Schools Funding - an introduction

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1 2004/05 15 September 2004 Schools - an introduction Executive Summary This paper is intended as an introduction to school funding. It describes the types of schooling available in New Zealand and the funding streams available to schools. Some contextual analysis is made of recent political reforms regarding education funding and some alternative models of school funding are considered. This is the first in a series of papers on education, to be followed with more in-depth analysis of particular education issues. An accompanying paper, The Administration of Schools The Changing Relationship Between Schools and the State, examines further the role between the state and schools. Introduction Schooling in New Zealand has undergone significant reform in the last 15 years as successive governments have moulded the system to fit their particular ideology. The Tomorrow s Schools reforms of and the reforms of the 1990s shifted school operation to one with elements of a quasi-market system, in which competition between schools became the key driver for educational quality, with parents and children as consumers in a semi-privatised schooling system. The government played a hands-off role, setting policy through the newly formed Ministry of Education, but keeping out of operational matters which was left to schools. The continuing policy emphasis on equality of opportunity, however, differentiated the system from a purely market model and since 1998 there has been a shift away from the decentralisation of school administration, with an emphasis on the whole network of schools and support role of the Ministry. Some recurring issues around the provision of education have driven reforms: how to reconcile research on how deep learning occurs and is sustained; 1 Department of Education Tomorrow s Schools: The Reform of Education Administration in New Zealand. Wellington.

2 how to fund an adequate level of education for all students, regardless of family resources or location; the need for a quality teaching workforce in all schools; the shift to standard forms of accountability and the push to standardise assessment. The debate around these issues is perennial and policy implementation is subject to the changing tides of party politics. The Labour Government began the decentralisation process with the 1989 reforms, the 1990s National Governments sustained it and, towards the end of that decade, started the move towards a network and support model, one that continues under the present administration. New Zealand s School System - Schooling in New Zealand All children in New Zealand, with few exceptions, must attend school from age 6 to 16. The majority of children in New Zealand are educated in publicly funded schools. The Education Act 1989 provides the right to free primary and secondary education: s.3: Except as provided in this Act or the Private Schools Conditional Integration Act 1975, every person who is not a foreign student is entitled to free enrolment and free education at any state school during the period beginning on the person's 5th birthday and ending on the 1st day of January after the person's 19th birthday. 780, , , , , , ,000 Figure 1: Total Number of School Students by Year 640, Source: Ministry of Education Classification Schools are classified by the level of schooling they provide by pupil age. Compulsory schooling is divided into primary, intermediate and secondary groups. Primary schools are the first level, catering for children from five years of age in Year 1, through to the end of Year 6. Children in Years 7 and 8 may either be in a separate intermediate school or part of a primary, secondary or composite / area school (see figure 2). Secondary schools provide for students from Year 9 until the end of Year 13. Adult students can return to school, entering into whichever year the majority of their subjects are in. 2

3 Figure 2: The New Zealand School System Source: Ministry of Education, Schooling in New Zealand. Types of Schools While most students in New Zealand attend state-funded schools, there are a number of schooling options. In July 2004 there were 2,678 schools in New Zealand (see table 1 below). Table 1 - Number of Open Schools by Type At 14 th July 2004 Other: Vote Education Private: Fully Registered Private: Provisionally Registered State State: Integrated Contributing Full Primary Intermediate Secondary (Year 7-15) Secondary (Year 9-15) Special School Composite Correspondence School Kura Kaupapa - Composite Kura Kaupapa - Primary Restricted Composite (Year 7-10) Teen Parent Unit Total Source: Ministry of Education Data Management Unit, July Total 3

4 State Schools Integrated Schools Schools are further classified by their source of funding. State schools are predominantly funded by the Government, through taxation. In recent years, these schools have diversified their source of income, but still receive 90 percent of their funding from central Government. State schools are coeducational (mixed sexes) at primary and intermediate level, but some offer single-sex education at secondary level. Integrated schools are schools of special character, as defined under the Private Schools Conditional Integration Act They are schools that were once private but have now become part of the state system. Integrated Schools retain ownership of their property, and are therefore not funded for capital works. They teach the New Zealand curriculum but keep their own special character, usually a philosophical or religious belief, as part of their school programme. The Education Act 1877 prohibited state funding to private schools. Church authorities lobbied successive governments, arguing that they were discriminated against by the policy. The Private Schools Conditional Integration Act 1975 was passed after a century-long debate on whether the state should financially support private schools. Some key features of the Act: state funding is extended to a private school that integrates; a private school can become part of the state education system while having the assurance that its special character, reflected through its teaching and conduct, will be protected and safeguarded; an integrated school can continue to teach religious education. This overruled the Education Act 1964 that required primary schools to be secular; preferential entry is provided to those students whose parents subscribe to a school s special character; an integration agreement is written in perpetuity. Amendments were made to the Act in 1998, including the discretion of the Minister of Education to decline an application from a private school to integrate. Kura kaupapa Māori Special Schools kura kaupapa Māori are state schools where teaching is in the Māori language (te reo Māori) and is based on Māori culture and values. The curriculum is consistent with the national curriculum framework, but can differ from that of state schools (under the Education (Te Aho Matua) Amendment Act 1999). Kura kaupapa cater for students from years 1 through to 8, or years 1 through to 13. These schools provide ongoing education in te reo Māori, building on from köhanga reo (Māori language early childhood education centres). Special Schools are state schools that provide education for students with special education needs. The curriculum is the same as at other state schools, however, most students with special educational needs are taught within ordinary schools. 2 Ministry of Education An education with a special character a discussion paper on the consolidation of the Private Schools Conditional Integration Act 1975 into the Education Act. Wellington. 4

5 Designated Character Schools Independent or private schools Designated character schools are state schools under section 156 of the Education Act that teach the New Zealand curriculum but have been allowed to develop their own set of aims, purposes and objectives to reflect their own particular values. An example is Te Kura o Tawhiuau in Murupara, an iwi based bilingual school in the Bay of Plenty. Independent or private schools are governed by their own independent boards but must meet certain standards in order to be registered. They charge fees, but also receive some subsidy funding from the Government, set by the Ministry each year. The current system of state funding for private schools, introduced in 1995, was to be based on the average cost of educating a child in the state sector 3. The subsidy, payable to the proprietors of independent schools, was calculated according to the various school year groups. The subsidy was to increase over time with any increases in average state costs per pupil for each school year group. The new funding formula was implemented in the 1996 school year. Under the National Government the level of the subsidy was progressively increased until it reached 25 percent of total state costs per pupil for students in years 1-10, and 40 percent of state costs per pupil for senior secondary students (years 11 to 13) in the 1998 school year. In the 1999 school year the level of the subsidy for years 1-10 students was again increased from 25 percent to 30 percent of average state sector costs. These arrangements remained in place for 2000, when the incoming Government capped the amount of the subsidy at the 2000 year level. Figure 3 Independent School Subsidy Rates, School Years 1- Years 7- Years 9 - Years 11 - Year % % % % Note: The figures for 2001 are indicative only as this data is no longer collected/ Source: Independent Schools of New Zealand Boarding schools The Correspondence School Home-based Schooling Boarding schools may either be independent or part of a state-funded school. All Boarding schools charge boarding fees to parents. The Correspondence School (TCS) provides distance learning for more than 18,000 students across New Zealand. Students may live a long way from their nearest school, live overseas, be itinerant, study with TCS for medical reasons or have special needs. Secondary students may also enrol in specific subjects if these are not available at their regular school. Home-based schooling is available for parents and caregivers who want to educate their children at home. Parents and caregivers need to get approval to do so from the Ministry of Education and must educate their children to the standard they would receive at a registered school. Home schooling parents 3 Davies, P. & Beckett, J arrangements for independent schools in New Zealand : is the existing funding provided by Government to independent schools 'optimal' in an economic sense? : report to Independent Schools of New Zealand. New Zealand Institute of Economic Research. Wellington. 5

6 and caregivers are given an annual grant to help with the cost of learning materials and can choose to purchase teaching services from the Correspondence School. Although the number of home school children in New Zealand has grown considerably in recent years it accounts for only one percent of total school enrolments. Table 2: Number of Students Attending Schools by Type of School 1 July 2003 Type of School State STATE INTEGRATED PRIVATE FULLY REGISTERED AND PROVISIONALLY REGISTERED TOTAL Full Primary Contributing Intermediate Secondary Year Secondary Year Composite Special Correspondence School TOTAL Source: Ministry of Education. State of Schools - Methods of Under the current funding system, the Government pays schools to provide education to students, with funding provided from general taxation. Schools are funded primarily through Vote Education. In 2002, schools had a total income, or revenue, of $3,546.2 million. Government grants are the primary source of revenue for schools, accounting for an average of 90 percent of a school s income. Locally raised funds are a second source of income, and arise from activity fees, donations, trading activities, fundraising and (especially for secondary schools) international students fees 4. The Government s funding formula allows for: per pupil funding by year level; base funding by type and size of school to recognise different types of school and economies of scale; targeted funding to provide additional assistance for those at risk of educational under-achievement; targeted funding to recognise the additional costs imposed on rural schools by their geographical isolation; property maintenance and utilities funding; special programmes and policy initiatives to achieve national goals - on a planned basis, and limited to a specified expenditure per year. Decile Each school is assigned a decile rating to determine its eligibility for weighted funding, such as the Targeted for Educational Achievement (TFEA), 4 Minister of Education New Zealand Schools Nga Kura O Aotearoa. Wellington. 6

7 The decile rating is the indicator used to measure the extent to which schools draw pupils from low socio-economic communities. Each state and integrated school, (with some exceptions), is ranked into deciles (10 percent groupings) on the basis of the indicator. The indicator is based on census data for households with school-aged children in each school s catchment area, together with ethnicity data from the school s roll returns to the Ministry of Education. Decile ratings determine the allocation of the TFEA, Special Education Grant (SEG), the Careers Information Grant (CIG), and Decile Discretionary. Decile ratings are reassessed following each census: all decile ratings were reassessed during 2002, following the 2001 census and the new ratings applied from Boards can request to have a review of their decile rating on an annual basis. Operational Operational funding is provided for the general operation costs of the school. The amount of funding depends on the type of school, student numbers and ages, and the property profile of the school, determined by a funding formula. Many boards of trustees also choose to raise additional funds from the local community, including sponsorship, to provide for extra activities and staffing. Operational funding does not include the salaries of entitlement teachers, property, or other large capital items. Teachers are now paid directly by the Ministry of Education. The initial funding for the year for all schools is calculated using the predicted school roll, submitted in the July roll data return to the Ministry of Education for the next year, beginning in March. Primary and special schools submit a prediction for the following July while intermediate, area/composite and secondary schools predict for the following March. The funding is paid quarterly by the Ministry of Education directly to the board in the form of a bulk grant. Table 4: Schools' Operational increase or Year Operational decrease (%) 1990 $490,740, $444,640, % 1992 $525,783, % 1993 $526,707, % 1994 $543,890, % 1995 $582,730, % 1996 $651,593, % 1997 $727,687, % 1998 $777,678, % 1999 $796,405, % 2000 $830,135, % 2001 $929,064, % 2002 $948,809, % 2003 $976,990, % Source: Ministry of Education Resourcing Unit, June

8 Operational Components Operational is available in various components 5 : Base (6.83%); Per-pupil funding (57%); Relief teacher funding (5.8%) TFEA (11.9%) Others see details below. These components are not tagged - boards are not required to account for the spending of each individual element. Boards of trustees are responsible for setting priorities and managing the total funding. In doing so, the board must meet the requirements of the National Education Guidelines, the National Administration Guidelines, their obligations as good employers and any legislative and contractual requirements to which they are subject to. They are also responsible for achieving the objectives specified in their charter. After these responsibilities, requirements and objectives are achieved, any surplus funds may be used by the board within the current year or carried over for future years. Streams - Base Per-pupil Schools can access a variety of components to operational funding: Base funding compensates for the diseconomies of scale involved in the operation of small schools. Base funding for small schools is comparatively large, but is reduced as the roll increases. Rates vary by school type as well as roll size. In most cases, per-pupil funding forms the bulk of operational funding. As the name suggests, this component is calculated using the number of students on a school s roll. It pays for equipment, books, non-teaching staff salaries and other resources. Four levels of per-pupil funding are set to recognise costs associated with educating students at that particular level, in recognition that older pupils typically require more resources than younger students. Relief Teacher Targeted for Educational Achievement (TFEA) Special Education Grant (SEG) Boards are funded to assist with the payment of wages and allowances for relief teachers. Low decile schools have greater concentrations of children from low socioeconomic backgrounds: these children can often face greater barriers to learning than children from more affluent communities. TFEA is a resource to assist schools to lower barriers to learning faced by students from low socioeconomic communities. TFEA is delivered using the decile funding system. The annual allocation depends on the school s predicted roll and socioeconomic decile rating, and is recalculated once the school s actual roll is known. The SEG is intended to assist schools to help students with moderate special education needs, such as learning and behaviour difficulties. SEG is delivered using the decile funding system. All schools receive a base grant plus a per-pupil grant. 5 Ministry of Education Schools Resourcing Handbook. See 8

9 Careers Information Grant NCEA Grant Information and Communication Technologies Vandalism Property Maintenance Heat, Light, and Water Redistributed Bulk This grant is intended to assist schools to meet their responsibility for providing career guidance for their Year 9 to 15 students. It is available to schools with students in Years 9 to 15 and is delivered using the decile funding system. This is additional funding for schools with Year students to assist with NCEA-related costs. The rate is $5.00 per Year pupil for This grant is intended to assist boards to meet the cost of operating and maintaining Information and Communication Technologies (ICT) in schools, including teacher training in ICT and accessing technical support. The aim of this grant is to help boards take positive steps to reduce vandalism (this is not available to integrated schools). Each school is funded in the mid range of its risk category and the board is expected to meet costs from the mid to the top end of the range. The property maintenance grant provides for maintenance expected to occur within a 10-year cycle. Within the grant is a component for minor capital works (not provided for integrated schools) to enable boards to undertake small capital improvements. The grant is based on each school s land and building areas. Schools are entitled to heat, light and water funding, which is provided for the supply and consumption of fuel and water. The funding component is individually assessed for each school to address reasonable needs. The assessment takes into account the school s individual characteristics, such as size and location. Money from the abolition of the bulk funding of teachers salaries is distributed on an ongoing basis as part of each school s operational funding entitlement. Figure 4: Estimates of Inflation-adjusted Per-student Expenditure, Source: Minister of Education, New Zealand Schools - nga kura o aotearoa. 9

10 Property funding While school property (land and buildings) is generally owned by the Crown, school boards of trustees are responsible for ensuring that the school property is well maintained. Schools receive money for general property maintenance and minor capital works through their operational funding. for major maintenance is also provided for both state and integrated schools. Capital works for state schools such as building projects are directly managed by the Ministry of Education. The property of integrated schools is privately owned and maintained. The Private Schools Conditional Integration Act 1975 had originally been based on an understanding that schools provided their own premises and that government would provide funding to maintain premises to the same level of an equivalent state school. This funding arrangement did not cover such situations as new roofs, and there was a long-standing dispute between some integrated schools and the government over what did and did not constitute capital works. This situation was resolved in 1998, and the government now provides capital and maintenance funding to integrated schools. Supplementary funding Schools may also receive supplementary funding, including the following: Ongoing and Reviewable Resourcing Scheme (ORRS) provides for students with high and very high special education needs. This funding is tagged to individual students who meet certain criteria; Secondary Tertiary Alignment Resource (STAR). STAR is a funding resource available to secondary or composite schools seeking support for senior secondary programmes in nonconventional subjects. The programmes, in full or in part, are required to lead to assessment towards credit against unit standards on the National Qualifications Framework (NQF) and for a range of other tertiary qualifications in non-conventional subjects; Māori Language Programme - schools receive extra support for Māori students enrolled in Māori language programmes at four immersion levels; School Risk Management - Boards are required to insure all school assets other than land and buildings owned by the Crown; Targeted for Isolation (TFI) and Targeted Rural (TRF). Schools in isolated areas are eligible for additional operational funding to recognise the additional costs of accessing the goods and services needed to operate a school and deliver the curriculum; Transitional Targeted Rural (TTRF). This is a transitional payment for those schools losing funding as a result of the change from one form of targeted rural funding to another; Adult Community Education (ACE). This is administered by the Tertiary Education Commission (TEC). Schools can host a number of programmes aimed at adult learners; Attached Teachers; Itinerant Teacher Travel; New classrooms. A setting-up grant is paid for each new classroom generated by roll increases or increased staffing entitlements. It is intended to help boards to equip new rooms with teaching and learning materials; Out-of-Hours Music and Art Classes for Years 1 8. The out-of-hours scheme provides additional professional tuition not normally available within the staffing of primary schools to help children to further their education in art and music; 10

11 Supplementary Grant for Principals Remuneration. Normal and Country Model Schools. Additional per-pupil funding is provided to cover costs associated with the operation of normal and country model schools; English for Speakers of Other Languages (ESOL). ESOL funding provides support for children with English language needs in mainstream classes and opportunities to target students through small group and classroom-based programmes. Education Development Initiative (EDI) The EDI is available for schools undergoing network reviews. The EDI first appeared in the 1991 Budget, as part of the then Government s policy of improving the economic and educational viability of schools. The driving force behind the initiative was originally the problems of excess school capacity and uneven regional patterns of population growth and school provision. The initiative involved local communities, in conjunction with the Ministry, evaluating their local schools and relocating two or more schools onto single or shared sites. The freed-up resources were then to be transferred to the new school, and set-up costs to be paid for. During the recent round of school closures, the extra funding was made available in planned area reviews if boards initiated mergers. Joint School Initiative (JSIF) and property funding was also made available to them. The funding returned to the schools is based on a formula according to roll size and its use is negotiated with the Ministry. The funding is made up of a cash grant for individual schools, funding for future shared school education projects (in most cases) and property entitlements. Contestable and discretionary funding Schools can also access various pools of contestable or discretionary funding and a range of resources that are provided directly. By the end of the 2002 school year there were at least 13 contestable or discretionary funding pools. These allocated $75 million for programmes such as alternative education, innovations for reducing truancy, second language programmes, ICT clusters and programmes to ease the transition between school and employment or further education (such as Gateway). Schools are also able to access in-kind resources directly, which have included laptops for teachers and principals, assessment tools, professional development, various fora for teachers and principals (LeadSpace and Te Kete Ipurangi), and software licensing, for example. Accessing tertiary funding streams Schools are able to access post-school funding streams such as Training Opportunities, Youth Training, Adult and Community Education (ACE) and Gateway. All tertiary education providers are required to produce a Charter and a Profile in order to access government funding, in order that the system can be steered. 6 Since schools already provide charters to the government, they do not have to produce a separate charter for tertiary funding purposes, but they are required to supply additional material to the Tertiary Education Commission, via the Ministry of Education. In order to access tertiary funding for 2005 to 2007, schools will have had to produced a Profile (similar to a strategic plan) by 30 June Ministry of Education. Tertiary Education Strategy 2002/2007. Wellington. 11

12 Foreign Fee- Paying Students Staffing - Entitlement Staffing Schools are increasingly supplementing their income by catering for foreign fee-paying students (FFPS). In 2002, 20 percent of all primary schools had at least one FFPS enrolled, while FFPS were enrolled at 71 percent of secondary schools. On 1 July 2002 there were more than 15,000 foreign fee-paying students attending 761 New Zealand schools. Schools are able to spend the money they earn from FFPS in any way they choose: most schools directed income from FFPS in 2002 to funding additional teaching staff, buildings and facilities. 7 State schools are provided with an entitlement for the number of teachers that they are allowed to employ in each year, based on their projected roll. Teachers are employed by schools, however terms and conditions are centrally set by through cyclic contract negotiation rounds. Teachers are paid salaries directly by the Ministry and this money is charged back to a Teachers Salaries (TS) account held at the Ministry for each school. Schools are required to manage their entitlement by charging back their entitlement activity to the Ministry, who regularly informs them of their progress towards expenditure of their entitlement. Schools can bank their unused entitlement for use later on, allowing them the flexibility to plan and provide for periods of high enrolment. Boards can also employ and pay for non-entitlement teachers through operational funding. Some Alternative Mechanisms - Increased competition Zoning and enrolment schemes As has been shown, schools attract funding on the basis of the number of enrolments. Until 1991, enrolments were limited by the practice of school zoning. The Education Amendment Act 1991 abolished zoning, and this, combined with per-student funding models, provided new incentives for schools to compete with each other to maximise their funding through enrolling large numbers of students. The ideological bases were new right ideas about efficiency gains through applying market models to social services such as schools and hospitals. Zoning regulated students attendance to schools within their home zone. The abolition of zoning under the Education Amendment Act 1991 enabled students to theoretically attend any school. Under parental choice funding systems, parents inevitably want to choose the school that they perceive to be the best. This can cause excess demand for desirable schools, and spare capacity at others. Markets require a mechanism to deal with situations in which demand for a particular item exceeds it supply, and for most commodities, the standard mechanism is price. The Education Amendment Act 1991 enabled schools to abolish existing zoning schemes. The intention was to offer parents more choice and to give schools more freedom from government control. Since price cannot be manipulated in the context of the marketplace of free state schooling, schools were allowed to adopt enrolment schemes, to prevent their rolls from becoming over full. Schools could not discriminate against students in terms of enrolment, and the Ministry of Education had the right to direct a school to accept a pupil who had been excluded by its enrolment scheme. The Education Amendment Act 1998 (No.2) introduced the requirement of 7 Minister of Education New Zealand Schools Nga Kura O Aotearoa. Wellington. 12

13 consideration by boards to consider whether they were reasonably convenient for students to attend in terms of distance, travel time and exposure to traffic hazards. The Education Amendment Act 2000 reinstated the concept of home zones, requiring their inclusion into enrolment schemes, allowing pupils to be enrolled at schools within their home zone. Under the legislation as it currently stands, the Secretary of Education gives a written notice to a state school that there is, or is likely to be, overcrowding at a school, and the board of the school must then develop an enrolment scheme for the school. A board may not begin developing an enrolment scheme unless it has received this written notice. Schools enrolment schemes must now define a home zone for the school. Children from within the home zone of a school that has an enrolment scheme are entitled to enrol at the school. Students who live outside the home zone may be enrolled under a priority system: first priority must be given to any applicant who is accepted for enrolment in a special programme run by the school; second priority must be given to any applicant who is the sibling of a current student of the school; third priority must be given to any student who is the sibling of a former student of the school; fourth priority must be given to any applicant who is a child of an employee of the board of the school; fifth priority must be given to all other applicants. Vouchers and parental choice Vouchers are models of funding whereby funding follows the student to attend any school they choose to enrol in. Systems that offer vouchers along with open enrolment are often described as offering Parental Choice and are associated with low government intervention in education systems. Voucher systems are models of funding education. The term vouchers refers to various different forms of funding education, ranging from individual scholarships for private school attendance and /or systems of open enrolment, school self management and per-capita funding formulae in public schools only, to systems which use public money to fund public and private schools alike 8. The core ingredients of voucher systems are as follows: funding formulae that set certain amounts per student, and give funds to individual schools on the basis of their roll to cover all student needs at the school. A school which has more students than another school serving an equivalent group of students generally receives more funds; individual school responsibility for managing and allocating its government funding; school enrolment based on parental choice, rather than on family location or on right of entry to the neighbourhood school. Vouchers currently exist in three main forms: individual scholarships or subsidies for private school attendance these are generally limited to low-income students. Examples are New Zealand s Targeted Individual Entitlement scheme (now 8 Wylie, C Can Vouchers Deliver Better Education? New Zealand Council for Educational Research, Wellington. 13

14 abolished), the English Assisted Places scheme (recently abolished) and a range of privately funded voucher programmes in the United States. open enrolment systems including both private and public schools these can be termed as full voucher systems, because Government funding goes to both private and public schools. Students can theoretically choose to attend any school. In some systems of this type, such as France and Sweden, students are initially assigned to a school, but can choose to attend another. Others, including the Netherlands, Belgium and Chile do not give students an initial assignment. open enrolment systems limited to state schools these have been termed quasi voucher systems. Students are not generally assigned to schools, and can theoretically choose to attend any state school. These may include schools with religious affiliations which meet certain criteria, for example, following the national curriculum. Private school attendance may be subsidised, but at less than half of the per-student funding amount given to state schools. Additional funding per student is likely to be given to schools serving low socioeconomic communities. These systems have existed in New Zealand (from 1989 to 1998), England (since 1988), and some district schools in the United States, most notably Cambridge, Massachusetts, and East Harlem. Proponents of voucher systems in funding education, particularly full voucher systems, believe that they offer true parental choice through an open market of education. They believe that parents are best placed to decide where children are schooled and that parental choice enables parents to choose, unrestricted by government regulation. Critics of models of parental choice argue that they fall short of offering choice to all students and parents: they can have the effect of changing the balance of power from parental choice to school choice, with the schools being able to choose which students to enrol. Often low-income families are not in a position to exercise choice, because no alternative options exist close enough to where they live and they cannot afford the transportation, fees, and other costs of enrolling in a desirable school. 9 They argue that parents use the decile score of a school as a proxy measure of school quality because of the implied social and economic make-up of the student body attending. High decile schools are implicitly seen as desirable and low decile schools, undesirable. Under a competition model, schools have a strong incentive to select more attractive students and therefore improve their competitive position. Conclusion Schools are not totally self-managing in New Zealand. The reforms of the late 1980s and 1990s brought the system close to it, but Government has retained some control and schools now operate under a network and support model. Schools funding is likely to continue to be the focus for debate in the run-up to the next election, given the continued lobbying over issues such as full voucher and bulk funding systems. 9 Fiske, E.B. and Ladd, H.F When Schools Compete A Cautionary Tale. The Brookings Institution Press, Washington D.C. 14

15 Suggestions for further reading / links Ministry of Education School Zones Website: Fiske, E.B. and Ladd, H.F When Schools Compete A Cautionary Tale. The Brookings Institution Press, Washington D.C Minister of Education New Zealand Schools Nga Kura O Aotearoa. Wellington. Paul Mahoney, Research Analyst Social Policy Team Parliamentary Library For more information contact Paul (ext.9019) Copyright NZ Parliamentary Library Except for educational purposes permitted under the Copyright Act 1994, no part of this document may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, other than by Members of Parliament in the course of their official duties, without the consent of the Parliamentary Librarian, Parliament Buildings, Wellington, New Zealand 15