How are schools funded in Australia?

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School education in Australia’s federation

State and territory governments have been responsible for delivering school education in their jurisdiction since Australia became a federation. This includes registering and regulating schools (whether government or non-government) and operating government schools.

However, the Australian Government has a role in education funding and national policy. While the Commonwealth does not operate any schools or employ any teachers, funding responsibility is shared between the Australian Government and state and territory governments; and national education policy is decided by all governments working together through the Council of Australian Governments.

Schools receive funding from both the Australian Government and their state or territory government:

  • Government schools account for 65.6 per cent of students in 2020. States and territories are the majority public funder of the government sector in line with their constitutional responsibility. The Australian Government is the minority public funder.
  • Non-government schools account for 34.4 per cent of students in 2020. The Australian Government has historically been the majority public funder, reflecting its commitment to supporting parental choice and diversity in the schooling system. State and territory governments are the minority public funders.

National average government per student funding by sector, 2017

  Commonwealth< State and Territory< Total Government funding
Government 2455 10568 13023
Catholic 8441 2515 10956
Independent 6800 2236 9036

Source: Australian Curriculum, Assessment and Reporting Authority (ACARA) (2019). My School Finance Data Collection, as published on ACARA’s National Report on Schooling in Australia: Data Portal

Australian Government funding to non-government schools takes into account the capacity of school communities to contribute to school’s operating costs, for example the ability of parents to pay school fees.

While four out of every five school funding dollars comes from public sources, it is not evenly distributed across sectors. On average, around three quarters of funding for Catholic schools and less than one half of funding for independent schools is from public sources. In contrast, almost 95 per cent of funding for schools in the government sector comes from the Australian Government and state and territory governments. The government sector receives around 70 per cent of total combined public funding.

The Australian Government share of school funding has been increasing over time

Total combined Australian Government and state and territory funding per student has grown in real terms by 17.0 per cent over the decade from 2008-09 to 2017-18. At the same time, Commonwealth funding has grown in real terms by 48.2 per cent.

This means that Australian Government school funding has grown at a much faster rate than state and territory government funding over this time, with the Australian Government share of total public funding increasing from 71.6 per cent in 2008-09 for non-government schools to 75.7 per cent in 2017-18 and 11.2 per cent in 2008-09 to 15.4 per cent in 2017-18 for government schools.

Growth in recurrent funding for government schools 2006-07 to 2015-16

    NSW Vic Qld WA SA Tas ACT NT
Commonwealth 67.2% 87.3%< 87.6% 55.1% 78.6% 125.4% 69.2%< 151.1%
State and Territory 12.4% 7.0% 4.0% 4.3% 6.2% 4.1% 14.6% -4.2%

Source: Productivity Commission (2020). Report on Government Services. Table: 4A.14.

Consistent Australian Government funding arrangements

From 2018, the Australian Government introduced a funding model that is simple, transparent and based on need. Funding is based on the Schooling Resource Standard (SRS) which is a measure of the amount of public funding needed by each school to meet the educational needs of its students. Unlike the previous inconsistent arrangements where the Australian Government contribution of the SRS varied between states and territories, the Australian Government is moving towards consistently funding:

  • 20 per cent of the total SRS for government systems, reflecting its role as the minority public funder of this sector, and
  • 80 per cent of the total SRS for non-government schools and systems, reflecting its role as the majority public funder of this sector.

Schools currently funded below their target Commonwealth share of the SRS will transition to the target by 2023, to ensure they get the support they need faster.

Schools that are currently funded above their target Commonwealth share will transition to it by 2029 at the latest.

This will ensure that, regardless of their home state or territory, students with greater needs will attract higher levels of funding from the Australian Government, and students with the same need within the same sector will attract the same support from the Australian Government, regardless of the state where they live.

State and territory funding requirements

Under section 22A of the Australian Education Act 2013 (the Act), states and territories must meet or exceed minimum funding contribution requirements for both government and non-government sectors as a condition of receiving Commonwealth funding. State and territory governments have discretion to fund above these requirements.

State and territory funding contribution requirements are set as a percentage of the SRS. The SRS is calculated at school level and may change annually based on enrolment numbers, indexation and student or school characteristics. Consequently, state funding dollar contributions will vary from year to year, the same as Commonwealth funding.

Minimum state and territory funding requirements from 2018 to 2023 are outlined in bilateral reform agreements signed by the Australian Government and each state and territory. The bilateral agreements also outline state-specific reform activities to improve student outcomes and sit alongside the National School Reform Agreement that sets out long term national goals for education.

Bilateral agreements with each state and territory commenced on 1 January 2019, with the exception of Victoria, whose bilateral agreement commenced on 1 February 2019. Note: funding arrangements under all agreements apply from the 2018 calendar year.

Under section 128 of the Act, the National School Resourcing Board must undertake an annual and independent review of each state’s compliance with requirements under section 22A of the Act and bilateral agreements relating to total funding for the government and non-government sectors. In accordance with the Terms of Reference, the Board has commenced its first review of state compliance with section 22A of the Act to assess 2018 funding, with the final report to be submitted in June 2020.

The Board’s assessment will inform the Minister for Education’s considerations in relation to a possible compliance response. If the Minister is satisfied a state or territory is not compliant, under sections 108 and 110 of the Act the Minister has discretion to determine compliance and any sanction action, including conditional approval, delaying and reducing funding.