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Does the latest Funding Offer from the Government still leave unanswered questions?

Posted by Frank FitzGerald on 27 September 2018
Does the latest Funding Offer from the Government still leave unanswered questions?

There is no doubt that many CaSPA Principals around the country are relieved that the months of uncertainty about funding for Catholic schools has been "resolved". Given the uncertain political climate we live in, and the reaction from other sectors when the news was announced, one has to wonder whether this has brought certainty and whether the public and at times bitter disputes about the fairness and transparency of funding of Education in Australia has been resolved.

This having been said, we are indebted to those who within the Catholic sector who worked so hard to bring about the change of policy [and heart] from the current Federal Governament.

Looking back on the initial announcements regarding Gonski 2.0 in May 2017, it seemed that the then Minister for Education - Simon Birmingham - had a number of objectives with the proposed funding formula:

  • no special deals to sectors
  • funding should be sector blind and needs based
  • transparency

There was also the sense that Senator Birmingham had concerns about how some in the Catholic sector was using its funds - espcially the proportion of monies being held back by Catholic Education Offices, so that schools only got a proportion of the funds that the Government calculated they were entitled to. Also some of the work of Block Grant Authorities were subject to scrutiny as evidenced by the Greiner Report which asked if the more affluent Dioceses were getting a disproportinate amount of Government funds to the detriment of Dioceses in least affluent areas. 

Other questions that have been raised in the course of the current Funding debate relate to how to measure the "needs" of a non governemt school and the capacity of its parents to pay fees. The Catholic sector presented an excellent case to the National Schools Resourcing Board (NSRB) Cheney Review. There was a general feeling that basing need/capacity to pay on Family Income via data matching and Tax File Numbers ticked all the boxes:

  • objective
  • fair 
  • transparent
  • defensible

Prior to the Cheney Review, distribution from CEO's to schools did not follow the then SES rating, with each Diocese claiming that they had a "better sense" of the needs of their schools, than the Government. This may well have been the case, but was there a clearly defined - and published - methodology for this? There was certainly the sense that each CEO employed its own criteria.  The question going forward is will these old methodologies still be empoyed, and if so, how can they be shown to be more accurate than the Data the government will be using? One would imagine the Government would have far more accurate and current data than any school or CEO would have about its families' financial situations.

Having made such an energetic case for using Tax File Information as a measurement of need, will this be now be the basis for how CEO's around the country distribute funding to schools?

The article below by Peter Goss from the Grattan Institute touches on a number of these issues. In particular he questions how our sector on the one hand can lay claim to be seeking funding fairness, but then creating a situation where parents with the capacity to pay far higher fees, will be gifted a situation where the fees of their local Catholic School will remain artificially low. Is such a situation consistent with our very public claims to achieve Fairness in Funding.... after all if some affluent parents are being provided fees significantly below their socio economic capacity to pay, then they are getting access to Funding that would otherwise go to needy families in the less affluent areas. ...

The Following Article is sourced from: The Conversation.

Dan Tehan's first major action as Federal Education Minister was a deal for Catholic and independent schools. From a policy perspective, the pieces were already in place.

Mr Tehan's predecessor, Simon Birmingham, had moved all schools onto a consistent funding formula. The National Schools Resourcing Board (NSRB) showed how to use household income to gauge how much parents could pay if they chose a non-government school.

The good news from yesterday's announcement is the government accepted all the recommendations of the NSRB's Chaney review of how socio-economic score is calculated. By 2029, funding for all non-government schools will be based on the same formula. In my view, this transition process is longer and much more expensive than needed but at least it gets us to the right spot.

The bad news is the new deal undercuts itself. Some $1.2 billion has been set aside to keep school fees "affordable", among other priorities. But the fund is only available to Catholic and independent schools. In other words, all schools are equal but some are more equal than others.

This $1.2 billion slush fund seems to be a political fix to the main Catholic sticking point: the claim parents in advantaged Catholic primary schools can't afford the increased fees implied by the Gonski/Chaney model.

New analysis shows parents at advantaged Catholic schools can afford to pay their way.

Few Catholic primary schools need big fee hikes

There are just over 1,200 Catholic primary schools across Australia. In 2016, all of them had fees below $4,000.

Under the Gonski/Chaney model, the Federal Government would reduce funding to schools with high-income parents, meaning fees would need to rise. Fees would not need to rise at schools serving low- to middle-income families because their government funding would continue to grow.

Only about 160 Catholic primary schools (one in eight) would need fee hikes of at least $2,500 to compensate for their reduced levels of government funding. By contrast, more than 800 (three in five) would need only minimal fee increases or even get more government funding.

Few Catholic primary schools would need to have large fee increases under needs-based funding
Media stories typically focus on Catholic primary schools where fees might need to rise by $4,000 or more. These schools are outliers, but they underpinned the Catholic campaign against the government.

Yet under Chaney when parental capacity to contribute is based on income rather than where parents live just 36 schools (one in 30) fall into this category. And the reason their fees would rise so much is because the parents can afford it.

Some Catholic school parents can afford more

Affordability can be a slippery concept. It can also be remarkably simple. If Jane earns twice as much as Dick, she can afford twice the mortgage. Jane's taxes will also take up more of her income than Dick's. Earning more but paying a lower rate of tax would be regressive. But that's exactly how Catholic primary school fees work.

The next chart shows the ratio of school fees to income, and how that ratio changes as households earn more.

Lower income Catholic primary school families currently pay a higher ratio of fees than high income families

In 2016, families on modest incomes (from $30,000 to $79,999) had to shell out 2.6 per cent of their pre-tax income to afford one set of Catholic primary school fees. Families on incomes above $300,000 paid just 1 per cent.

By contrast, school fees at independent primary schools tend to grow in line with household income.

If Catholic primary school fees rose in line with parents' income, some Catholic schools could afford to charge much higher fees.

Catholic primary fees would still be relatively low

What would happen if Catholic primary school fees were a consistent 2.6 per cent of median family income?

Fees would rise substantially at Catholic schools where incomes are high to nearly $8,500 at the small number of schools where the average family earns $300,000. They would still be much lower than fees at independent schools with similar communities.

Even if lifted to 2.6 per cent of family income Catholic primary school fees would still be much lower than independent schools

This means the fees implied by Gonski/Chaney are realistic.

First, the 10 or so Catholic primary schools where family incomes are more than $300,000 really can afford to charge fees of more than $8,000. After all, their families can afford it equally as much as a family on $60,000 can afford fees of $1,600, which is about what they already pay.

Second, this level of fees is still much lower than what independent school families already choose to pay. In fact, independent school families with incomes of $120,000 to $180,000 already pay fees of about $8,200, about the same as the highest capacity to contribute expected under Gonski 2.0.

Some will argue, faced with fees of $8,000, Catholic school families will send their children to the free government school down the road. That may well occur. But that is a matter of choice and value, not affordability.

Tens of thousands of families of modest means already pay 2.6 per cent of their earnings towards a Catholic primary school education. If families earning four or five times more are unwilling to spend an equivalent fraction of their income, government should take it as a sign they don't value the education on offer, not that a higher subsidy is needed.

These three charts show few Catholic primary schools need big fee hikes under a fair and needs-based funding model. The parents that would have to pay more can afford it. And their fees would still be less than half what independent-school parents typically pay.

Every government dollar should be spent where it will make most difference.

The Coalition's school funding fix is a good deal for Catholic and independent schools. It's a bad deal for the rest of us.

Author: Frank FitzGerald
Tags: Funding

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