Still time to fix the school funding conundrum

As the nation awaits the first Abbott Budget, there have been strong voices raised against the National Commission of Audit’s (NCOA) proposal to transfer all policy and funding responsibility for schools to the states by 2018.

Commentators representing independent schools have rightly argued that moving everything to the states is too simplistic. It would break the direct funding relationship between the Australian Government and non-government schools that has existed for over 40 years – a relationship that has served schooling well.

Putting policy and funding responsibility in the hands of the States would reverse a 30-year trend towards the nationalisation of school education. It would also expose a flawed public policy position whereby the cash-strapped States would not only be the funders of non-government schooling, but also the regulator and competitor.

Given the Federal Government’s commitment to the current funding arrangements until 2017, we luckily have time to do some more homework on a viable funding model to be implemented from 2018.

This might include a consideration of a deregulated “self-adjusting” model of policy development and service delivery which is responsive to parent and student demands. Putting school education policy and funding in the hands of the States without first addressing their role, particularly as a direct provider of education services and a purchaser of education services from the non-government sectors, would simply entrench the current public–private divide in schooling. It would stall any chance of genuine education reform to a system which is driven by the needs of students and parents, and where government funding for schooling is allocated based on individual student needs, not the sector of schooling.

The Fitzgerald Audit Commission in Queensland (1996) highlighted principles for reform that would see a distinction between the roles of establishing policy and managing service delivery and a distinction between the roles of government as a purchaser of services and as a provider of services.

Such principles should have been considered by the NCOA, as a transfer of the responsibility for schools to the States could only be successful if the dual role of State governments as regulator and funder is also addressed. All schools would need to be placed on a more level playing field in terms of funding and regulation.

There are many examples of State Governments’ conflict of interest as regulators and funders of non-state schooling; one of the more frustrating is their failure to improve competition and flexibility in schooling by maintaining barriers to entry by non-government schools into the education market. In Queensland, non-state schools have to go through many government imposed tests before given approval to open, including the potential impact on other schools (even where such schools are failing and the community is demanding alternatives).

More concerning is the NCOA proposal that from 2018, the Commonwealth’s contribution to schooling would simply be based on the 2017 levels with indexation by a weighted average of the CPI and the relevant Wage Price Index.

Given the Commission’s views on the new schools funding model, including that “increasing funding does not necessarily equate to better student outcomes”, it would be odd to entrench Commonwealth funding levels for schooling  from 2018 on the basis of a flawed model introduced in 2014.

Effectively the Commission wants us to accept that whatever the funding is in 2017, it will be good enough for the future. This is particularly difficult to accept in the case of independent schools which are not subject to systemic redistribution of funds as available to public and Catholic schools.

It would continue to lock into schools funding the grandfathering provisions in not only the new funding model but previous funding models whereby some schools receive funding over their entitlement. The Commission made several references to these provisions, clearly an issue in schools funding, yet recommend a future arrangement which would fail to address the contentious and inequitable over-funding of some categories of schools.

The changed indexation arrangements for schools funding recommended by the Commission would no doubt address the unsustainable growth in Commonwealth expenditure. However, it would have a devastating impact on all schools. Over time, the real value of government funding would be seriously eroded, impacting on the provision of programs and the quality of education.

If implemented today, indexation of schools funding by CPI would result in a real decline in government funding of between 2-3% annually. Over a period of time, this could only lead to a reduction in programs and education quality, or in the case of independent schools, significant increases in fees.

It is not unreasonable that government funding for schooling be indexed according to a specific education-based mechanism that measures increases in education costs. The CPI is not a reflection of the increased costs schools face to implement the Australian Curriculum for example, nor does it reflect the movement in the salaries and on-costs of staffing which continue to comprise the largest percentage of school costs.

Schools funding has been a contested public policy issue for decades. Unfortunately the NCOA recommendation to simply transfer responsibilities for schooling to the States is not going to provide the solution as we strive for a fair, sustainable and predictable funding model.