Too much spin at the spinoff

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I try to bring some facts to a very poor post at a site that I typically very much enjoy reading and supporting.

I very strongly believe that nearly all teachers have the best interests of students at heart, and that the same is true for nearly all employees of the Ministry of Education. I also believe that the various Ministers of Education are, at minimum, not opposed to improving outcomes for students.

To the detriment of our children, these groups cannot get along. All of them have made poor decisions in the past, and none of them seem able to get past it. It’s far past time for this to be remedied, so that everyone is able to agreeably work together to improve education in New Zealand. Teachers need to realise that the Ministry isn’t always out to get them, and the Ministry needs to realise that teachers have much to contribute to guiding how education is shaped.

Communication is particularly a problem. When honestly examined, much of what is presented by teacher unions is propaganda, often filled with misunderstanding, half-truths, and paranoia. On the other side, the Ministry’s messaging is so bad that many people believe that this is deliberately so – to distract from some dastardly plan. Personally, I think that Hanlon’s razor applies.

(It’s ironic that Communities of Learning are designed to encourage collaboration between schools, when nearly all schools were already engaged in such collaboration, and it’s collaboration between the policy section of the Ministry and schools that is lacking).

First, some things that this post is not about, to get them out of the way:

It’s incredibly difficult to run a school on the funding that they get from the Ministry; schools are extremely dependant on donations (both time and money) from parents and other fundraising, and doing more than the bare minimum is nearly impossible relying solely on a school’s operations grant.

I do believe that there are improvements that could be made in how the funding that is available is distributed. I don’t pretend to know what the answers are.

There are seven (3 main, 4 supplementary) proposed changes to how education is funded, and the “global budget” is only one of those (and only a supplementary one). I do have concerns about some of the others, and it’s not entirely clear what the impact of them all will be. The Ministry is also pushing a very large amount of change in a very short period of time, which I don’t think is ever wise.

A rough guide to how teaching staffing currently works in NZ (for state, non-Partnership, schools)

Each school is allocated an amount of staffing, based on a formula that’s mostly to do with the number of students expected to be attending the school as of July 1st, which is expressed in full-time teacher equivalents (FTTEs).

Schools are permitted to “bank” staffing. This allows flexibility in when during the year the staffing entitlement is used – for example, if you have an entitlement of 5.5 full-time staff, you could have 5 full-time staff and one half-time staff member for the whole year, or 5 full-time staff for half the year, and 6 full-time staff for the other half.

Schools may also elect to not employ as many (equivalent full time) staff as they are entitled to, and get a refund of actual cash, or (far more commonly) employ more staff than they are entitled to, and pay for those staff from their other funds. There are limits around how much can be “banked”, and you may only overuse or underuse by 10% of your entitlement in a year.

In the school’s accounts, there’s a total amount of money that was spent on the teaching staff (for example, this was $358,570 at Ahuroa School in 2015), and a grant of exactly the same amount of money from the Ministry. Although this shows in the accounts, the school never actually comes into contact with this money, other than with staffing over or under use. For banked staffing, if you have underused you are paid out at $54,500 per FTTE, but if you have overused, you need to pay back at $68,500 per FTTE (2016 rates).

For example, if you’ve been allocated 3.9 staff members, but you decide to top that up to 4.0, then you’ll need to pay from your other funds $6,850. If you’ve been allocated 4.1 staff members, and you only employ 4.0, then you’ll be given $5,450 in additional operational funding.

Schools have no control over how much any teacher is paid, and, for the most part, it makes no difference to a school how much their teachers are paid. You can have all your staff at the top of the pay scale and you consume the same number of FTTE as a school whose staff are all at the bottom of the pay scale.

Where this gets particularly complicated is that Boards can decide (subject to various conditions) to employ staff directly from their operational funding. When this is done, the school still has no control over how much the staff member is paid, but pays the real cost of that staff member’s employment.

The lowest pay for a full-time primary teacher is currently $47,039 per year, and the highest (other than ‘units’ and other additional payments) is $74,460.

Going back to the example where you were entitled to 3.9 FTTE and employed 4.0 – if you have a teacher at the bottom of the pay scale, and employ them (for 0.1 of their time) from your operations grant, this will cost you $4,703 (plus various other incidental costs).

This is around $2,000 less than if you simply overused your staffing entitlement, so all around the country principals employ this technique – as long as you have staff that earn less than approximately $68,500 (which is quite high on the pay scale) you pay them via the operations funding (it makes no difference to the teacher) and balance your staffing entitlement to zero.

If you don’t have any staff earning less than that then you can overuse your staffing (up to the 10% limit) and pay less than you would need to otherwise.

This is all rather complicated (and it doesn’t even go into paying for other types of staff, casual staff, units, holiday pay, study grants, or anything else like that). One of the reasons that Novopay was such a mess was that the system is overly complex.

The “global budget” proposal in reality

The intention is to simplify the system, so that instead of having staff paid from both a staffing entitlement and from operational funding, there’s a single staffing credit system.

Schools would be allocated a number of staffing credits each year. There’s no more or less money available, and the formula for credits would be (other than changes from the other 6 proposals) essentially the same formula as for FTTE.

A staffing credit would be valued at the national average teacher salary. For example, if the average was $70,000, then rather than 3.9 FTTE, the school would receive $273,000 in staffing credits. It’s important to note that it’s irrelevant what the teachers at the school are paid – only the national average matters.

Schools would still never touch any of this money. When teachers are paid, schools would be charged at a rate equal to the national average teacher salary. So if your school employed 3.9 equivalent full-time staff, then the school would be charged $273,000.

You can see that this balances in exactly the same way that FTTE does. From the Ministry’s point of view, the amount of money that they are paying stays exactly the same. They also don’t care whether any individual school has low-paid teachers or high-paid teachers, because it’s only the national average that makes any difference.

If all the high-paid teachers in the country were replaced with low-paid teachers, that would save the Ministry money (and make no difference to the cost to any individual school), but there’s an admirable separation (both now and in the proposed system) between the people that decide to hire someone and the organisation that bears the cost of that decision.

A “banking” system would still be available, so that you can spread your staffing credit usage throughout the year. There would still be limits on how many credits can be banked, and how much of your credits could be turned into cash if not used for employing teachers. You could “purchase” additional credits to employ extra teachers, just as you can overuse your staffing entitlement or employ staff from the operational funding.

There are two key differences:

  1. Support staff get incorporated into the same staffing credits system. Schools still determine what these staff are paid, and would “purchase” enough staffing credits to cover whatever is required.
  2. The complex system where all the principals share with each other the trick about making sure you have the right staff paid by the operational funding and by your staffing entitlement goes away. This is cleaner, but will cost most schools a small amount more, because most schools overuse rather than underuse, and most schools have enough teachers earning less than the national average that they can currently save through this loophole.

Realistically, the Ministry could decide at any time to close this loophole by just adjusting the rules around banked staffing. The Ministry could also decide to improve the funding proposal by charging instead at a much lower rate, to encourage employing more teachers (just as they currently discourage underuse of the staffing entitlement by refunding at a low rate).

In the existing system, you’re able to employ the most “expensive” teachers you want, and as long as you have enough “cheap” teachers to cover your employment beyond the staffing entitlement, you “win”. In the new system, you’d be able to employ the most “expensive” teachers you want, without needing to have those “cheap” teachers as a balance. However, this does come at some additional cost.

(For what it’s worth, all the principals I have worked with believe that there are benefits to employing teachers at all positions along the pay scale).

Theoretically, a school could employ many support staff instead of teaching staff, but it’s likely that there would be limits around this (just as there are with everything else).

ERO are still going to be reviewing that schools are using their staffing entitlement appropriately, principals (and their management teams) are still going to be the ones deciding how the staffing entitlement is used, and boards (who have a majority of members elected by parents) will still be monitoring and approving what management does in terms of staffing.

There’s a reason that this is only a supplementary proposal, and not one of the main ones. It changes very little. It’s basically just intended to clean things up.

A rebuttal of the spinoff article

Firstly, this is not bulk funding, and the Ministry is very explicit about that. The fundamental aspects of bulk funding are that it matters how much each of your teachers are paid and that if you employ fewer teachers you have money available that you can spend elsewhere. Neither of those are true under the proposal “global budget” system – you are funded and charged at a national average regardless of the true cost of employing the staff member, and you cannot simply convert your staffing credit into operational grant funds (other than in the limited way that you can already with FTTE).

Eden says that the proposal will result in fewer teachers (and therefore larger class sizes and everything that goes with that). There is no evidence to support this. The same amount of funding will be provided for staffing and schools cannot simply take the cash instead.

There is evidence that counters this. Right now, schools can choose to understaff by 10% and use that additional money for whatever other purposes they wish. Almost no-one regularly does this (you can ask if you want current numbers), and in reality boards are doing exactly the opposite.

Eden says that there will be fewer teacher aide hours. Teacher aides are (generally) not paid from the staffing entitlement, but from operational funding (typically provided by grants from various organisations). The global budget proposal contains no suggestions that the funding amount for teacher aides would change in any way (other proposals could result in changes). The amount spent on teacher aides would not be impacted by this proposal in any way.

Eden claims that it would likely mean untrained teachers in the classroom, because they would be cheaper. Firstly, schools cannot employ untrained teachers – there are strict regulations about teacher registration, and there are requirements for beginning teachers to demonstrate not only that they are trained but are qualified and meet all of the expected standards. Assuming that she is disparaging trained, qualified, beginning teachers instead, this is also untrue. There is no benefit to a school to employ a beginning (‘cheap’) teacher over an experienced (‘expensive’) teacher, because the school pays the same for them either way, just as they do now. The opposite is actually possible, because the need to have ‘cheap’ teachers to use for paying for staffing overuse will be removed.

The section “So what is the Ministry of Education’s proposal” is flatly wrong. So is the idea that there are “caps to class sizes” (staffing is based on a class size that the Ministry believes is appropriate, but it’s up to each individual school to decide how the staffing is actually utilised).

There will be no decision about whether to pay for power (which is funded separately and adequately in the heat, light, and water component of the operations grant) or a teacher. Her points around property funding changes are to do with one of the other funding proposals (supporting #2), not the global budget. Changing the decile system is also an entirely different proposal (core #2). The rest of the post then devolves into a rant about how education is insufficiently funded, which is true, but nothing to do with the global budget proposal, since that does not change the amount of money available in any way.

It’s great to discuss how we can improve education in New Zealand, including how funding works. But let’s do it with carefully researched facts, not something that you’ve half-heard in a union meeting.


My background: I taught in the tertiary education section for a while, my father was a teacher, my mother and sister are teachers, and many other family members are teachers or work in some sort of education role. I have been on the Board of Trustees at Ahuroa School for around 7 years, as chair for around half that time (including currently). The facts above are sourced either from publicly available information directly from the Ministry, or directly from the Ministry staff that are overseeing the funding review, at one of the workshops that was held in July 2016.

This post is not a statement from Ahuroa School; please contact chair@ahuroa.school.nz if you would like to have one that is.

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