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Funding Arrangements For Independent Schools

Report On Funding Arrangements For Independent Schools

Thursday 11 September, 2003

Increased funding for independent schools a win-win opportunity - report

A report released today argues that by increasing the level of state subsidy rate to independent schools the Government has a significant opportunity to both lower the overall level of public expenditure on school education and improve the overall quality of education.

The report, 'Funding Arrangements for Independent Schools' has been commissioned by Independent Schools of New Zealand (ISNZ) and authored by the NZ Institute of Economic Research (NZIER).

It demonstrates that there is a strong economic case for increasing the subsidy for independent schools from the current level of around 35 percent of the cost of state sector funding to just under 50 percent. The saving from students switching to independent schools would exceed the cost of the increased subsidy.

The ISNZ report urges the Government to remove the cap on the subsidy to independent schools which was imposed in 2000. Lifting it by a relatively modest amount produces a win-win situation, lowering the cost of education to government, while increasing the overall quality of education. Evidence indicates that a strong independent sector has positive effects on both the academic achievements of those attending independent schools and state schools through competitive pressures.

Previous reports commissioned by ISNZ had demonstrated the critical role that independent schools play in the New Zealand education sector. The NZIER report released today goes to the next stage and examines whether the Government could get better value for money through altering its education spend.

Even following an increase in the subsidy rate to around 50 percent of the cost of state sector education, parents sending students to independent schools are making a substantial personal sacrifice through spending private resources (and paying GST) on the education of their children while also contributing their share of taxes to vote education.

ISNZ accepts that the subsidy is unlikely to be increased to equate with the full cost of educating a student in the state school sector. But the NZIER report demonstrates that the existing subsidy level is not optimal from the perspective of either Government, wanting to get the best value from its spend on education, or parents who want to choose where their children are educated.


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