Some of Australia's wealthiest private schools are running multimillion-dollar surpluses with the help of excess taxpayer funding, prompting fresh calls for the Turnbull government to tackle inequalities in the education system.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Fairfax Media last week revealed more than 150 private schools were receiving hundreds of millions of dollars in taxpayer funding above their entitlement, while many schools in the public and private sectors remained significantly underfunded.
Financial statements lodged with the Australian Securities and Investments Commission and Australian Charities and Not-for-Profits Commission show in some cases, schools are enjoying surpluses that exceed the amount by which they are overfunded. In one case, Melbourne Grammar's $8.3 million end-of-year result exceeded their total government funding of $7.3 million.
The records suggest many schools could have overfunding removed with little or no impact on their regular operating costs, and could give Education Minister Simon Birmingham cover to move on them as he negotiates a new post-2018 funding agreement with his state and territory counterparts.
Senator Birmingham reignited the schools debate a fortnight ago by saying some schools were "overfunded" beyond their Schooling Resource Standard, the needs-based entitlement formula of Labor's so-called Gonski reforms.
The largest surplus in a group of schools examined by Fairfax Media belonged to Melbourne Grammar, with $8.3 million. This sum is almost four times the $2.2 million the school is overfunded by and easily exceeds their total federal and state funding of $7.3 million in that year.
Queenwood School for Girls in Sydney – overfunded by $1.7 million – had $2.2 million left over when all costs were paid for.
Scotch College in Hawthorn, which on Thursday unveiled a $30 million science centre, benefited from a healthy surplus of $6 million in part thanks to $610,000 of overfunding by the taxpayer.
Loreto Normanhurst, an exclusive Catholic boarding and day school in Sydney's Hills District, reported a surplus of $2 million, similar to its $1.8 million in annual over-funding.
Al Siraat College – an Islamic school in Victoria – drew $1.5 million in government overfunding, an amount just shy of its $1.7 million surplus.
College director Fazeel Arain said the institution was "a needy school by any account", adding the school lacks some basic facilities and government funding is used for meeting the needs of lower socio-economic students who are often from non-English speaking backgrounds.
Mr Arain said 60 per cent of students were taught in demountable classrooms, arguing "there seems to be a simplistic assumption that schools receiving money above [the Gonski funding formula] are 'wealthy private schools' ".
Analysis suggests the federal government would have more than $215 million extra a year to distribute to needy schools if they stopped funding others above what they are are entitled to.
Of the roughly 150 private schools considered overfunded, Fairfax Media gathered the 2014 financial information of 17 across NSW, Victoria, Queensland and the ACT.
Records of at least six showed the removal or freezing of their overfunding could have been absorbed without putting budgets in deficit.
The other 11 would have gone close to breaking even or into deficit if their overfunding was removed.
As not-for-profit organisations, these schools ultimately reinvest any surplus cash. Built-up capital is often used to pay off debt or for new buildings.
Centre for Policy Development fellow and funding equality advocate Chris Bonnor said the situation "cries out for a very convincing explanation" and illustrates anomalies in the way the Gonski funding scheme was implemented. Former prime minister Julia Gillard announced the reforms in 2013 with a promise that no school would be worse off.
"If the object of the exercise is to raise student achievement, that money should absolutely be redirected to where need is greatest," Mr Bonnor said.
The Independent Schools Council of Australia said a calculation based on a single funding year was a "narrow and potentially misleading snapshot" and all schools considered overfunded were in the process of adapting to downgraded entitlements.
"Schools structures cannot be changed in short time frames and as charitable organisations, all surplus funds are invested directly back into the school to improve educational outcomes for their students for many years to come," a spokesman said.
The spokesman noted private income contributes an average 58 per cent of annual costs and 86 per cent of capital costs at independent schools.
"Government funding to the Independent school sector represents a very successful long-term partnership between government, parents and community," he said.
Senator Birmingham hopes to reach an agreement on a new funding formula by early 2017.
