In 2023, the Ministry of Education will move from using the decile system to distribute equity funding to primary, intermediate, and secondary schools, to using their newly developed Equity Index (EQI).
It is worth noting that the equity funding distributed using the decile system in 2020 was $161 million, which comprised 2.5 percent of total school funding (teacher salaries comprised 70 percent of funding, and operational grants comprised 27.5 percent). In 2023, equity funding to be distributed by the EQI will increase to $244.6 million, representing 3.8 percent of total school funding in 2023.
The Decile System
The decile system introduced in 1995 was comprised of five indicators. These indicators were derived every five years from the Census for the neighbourhoods surrounding each school and were meant to reflect the socio-economic barriers faced by local students going to their local school. The indicators used were as follows:
- Percentage of household with income in the lowest 20 percent nationally
- Percentage of employed parents in the lowest skill level occupational groups
- Household crowding
- Percentage of parents with no educational qualifications
- Percentage of parents receiving income support benefits.
The limitations of the decile system were that it could only be updated using five yearly census data, that it assumed that all students at a school would be coming from the local neighbourhood surrounding the school, and that it grouped all schools into one of 10 decile groups.
In 2016, the then National Government asked the Ministry of Education to begin development of a risk index, which would use several administrative data indicators to identify the most at-risk students, who then could be targeted with additional funding to increase their educational achievements.
In 2018, the then Labour Government asked the Ministry of Education to replace the work on the risk index with the newly developed EQI. In total the new EQI will use 37 indicators across the following four headings:
- Parental socio-economic indicators
- Child socio-economic indicators
- National background
- Transience.
The Equity Index
The EQI has been designed to be updated annually, with each school being provided with their index number prior to the school year, to allocate equity funding to each school. The Ministry of Education has noted that there is effectively a four-step process that they go through each time the index is updated, which you can read on the Ministry of Education’s website.
“There are advantages in introducing this new system, but there are also risks,” explained Hugh Dixon, Data Manager for berl.
“The first advantage is that compared to the previous decile system, the new EQI is a system which makes better use of available administrative data. This has enabled a new system to be created, that is more targeted (using the last three years of actual students), timelier (with annual updates, rather than five yearly updates), and hopefully more equitable using actual past students’ educational achievements and their socio-economic backgrounds.”
Dixon noted that the EQI will be a big test of the public’s confidence in central government using large amounts of combined administrative data on individuals, and its social license in creating this type of linked socio-economic data, even if it is anonymised.
“While Statistics New Zealand’s IDI has been used extensively by government Ministries for evidence to help design policy, the EQI is one of the first large scale uses of the IDI that will get large scale public attention.”
