Plans to link school funding with student achievement have riled educators, who say it will cause chaos without solving problems.

Education minister Hekia Parata told teachers at a PPTA conference yesterday that achievement would be "absolutely" be one of the factors in a school funding review, intended to replaced the outdated decile system.

"We're very much at the beginning of this process so no decisions at all have been made as to which variables and in what way they'll be used but will student achievement and learning be one of them? Absolutely," the minister said.

She later added there couldn't be a review of funding without including how well kids were doing, however a spokeswoman told the Herald there were no firm ideas on how it would work.

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"It's too early to say how it will be included, but sector groups will have input," Ms Parata said.

Principals were highly sceptical of the idea, with some saying the minister was being too vague, and pointing out the same kind of scheme had failed elsewhere.

David Hodge, principal of the country's largest secondary school, Rangitoto College in Auckland, said the minister needed to spell out what she meant.

"I suspect another very poorly thought out kite is being flown in the absence of any real ideas," Mr Hodge said. "Being vague...does nothing to foster a spirit of trust and collaboration that is shown to be necessary for an education system to be most effective."

He said when performance was tied to funding in other countries it had not been successful, such as with the United States' "No Child Left Behind" policy, where results were manipulated and the curriculum was narrowed to get the best results on standardised tests.

"Presently schools are criticised for manipulating national standard results and NCEA scores due to league tables etc ...imagine the pressure if funding (or) jobs were on the line."

Mt Albert Grammar School principal Dale Burden said given all the variables, he didn't think the idea would work

"Measure, measure, measure. Is that all they can do?" he said. "So high achievement more money and low achievement less money. It's not the fear factor that improves performance, it's better resourcing ... I think that they are out of ideas!!"

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Mangere College principal John Heyes said the issue for him was that there were no reliable measures for assessing Year 9 students, to allow schools to demonstrate value added achievement of the cohort when they got to Year 11.

"And I am not sure if this is what the Minister had in mind when talking about achievement."

Currently, schools are not required to collect data on achievement at Year 9 and 10, although the government is considered extending National Standards to cover the "gap" in the data.

The primary teachers' union, NZEI was also unhappy with the idea, with National Secretary Paul Goulter calling it "disastrous".

"National standards data should never be used to blame and punish the schools doing the hardest work with our most disadvantaged children," Mr Goulter said. He said it would only worsen inequality.

"Instead of removing already limited resources from schools in low socio-economic areas, government needs to address all of the factors that disadvantage children. Inadequate family income, poor housing, and lack of support for parents are making it harder and harder to children to learn. Addressing these issues should be government priorities."

Green education spokeswoman Catherine Delahunty said if achievement was part of the funding review it would have "shambolic" outcomes for children.

"Tying school funding to achievement data will drive an even bigger wedge between the kids who are doing well at school and those who, for a variety of reasons, aren't," Ms Delahunty said.

"It's also going to put even more pressure on schools that are teaching children who come to school hungry, have transience issues, are dealing with stresses at home or have learning differences.

An official school funding review is yet to be announced, but the minister has repeatedly said it is something she wants to address. A spokeswoman said the idea was only in its very early stages, with only "discussions" being held so far. A working group was yet to be set up.

Currently, schools are funded according to decile, with funding spread according to a range of socio-economic variables. Decile 1 schools are the 10 per cent of schools with the highest proportion of students from low socio-economic communities, whereas decile 10 schools are the 10 percent with the lowest proportion of such students.