Finance Minister Nicola Willis was advised by Treasury officials in January that funding for the introduction of charter schools shouldn’t be included in this year’s Budget, citing “highly uncertain” costs.
The January 31 briefing, in addition to others describing the policy choices behind the re-introduction of charter schools, was released today as part of a wider tranche of documents from the Budget 2024 decision-making process.
The introduction of charter schools has been controversial, with strong opposition from education unions over taxpayer money being spent on private organisations and claims it would enable ineffective education outcomes.
An evaluation from advisers to the previous government, before the former model was last removed, concluded: “We were unable to be confident about the performance of a school and what material difference the school was making to student outcomes.”
Charter schools are publicly funded but unlike public schools, they’re privately run and can be operated in a for-profit capacity.
The model provides freedom of choice for curriculum, staffing, opening hours, and governance in a bid to give schools more flexibility to lift achievement. Charter schools will be run by sponsors, who have to report on performance measures to an authorisation board.
The first schools are set to open from Term 1 next year.
Costs ‘highly uncertain’ in January
On January 31, Treasury officials told Willis that, without further policy development, the costs were “highly uncertain” and, at that point, it didn’t support funding in Budget 2024.
The report states the minister previously agreed for charter schools to be deferred to next year’s Budget.
“This is due to the significant policy work still required before this policy could be enacted, particularly in relation to determining the scope of the model,” officials wrote.
Poor financial reporting was a problem last time around but Seymour is now rejecting financial advice. (Source: 1News)
“Without further work on the policy, the potential costs are highly uncertain, and we would not support funding them at this stage.”
If Government ministers wanted to enter a Budget bid on charter schools, Treasury advised the funding should be held in a tagged contingency until policy was further developed.
Debate over new Charter School Agency
In mid-March, Treasury staff advised Willis, ahead of a meeting with the relevant ministers, that she could reiterate her expectation that added costs for setting up the Charter School Agency are to be met through existing baseline funding, or covered by reducing the amount of funding for setting up charter schools and converting existing state schools.
At that stage, the draft Budget for charter schools was $137.1 million.
Treasury recommended a “scaled funding” approach to “balance support” for the initiative with “uncertainty around key design choices”. This approach reduced the expected number of schools to be established from 80 to 50 by 2026.
Over 35 groups expressed interested in taking part, Associate Education Minister David Seymour says. (Source: 1News)
At that stage, officials stated decisions on the establishment of an agency were still to be made and it wasn’t clear if the benefits of a dedicated agency would outweigh the costs.
Treasury also stated there wasn’t a “strong case” for the agency at that stage.
By April, the recommended Budget funding from Treasury had risen to $153.1 million — an increase of $16 million to cover the cost of setting up the Charter School Agency — after Cabinet ministers agreed to establish the department.
A legal framework had also been agreed to by ministers for reintroducing the charter school model into the education system — this time with conversions of state schools too.
“This is the one of highest funded non-capital initiatives in the education package,” Willis was advised ahead of a weekend call with Associate Education Minister David Seymour.
“You may wish to seek the associate minister’s view on implementation challenges noting that under the previous model, 11 schools opened over 4 years and levels of demand for the new programme are currently uncertain,” officials told the Finance Minister.
On charter schools being reintroduced, Treasury officials advised achieving one of Seymour’s “aspirations” on the policy was “challenging”.
Additionally, introducing the budgeted 15 new schools would “be challenging to implement”, the advice stated. Uncertainty on demand was again pointed out to the Finance Minister.
“The Ministry of Education has not yet been able to undertake detailed market testing, and levels of potential demand for the initiative, both for new and convertor schools, are unclear at this stage,” officials wrote.
The Government is pushing ahead with plans to have charter schools back next year, after they were ditched under Labour. (Source: 1News)
Reintroducing a charter school model quickly could benefit from the Education Ministry’s experience with the previous charter model, but rapid progress on school applications, and establishing the authorisation board and agency would be required, Treasury officials stated.
Converting state schools to charter schools was “new to New Zealand and brings an additional level of challenge”, the advice stated.
“The evidence for convertor schools is based on other jurisdictions with different governance, oversight and operational arrangements — in particular, England and the US.
“We recommend caution in assuming that the outcomes of these programmes would apply in a New Zealand context.”
Other challenges that would need to be addressed quickly included setting up funding processes for charter schools, particularly a proposal for funding to follow students who are transitioning from the state sector to a charter school, the advice stated.
Wellington Girls’ College and Onslow College say the ministry didn’t inform them they had buildings posing a risk in an earthquake. (Source: 1News)
Treasury officials also told Willis that she should signal the importance of having clear accountability on responsibilities between the Education Ministry and the Charter School Agency, before the new agency was fully set up, to the Associate Education Minister.
Charter school legislation is expected to pass in Parliament this month.
Associate Education Minister David Seymour ultimately secured $153 million over four years for up to 50 charter schools to be introduced and the Charter School Agency to be established in this year’s Budget.
Seymour is expected to report back to Cabinet by September next year on how the charter school model is progressing, including how much demand there is and what the latest costs are, Treasury documents stated.