Schools have finally won an increase in their base operational funding, four months before the election - but teacher groups say it is still less than the rate of inflation

The Budget increases operational grants - which pay for most school costs except teacher salaries - by 1.3 per cent from January 1.

But primary teachers' union NZEI president Lynda Stuart said she was "really disappointed" with the increase after consumer prices rose 2.2 per cent in the year to March.

"We would have expected 2 per cent," she said. "We're not taking that as a win at all."


There is also an extra $1.1 billion of capital spending over four years, including four new schools in Auckland and two elsewhere.

Kaye's office said Auckland's four new schools, at locations to be disclosed next week, would fulfil a 2014 National Party election promise to build nine new schools in the region within four years.

New schools have already been announced at Kumeu, Hobsonville, Ormiston Junior College, Flat Bush South-East and Hingaia South.

Auckland capital spending will also include one school expansion, 170 more classrooms across the city, and merging Carlson School for Cerebral Palsy and Sunnydene Special School into a combined school on a new site.

But Early Childhood Council chief executive Peter Reynolds was unhappy because the Budget did not increase early childhood subsidies at all, except for $10 million extra a year in targeted funding for the most at-risk children.

He said parents would have to make up the shortfall at many centres.

"It's not much of a pat on the back from the Government to get a bit of a tax break and then find that it's being taken out of your hand by childcare services because they are not getting any increase," he said.

Instead, Finance Minister Steven Joyce has extended an experiment with targeted funding for at-risk children from schools to the preschool sector.


Last year's Budget froze the main operational grant to schools, but gave an extra $12.3 million a year - equivalent to an operational funding increase of about 1 per cent - targeted to about one in six students who were classified as "at risk" based on factors such as having parents on welfare or with criminal records.

This year's Budget has increased that targeted funding by 2.67 per cent. Putting that on top of the 1.3 per cent general funding increase means schools will get a 4 per cent increase for about one-sixth of their students.

This time early childhood services will also get $10 million extra funding for children whose parents are or have been on benefits - a simpler measure than used in schools.

The new funding will be paid for the 20 per cent of the country's 200,000 preschool students whose parents have spent longest on benefits - but only if they are in preschool services where at least 20 per cent of the children are in that most "at-risk" 20 per cent.

Education Minister Nikki Kaye's office said only about 2000 of the 4400 early childhood services were likely to meet that requirement, reducing the number of children who will actually get the higher funding to 33,000, or 16.5 per cent of all preschool students.

On average, the extra $10 million will give about $5000 extra to each eligible service.

Reynolds said the extra $10 million represented only a 0.5 per cent increase in total early childhood funding of $1.8 billion.

Apart from these policy changes, the Budget provides much bigger funding increases simply to cater for increasing student numbers, boosting the total education operating spend by a massive $1.1 billion to $11.6 billion a year.