Q: How does the private schools subsidy work?
A: The private schools subsidy is paid out at a per student rate, currently from a fixed funding pool of $41.6million per annum. There are four different rates for four year group clusters: year 1-6, year 7-8, year 9-10, and year 11-13. Every year, the rates are recalculated by dividing the total funding pool by the total private school roll.
Q: How was the increase in funding calculated/why was it calculated that way?
A: The private schools funding pool is being increased by 11%. This amount is based off the cost adjustments provided to the State schools’ operational grant since 2023. The 2025 per-student private school subsidy rates were used as the basis for the new rates.
Q: Is the new funding evenly distributed across all schools/funding rates?
A: Funding is paid per-student, with the value of the rates depending on the year level of the students. Currently, funding rates are significantly higher for secondary students than primary students. Generally, schools get more funding as their rolls increase, and secondary schools get significantly more than primary schools.
Funding is being targeted in a way that reduces the difference between primary and secondary funding rates for private schools. 55% of the new funding is targeted towards increasing the primary rates, and 45% towards increasing the secondary rates. This will increase the primary rates by approximately 18-20% each, and the secondary rates by around 6-9%. The sector has been advocating for rebalancing funding rates across primary and secondary year levels for sometime.
Q: Why is the Government providing additional funding to private schools?
A: Government support for private schools has a long history in New Zealand. It is also common internationally. For example, Canada and Australia both provide significant government funding to their private schools. This funding is often used to increase school choice and increase access to private schools.
There have been no increases to government funding for private schools since 2010,even as the private school roll has grown. Per-student rates have reduced as funding has needed to cover a larger group of students and inflation has degraded the purchasing power of this funding.
This initiative helps address the cost pressures that private schools and fee-paying parents have faced as the value of government assistance for private schools has shrunk.
Q: Why is this a priority this budget?
A: Reviewing the funding formula for private schools to reflect student numbers is a coalition agreement between National and ACT. In the review of the funding model, officials found that the value of the per-student subsidy has diminished over the 15 years since the last cost adjustment, reducing its purchasing power. This reduction in value would worsen if left to a later budget.
Q: Why is the funding pool being unfixed? What does this mean?
A: The funding for private schools has been fixed since 2010. This means the per-student subsidy rates need to change each year to fit within the fixed funding pool. This is different from how core funding for State schools works, where the total amount of funding fluctuates depending on the number of students so funding rates can stay consistent. Because the funding rates change each year, private schools face uncertainty regarding how much funding they will receive.
To address this, the funding pool for private schools will be unfixed and become demand driven, like core State schools resourcing. Adjustments to the private schools funding pool will be managed as part of the standard process for State schools’ demand driven funding.
Separately, I also intend to seek further cost adjustments in future, like we do for State schools, so that funding doesn’t erode over time due to inflation.
Read more about the 2025 Budget announcement here.
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