Nikki Kaye is replacing the decile system with a Risk Index. Parents will not be able to judge potential schools on their place within the index, she says.

Education Minister Nikki Kaye has announced the Government will replace the decile system for schools with an anonymous targeted funding initiative.

The new "Risk Index" would allow the Government to better target funding at schools that needed it the most, and remove stigma from low-decile schools, Kaye said.

The new model will probably take effect from 2019 or 2020. No school will lose any money it is currently allocated.

The index is likely to look at the risk of a student not passing NCEA Level 2 using 16 indicators, including beneficiary status, the age of the mother when the child was born, ethnicity, and income. The final list of indicators has not been finalised.

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The data would be anonymised, and parents would not be able to judge potential schools on their place within the risk index, as they can now with the decile system.

"For too long, schools have been stigmatised and wrongly judged by their decile number," Kaye said.

"Today I'm announcing that the Cabinet has agreed to replace the decile system with a Risk Index that allows us to better target funding to schools with children and young people most at risk of not achieving due to disadvantage.

"Rather than allocating this funding on the basis of neighbourhood characteristics, as the current decile system does, the Risk Index will instead provide fairer funding that better reflects the needs of children in our schools and services."

Kaye wanted parents to use Education Review Office reports, and a school's strategic plan, to make decision about whether they wanted to send their children there.

It was the Government's hope that the change would be part of a major culture shift for New Zealand to look at schools for what was happening in teaching and learning, instead of the community around them.

Deciles had lead to some parents not sending a child to a certain school as they didn't think it was up to scratch, when in reality it could have some of the best teaching in the country, Kaye said.

The decile system ranked schools from one to 10 to reflect the socioeconomic background of their communities, and targeted funding where it was most needed.

Kaye said decile funding accounted for only about 3 per cent of operational funding.

She has spoken several times of her desire to replace the decile system.

The announcement that deciles would be done away with was the start to the conversation, but time would tell whether its successor would work, NZEI president Lynda Stuart said.

It would take a very long time for the stigma attached to certain low-decile schools to lift.

There were still strong concerns around the level of funding of schools, Stuart said. The ministry needed to make sure the replacement model would not stigmatise students in another way.

Post Primary Teachers' Association president Jack Boyle said there had been some unintended consequences of deciles, and allocating money more effectively could not really be argued against.

"It's good the Government has explicitly stated decile is going to go. I don't think there will be much disagreement from the sector."

As the ministry worked through exactly how money would be distributed, it needed to stay in close consultation with the sector, Boyle said.

Labour's education spokesman Chris Hipkins said it was difficult to take a firm view on what had been announced, as Kaye had released so little detail about what she was proposing to do.

He endorsed the removal of deciles, so long as whatever replaced them did not create a bigger stigma for schools and students than the current system did.

If the Government was forced to release the data of at risk kids at each school, it could create worse discrimination, Hipkins said. He did not see how the Government would not be forced to release the data under the Official Information Act.

The damage done by deciles would remain for a long time.

"The truth of the matter is schools in lower socio-economic areas, whether labelled or not, are going to be regarded by a group of parents as less desirable places to send their children."

There was a class issue at play that would not simply go away by removing that label, he said.

It was possible to come up with a better system, but Hipkins was not sure the Government had it right with its risk profile.