How much should education cost

Walgett spends $44,692 per student, with $43,501 coming from the federal and state government to support the school’s extra needs. By comparison, elite Sydney Grammar spends $40,982 per student, with $3617 coming from public funding. – source: Liberals trigger storm over private school funding, Australian, STEFANIE BALOGH, 12:00AM September 28, 2016

On Monday on #QandA the Education Minister was precise and stated the problem facing every education minister in this country. As the Australian put it:

Education Minister Simon Birmingham’s concession that some of the nation’s wealthiest private schools are “over-funded” and could lose money has ignited a fresh front in the decades-old ­political firestorm over education spending.

In the same Australian article the Grattan Institute’s Peter Goss said it well:

The Grattan Institute’s school education program director Peter Goss said Senator Birmingham “is to be absolutely commended for calling out the fact that some schools are over-funded relative to their need. That means we are spending dollars and extra dollars each year in places that don’t need it, and that is preventing us from spending it in places that do need it’’. “This must change,’’ he said. “This is about the principles of needs-based funding — arguments about hit lists of private schools are purely self-serving.’’

“This has been a no-go area for far too long. It is fantastic that Minister Birmingham is showing signs of taking it on.’’

School Funding has for years been portrayed as an intractable problem. So the Education Minister is keen to do something about it.

Senator Birmingham said he would not buckle in the face of “scaremongering” from Labor about a schools “hit list” and that he was determined to end the inequalities between states and school sectors. – Revealed: the nation’s most ‘over-funded’ schools, Matthew Knott, SEPTEMBER 28 2016 – 8:38PM, The Sydney Morning Herald

Here is a great Video about the Gonski model that proposed a way forward to resolve this problem.

I was listening to RN (@patskarvelas) and the topic of schools funding came up. Stimulated and curious I decided to have a look.

What is the current situation with schools funding?

First I read the two articles that deal with the comments made on Q&A. I then did a bit of rough research. This involved:

  1. Selecting a set of schools to study. I decided to take up two schools from the newspaper article and added three others – two schools I was familiar with and one school in Melbourne that has a reputation for academic excellence ( and for raising house prices in its school zone)
  2. I then downloaded the annual reports for these 5 schools. And extracted two figures from the report: Income (Government and other) and number of students.
  3. I have also used the figures mentioned in the newspaper article (for Sydney Grammar and Walgett) – expenditure by school per student. There was a discrepancy in the figures for Walgett – so I made two lines and thus kept both figures. The ones quoted in the newspaper and the ones in the annual report. I was using the K-12 figures – both primary and high school.
  4. I then made a simple excel spreadsheet you see below.

schools-funding

 

Note: The dataI used for the Walgett School is the one mentioned in this newspaper article. Its possible this is a unique school and potentially a special instance of funding.

Its possible that such a spread sheet can be made up – with more accurate figures. It is entirely possible that research such as this may have been conducted by Gonski/ The Grattan Institute and even by the Education Minister’s office. Purely in terms of Government expenditure – which the Minister seemed to be pointing at – it costs roughly 10 to 12 thousand $ a year to educate a single student in the Public-Ecosystem. On the other side the Federal government has to spend 2.1 billion a year on funding private schools.

This simple chart can be used alongside some key findings of educational research. It can also be used alongside key tropes to verify their validity.  That said a few aspects of the current debate are listed below.

  1. School academic performance is linked to postcodes.
  2. Future Employment outcomes are determined by the school the student graduated from.
  3. The Government should fund all students independent of their economic status.

Some aspects of the current debate are unique to the Australian context – such as preserving state funding for Private schools. Its quite common for state funding outside of Australia to be focussed only upon state schools.

How Much Does Education in Australia Cost?

To look at this next question I started with the ABS data on school going population in Australia.

Overall, government schools continued to be the major provider of school education in Australia in 2015, with 2,445,130 students (65.2% of all students) attending, while 1,305,843, students (34.8% of all students) attended non-government schools. Source Australian Bureau of Statistics (http://www.abs.gov.au/ausstats/abs@.nsf/mf/4221.0)

From my previous table and text I have two figures: The federal Government spends 2.1 Billion on education, and the rough cost of per student education in a public school is 12,000 $/year. Here is what I came up with:

  • Current State Funding Total 29,341,560,000
  • Federal Funding to Private Schools Total 2,100,000,000
  • Total Government Funding (State plus Federal) 31,441,560,000

The Federal Government is not a big player in the schools funding/ economic ecosystem. If they were to pull the money they spend on private schools and put that into the state system each student would get an additional 900$ – making the individual student spend 12900. For Balwyn High School this would mean an additional income of 1.8 million. This would come at a loss of 4 million to Sydney Grammar.

Note: Using the Federal Funding of 2.1 billion for private schools, for a student population of 1,305,843 – we arrive at an average figure (all students receiving the same level of funding)of Federal Government Funding of 1608$. This is half the quoted figure for Sydney Grammar – and its possible there is a formula that the Government uses to determine variable funding for different private schools.

How to think about Funding

This was an article in the Age today: “More than 150 private schools over-funded by hundreds of millions of dollars each year” by Matthew Knott and Fergus Hunter LINK.

An earlier article has a list of schools overfunded: Revealed: the nation’s most ‘over-funded’ schools, by Matthew Knott

There are a few issues at stake here, some questions and some narratives:

  1. How is the funding for an individual school determined? Therefore how have some of these schools ended up with such high levels of funding.
  2. My earlier analysis was focussed upon ‘taxpayer’s children’ – that is the government money is the portion of tax paid by the individual. This is the hypothesis that the way to fund private schools could use a rule that specified a ‘rate of funding’ attached to a student – such as 12,000$ per year. This funding then would move with the student to any school they wished to go to – a form of portable funding. So a fee of 32,000$ a year in a school could be imagined to comprise two components – the state fee support of  12,000 and a direct school fee for the balance owed – which would be 20,000 in this example.
  3. Re the phrase “No school worse off”: This rule could be interpreted as a notion of equity – currently some schools are worse off and this needs to be fixed. That all schools get funded by the Government to the same amount.
  4. Re How do elite private schools maximise their income from their three sources of funding – fees, Government subsidies, philanthropy/ endowments? There exists a form of private school funding – such as in the US – that has an established mechanism to draw large amounts of funding to exclusive schools. Australian Private schools that adopt these practices would be modernising their income portfolios and moving to become more resilient and potentially even more well funded. Government funding is easy money and holds back innovation.
  5. Is it correct that federal funding go to private schools and state funding look after public schools? This is a historical anomaly – and needs to be revisited. For income tax that individuals pay is collected by the federal government and no portion of this comes back to benefit the family that sends their child to a public school.
  6. How can an education minister change an entrenched system? The solutions are clear but the political path to an equitable future faces many hurdles.
  7. Public Schools adhere to the principle that schooling is a human right – like the air we breathe its free. Should all schooling be free – and paid for from the tax income, plus the tax on the “high net individuals” and corporations that are not paying any tax?
  8. Should a sovereign fund be established to provide for free schooling?

Till the recent voicing of the notion of ‘over-funding’ it has not been possible to have a national conversation about the future of schools funding.

Correction

I have used an old figure of 2.1 Billion – as what the federal government spends on private schools. Recent articles have used much higher figures – I am planning to speak with school principals to correct my figures in the coming weeks and months.

Further Reading

Gonski Report – Download here.

Commentary here.

What is the Gonski Report.

Declaration

My children went to/is in state schools. I am very happy with their schooling experience. I was prompted to write this – to have this conversation with them – partly to explain how government works in this case in dealing with service provision for its citizens. This information would be useful to them in the event one of them becomes the premier or prime minister.

I write this post – and will keep making additions and edits over the course of time – as a primer for people who may want to read a discussion about school funding.

 

 

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Soumitri Varadarajan

Soumitri lives in Melbourne, Australia - #probonodesign #codesign #sustainability #patientexperience #quantifiedself #mdg

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