Changes to school funding and Gonski 2.0

So what is happening with school funding?

The federal government has recently announced its new school funding plan for 2018 and beyond.

In a nutshell, school funding in the future will no longer be based on individually negotiated deals with different states and schools. Instead, the government will move towards a single, needs-based approach to funding, regardless of the school sector.

For non-government schools, this means that:

1. A small number will have their funding cut.

2. Some other schools will receive less funding increases that they otherwise would have.

3. Most schools will receive a funding increase

Catholic schools will be the most negatively impacted by the funding changes as they have historically received a very large proportion of their funding from the federal government.

However, also impacted are a select group of independent schools which are considered by the government to be “over-funded” based on the needs-based allocation.

This is the list of the 24 schools which will face immediate funding cuts from 2018:

Loreto Kirribilli	Hillbrook Anglican School
Stella Maris College Manly	Masada College High School
Monte Sant' Angelo Mercy College	Radford College
Oakhill College Castle Hill	Burgmann Anglican School
St Aloysius	Cannon Hill Anglican School
College Covenant Christian School	Marist College Canberra
St Pius X College	Inner Sydney Montessori School
Waverley College	Brigidine College St Ives
Mount St Benedict College (Pennant Hills)	Orana Steiner School
St Scholastica's College	Brindabella Christian College
Daramalan College	Covenant Christian School
Northern Beaches Christian School	St Edmund’s College

What does this mean for families?

The obvious impact on families is the prospect of school fee increases as a result of government funding cuts. In a recent survey we held about the recent funding changes, 64% of parents felt that private school fees would increase as a result of funding changes.

This is especially for the case of the 24 schools who will be facing funding cuts much sooner than most schools. Families at the hundreds of additional schools who will be receiving less funding increases than previously expected are also likely to feel the impact of school fee hikes. Of course, it is ultimately up to each school to determine exactly what the fee impact may be.

Most of you are probably wondering why these funding changes are causing schools to increase their fees. This is mainly attributed to two reasons:

1. Schools are largely a fixed cost operation. They must pay staff fixed salaries, regularly pay maintenance expenses for their facilities and also plan for long-term capital expenditures on buildings and other infrastructure.

2. Schools are also non-profit organisations, resulting in most of their funding being expended within a year with very little retained surplus (as it should be).

The combined effect of this is that schools have very little “room to move” when their sources of funding are suddenly altered. There is little they can do in removing costs from their operations in the short-term, so they are left with only one remaining option – lift the contributions from parents.

However, schools that won’t charge higher fees may trigger hidden costs in the quality of teachers, the quality of school facilities and the amount of unique opportunities that non-government schools can offer. These potential costs are based on the common concerns raised by parents who took our survey.

The impact on families

Some would suggest that parents paying private school fees can simply absorb the impact of any fee increases which may be triggered by the school funding changes.

Of course here at Edstart we know that for the vast majority of families that is simply not the case. We know that for most families:

• Private school fees are their number 1 or 2 largest family expense.
• 50% of families are currently spending more on school fees than they have in available disposable income.

This means that the ability of these parents to just “absorb” school fee increases is extremely limited.

How does Edstart help?

Edstart works with schools and familes to make school fees easier to manage. We pay fees directly to schools as and when they fall due, and parents simply repay to Edstart over a period that suits them. This means they can spread out their most expensive school fee years over a more manageable timeframe, and even extend beyond the period of tuition if desired.

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