CAPITAL FUNDING

Most of the capital development (land, buildings, equipment) in Independent schools is funded from private sources.

Governments provide only a small fraction of the capital investment made by Independent schools. Parents contribute the vast majority of capital investment through fees, fundraising and voluntary contributions.

Main sources of capital funding for Independent schools, 2020

Source: Australian Government Department of Education

$1.07 billion

Funds provided by Independent school parents for capital development each year

Demand

The steady growth of enrolments in Independent schools has placed heavy demands on capital development such as buildings, grounds and equipment in the sector.

Growth in the sector not only requires new schools, but refurbishing or expanding existing facilities, the replacement of out-of-date materials, and upgrades to equipment to meet changing curricula and expanded courses.

Expenditure

Most capital expenditure in Independent schools is for buildings and works. Land, buildings and improvements accounted for 78 per cent of the total expenditure. Expenditure on other items such as furniture and equipment accounted for the remaining 22 per cent. In 2020, capital expenditure in Independent schools was $2.25 billion, or an average of $3,490 per student.

Funding sources

In 2020, school community contributions provided about 87 per cent of capital funding in the sector equalling over $1.07 billion of parental contributions being spent on capital development. Parents and school communities make their contribution through school fees, donations to school building funds and fundraising activities. Parents can make voluntary payments to school building funds, which are recognised as ‘deductible gift recipients’ for income tax purposes.

The remaining 13 per cent of capital funding for non-government schools comes from governments through capital grants programs, state or territory government interest subsidies or loan schemes.

The Australian Government grants contribute an estimated 7 per cent of total capital funding. The remaining 6 per cent comes from state and territory governments. Access to these grants varies considerably across Australia. The Australian Government also supports the sector through tax concessions on parents’ voluntary contributions to school building funds.

The sector also uses borrowings for capital as well as for some recurrent purposes. In 2020, the net total borrowings of the sector was $4.2 billion which equates to $6,450 per student. This borrowing has increased steadily over the last decade. In 2020, debt servicing – which is built into school fees – accounts for about 1.1 per cent of recurrent expenditure in the Independent school sector.

Australian Government Capital Grant Program

Australian Government capital funding to non-government schools is delivered mainly through the Capital Grants Program which aims to improve infrastructure such as school facilities, particularly for the most disadvantaged students. Block Grant Authorities in each state and territory administer Australian Government capital grants for Independent and Catholic schools. In 2021, capital grants for the Independent sector totalled approximately $71 million.

These grants are based on need, with priority given to disadvantaged school communities with the least capacity to raise funds. Most long-established Independent schools receive no capital grants from governments. The extent and quality of their facilities reflect the contributions from families, former students and other donors.