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Independent Update Direct Income Measure of Capacity to Contribute

Independent Update

Updated 12 September 2019

Direct Income Measure of Capacity to Contribute

 

On 20 September 2018 the Prime Minister, the Hon Scott Morrison MP, and the Minister for Education, the Hon Dan Tehan MP, announced new school funding arrangements.

The main change announced by the Australian Government is the phase-in of the Direct Income Measure of Capacity to Contribute (CTC) SES scores. The adoption of this new methodology for calculating CTC was based on the recommendations of the report on the Review of the socio-economic score methodology undertaken by the National School Resourcing Board (NSRB) in 2018.

Under the current funding arrangements, Commonwealth SRS base funding for non-government schools is adjusted according to a measure of ‘capacity to contribute’, determined by a measure of the school community’s socio-economic status (SES). This means that schools with a higher SES score will receive a lower level of per capita base funding and vice versa.

The NSRB recommended moving away from the current area-based methodology based on the ABS Census of Population and Housing to an individual measure of the income of parents and / or guardians based on Personal Income Tax (PIT) data. The Australian Government accepted all the recommendations of the Board’s report.

The NSRB’s full report is available here https://docs.education.gov.au/system/files/doc/other/national_school_resourcing_board_ses_review_final_report.pdf

 

Technical Working Group

Work on the new methodology has been on-going in 2019 through a Technical Working Group chaired by the Commonwealth Department of Education and including representatives of the non-government sector (Independent and Catholic), state governments, the Australian Bureau of Statistics, and the Australian Tax Office.

The Technical Working Group has been working through a range of issues associated with the implementation of the new methodology including:

  • Data validation
  • Student Residential Address and Other Information Collection
  • Measurement of income
  • Volatility of changes
  • Data linkages
  • Treatment of missing personal income tax data
  • Privacy protections
  • Appeals and qualitative indicators

More information regarding the work of the Working Group is available at https://www.education.gov.au/what-direct-income-measure.

 

Phase-in Arrangements

The move to the new arrangements for calculating CTC will be phased in from 2020. These phased arrangements mean that schools will be funded on the basis of ‘best-of’ 2011 Census SES scores, 2016 Census SES cores or PIT SES scores in 2020 and 2021 with all schools transitioning to PIT SES scores in 2022.

Also announced were amended transition pathways for schools which take into account the move to PIT SES scores.

  • Schools transitioning up to 80% Commonwealth share of their Schooling Resource Standard (SRS) will complete their transition in 2023.
  • Schools transitioning down to 80% Commonwealth share of their SRS will complete their transition in 2029.

This gives schools transitioning down to their entitlement an additional 2 years to complete their transition.

For systems, the transition arrangements will be applied at the school level rather than at the system level which is the current methodology. Systems will still be able to redistribute funding between schools.

 

How is parental data collected?

The new methodology for calculating SES scores requires the collection of the names and addresses of students’ parents and guardians from non-government schools every year which are then provided to the Commonwealth Department of Education as part of the student address collection.

These names and addresses are then linked to personal income tax records in the Multi-Agency Data Integration Project (MADIP), a secure ABS data environment which enables linkages between large government data sets.

For the 2019 Address Collection all approved authorities for schools in the non-government sector were provided with a 2019 Collection Notice for parents and guardians setting out the use and disclosure of personal information and a FAQs document.

These documents are available at https://ssphelp.education.gov.au/socioeconomic-status.

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