Other proposals to be outlined by Education Minister Hekia Parata today include:
• Giving extra money to small and isolated schools to ensure they survive as rolls drop.
• Changing how private schools are funded by giving them a per-child subsidy, a move that would likely provide more public money.
• Only paying schools maintenance money if they prove they have carried out basic jobs such as clearing gutters and painting buildings. Parata said that came after some schools hadn't used maintenance money appropriately.
• The ministry is working with energy providers to get usage data. Schools which cut heating bills would retain a portion of the savings to encourage energy efficiency.
Sector groups will now work with the Ministry of Education to develop the proposal.
Any new system will be in place by 2020, aiming to make radical enough changes to address the weaknesses in New Zealand's education system, particularly the gap between the top and bottom students, one of the worst in the OECD.
A paper presented to Cabinet by Parata makes the challenge clear: In some classrooms the gap between children who achieve and those left behind could be as much as two years' worth of learning.
Parata said the current funding system was "riddled with complexities".
She proposes the creation of a per-child funding amount that will simplify and make up the core of school and early childhood funding.
That will be topped-up by special education funding, due to be overhauled, and extra money designed to support schools with more disadvantaged students.
The latter is currently allocated through the decile system which is based on the area from which a school draws its students.
As a replacement, officials had considered using four "social investment" indicators to judge a child's risk of under-achievement and target money accordingly.
That work has gone much further with the development of the statistical "risk index" to assess children's circumstances in a "fine-grained way", Parata said.
A law change could be required to allow access to the Statistics NZ database that holds information from a wide range of Government departments and agencies.
Parata said it had not been decided what factors would be included if the proposal went ahead. "We are saying now that we have a wider variety of choice than we did have even a year ago ... the [database] is identifying a whole lot of other factors. We can settle on different parts of them, and we haven't yet done that work."
If the risk index did progress, one possibility outlined in a Cabinet paper for allocating money was to tag funding to the 25 per cent of students who, as measured by the index, were most at risk of failing.
Schools would be told the level of funding and how many students generated it, but not which children were identified as disadvantaged.
The Government will next year test another version of "at-risk" funding.
Schools will not get a general increase to operations funding to cover inflation. Instead, schools will get $92 in extra funding for each student from a long-term, welfare-dependent background.
The at-risk index would be a far more sophisticated way to target extra money, but demands privacy considerations.
Labour's education spokesman, Chris Hipkins, has said targeted funding to at-risk kids could create more inequalities if poorly designed, and highlighted the fact that many schools will receive less money next year under the basic trial system.
Meanwhile, the Government has abandoned a proposal strongly criticised by unions as "bulk funding", Parata will confirm today.
In September, 60,000 members of the two largest education unions held meetings due to concerns over the global budget proposal.
Under the scheme principals would have determined the split between cash for school expenses and credit for salaries, and unspent credit would be paid out.
Currently, the ministry tells schools how many teachers they can employ based on the roll, with salaries paid centrally. Schools can employ more teachers but need to use locally raised funds.
Unions argued principals and boards would be forced to make trade-offs between paying for experienced teachers and other resources.
Parata said feedback from the sector, including an 18-member advisory group, "indicated that the sector is not ready for the level of flexibility and accountability" in a global budget.
