Independent Update Funding Arrangements for Independent Schools

Independent Update

Updated 12 September 2019

Funding Arrangements for Independent Schools


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.


Capacity to Contribute

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 SES Methodology undertaken by the National School Resourcing Board (NSRB) in 2018.

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 parental income based on Personal Income Tax (PIT) data.

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 scores or PIT SES scores in 2020 and 2021 with all schools transitioning to PIT SES scores in 2022.

The Australian Government has undertaken to review the new arrangements in 2027. Indexation for school funding will also be reviewed by 2023.


Amended transition pathways

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.


Choice and Affordability Fund

The Choice and Affordability Fund was also announced in September 2018 and aims to support parental choice, opportunity and diversity, provide structural adjustment assistance, support underperforming schools and provide targeted extra support for schools.

The Fund totals $1.2 billion over 10 years, to be split between the Catholic and Independent sectors based on the sector share of schools and will provide approximately $485 million for the Independent sector from 2020 to 2029.

The Fund also incorporates the $40 million National Adjustment Assistance Fund which was created to provide funding directly to schools which were transitioning down to 80% Commonwealth share of their SRS.

There will be Guidelines, agreed priorities and an agreement with government regarding how funds are to be used to support schools through each state and territory Association of Independent Schools.


2019 transition arrangements

While the needs-based funding model in the Australian Education Act 2013 remains unchanged for 2018, additional transition measures were extended to 2019 and enacted through regulation. This funding is regarded as being ‘outside the model’.

  • Schools will receive funding based on their ‘best of’ 2011 or 2016 Census SES scores
  • Guaranteed 3% indexation for individual low or negative growth schools
  • System weighted average SES scores for systems will continue with payment outside the model, using best of 2011 or 2016 SES scores

From 2020, the 2019 transition arrangements outlined above will cease except for the use of 2016 Census SES where relevant during the phase-in period.

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