The federal government has announced a new “safeguard” around how funding is spent to support school students with disabilities.
The budget papers say there is an issue with “inaccurate claiming” by schools and new controls are needed to prevent “fraud and non-compliance”.
This is more than a technical measure. It is about how disability support is recognised, documented and resourced in Australian schools.
How does school funding work at the moment?
The way school funding works is that all schools receive a base amount for each student. There are extra loadings if the student is Indigenous, has socioeconomic disadvantage, low levels of English or a disability.
The new measure aims to “increase compliance” around the disability loading part. According to estimates in the budget fact sheet, the loading is worth about A$5.1 billion in 2026.
The government now aims to save about $463 million over four years by cutting out what is described as “inappropriate allocation” of the disability loading to schools.
The federal Education Department will also get $40.4 million to strengthen compliance around disability loadings. This includes clearer guidelines around how disability data is collected from schools.
How does disability funding work in schools?
Schools are required to provide reasonable adjustments so students with disability can participate in their education and learn on the same basis as students without disability. This requirement is set out in the Disability Standards for Education.
Schools decide what adjustments are needed. This should be done in consultation with students and their parents and caregivers.
This can include changes to timetables, assessments and learning materials. It can also include communication supports, behaviour plans, specialist programs, environmental modifications and health or personal care plans. Teachers’ professional judgement is crucial to the whole process.
Schools are then required to report how many of their students need adjustments and what adjustments they need through a national reporting system.
The government’s disability loading is based on this national data.
Students or their families do not personally receive any funds. The disability loading gets added to overall government funding to “approved authorities”.
For government schools, the authority is the relevant state or territory government. For non-government schools, it is the approved body corporate for the school. Approved authorities responsible for more than one school can redistribute Commonwealth funding across their schools using their own needs-based arrangements, and can pool funding from government and private sources.
Schools are not required to spend a particular loading amount on a particular student. Schools have the flexibility to determine how to best use their overall funding allocation for their school community. For example, funding might be used to hire a classroom assistant or it might be used to develop new teaching resources.
What’s the problem?
The concern appears to be about how the disability loading is calculated and distributed.
A 2019 review noted the national data around students’ with disabilities relies on teachers’ professional judgement and self-reporting. It found linking this to funding can create risks of “manipulation and perverse outcomes”.
The government says compliance work will look for funding that has been “over-allocated or accumulated”. Given federal funding is paid to approved authorities, which can pool and redistribute funding across schools, this may refer to money sitting within systems rather than clearly flowing to areas of student need.
The public documents do not clarify whether the concern is inaccurate claims from schools about student disability, retained or pooled funding, or a lack of transparency about whether disability loading is translating into classroom support.
Numbers are growing
In 2024, more than one million Australian school students received an educational adjustment due to disability. This represented 25.7% of total enrolments, up from 24.2% in 2023 and 18% in 2015.
This increase should not be read automatically as evidence of over-claiming. It may reflect improvements in the recognition of students’ needs.
The national regulations do not require a medical diagnosis for a student to be counted as having a disability.
The school, in consultation with the student and their parent or carer, determines an adjustment is needed for that student to learn and participate in their education. This approach is in keeping with the Disability Standards for Education.
Why are we talking about ‘compliance’?
The government says this new measure will mean adjustments for students are “targeted, effective” and meet both disability law and funding requirements.
The government also says funding should be “based on need”. This is of course very important.
But the risk here is in how the issues are framed. The budget announcement is explicit about “inaccurate claiming” and “regulatory loopholes”, and funding that may be “over-allocated”.
It does not acknowledge ongoing issues about under-recognition and unmet need in the community when it comes to disability support.
There is also little detail on how governments will work out whether or not students are getting appropriate support at the classroom level.
The school funding measure also sits within a wider shift in disability policy. In the same budget, the government is seeking to slow NDIS cost growth. The reforms are expected to save $37.8 billion over four years, even as the scheme continues to grow each year.
What now?
Existing government guidance says the national reporting on students with disability should be drawn from what happens in classrooms and existing school records. Schools are not required to create new or additional evidence.
If “integrity” is interpreted mainly as tighter surveillance of claims, the practical effect may be more paperwork and more pressure on teachers and families to prove what should already be understood as an educational right.
In that scenario, compliance will not protect inclusion. It can crowd it out.
