What is the Direct Measure of Income?
The Schooling Resource Standard (SRS) benchmark establishes the minimum (or “base”) cost of educating each Australian student. For the 2021 calendar year, the SRS benchmark for each student is $12,099 for Primary students and $15,204 for Secondary students.
On top of base funding, students in priority cohorts and disadvantaged schools attract additional funding called “loadings”. The loadings a student in a priority cohort attracts are the same regardless of where the student goes to school.
In contrast with loadings, base funding for most non-government schools is means tested in accordance with the requirements of the Australian Education Act (2013 and later amendments). This is called a school’s “capacity to contribute”. Government schools are exempt from capacity to contribute and are not required to make any private contribution to base funding.
Previously, each Catholic and independent school’s capacity to contribute was estimated using socio-economic information from the ABS 2011 Census calculated for areas wherestudents live. These area-basedestimates (called SES scores) were replaced in 2020 with a direct income measure (DMI) based on the actual financial data of the parents and guardians of students at a school. Financial information used in the calculation includesAustralian Tax Office records and other income-related records such as PAYG and Concession cards.
The new DMI measure was developed on a recommendation of the National School Resourcing Board’s review of the socio-economic status (SES) score methodology. Replacing area-based SES scores with a direct measure of family incomes enables a fairer and more accurate distribution of government funding to the students that need it most.
To create school DMI scores, the Australian Bureau of Statistics:
- calculates family income for each student enrolled ata school by adding all ofthe income information available forthat student’s parents and/or guardians
- identifyies the median (middle) family income from the set of all family incomes within the school
- ranks all the median incomes calculated for all non-government schools
- converts the ranked median income values into a set of DMI scores.
The Department of Education, Skills and Employment uses school DMI scores todetermine each school’s capacity to contribute (its CTC score). A school’s CTC score is the rounded average of its annual DMI scores for the three most recent years. For example, a school’s CTC score for 2021 is based on the average of its 2021, 2020 and 2019 DMI scores.
CTC scores determine each non-government school’s private contributions to base funding, ranging from a 10% contributionfor schools with CTC scores of 93 and lower to 80% for schools with CTC scores of 125 or higher. Governments’ responsibility for base funding is reduced by the same amount, in accordance with the CTC schedule set out in the Australian Education Act (2020 amendment).
Example: Government contributions to base funding – secondary schools
While a change from the previous SES area-based score to the DMI score improves assessment of need, some non-government schools will face substantial reductions in government funding. To assist these schools to adjust, government funding for 2020 and 2021 will be based on the most financially beneficial of three CTC scores: 2011 Census SES score, 2016 Census SES score or DMI score. The DMI will apply to all schools by 2022.
The Australian Government Department of Education, Skills and Training has published details of the methodology for the DMI.The Department, in partnership with the Australian Bureau of Statistics (ABS), will also apply a new Data Quality and Validation Framework to assess whether the data used to calculate annual DMI scores are fit for purpose. For a small number of schools where data does not pass the validation process, the Department will use a refined area-based SES score to calculate that school’s private contribution.
RELATED PAGE: SCHOOL FUNDING