Outcomes-based school funding easier said than done

Glenn Fahey

25 October 2019 | Ideas@TheCentre

There’s good reason to support government rhetoric about becoming more ‘outcomes-driven’. Who doesn’t want “an ongoing focus on value for money” as proposed by the NSW Government’s approach?

Momentum has been gathering to correct the misplaced perspective that sees education issues exclusively in terms of inputs (namely, how much money is being pumped in), to one based on outcomes.

This flips the conventional wisdom that funding should be decided simply according to the students coming into a school, to one based on what schools are actually doing for their students.

The evidence of today’s unwise and ineffective spending is seen in the ongoing decline in student achievement.

However, introducing new outcomes-based school funding reform is proving to be easier said than done.

Buoyed by the NSW Education Minister’s promise to “ensure that we match education funding to outcomes”, an ambitious parliamentary inquiry was established earlier this year to investigate “measurement and outcomes-based funding for schools.”

This is a natural extension to the NSW Treasurer’s bold plans for “shifting to a focus on outcomes” when it comes to public finances more broadly. At the same time, the NSW Productivity Commission has prioritised lifting school performance and education outcomes in its quest to lift the state’s productivity.

Teachers and school leaders want what’s best for their students, but current funding arrangements don’t support these aims.

For instance, a school receives additional funding for enrolling more students, particularly those suffering from disadvantage, but there are no implications — such as financial incentives —  nor accompanying checks on, how well, or poorly, these students are served.

An outcomes-based funding approach would benefit all students because schools and educators would have clear incentives to improve teaching and learning practices.

Yet, before the committee had the opportunity to hold hearings into reform, the policy approach became muddled, with the Education Department suggesting that any change would merely be “a different financial practice” and that “there will be no change to the way schools are funded and operated.”

A reasonable observer might then ask: if there is no change to the funding and operation of schools, what, and how, are educational outcomes expected to improve?

For genuine outcomes-based funding, the OECD suggests applying financial consequences for over- or under-achievement of performance objectives, which should be supported by performance management. Yet, recent evidence has highlighted that performance management is all but non-existent in NSW schools — which goes some way to explain the poor educational outcomes being experienced.

It’s true that there are pre-existing commitments to so-called ‘needs-based’ school funding — that is, funding is supposed to be redistributed for equity purposes. But ensuring that schools deliver outcomes for students, and deliver better value for money, cannot be considered mutually exclusive to needs-based principles.

It is hard to see that a change in the accounting treatment of corporate departmental line items could have any impact on educational outcomes. It would seem that what’s on the table could be more of an accounting change rather than accountability one.

But a change in accounting treatment is no substitute for educational reform. The NSW government should not permit another opportunity to go by to introduce genuine school funding reform that cares about how money is spent, not just how much.

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