Funding & Policy

The Preschool Funding Model

The Preschool Funding Model (PFM) came into effect in January 2014 and made available $150 million to the community preschool sector, a 20% increase on previous funding levels. A three-year transition period is in place to give services time to adjust.

With the introduction of the Preschool Funding Model, between 2013 and 2014, 95% of community preschools received an increase in their base funding rate, with the highest increases directed to children who can benefit most from a preschool education.

The PFM is already having a positive impact. Between 2013 and 2015, enrolments of children in the year before school, from low income and Aboriginal backgrounds, increased by 7%; and enrolments of three year old children from low income and Aboriginal backgrounds, increased by 11%.

For preschool providers, there are a number of resources that explain the technical details of the PFM and which can provide assistance. These include:

The changes to the funding system are based on Professor Deborah Brennan’s Review of NSW Government Funding for Early Childhood Education. The review found that government funding for early childhood education was complex, inefficient and poorly targeted so that not enough children in the year before school and from disadvantaged backgrounds were accessing preschool.

In line with Professor Brennan’s recommendations, funding for community preschools is being targeted to four and five year old children in the year before school and children aged three and above from low income and Aboriginal backgrounds.

The changes are designed to drive increased participation and support the Government’s aim of reducing fees so that cost is not a barrier to access for these children. Targeting funding to children in the year before school is also a requirement of the State’s National Partnership agreement with the Commonwealth.

The Preschool Disability Support Program (PDSP)

The Preschool Disability Support Program

The Preschool Disability Support Program (PDSP) supports the inclusion of children with disability in NSW community preschools.

This new program has been developed following recommendations by the Review of NSW Government Funding for Early Childhood Education by Professor Deborah Brennan. The PDSP replaces the Supporting Children with Additional Needs (SCAN) program and Intervention Support Program (ISP) for community preschools.

The Department of Education and Communities has appointed Northcott to administer the program on behalf of the Department.

There are four key elements of the PDSP:

New universal disability loading

For the first time, under the PDSP, every community preschool will receive an annual funding allocation to support children with disability through the Universal Disability Loading (UDL). The loading recognises the widespread prevalence of low-level disability and assists preschools to meet their educational obligations under the Disability Discrimination Act 1992 and the Disability Standards for Education 2005. The disability loading provides preschools with the flexibility to decide where support is needed most so that more children have access to funding without the need for a formal application or diagnosis.

The UDL allocation received by preschools is calculated based on total enrolments of children eligible for the Preschool Funding Model (PFM) subsidies using the preschool census in August of the preceding year. Metropolitan preschools receive $60 per child per annum, with rural or remote preschools receiving a higher rate of $75 per child per annum. Payments are made automatically twice a year in December and July.

Child-focused targeted support

Child-focused targeted support provides funding to assist community preschools support individual children with disability or additional needs.

Funding is based on applications from preschools for individual children for up to 600 hours per year, based on three daily rates:

Level 3: $120 per day for children who require intensive support to participate in preschool.

Level 2: $90 per day for children requiring considerable assistance to participate in preschool.

Level 1: $45 per day for children requiring moderate help to participate in preschool.

Applications are managed by the Northcott Society, the program manager of the PDSP, in accordance with the Program Guidelines. Applications can be made through the PDSP Portal, which also provides detailed information on the program.

Support for preschools

Northcott will provide telephone (hotline: 1800 455 522) and online support (through the PDSP Portal) for metropolitan, regional and remote community preschools. This will include advice on applications and how to access support as well as training and resources to help preschools improve educational outcomes for children with disability.

Scholarships for post graduate study

The scholarship program provides funding to support preschool teachers to complete post-graduate study to assist children with additional needs. Up to 20 scholarships are available each year and will cover the full cost of an appropriate Graduate Certificate or Master’s program.  Priority access will be given to applicants in rural and remote NSW, and indigenous applicants.

Applications are managed by the Northcott Society through their PDSP Portal.

Commonwealth funding for schools (Gonski and the NERA)

Non-Government Schools and the National Education Reform Agreement 

On 23 April 2013, New South Wales and the Commonwealth signed the National Education Reform Agreement (NERA) and a Heads of Agreement. On 5 August 2013, these commitments were formalised through the signing of a Bilateral Agreement between New South Wales and the Commonwealth.

The Bilateral Agreement confirms the NSW and Commonwealth levels of investment in NSW schools over the NERA implementation period of 2014 to 2019.

The introduction of the NERA provides additional funding for schools distributed on the basis of need, consistent with the Schooling Resource Standard model.

The combination of per capita funding and additional funding under NERA means that NSW state funding to non-government schools will, over time, move closer to the Schooling Resource Standard.

The Bilateral Agreement provides detail on how State funding to non-government schools will work via the existing mechanism with a gradual transition to a new needs-based funding model over time. On 13 November 2013, the New South Wales Parliament passed the Education Amendment (Non-Government School Funding) Bill 2013, to enable non-government schools to be funded consistent with the State’s NERA Agreement.

Funding for public and non-government schools

Public Schools

The responsibility for the funding of public schools lies with the Department’s School Operations and Performance division.

 Non-Government Schools 

The NSW Government provides over $1 billion annually to support non-government schools. The Department’s External Affairs and Regulation (EXAR) division is responsible for the distribution of this funding and for providing policy advice in consultation with the non-government schools sector.

Funding is provided in accordance with the Education Act 1990.  The criteria for funding are that a school is registered by the NSW Board of Studies, Teaching and Educational Standards (BOSTES) and that it does not operate for profit.

Per capita funding is the largest component and is based on a needs-based category system. The category reflects the school or system’s resources and ability to privately contribute to its own resourcing levels. All students enrolled in a registered non-government school attract a per capita grant determined by the category of the school.

The Department also provides funding to students with disabilities in non-government schools under the Supervisor Subsidy Scheme, which supports the employment of teachers and supervisors in non-government special schools catering for students with moderate to severe intellectual disabilities (including autism), and under the Assisted Student Transport Scheme.

Non-government schools not-for-profit requirements

External Affairs and Regulation oversees the functions outlined in Section 83C – L of the NSW Education Act 1990 which states that to be eligible for NSW Government funding, non-government schools must not operate for profit.

As at 29 January 2015 amendments which tighten the not-for-profit requirements under the Education Act 1990 came into effect.

The definition of not-for-profit now specifies that:

  • All income and assets must be used for the operation of the school
  • Members of school governing bodies cannot be paid sitting fees
  • All payments, including payments to related parties, must be at market value
  • Schools must have met the new requirements by 29 January 2015.

The Minister for Education has the authority to audit schools at any time. Schools must cooperate with investigations and provide information to the Department of Education as required, or risk being declared non-compliant.

Guidelines have been developed to assist schools and school proprietors to comply with the requirements.

For further information, please also see


National policy and funding

External Affairs and Regulation develops and coordinates NSW Government policy on national issues in education and training.

We negotiate and guide the key agreements and national funding agreements with the Commonwealth that deliver funds for school systems (both government and non-government) and for early childhood in NSW. In funding negotiations, our aim is to achieve the best alignment with NSW Government priorities and optimum outcomes for the State’s education system as a whole.

We are responsible for national initiatives, policy development and projects of significance to NSW, and through our leadership of the Schools Policy Group (a part of the COAG education architecture) we lead the development of high-level national strategic policy advice in schooling.

Key responsibilities

  • Negotiate and manage Commonwealth funding, national funding agreements and other national projects across the whole NSW education sector. National funding and project agreements in early childhood and schooling are worth over $19 billion to the state between 2013/14 and 2016/17
  • Manage accountabilities to the Commonwealth for funding initiatives and negotiate funding agreements with the NSW non-government sector
  • Advise the government on commitments made under the National Education Reform Agreement (NERA)
  • Act as a hub for all matters relating to national funding initiatives and projects
  • Manage and advise on NSW participation in official national education forums, including ministerial councils.