On school donations and school funding

Reports this week of school donations topping $1 billion over the last 15 years have left many wondering just how ‘free’ the state education system really is.  In some ways these reports are alarmist – for some perspective, government spending on education was nearly $13 billion last year alone.  However, these reports also neglect a key factor in understanding education funding in New Zealand – it relies on local contributions.

The funding system, also known as the decile funding, is often misunderstood.  It uses data from the census to assess the wealth of a community and allocates funding on ten-point  sliding scale.  Schools in areas with the least wealthy households (Decile 1) receive the most government funding; those in the wealthiest areas (Decile 10) receive the least.

The funding formula is based on several fixed costs and a basic per-student grant, then additional funds that vary by decile.  The largest variables are the Targeted Funding for Educational Achievement and the Special Education Grant.  Between these components a decile 1 school receives approximately $950 more per student than a decile 10 school.  Lower decile schools also receive extra services, such as social workers for deciles 1 to 5, and free fruit for all decile 1 and 2 and some decile 3 schools.  These initiatives alone cost $19 million and $7.8 million respectively.

Implicit in this formula is the assumption that schools in wealthy areas can gather funds and resources from their local community.  Think about how much more easily a school in a wealthy area can fill that fundraising gauge.  In theory decile funding provides educational equity – those most able to contribute financially to their child’s education do so, so that government funds can be directed to the children of less well-off families.

Looked at in this way the fact that more than half of all funds raised by donations go to decile 9 and 10 schools makes complete sense. Would it be right for people in Blackball or Mangere to subsidise that extra $2.2 million collected in donations from families that can afford to live in Grammar zone?

What of the so-called ‘free’ education then?  By law, parents cannot be forced to pay a voluntary donation.  Schools that breach this can, and are, censured by the Ministry of Education.  This happened last year when New Plymouth Boys High School attempted to prevent students sitting exams unless they paid a donation.  In 2010 the Ministry warned Karamu High School for preventing a student from buying a ball ticket unless they paid a donation.  Schools cannot ask for fees to cover core curriculum classes, but can charge for optional activities.  State-integrated schools, which do not receive government funding for property maintenance, are allowed to charge attendance dues to cover this.

In schools I taught at donations to covered a range of costs, from text books and felt tips to ICT equipment, new buildings and even additional staff.  Did it assist the education of students?  Definitely.

However, the decile system has many challenges.  First is the issue of students not attending their local school.  Wealthy parents may live in one area, making the local school higher decile, so it therefore receives less government funding, but send their children somewhere else. Secondly, parents may, perhaps understandably, be unwilling to contribute donations to a school. In both these cases government funding remains fixed, while the income of a school is lower than the formula assumes.

Furthermore, the allocation of deciles is zero-sum.  When the decile of one school drops another must rise, irrespective of whether the wealth of that community has increased.  In practice, this meant that many West Coast schools had their funding cut, even while mines were closing and jobs were being lost, because the decile distribution had to be maintained.

However, one of the biggest problems relates to educational equity.  Schools can apply for special exam conditions for individual students.  This requires a specialist assessment, and, while they can obtain these from a small Ministry-funded team, parents with deep pockets can pay for their own.  This has led to decile 9 and 10 schools having more than five times as many students with Special Assessment Conditions as decile 1 and 2 schools – 197 and 164 students for deciles 1 and 2 compared to 1164 and 1365 for deciles 9 and 10 in 2015.  In these cases, wealthy parents can buy different exam provisions for their children.  These assessments can also be used to gain extra government funding for recognised conditions.

Additionally, there could be an incentive to let students continue to have high needs, rather than solving their learning difficulty, as identified in a 2012 American Institutes for Research analysis of special educational needs funding for the Nevada school system.  However, the Finnish experience shows the long-term gains made from identification and intensive support of learning difficulties in early schooling. In 2014 47.4% of Year 1-9 students received some kind of special support; 21% received it in at least 4 subjects.  The willingness to apply intensified support is a key factor in their top ranking in PISA studies.

Many argue that the solution is just to fund schools more.  But how much more?  New Zealand currently spends 5.4% of GDP on education (17.8% of total government spending), slightly higher than the OECD average of 5.3%.  Per-student funding has increased in real terms since 2007.  What would constitute a ‘fully-funded’ system?  Fund all schools like Partnership Schools?  Unfortunately for critics, they are funded at the same rate as new state schools.  Should schools provide stationery?  What about devices?  Lunches?  Uniforms?  Overseas trips? Sports academies?  Should some of these issues be addressed by social welfare rather than education spending? When some schools can provide education without asking for donations should government subsidise those that can’t make ends meet?

If you think some of those items are just extras that parents should pay for themselves we just end up with the same system we have now.

The answer could be more precise allocation of what we already have by funding individual students according to their individual needs.   Instituting such a system would require a large amount of data gathering and a similarly enlarged bureaucracy to manage it.  A funding formula would need to take into account a huge range of variables, from differences in literacy and numeracy skills, English language learners, special needs requirements, gifted learners, and support for Maori immersion, while providing for necessary teacher professional development, and even school infrastructure alterations.

The answer could also be schools applying for a budget based on what they deem to be the learning needs of their particular students.  After all, there is considerable variation of students within deciles – for example, some schools have a large proportion of immigrants who require additional English language learning support.  If school leaders are saying current funding is insufficient, then they should be able to identify what they require. With this then comes the challenge of accountability – how would the effectiveness of this funding be measured?  Specified targets?  Other measures of student progress?  What would happen if outcomes were not met?  And most controversially for teacher unions, would tying funding in some way to student outcomes be acceptable?

It is clear the decile system is flawed.  But it is not an easy problem to solve.

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