A new federal schools funding model: challenges and opportunities for the Coalition

The re-elected Turnbull Government has serious challenges in terms of implementing its school funding policies and little time to resolve them.

Any changes to the current funding arrangements will require amendment of the Australian Education Act 2013. Re-appointed Education and Training Minister, the Hon Senator Simon Birmingham, will need to employ his best negotiating skills to successfully see any reforms pass through the Senate.

The other challenge for the Australian Government is how to treat the range of special deals that were brokered when the "Gonski" funding model (the correct name is Schooling Resource Standard) was introduced in 2014, including different funding arrangements for some states and territories and favourable funding rates for systemic schools.

However, there are some options the Australian Government could consider. One significant change worthy of examination is taking Australian Government funding for state schools out of the model. A complex funding model is not required for the Commonwealth to strike a funding amount for state schools. Such an approach is also supported by the fact that the Commonwealth provides only about 15% of direct public funding for state schools, with state and territory governments responsible for the bulk of funding (remembering that, for example, in the case of Queensland, the Commonwealth provides about 50% of its total budget income through grants and GST revenue).

However, given the failed attempt by the Prime Minister at a Council of Australian Governments meeting earlier this year to win state and territory support for giving them complete funding responsibility for state schools, with additional revenue raising capacity, this option is unlikely to be seriously contemplated.

The Coalition does have the opportunity to make some technical adjustments that would improve the equity and efficiency of the current funding model.

The Capacity to Contribute settings which are used to determine the percentage of the Schooling Resource Standard received by non-government schools based on their Socio Economic Status (SES) scores should be changed to address the current anomaly that sees some primary schools receive more government funding than secondary schools with similar scores.

The other significant change that could be made is to reduce the complexity of the model by streamlining the number of loadings. There are currently six additional funding loadings relating to school size, school location, the number of students from low SES backgrounds, the number of Indigenous students, students with disability and the number of students with low English proficiency.

The low SES loading could be easily accommodated within the Capacity to Contribute settings. Such a change would also have the advantage of using SES scores for this loading compared to the current use of poor quality and unverified parental background data.

The best way to target additional funding for our neediest students is to take the loadings for students with disability, Indigenous and low English proficiency students out of the model and revert them to Targeted Programs or National Partnerships, administered by sector authorities and associations who can also add value through support services and other assistance to schools.

With these changes the new funding model would still be based on a Schooling Resource Standard, but with a greater emphasis on a valid Capacity to Contribute setting with just two loadings related to school size and location. Additional funding for student needs would be administered through the long established and efficient school authority system.

Special Schools for students with disability, Special Assistance Schools for disengaged youth and Majority Indigenous Schools should be removed from the model with the Commonwealth determining an individual funding amount based on the unique and specific circumstances of each individual school and the needs of its students.

A further challenge for the Coalition will be how to strike a fair and equitable indexation rate for individual school funding amounts from 2018. Ideally, schools should receive indexation that maintains their funding increases at the same rate as education cost increases which are currently between three to four percent. However, this is unlikely with differential indexation rates likely to be applied depending on where a school sits on the transition to its Schooling Resource Standard entitlement.

The Government will need to move swiftly to have a new funding model in place by 2018, preferably with a four-year time horizon to give greater certainty to schools. However, given previous funding models have taken several years to research, design and implement, time is not on the Coalition's side.

A good start would be a short high-level review of the existing arrangements, including whether or not the funding has resulted in improved student outcomes. Such a review would provide the foundation to redesign the current funding model into one that is simple, transparent and equitable. And most importantly a model which is focused on improving student outcomes in our schools.