Funding for schools: a quick guide


24 April 2023

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Dr Shannon Clark
Social Policy

State and territory governments and the Australian Government provide funding for schools, with state and territory governments providing the majority of the total funding.

  • State and territory governments provide the majority of public funding for government schools and the minority of public funding for non-government schools.
  • Conversely, the Australian Government provides the majority of public funding for non‑government schools and the minority of public funding for government schools.

Schools, particularly non-government schools, also receive funding from private sources.

Australian Government funding for schools

Legislative framework

Australian Government funding for school education is provided for by the Australian Education Act 2013 (the Act). The Act imposes requirements that states and territories must comply with, as conditions of financial assistance. The Australian Education Regulation 2013 (the Regulation) supports the operation of the Act and provides more detail, including outlining financial accountability and other conditions that need to be met to receive funding under the Act.

Financial assistance is provided to the states and territories under sections 96 and 122 (respectively) of the Constitution.

National School Reform Agreement

One of the conditions of financial assistance under the Act is for states and territories to be party to a national agreement relating to school education reform. The National School Reform Agreement (NSRA) is a joint agreement between the Australian and state and territory governments that sets out strategic reforms to improve student outcomes.

Each state and territory is also required to have a bilateral agreement with the Australian Government. The bilateral agreements set out state-specific actions to improve student outcomes, including activities that support particular student cohorts. Bilateral agreements also set out the minimum funding contribution (as a percentage of the Schooling Resource Standard, discussed below) states and territories must meet as a condition of receiving Australian Government school funding.

The NSRA commenced on 1 January 2019 and was due to end on 31 December 2023. In December 2022, Education Ministers agreed to extend the current NSRA and bilateral agreements for 12 months to allow for a review to inform the next agreement. Prior to the NSRA, the National Education Reform Agreement (commencing on 1 January 2014) and National Education Agreement (commencing on 1 January 2009) set out goals, reform efforts and funding arrangements for school education in Australia.

Schooling Resource Standard

Australian Government recurrent funding for schools is worked out by reference to the Schooling Resource Standard (SRS). The SRS is an estimate of how much total public funding a school needs to meet the educational needs of its students. The SRS comprises a base per student amount and 6 loadings to help students and schools in priority cohorts. Loadings are provided for students with disability, low English proficiency, Aboriginal and Torres Strait Islander students, socio-educational disadvantage, school location and school size. Funding formulae for schools are set out in the Act.

The SRS was the central recommendation of the Review of Funding for Schooling (Gonski Review). It was based on the funding received by high-achieving ‘reference schools’—schools where at least 80% of students were achieving above the national minimum standard in the National Assessment Program—Literacy and Numeracy (NAPLAN) reading and numeracy assessments across 3 consecutive years.

For non-government schools, the SRS base amount is generally discounted by a school community’s capacity to contribute (CTC) to the operating costs of the school. The higher a school’s CTC score, the more the Australian Government’s base funding to the school is reduced. Some non-government schools (special schools, special assistance schools, sole provider schools and majority Aboriginal and Torres Strait Islander schools) are exempt from having a CTC score determined. In September 2018, the Australian Government announced a new direct measure of income methodology for calculating CTC scores for non-government schools.

Funding distribution

Australian Government funding for schools is paid to states and territories for all schools in their jurisdiction. States and territories are then responsible for distributing the funding to approved authorities. Approved authorities administer the funding for one or more schools. Approved authorities for government schools are state and territory education departments; approved authorities for non-government schools are the legal bodies approved by the Commonwealth Minister for the school/s.

Approved authorities receive funding for all of their member schools and are able to redistribute it to their schools based on the SRS or the approved authority’s own needs-based funding model, as long as the model complies with section 78(5) of the Act. Approved authorities that distribute funding to member schools based on their own needs-based funding arrangements are known as approved system authorities.

In 2021, there were 903 approved authorities, including 8 state and territory government approved system authorities; 8 Catholic school approved system authorities; and 15 independent school approved system authorities (pp. 79–80, 83–5).

School funding expenditure and income data

There are a number of data sources for school funding information. Datasets can differ by information collected, how schools are categorised and timeframes (see Table 4.1 on p. 119 in the National Report on Schooling in Australia 2021). They are not all directly comparable.

This section outlines information on government expenditure on school education and schools’ gross income. The data are not comparable.

Government expenditure on school education

In the 2020–21 financial year, total government recurrent expenditure on schools was $72.2 billion or $17,992 per full-time equivalent (FTE) student (see Table 1 below).[1]

Table 1     Government recurrent expenditure on school education, 2020–21

Government

Non-government

Total

$b

$ per FTE

$b

$ per FTE

$b

$ per FTE

Australian Government

9.1

3,480

13.1

9,429

22.2

5,543

State & territory governments

45.8

17,459

4.2

3,013

50.0

12,449

Total government

54.9

20,940

17.3

12,442

72.2

17,992

Source: Drawn from Productivity Commission, ‘4 School education’, Report on Government Services 2023, (Canberra: Productivity Commission, 2023), Tables 4A.10 and 4A.14.

Gross income

Non-government schools also receive a substantial proportion of their income from private sources, such as fees charged and parental contributions. The following table and figure show the breakdown of gross income by source for government, Catholic and independent schools.

Table 2     Proportion of school gross income by source, 2021

 

Government

Catholic

Independent

All

 

$b

%

$b

%

$b

%

$b

%

Australian Government recurrent funding

9.2

20.9

8.4

60.9

6.2

37.3

23.8

31.9

State/territory recurrent funding

33.4

75.7

2.2

15.9

1.8

10.8

37.4

50.2

Fees charged and parental contributions

0.9

2.0

2.9

21.0

7.8

47.0

11.6

15.6

Other private sources

0.6

1.4

0.3

2.2

0.8

4.8

1.7

2.3

Total gross income

44.1

100.0

13.8

100.0

16.6

100.0

74.5

100.0

Source: Drawn from Australian Curriculum, Assessment and Reporting Authority (ACARA), ‘School income and capital expenditure for government and non-government schools (Calendar year) dataset’, (non-systemic Catholic schools included in independent sector), National Report on Schooling in Australia—data portal; Parliamentary Library calculations.

Gross income by source for each FTE student by school sector is illustrated in Figure 1.

Figure 1    School gross income by source, 2021 ($ per FTE student)

 

Source: Based on data from ACARA, ‘School income and capital expenditure for government and non-government schools (Calendar year) dataset’, National Report on Schooling in Australia—data portal.

Further information

The following resources provide further information about school funding:

Parliamentary Library publications on school education include:

 

For copyright reasons some linked items are only available to members of Parliament.

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[1].    Recurrent expenditure refers to funding granted to schools to meet their ongoing operating costs (see Department of Education’s School Funding Glossary). It does not include capital expenditure or special circumstances funding.