What is the direct income measure?

Download What is the direct income measure? fact sheet

To ensure government funding is allocated fairly and transparently, a direct income measure will be applied based on the median income of parents or guardians of students at a non-government school. The direct income measure is based on findings from the National School Resourcing Board's review of the socio-economic status (SES) score methodology.

Current arrangements for determining non-government school funding use an area-based socio‑economic status (SES) score measure, which was the best available data when implemented in 2001. Recent innovations mean that a better measure of a school community's capacity to contribute is now available. Accordingly, from 2020, schools will use a direct income measure. This targeted, more accurate approach will ensure funding flows to the schools that need it the most.

The Government is helping implement the direct income measure by providing an additional $3.2 billion in funding for the non-government sector during the transition from 2020 to 2029.

To complement the funding arrangements, the Government will create a new fund that will provide the non-government sector with a flexible means of driving other government priorities, including support for parental choice, opportunity and diversity in the schooling system, providing structural adjustment assistance, lifting outcomes in underperforming schools and targeting extra support for schools who need a helping hand.

When will the direct income measure start?

The Department of Education and Training will advise approved authorities of whether a school would financially benefit from the use of direct income measure arrangements in 2020, 2021 or 2022. This decision will in part depend on their own readiness for the new data collection.

In recognition that systems are best placed to understand the needs of their schools, approved authorities will continue to have the flexibility to distribute funding to schools according to their needs-based funding arrangements that comply with section 78(5) of the Australian Education Act 2013 (the Act).

Do schools need to apply for this funding?

Schools and approved authorities do not need to apply to commence the use of the direct income measure. The department will automatically calculate the funding amounts for non-government schools and determine whether there is a financial benefit to commencing in 2020, 2021 or 2022.

What happens before then?

As an interim support measure, the Government will provide approximately $170.8 million in additional funding for 2019 for non-government schools. This support builds on similar provisions in 2018, allowing schools to plan with confidence for the 2019 school year while work is underway to test and refine the direct income measure and settle the new arrangements.

The estimated $170.8 million in additional funding will provide assistance for low growth independent schools in 2019 guaranteeing a minimum of 3 per cent growth in funding in that year; assistance for system‑weighted average SES schools in 2019; and financial assistance equivalent to the benefit that a school would receive if updated 2016 Census data were used to calculate SES scores in 2019. Schools and approved authorities do not need to apply for this funding. The Department of Education and Training will automatically calculate the additional funding amounts and notify approved authorities who are eligible. 

For more information about interim support as schools transition to the direct income measure, see the below fact sheets:

Direct Income Measure Technical Working Group

The Department of Education and Training has established a Technical Working Group to undertake further work on the implementation of the new direct income measure. The Technical Working Group will meet on a regular basis and consists of representatives from the non-government schools sector, the Australian Government, and state and territory governments.

For more information