Experts say schools should not be told which children are at risk of failure if the Government adopts a risk-based school funding system.

Auckland University ethics professor Tim Dare said telling teachers which children were at risk might be stigmatising, leading teachers to interact with those children in ways that actually worsened the risk of poor outcomes.

The Herald revealed yesterday that the Ministry of Education is considering replacing income-based decile funding with a new funding formula based on four risk factors in a child's family: long-term benefit dependency; an official finding of abuse or neglect; a parent who has had a jail or community sentence; and a mother with no qualifications.

The ministry says about a third of children have at least one risk factor. Schools would get extra funding for every student with a risk factor, plus extra funding if they have high shares of children at risk.

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Education Minister Hekia Parata said no option for a new funding model had been chosen but "no options were off the table".

"We have quite a generous amount of time to do the process because the next decile recalibration isn't due until 2019," she said.

But a spokeswoman confirmed that Ms Parata would take a funding review paper to the Cabinet soon.

The Herald understands schools would be told which children were at risk. Parents would not normally be told if their children were at risk, but would be able to find out on request and ask for a review.

Dr Dare, who has written several papers on the ethics of assessing risk factors for child abuse, said he did not see why schools needed to know which particular children were at risk.

"I feel the same about parents too, I don't see why you'd tell parents," he said. "They can ask. But what we need to do is to make sure it doesn't matter - you are not taking people's children off them, you are not labelling them as hopeless."

Otago University social work lecturer Dr Emily Keddell, who has also written on risk models for children, agreed that schools should not be told which children were at risk. But she said parents should be told.

Post-Primary Teachers Association president Angela Roberts said teachers already knew their students' backgrounds anyway.

Funding proposal has good points PPTA

The proposal to attach extra funding to children assessed as at risk has some good points and could be better than the decile system, the Post Primary Teachers' Association says.

The Act Party, education unions, a secondary principals' association and opposition parties including Labour have agreed with Education Minister Hekia Parata the decile system needs to change.

However, some are concerned at one option considered by Ministry of Education officials - identifying at risk preschoolers and school children and attaching extra funding to them.

PPTA president Angela Roberts said she was surprised the ministry was so advanced in its thinking about new school funding models, as the sector had very little involvement so far.

Chris Hipkins, Labour's education spokesman, said there were huge risks in identifying children and preschoolers as "at risk" based on indicators such as a parent's qualification history.

"Are mothers going to have to show up with evidence of what their qualifications are, and if that changes during the student's time at school, does the funding get cut?"

Green Party education spokeswoman Catherine Delahunty said any changes to decile funding needed to come with a "cast iron guarantee" that funding would be increased to schools in poorer areas.

Prime Minister John Key said he had been briefed by Ms Parata a couple of weeks ago on school funding, and discussions about what could replace the decile systems were at a very early stage.

The possibility of more targeted funding fits with the "social investment" approach, which is being championed by Deputy Prime Minister Bill English.

"[Change] is sort of years away, not months away. But it is something they are looking at."