‘Unfair, incoherent, and wasteful’: Calls to overhaul school funding model

‘Unfair, incoherent, and wasteful’: Calls to overhaul school funding model

The admission by some private schools that many grandparents pay school fees is also an admission they are over-funded by the taxpayer, according to a new analysis.

In an education policy comment released on Monday, Public school advocates Save Our Schools said the overfunding of private schools is made evident by the payment of fees by grandparents, which is not counted in the assessment of the need for government funding.

“This assessment is based just on the capacity of parents to pay the fees. The result is that private schools are over-funded by governments by even more than shown by official figures,” SOS national convenor Trevor Cobbold said.

A story published in the Sydney Morning Herald on 10 May reported two elite private schools admitting that many grandparents paid the school fees for students.

“It is difficult to estimate the extent to which grandparents pay school fees. However, surveys by financial services firms indicate that a significant proportion do so,” Cobbold said. “For example, the industry superannuation fund, REST, found that almost one-third of grandparents use their superannuation to pay school fees for grandchildren.”

‘Bank of Grandma and Grandpa not taken into account’

Cobbold pointed to a survey by the education finance company Edstart, which found that only half of families with children in private schools can afford the fees from their income, saying “it is hardly surprising” that grandparents are helping. In 2018, another financial services company, Alpha Advisors, reported that 60% of private school students have their fees at least partly paid by their grandparents.

One Melbourne wealth management firm revealed that 70% of its clients are paying school fees for their grandchildren, as reported in The Sydney Morning Herald last week.

“Commonwealth Government funding of private schools is based on the capacity of families to pay fees as measured by parent income. It does not take account of fee payments by the ‘Bank of Mum and Dad’, that is, the ‘Bank of Grandma and Grandpa’,” Cobbold said.

“This failure means that the capacity of families to pay fees is under-estimated and that private schools are highly over-funded by the taxpayer, even more than official figures show.”

Commonwealth funding of private schools also ignores other income provided directly or indirectly to families, Cobbold noted.

“The Bank of Mum and Dad provides a steady stream of income to more advantaged families for things such as money for home deposits, cars, household assets, childcare, etc., that frees up family income so it can be spent on school fees,” he said.

“For example, money provided to adult children by the Bank of Mum and Dad is a substantial addition to family income.”

‘A complete perversion of the Gonski model’

Cobbold says the failure to take account of all the income provided to families by the Bank of Mum and Dad means that the capacity of families to pay school fees is “vastly under-estimated” and that private schools are highly over-funded by the taxpayer.

However, there are additional defects the funding model for private schools, Cobbold added.

“Another major flaw is that it ignores other sources of income and wealth of private schools including donations to tax deductible building, library, arts and scholarship funds and income from investments, rental properties, and hire of facilities such as aquatic centres,” he said.

“Private schools rake in hundreds of millions of dollars from these sources. For example, figures obtained from the Australian Charities and Not-for-profits Commission show that 50 private schools received $611 million in donations and investment income over five years from 2017 to 2021.”

Cobbold said none of this income is considered when assessing taxpayer funding of private schools.

“Together with the failure to take account of family income received from the Bank of Mum and Dad, it means that private schools, particularly the elite schools, are vastly over-funded,” he said.

“The funding model introduced by the Morrison Government is a complete perversion of the Gonski principle of funding according to need. A complete overhaul of this failed funding model is long overdue, because it is a model specifically designed to over-fund private schools.”

‘Unfair, incoherent, and wasteful’

Cobbold said the Federal Government “should acknowledge that the funding model is unfair, incoherent, and wasteful.”

“It should commission an independent inquiry to design a better approach,” he said.

“It is not a matter of tinkering with the model. Basing the funding of private schools on the concept of parent capacity to pay is fundamentally flawed. The problems associated with this approach are insuperable because it ignores other income and assets of families and schools.”

Cobbold said a new model for funding private schools is necessary to ensure schools are funded solely on a needs basis.

“The basic principle behind government funding of private schools should be that no school operates with less total resources than a community standard necessary to provide an adequate education for all students,” he said.

“Governments have the responsibility to ensure that children should not be deprived of an adequate education because their parents enrol them in under-resourced schools.”

Overfunding claims have ‘no foundation’

Graham Catt, Independent Schools Australia Chief Executive Officer, said Cobbold’s claims “show a lack of understanding of non-government schools, the families who choose them, and our funding system.”

“The assertion that Independent schools are somehow ‘over-funded’ due to grandparents’ contributions has no foundation and seems to be based on anecdote and unsubstantiated media reports,” Catt told The Educator.

“The data shows that most Independent schools are low – mid fee, charging less than $6,000 per year per student. Most Independent school parents are working families, often juggling multiple responsibilities to provide for their children.” 

Catt said parents may make “significant sacrifices to choose a school that they believe will be the best fit for their child and with their values and aspirations, and Independent schools play a crucial role in giving some parents that choice.”

“We believe that investment in education is a primary role of governments. Every child deserves some educational support through funding, every school sector is important, and every school should be fully and fairly funded.”