How will a school's transition to new funding arrangements be calculated?

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Calculating a school's funding entitlement during the transition period (2018-2027)

The new Commonwealth school funding arrangements will determine funding entitlements based on need using a Schooling Resource Standard (SRS) as recommended by the 2011 Review of Funding for Schooling. The SRS for each school includes a base per student amount for primary and secondary students, plus loadings for disadvantage.

Under the new arrangements, the Commonwealth's funding entitlement for schools will be based on new consistent Commonwealth shares of the SRS. These new shares will increase:

  • from an average of 17.0 per cent of the SRS for government schools in 2017 to 20 per cent in 2027, reflecting the Commonwealth's role as the minority public funder of this sector
  • from an average of 76.8 per cent of the SRS for non-government schools in 2017 to 80 per cent in 2027, reflecting the Commonwealth's role as the primary public funder of this sector.

Schools funded below their Commonwealth target share of the SRS (20 per cent for government schools and 80 per cent for the non-government  schools), will transition over six years (2017–2023).

This means their funding will grow faster than the SRS indexation rate over 2018 to 2023 and then grow at the SRS indexation rate from 2024 to 2027.

Schools that are currently funded above their Commonwealth target share of the SRS will transition over ten years (by 2027).

Setting the Commonwealth share during the transition

To calculate the funding entitlement for a school each year, a 'starting Commonwealth share' will be set based on actual recurrent funding paid to the school in 2017 under existing arrangements and what this amount is as a percentage of the 2017 SRS as calculated under the new settings.

For a school funded below their Commonwealth share of the SRS, their 'starting Commonwealth share' is then adjusted in 6 equal annual steps until the 'final Commonwealth share' is reached in 2023. The final Commonwealth share is 20 per cent of the SRS for government schools or 80 per cent of the SRS for non-government schools.

For a school funded above their Commonwealth share of their SRS , their 'starting Commonwealth share' is then adjusted in 10 equal annual steps until the 'final Commonwealth share' is reached in 2027. The final Commonwealth share is 20 per cent of the SRS for government schools or 80 per cent of the SRS for non-government schools.

Amendments to the Australian Education Act 2013, passed by Parliament on 23 June 2017, set out the arrangements for a transitioning school each year from 2018 to 2027. 

Example 1: A hypothetical non-government school, currently below the 80 per cent share of the SRS:

  • 2017 total recurrent funding for a non-government school's approved authority in 2017 is $7,000,000.
  • The SRS for that authority under the new settings is calculated to be $10,000,000.
  • The school's 'starting Commonwealth share' is $7,000,000 divided by $10,000,000, expressed as a percentage – or 70 per cent.
  • The school's 'final Commonwealth share' is 80 per cent.
  • The Commonwealth share for each year will be set based on six equal steps between the starting and final Commonwealth share as follows.
2017 2018 2019 2020 2021 2022 2023
70% 71.7% 73.3% 75% 76.7% 78.3% 80%
  • Funding each year will be determined by the Commonwealth share for each year, multiplied by the school's SRS each year, which is calculated based on enrolment and student characteristic information provided through the Census each year.

Example 2: A hypothetical non-government school, currently above the 80 per cent share of the SRS:

  • 2017 total recurrent funding for a non-government school's approved authority in 2017 is $9,500,000.
  • The SRS for that authority under the new settings is calculated to be $10,000,000.
  • The school's 'starting Commonwealth share' is $9,500,000 divided by $10,000,000, expressed as a percentage – or 95 per cent.
  • The school's 'final Commonwealth share' is 80 per cent.
  • The Commonwealth share for each year will be set based on 10 equal steps between the starting and final Commonwealth share as follows.
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
95% 93.5% 92% 90.5% 89% 87.5% 86% 84.5% 83% 81.5% 80%
  • Funding each year will be determined by the Commonwealth share for each year, multiplied by the school's SRS each year, which is calculated based on enrolment and student characteristic information provided through the Census each year.

Systemic schools

For schools that are part of a system, the starting Commonwealth share will be determined at the system level and applied to each of the member schools.

Under the current arrangements, the notional allocation for each school in a system is based on its historical school-level funding. This means that, within a system, schools can attract very different shares of the SRS from the Commonwealth.

The new arrangements are designed to make school funding consistent across Australia within sectors. From 2018, the notional allocation for each school in a system will be based on the average share of the funding standard for all students in the system. This means that every school and student within a system will attract the same share of the SRS from the Commonwealth.

Note that this methodology for systems does not change the total funding envelope for the system or how funding is passed on to your school by your system.

Systems such as state government and Catholic Education Commissions in each state will continue to be paid the Commonwealth school funding for all of their schools as a lump sum. These systems are then able to distribute this funding to their schools through their own needs-based funding arrangements.

Responsiveness to changes in student body

Importantly, during transition, any changes in student characteristics at the school (and therefore level of need as measured by the SRS) will be reflected in the school's funding entitlement, as the funding entitlement will be calculated as a share of the SRS rather than a dollar amount.