What do decile ratings tell us?

Over the last couple of years, the Minister of Education has regularly been reported as stating that the decile rating and funding systems are ‘well-intentioned but clumsy’. This may be true of the decile funding system (which is politically driven). It is not true of the decile rating system (which is evidence-based). It is important not to confuse the two.

The decile rating system is relatively precise and not at all clumsy. The decile funding allocation system is both crude and clumsy – particularly for school communities that are neither rich nor poor. In terms of considering changes to decile-related funding allocations, there are three key questions here:

  • Is the schooling system adequately funded overall by government?
  • Does the decile rating system fairly distribute available funding?
  • To what extent does the decile funding system adequately compensate for socio-economic disadvantage as it is intended to do?

Some things really matter in education. On average, children from wealthier families do better at school than children from poorer families, simply because of their advantages of family circumstance and background. Family circumstances and background at birth are by far the strongest indicators of whether or not a child is likely to succeed at school. Most people would accept that this is inherently unfair. Children should not benefit or suffer because of their parents’ life circumstances. One of the most important things government can do in attempting to make society fairer, therefore, is to try and make the education playing field a little more level. Here, government has several policy levers at its disposal, one of which is to increase state funding for those schools where there are proportionately more children in poverty; another is to increase the ability of families to choose which school their children attend.

Socio-economic decile ratings were created in the mid-1990s to facilitate more systematic and objective decisions about fair funding allocations to all state schools (an intended policy consequence). Each decile contains 10% of schools. Decile one schools are situated in the relatively most socio-economically disadvantaged communities, and decile ten schools in the most advantaged. Ratings are calculated using census data at the meshblock (50 households) level. The socio-economic indicators used to calculate relative advantage or disadvantage are the proportions of households with:

  • Total income in the bottom 20% nationally;
  • Parents in low-skill occupations;
  • More family members than bedrooms;
  • Parents without qualifications; and
  • Parents receiving income support.

These indicators are very strongly correlated with children’s chances of experiencing educational and later-life success. While they are not perfect (i.e. they do not measure deprivation at the individual household level and they are only reviewed every five years), they are nevertheless evidence-based. We know that these five indicators of relative disadvantage matter greatly when it comes to predicting whether or not children will succeed at school. Consequently, they are also a relatively sound basis for making decisions about the schools to which government should target additional funding in order to partly compensate for the disadvantaged circumstances in which children in poverty find themselves – through absolutely no fault of their own.

However, decile ratings have also been used by some parents to make their choice of school (an unintended policy consequence). One reason why some parents may use decile ratings as a proxy for school quality is because they are constantly reminded through mass media that on average students in high decile schools achieve better results in National Standards and NCEA assessments. Decile rating tells parents nothing whatsoever about the actual quality of teaching and learning in those schools, but it does reassure them that their child will be mixing with a higher proportion of children who are more likely to do well at school, and subsequently to go onto rewarding professional careers. The decile rating reflects the socio-economic advantages of the school community as whole. So, when parents seek to enrol their child at a higher decile school, they are also attempting to ensure that their child rubs shoulders with the children of socially and economically successful parents.

This social networking advantage partly explains the increase in higher decile school rolls over the last 25 years, and the decline in lower decile school rolls. (It also explains why some parents are prepared to pay a significant premium for their child to attend private schools despite consistent evidence that they add little or no educational value compared with high decile state schools.)

However, not all parents have an equal chance to enrol their child at a high decile school. School choice mechanisms work on the theory that if you give all families information about how well particular schools provide for children’s needs, all families are in a position to ‘choose’ which school to send their child to. Experience has shown that this theory has serious flaws. Generally speaking, wealthier parents and families are more skilled at finding, interpreting and using information about the quality of local schools. They are also generally more mobile and confident in gaining entry to their school of choice. Finally, they generally have considerably more assets and income at their disposal, and can therefore more easily afford to buy or rent houses within the socially desirable local communities where most high decile schools are to be found. Mobility, confidence and wealth enable already advantaged parents and their children to get around the ballot system that is typically used to manage over-subscribed school zones. (This is also why real estate agents often include information about school zone and decile when they market properties.)

Parents and families who live in poverty simply do not have the wherewithal to ‘game’ the market in this way. In any event, this is a problem with how school choice policies operate, not with the effects of decile ratings. The fact that most school communities engage in significant fundraising activities (e.g. voluntary donations, user pays curriculum enrichment and international student recruitment) might suggest either that they do not receive adequate funding from government to provide the education basics, or that school choice policies have resulted in pressures to increase revenue in order to provide more education frills than neighbouring schools. The fact that many high decile schools complain about the inadequacy of their funding may also reflect a shortage of government funding overall. This impression is reinforced by OECD data which shows that New Zealand spends less per student on schooling than the OECD average. Moreover, the reality that, after more than 20 years, decile-based Targeted Funding for Educational Achievement has not greatly reduced differences in educational and life chances between children in poverty and children in wealth implies that the decile funding system does not yet adequately compensate for socio-economic disadvantage.

In terms of government’s major policy levers, school choice has been an abject failure for children living in poverty. In fact, overall, it has caused considerably more harm than good for students, schools and local communities nationally.

This leaves government with the choice of either:

  • Increasing overall per-student spending for all schools; or
  • Further targeting existing funding to students in the most disadvantaged school communities.

Raising the necessary taxes to do the first of these would require significant political courage. Doing the second demands political integrity. Sadly, doing both may just be a pipedream.


John O’Neill is a professor of education at Massey University and an education spokesperson for the Child Poverty Action Group.