School Funding Explained: What it means for Independent Schools

Written by Chris Ivey, Headmaster

Dear Somerset Community

Over the past couple of days leading up to the Federal Budget, school funding has been in the news with the announcement that schools are now ‘fully-funded’. I thought parents might appreciate a little insight into the potential ambiguity of such a statement and some dot points about how government funding works.

‘Fully-funded ‘refers to a figure that was established many years ago. The Rudd/Gillard Government introduced a review of funding and other matters led by David Gonski, which recommended a review of how schools were funded. The first part of this was to increase the Commonwealth’s commitment to public (state) education.
Aside from parent fees, government funding for Independent Schools is largely funded by the Commonwealth Government, with a much smaller supplementation from the state.
This is the opposite for public (or state) schools, which receive around 80% of their funding from the state government and the balance (20%) from the Commonwealth.
So, when some in the media try to muddy the waters and present a statement that the federal government funds more to Independent schools, it is not technically correct, the Commonwealth only contributes a smaller amount to public (state) schools, which are the responsibility of the state governments.
What we are currently seeing in the Federal Budget and the media is a push from the states to increase funding via the Federal government to public schools. The Federal Government offered an increase to 22.5% in order to push through some of their education reforms. Some states held off until just recently, including Queensland, until the offer had been increased to 25%. This is how they can now claim public schools are ‘fully-funded’.
Where does this extra Commonwealth money come from for state schools? Yes, there is now an increase to our overall debt, but it also comes from a ‘freezing’ of the Independent school size of the pie, which the Federal Government has traditionally allocated to Independent Schools.

On the other side of the Gonski reform was the impact on Independent Schools.

Until a few years ago, funding for Independent Schools was fairly stable and schools received a normal % increase each year. The amount of funding was determined by the income of postcodes.
Under the new model recommended in the Gonski report, they began to access more targeted data from the ATO. Funding for Independent schools is now determined on the median income of parents of any particular school.
This began in 2021, and the government began to gradually implement the reforms. As a result, the funding for Independent Schools changed across the country, with smaller CPI increases and a reduction in funding for some schools.
For Somerset College, the significant fee increase in 2024 was a direct result of a reduction in Commonwealth government funding for Somerset College. The transition period in which we find ourselves rolls out to 2029, during which time, our funding is still a little unsure and unpredictable.

As we head toward a Federal election, I thought it might be helpful for parents to be aware that there is a strong political push by Independent Schools Australia (ISA) to advocate on behalf of Independent Schools, particularly in the space of protecting choice and affordability.

We are reaching a critical moment for the future of Independent Schools across Australia because there is a strong push from some in positions of influence to continue to reduce or even possibly cease funding to Independent Schools. I don’t believe we will get to that extreme because all levels of government are aware of the savings made to the government purse when parents choose an Independent School.

Funding is a complex space and after many years of leading Independent Schools and serving on National Bodies, I am happy to chat further with parents who might have more questions.

Warm regards,
Chris Ivey
Headmaster

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