Evaluating the Weights and Factors Used in the New Zealand School Decile Funding System

In New Zealand, the primary means of addressing the disparities that exist in educational outcomes by students’ socio-economic status is the “decile” funding system. The country’s Ministry of Education uses census data on five socio-economic deprivation factors of the households containing school-aged children in the meshblocks of the children attending each public or public-integrated school. In this paper, we look for evidence whether the decile funding system is using the best weights possible on the five socio-economic characteristics used in the funding formula, and whether other neighbourhood factors should also be included. Using school fixed effects regressions, we test whether the effectiveness of Ministry of Education funding per student in raising school leaver qualification achievement rates is affected more by some deprivation factors than others. We also explore whether additional factors such as health, crime, languages spoken, marital status, immigration status, and others have additional explanatory power on qualification achievement rates. We find that under the current practice of equally weighting the five factors, “low skill occupation” raises the effectiveness of government spending on achievement, while “receiving a benefit” reduces it. This suggests that raising the relative weight on “low skill occupation” and lowering the weight on “receiving a benefit” would increase the effectiveness of decile-adjusted school funding on raising achievement rates.