Local principals say there are flaws with a radical new funding system which will see some Rotorua schools benefit and others suffer.

The New Zealand Herald revealed this morning more than 1300 schools nationwide will be worse off next year as a result of a radical new funding system based on the number of 'at-risk students' on a school's roll.

Schools will get $92 in extra funding for each student from a long-term welfare-dependent background.

About 816 schools will get more that they previously did.

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Critics argue the shake-up will hurt some schools and force parents to fork out more for their child's education. But the Government says it targets funding to those students who need the most help.

Rotorua Principals Association president and Ngakuru School principal Grant Henderson said he could see both positives and "fish hooks" to the funding review.

"We had it strongly indicated to us we weren't going to receive the usual increase into our operations fund which is a bit disappointing."

He said that increase was usually to help schools cover not just inflation, but the increasing cost of schooling.

Principals were "extremely disappointed" they would be fundraising and "selling more sausages" to help cover costs, he said.

Mr Henderson said he thought it was a nice idea that some schools would get more based on socio-economic data from Work and Income New Zealand.

However he questioned what would happen if students started at one school and then moved to another.

He said he could see administration staff and principals chasing around money as a result.

Mr Henderson said another challenge would be how schools reported and gave feedback as to the difference made to the children who fitted the at-risk criteria.

He said a positive was principals were really using that money to help the identified 'at risk' children.

Also, that schools would not have to fill out "forms and forms" to get money and would not have to go to other education agencies to get help for those children.

The money is designed to close the gap in achievement between the top and bottom New Zealand children, and will be a substantial bonus for some schools - while also underlining the challenges they face.

Some of the local schools set to get less money include John Paul College, Western Heights High School, Lynmore Primary School and Otonga Road School.

Others like Owhata School and Glenholme School are set to benefit.

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Westbrook School principal Colin Watkins said inflation adjusted funding was important and that New Zealand parents were having to pay more and more, "in some cases thousands a year".

According to statistics supplied by the Labour Party, Westbrook School will receive a Targeted At Risk Grant of $11,048, leaving it $578 worse off than this year.

He said feared this could be the first stage of bulk funding coming into play.

Mr Watkins said Westbrook School had more support staff to pay than any other primary school in Rotorua - a concern now it would be getting less funding.

Aorangi School principal Debra Harrod said, as a decile one school, quite a few of their pupils were targeted for the new funding.

However, not having the increase into the operations grant was really going to affect it, due to the costs of running the school, such as heating and electricity, she said.

Aorangi School will receive a Targeted At Risk Grant of $6963 - making it $2384 better off.

She said although the school would be getting $92 per at-risk student on their roll that was probably only about four paid hours of teacher aide time.

Ms Harrod said it would be hard to meet the budget next year and the school did not ask for donations from pupils' whanau.

"I think we run on the smell of an oily rag."

Otonga Road School principal Linda Woon said although her school would be getting less money than it would have received had the usual increase to cover inflation been adopted, she thought it would be okay as it would be receiving at-risk funding.

"I think we are probably going to balance out overall."

However, she said school budgets were getting "squeezed" and when running a school a lot of the costs were set ones such as water, power and heating.

Otonga Road School will be receiving Targeted At Risk Grant of $6313 - down $4829.

• Schools will get $92 per at-risk student on their roll.

• More than 1300 schools are set to get less money than they would otherwise have received under the shake-up. About 816 schools will get more, and information on a further 242 schools is suppressed for privacy reasons because fewer than five students are at-risk.

• Critics say the change will hurt more than 1300 schools and force parents to pay more for their child's education.

• Govt argues the new model will target those kids who need the most help.