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Article Excerpt
Australia's system of school funding is notoriously complex and difficult to understand.
This article shines some light on this issue by describing clearly the processes of school funding that currently exist in Australia. It describes the steps taken by federal and state governments to provide over $30 billion each year to government and non-government schools.
The article argues that more can be done by both levels of government to implement a consistent and transparent allocation process. Greater consistency and transparency in this area would improve efficiency (by understanding better the impact of school resources on student outcomes) and equity (by understanding better the level of real need in individual schools, and funding appropriately). As such, it is a worthwhile goal.
Keywords
educational economics politics of education educational finance private school aid educational administration school funds
Introduction
Australian governments spend over $30 billion on primary and secondary schools each year: $30.8 billion in 2005. This amount does not include school fees paid by parents or capital expenditure by governments, which, if included, would raise the total to approximately $37 billion. This article concerns itself with recurrent public funding of schools (the $30 billion) and uses the latest publicly available figures, which at the end of 2007 was 2005 financial data (or 2004-05 financial data).Yet the process of school funding, including the way in which amounts are calculated, distributed and reported upon, is inaccessible not only to the wider public but to some extent even to those working in education. Although Australia's total spending on schools is small by international standards (given the size of its population), it is significant enough to warrant a more transparent process.
Accountability, comparability and transparency are challenging school systems in a wide range of areas. Collecting data on school attendance and making it comparable across states; establishing a national curriculum; creating a national testing regime; evaluating teachers against nationally agreed standards--all vary in their complexity but all are motivated by a single philosophy: namely, that education should be made more transparent in order to hold those responsible for it accountable, thereby ultimately improving the service.
A belief that underpins each of these proposals is that the central planks of education can be measured and quantified in a clear and logical fashion. Despite this, those who push for these initiatives recognise, to a greater or lesser extent, that education is a complex process that cannot be reduced to a simple process of inputs and outputs. Regardless, there is a growing consensus that clarity and focus can be improved through careful measurement. The mantra of 'what gets measured gets done' is being increasingly applied to education by both administrators and politicians alike. Teachers as well as administrators agree that a statistical spotlight can and should be shone into the black hole of education: a recent study into the resourcing of Australia's primary schools found that primary principals and teachers believe the rise in external assessment required of schools has had a beneficial effect in focusing their efforts on areas of weak student performance (see Angus et al., 2007, p. 31).
In Australia, colonial railways were built to three different gauges. This became a problem in pre-Federation days once the lines of different systems met. The phrase 'rail-gauge debate' now refers to any policy area in Australia that needs national harmonisation but where sensible consistency is prevented for some reason. 'Rail-gauge' issues are particularly evident in school funding. School funding, which is the area of education that should be most amenable to quantification and measurement, is plagued by inconsistency. Arguably, the lack of consistency and transparency in this area has a broader impact, as all other aspects of education depend on the primary issue of funding. It is theoretically possible to measure and report school resourcing in a clear and logical fashion yet it remains resistant to greater comparability, transparency, and accountability.
Some commentators believe that financial reporting remains obscure because no political party has any motivation to fix it (Angus, 2007). Angus believes that maximum flexibility comes from maximum obscurity, which appeals to politicians seeking maximum freedom to do as they will. In commenting on the prospect of establishing a national system of school funding, Angus states that 'neither side feels compelled to reach an agreement since an agreement would impose some constraint over spending priorities' (2007, p. 115).
As Angus observes, not only is it impossible to know at the present time the actual funding that any individual school receives but there are also different processes for funding schools within sectors as well as between states (including the territories; subsequent references to states will also include the territories).There is even a lack of financial comparability between the Commonwealth and the states, to the extent that the same reporting year is not used, much less the same accounting system (states report on a financial year while the Commonwealth reports on a calendar year; states use accrual accounting while the Commonwealth uses a combination of cash and accrual accounting).To take just one example, 'user cost of capital' (UCC) is a concept used in state reporting of school funding as an aspect of accrual accounting but not in Commonwealth reporting. Commonwealth funding does not rely on this concept. This may seem an arcane point except that UCC constitutes 13.6 per cent of total recurrent expenditure in government schools (MCEETYA, 2005, Statistical Appendix, Table 19). UCC is only one of many inconsistencies in school financial reporting and shows that--even without transparency--lack of comparability can make meaningless even the current, highly aggregated form of reporting that exists in school finances today (See Cobbold, (2003).
Angus notes the negative consequences of this confusion: the Commonwealth and the states ritualistically allocate blame to each other using different sets of data while the real knowledge needed for a new debate, one about the relationship between student performance and school resources, fails to materialise (2007, pp. 114, 116).
The appropriate allocation of resources is as important for Australia's schools as the need for increased resources (McGaw, 2007). The aim of this article is to describe the processes of school funding that currently exist in Australia to argue that more can be done to implement a consistent and transparent system.
How much is spent on schools
In 2004-05, the USA spent $A518 billion to educate just under 50 million students and the UK spent $A83 billion to educate approximately 10 million students (see US Department of Education, 2006; Department for Education and Skills, 2006; the exchange rates that applied on 31 December 2004 have been used). In 2004-05, Australian governments spent nearly $31 billion to educate 3.3 million students in 10 000 schools across the country (Productivity Commission, 2007, Table 3A.9).There were 3 344 652 students in 2004-05 and 9623 schools in 2005 (see Productivity Commission, 2007, Table 3A.3).The amount of $31 billion does not include the $4.8 billion received by non-government schools through private income, or the $1.2 billion spent on capital projects, which, if both were included, would bring the total to nearly $37 billion in 2004-05 (see MCEETYA, 2005, Statistical Appendix, Table 23). Table 23 of the MCEETYA (2005) Statistical Appendix provides per capita amounts only but total amounts come from calculating the total number of non-government students in 2005 (1 103 346) to derive the $4820 million received by non-government schools as private income. Capital costs for government schools totalled $1112 million in 2004-05 (see Table 19 of MCEETYA, 2005), while additional capital from the Commonwealth to non-government schools was $105 million (see Table 28 of MCEETYA, 2005).
While low in real international terms, Australian governments nevertheless spend a significant amount of money on school education and are comparable to the rest of the world in terms of per student spending. Figure 1 shows Australia's per-student spending as being just below the OECD average for primary education, and above the average for secondary education. The Australian funding for schools derives in part from the Commonwealth and in part from state governments.
[FIGURE 1 OMITTED]
Source of funds
School sector and type of government are the two axes along which arguments about school funding occur. While most school funding comes from the Commonwealth through its wider tax base, the states' share of these taxes (in terms of untied general purpose funding or specific purpose payments) is generally recognised as state...
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