachievable option to implement.
b) Reduce or rationalise school services to minimise operating expenses. Some savings may be achieved but not at the expense of teacher reductions.
c) Raise tuition fees while attempting more stringent controls to gain marginal cost savings.
While many parents utilising independent schools are facing their own personal financial restraints because of tighter economic times it seems c) will become an inevitable outcome from the state's funding decision.
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