School Funding

Independent schools in NSW that are not-for-profit are eligible to receive Government funding. Schools which operate for profit are not eligible for funding.

Only schools that operate not-for-profit are eligible for recurrent government funding

If the school meets the registration criteria (described in more detail below), both the Commonwealth and State Governments will provide funds which contribute to the cost of operating the school. Funding for independent schools is shared between the Commonwealth and NSW Governments. The Commonwealth pays 80% and the NSW Government pays 20% of the funding entitlement.

The quantum of the funding entitlement is a calculation based upon the school’s ‘capacity to contribute’ (CTC) ranking. The CTC for independent schools is a percentage of what is called the Schools Resourcing Standard (SRS) which is an amount determined annually as the amount needed to successfully educate one student. The SRS is determined using the financial data of a number of schools identified as meeting academic performance standards. The value of that CTC percentage is a function related to the relative affluency of the school, determined by the Direct Measure of Income (DMI), which derives from a data-matching exercise which seeks to determine the median household income of the parent’s addresses. In essence, the higher the DMI, the higher the CTC and the lower the level of funding. Conversely, a lower DMI equates to a lower capacity to contribute and a higher level of recurrent funding.

Since government funds can only be paid once the school is established, it is critically important to consider funding eligibility, along with proposed enrolments, fees and expenditure etc., to determine the feasibility of the school before committing to the expense of acquiring land and constructing facilities. As Government funding does not usually cover the costs of building and operating a school, tuition fees will make up the shortfall. It is important for school operators to accurately assess the fees required to ensure the school can be operated sustainably.

Commonwealth Government Funding

The approved authority for a not-for-profit school may also seek approval for eligibility for funding by the Commonwealth Government. Schools are encouraged to apply as soon as NESA has provided approval to operate the school. 

Schools can only apply for Commonwealth funding once they have been granted initial registration from NESA. Application for Commonwealth funding is via an online application at SchoolsHub. The online funding application process ensures that all the legislated requirements (under both the Australian Education Act 2013 and the Australian Education Regulation 2013) are met, including necessary supporting documents (demonstrating NESA registration etc.).

Payments to new schools are made after the school opens, and after the school’s entitlement has been calculated from a compliant funding application. For a school that opens before August, the estimated entitlement uses the initial student cohort from when the school starts to deliver education (opens). Entitlements are then updated with the actual student numbers from the August census day.

For new school funding approvals, the proportion of the entitlement paid as an initial amount is shown below, with the balance paid in October to take into account data from the August student census:

  • for approvals before July, the payment is a 50 per cent advance, calculated from their estimated entitlement
  • for approvals from July to August, the payment is a 75 per cent advance, calculated from their estimated entitlement
  • for approvals after August, the payment is 100 per cent of their actual entitlement (using student census data).

Further information on Commonwealth funding for a new school is available from

State Government Funding

State Government funding, for registered schools operating not-for-profit, is aligned with the Commonwealth’s funding model with the Commonwealth determining each school’s funding entitlement. The NSW Department of Education (DoE) Non-Government Schools Unit manages the payment of State Government funding to NSW non-government schools.

Further information about NSW non-government school funding is available here.