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February 10, 2026 — 5:31am
The state government is using “accounting tricks” to shortchange Victoria’s public schools of nearly $1.4 billion, a leading education advocacy group claims.
A two-year funding deal signed late last year between the Victorian and federal governments is supposed to mean the state pays at least 70 per cent of the agreed benchmark funding level for each of its 1600 public schools.
But advocacy group Save our Schools claims the state government used exemptions and carve-outs written into the agreement to reduce the money it spent on schools by $671 million last year and $705 million this year – a total of $1.37 billion – leaving a funding shortfall of more than 14 per cent on the minimum standard agreed to by the federal and state governments.
The Schooling Resource Standard, developed by the Gonski review of school funding in 2011, sets the benchmark amount needed to be spent to provide a good education to a student.
The standard amount this year is $14,467 per primary student and $18,180 for a high schooler, with top-up amounts available based on a school’s remoteness or disadvantage.
All states and territories have agreed with the Commonwealth to fund their schools to at least 100 per cent of the standard by 2034, but Victoria has not settled its final terms of that deal with the federal government.
Victoria and Canberra have signed a two-year deal securing 90 per cent of the funding benchmark to state schools in 2025 and 2026, with the Commonwealth paying 20 per cent and the state paying 70 per cent.
But in a withering assessment of the deal, Save Our Schools said the Victorian government was claiming a series of deductions and offsets to significantly cut its contributions to the funding mix.
The agreement allows the state government to reduce the amounts it pays to schools by up to 4 per cent of the Schooling Resource Standard to reflect “indirect funding” of the educational system through depreciation of capital assets or the financing of educational agencies.
Save Our Schools’ national convenor Trevor Cobbold said the indirect funding carve-outs were an “accounting trick”.
With the indirect funding discounts stripped out, Cobbold said Victoria’s true contribution would this year be less than 66 per cent of the standard.
Based on those figures, Victoria’s public schools would be the second most cash-starved in the nation, with only the Northern Territory’s public schools faring worse.
The agreement allows the state to deduct the cost of services provided to public schools by the Victorian Curriculum and Assessment Authority and the Victorian Registration and Qualifications Authority, and subsidised school transport, but not those services provided to private schools, according to Cobbold’s analysis.
The former Productivity Commission economist, who has campaigned for decades for a fairer deal for public education, said the carve-outs “blatantly discriminate” against government schools.
“It provides yet another resource advantage for private schools,” Cobbold said.
“The governments are prepared to continue to underfund public schools and use accounting tricks to defraud them, but they will not touch private school entitlements.
“The Premier, Jacinta Allan, and the Education Minister, Ben Carroll, like to refer to Victoria as the education state. This is a complete sham. If anything, Victoria is a failed education state.”
Pasi Sahlberg, an internationally renowned education expert at the University of Melbourne, said the indirect funding discounts slashed billions from the education spend across the nation, and called for them to end as soon as possible.
“The funding gap is significant, and it would be much faster to fix if these funding tricks could be abolished,” Sahlberg said.
“When Anthony Albanese announced that public schools would be fully funded, many of us thought that full funding meant 100 per cent of the Schooling Resource Standard. But, with these funding tricks of up to 4 per cent, it sounds like a little bit less, but it is still significant.”
Victoria signed up in November 2023 to the long-term goal of raising the nation’s government schools minimum funding levels to 100 per cent of the standard by 2034, with the payments split 75-25 between the state and Commonwealth.
But a secret decision by the Victorian government revealed by this masthead last year delayed the step-up in its agreed contributions to 2031. That decision would leave the state’s schools about $3 billion worse off than they would have been had the Allan government stuck to its agreement to reach 75 per cent funding by 2028.
As negotiations on a final version of the long-term deal continue between the state and Commonwealth, an interim two-year arrangement was signed in December by Carroll and his federal counterpart, Jason Clare, to provide about $13 billion to the state’s public schools in 2025.
Carroll responded to Save Our Schools’ criticism of the agreement by defending the Labor government’s record on school funding.
“Our priority is – and has always been – that every child, no matter where they live, has access to a world-class education for free in a Victorian government school backed by full and fair funding,” Carroll said.
“Victoria is the education state and our nation-leading NAPLAN results are the proof. Victorian students are not only the top performing in the country but also performing better than at any other time on record.”
A spokesperson for Clare said the deal with Victoria meant the state’s schoolchildren would be fully funded, eventually.
“The agreement puts all public schools in Australia on a path to full and fair funding,” they said.
“In December, Victoria signed a bilateral agreement for the initial two years.
“We will continue to negotiate with Victoria this year towards a bilateral agreement to cover the full 10-year period.”
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