School funding report makes flawed case for full Gonski reforms

As we pass the halfway mark of the four year federal education budget cycle, attention is turning once again to the issue of schools funding.

The federal government has given no indication that it will relent and implement the most expensive fifth and sixth years of the ‘Gonski’ funding package, and the federal opposition has also repeatedly declined to make any such pledge. But hope remains among some educators and commentators that the Gonski dream may still come true.

A report released this week by academics Lyndsay Connors and Jim McMorrow, affiliated with Sydney University but with a long association with public school advocacy and education unions, puts forward a lengthy case for the huge increase in public funding for schools that full implementation of the schools funding package based on the Gonski model would entail. Full implementation would see federal funding increase from $15 billion this year to $21 billion in 2017-18.

The best part of Connors and McMorrow’s report is the discussion of the Gonski review, its political and historical context, its strengths and limitations, and the obstacles it faced. Unlike many commentators with opinions on the Gonski report and its recommendations, Connors and McMorrow have obviously actually read the report and understood its intent. They acknowledge that funding reform that demonises non-government schools is futile, stating that there is ‘no evidence that high quality equitable system cannot be achieved with a mix of government and non-government schools’.

Yet their analysis boils down to this: funding for non-government schools is too high; school choice policies have led to harmful inequities in the school system; the first four years of the Gonski funding package have further entrenched funding disparities; and, therefore, large increases in federal funding to public schools are required.

The Gonski review attempted to create a more consistent, transparent and equitable school funding system. Connors and McMorrow correctly describe the model proposed as a form of ‘paperless voucher’.  It was based on student need , comprising a base funding entitlement to which all students were entitled (but which was means-tested for non-government schools) supplemented by loadings for educational disadvantage.

It is easy to indulge in partisanship when apportioning blame for the failure to achieve this aim, however ultimately the failure came down to one thing – the final price tag. Connors and McMorrow state that the major contributor to the unfeasibly large cost of the package was the funding guarantee to non-government schools, whereby students in all schools irrespective of sector and socioeconomic status received a minimum of 25% of the base funding entitlement, indexed each year.

An alternative and more plausible explanation is that the equity loadings – the additional dollars allocated to students and schools with educational disadvantages – were responsible for the high final cost. These loadings were supposed to come into full effect in the final two years of the package. It was in these years that the promised flood of money to recalibrate the balance of funding towards government schools was supposed to be delivered, but is now likely never to eventuate.

The issue is not the concept of loadings, it is the value attached to them. Connors and McMorrow seem to accept that the loading amounts were reasonable, but that is questionable. Although imperfect, the base funding amount is easier to defend. It was based on inputs and outcomes in a sample of real schools and is an estimate of the cost of achieving adequate student performance in a school with low levels of educational challenge. It was given extra validity by being comparable to existing recurrent average cost estimates.

The loadings on the other hand are contestable. The loadings applied in the ‘Better Schools’ funding package devised by the Labor government differed significantly from those proposed in the original Gonski model. In the Labor version, a much larger proportion of schools and students were eligible for loadings, with little or no research or evidence base to support the decision. The true objective was to ensure that no school would be worse off, but the consequence was a budget blowout that derailed the whole project.

Connors and McMorrow’s report deserves to be read but parts of it also deserve to be challenged, including its claim that non-government schools cost more in public funding than government schools. The report says that the growth of students in the non-government school sector from 1973 to 2012 would have cost $2 billion less if these students had enrolled in the government school system instead. According to Connors and McMorrow’s figures, the non-government school sector had an additional 634,068 students in 2012 than in 1973, at an additional cost of $9.3 billion. They claim that these students would have attracted an additional cost of only $7.4 billion in the government school system.

This seems difficult to reconcile with the well-known facts on school funding — particularly the indisputable fact that the average total government funding to non-government school students is much less than the average government funding to government schools. Indeed, the report itself provides data from the Australia Curriculum Reporting and Assessment Authority (ACARA) showing that in 2012, average per student funding was $11,700 to government school students, $9,200 to Catholic students, and $7,500 to independent school students. Using student numbers from the Australian Bureau of Statistics, it can be easily shown that if the students in Catholic and independent schools had received the same funding as students in government schools in 2012, the total bill would have been $4 billion higher.

So how did they arrive at the conclusion that non-government schools cost more? First, school income data from ACARA is substantially different to expenditure data from other official sources like government budgets and the Productivity Commission. The Productivity Commission gives an average expenditure of $15,768 per student in government schools and $8,546 per student in non-government schools in 2011-12. Using the Productivity Commission expenditure figure instead of the ACARA income figure in Connors and McMorrow’s calculations gives a very different result – $10 billion per annum in recurrent funding to accommodate 634,000 additional students in government schools.

The second problem in Connor and McMorrow’s calculation occurs because they apply the extra non-government school funding only to the additional 634,000 students; they assume funding for the other 613,000 non-government school students would have remained at 1973 levels – around $1,416 in real terms. If the extra $9.3 billion in funding is instead applied equally across all students in the non-government school sector in 2012, the marginal cost of the additional students in the non-government sector is $4.8 billion. This analysis makes the extra cost of the additional 634,000 students $5.2 billion a year more in the government school sector – not $2 billion less. Lastly and importantly, this does not include the capital costs of building the requisite 1,000 or so extra schools. In government systems, this cost is entirely borne by government, whereas much of the capital cost in the non-government sector is paid for by private income from parents.

Also disputable are the report’s claims that school choice policies, including public funding to non-government schools, are part of a ‘neoliberal’ agenda that seeks to entrench privilege with little regard for the educational opportunities of the poor and disadvantaged. This characterisation is wrong. The ability of parents to have some say in where and how their children are educated should not be a privilege, it should be a right. Far from there being too much choice available to families, there is too little – especially for low income families and children with special needs.

School funding reform in Australia is a diabolical problem for many reasons: the federalist structure that disconnects the responsibility for education provision (states) from the ability to raise revenue (federal); the existence of three school sectors in each of the states and territories; and the sheer size and diversity of the country. The Gonski review made an admirable attempt to reconcile all of these features and present a cohesive plan, but the convoluted and truncated system it eventually spawned is worse in many respects than the funding arrangements it replaced.

It is not clear yet what will happen with school funding at the federal level beyond 2018. The annual indexed increase in the budget papers is likely to be a temporary place holder while a longer term solution is developed. What is clear is that there is no political will at the federal level to pour an extra $6 billion a year into schools given that the doubling of funding in real terms over the last two decades has led to no improvements in student performance. Some aspects of the solution might be found in the Gonski report, but some creative new thinking is required, too.