FAQ – Equity Index

What is the Equity Index?

Too many children and young people face barriers to educational achievement because of their socioeconomic circumstances and are not being adequately supported to reach their full potential.

We provide schools and kura with equity funding, in addition to their core funding, so they can work in different ways to reduce the impact socioeconomic factors have on student achievement. 

From January 2023 we’ll begin to use the Equity Index (EQI) to determine a school’s level of equity funding.

The EQI tells us the extent to which a kura or school’s students might face socio-economic barriers that could get in the way of them achieving. A higher EQI number tells us that students at that kura or school face greater socio-economic barriers to achievement.

Through Budget 2022 the Government has provided a 50% ($75 million) increase in equity funding. So, we have more money, better targeted to address equity issues.

How is the EQI different from deciles?

It is important to note that neither deciles nor the EQI are measures of school quality. Rather, they are ways for us to understand the relationship between socio-economic circumstances and student achievement.

The decile system uses census information. It considers five variables and is based on the ‘average’ of areas where students live.

  • The percentage of households with income in the lowest 20% nationally.
  • The percentage of employed parents in the lowest skill level occupational groups.
  • The percentage of households that are crowded.
  • The percentage of parents with no educational qualifications.
  • The percentage of parents receiving income support benefits.

The EQI is updated annually through Stats NZ Integrated Data Infrastructure (IDI), considers 37 variables that we know relate to achievement and is based on the circumstances of individual tamariki and rangatahi, rather than of the areas they live in. Note that all information is deidentified meaning we can’t see names or other identifying details about any person.

Stats NZ Integrated Data Infrastructure (IDI) — stats.govt.nz(external link)

The EQI will help us to better target funding and resources, by: 

  • including a much broader range of socio-economic factors that we know relate to educational success
  • using up-to-date information. Unlike the decile system, the Equity Index will be updated annually so we have a more accurate view of current socio-economic factors.
  • considering the circumstances of individual tamariki and rangatahi, rather than of the areas they live in.

Deciles will no longer be used for funding from January 2023 and will also be phased out for other initiatives.

How does the EQI compare to deciles?

The decile system and the EQI are not directly comparable.  There are two main reasons for this.

  1. They are based on very different statistical methodologies (e.g., the EQI is a much more nuanced model which looks at the impacts of a significantly larger range of SES variables that we know can impact on NCEA achievement).
  2. They apply very different funding methodologies. The funding for EQI is based on a funding curve rather than the stepped decile model). Schools aren’t banded into even groups as they are under decile.

The overall amount of equity funding is also increasing by 50% ($75 million) per annum.

You can read more about how the model works on An Introduction to the new Equity Funding system for schools and kura [PDF, 771 KB].

Why change?

A lot has changed in the almost 30 years since deciles were introduced. We have access to improved data and a better understanding of the factors outside of the classroom that impact on young peoples’ learning. We’ve used this information to develop the Equity Index (EQI). 

In making this change we’re also addressing the issue that deciles are commonly misunderstood as a measure of school quality.

It’s not helpful when our schools get labelled as “low decile” and our young people face added stigma. That's why we're moving away from a system that gives schools a 1-10 rating.

How is the EQI calculated?

To work out each school’s Equity Index number our statistical model uses information held in Stats NZ Integrated Data Infrastructure (the IDI). This is made up of administrative data provided by other government agencies. Data in the IDI is de-identified. This means information like names, dates of birth, and addresses has been removed. Numbers that can be used to identify people, like IRD and NHI numbers, are encrypted (replaced with another number).

Stats NZ Integrated Data Infrastructure (IDI) — stats.govt.nz(external link)

The model:

  • Looks at cohorts of children from the last 20 years, who have already passed through the school system. It assesses which socioeconomic characteristics observed at different ages best predict a student’s achievement in NCEA levels 1 and 2. 
  • It then looks at the socio-economic characteristics of students enrolled at schools for the last three years and predicts how likely they are to achieve NCEA level 1 and 2. 
  • Student numbers are averaged at an individual school level to produce an EQI number for each school between 344-569. 

How the Equity Index works

An Introduction to the new Equity Funding system for schools and kura [PDF, 771 KB]

What will this mean for schools and kura?

From January 2023, schools will receive Equity funding based on their Equity Index number, as opposed to a decile rating. Other uses of decile will be phased out. We will provide updates to schools on those initiatives over time.

Will funding still be based on bands?

No, the funding model we will apply to the EQI is quite different to the decile model. The new model will have 226 graduated funding rates along a smoothed funding curve. This is different to the decile system that used a stepped funding approach that created ‘funding cliffs’, where schools or kura could see a significant loss/gain in per student funding when moving between deciles. 

Budget 2022 also included a 50% ($75 million) increase in Equity funding. This means that most schools will receive an increase in funding as a result of these changes. 

For the small number of schools who lose funding we’ll provide transition support. For the 2023 year no school or kura will receive less per-student equity and isolation operational funding due to the EQI and Isolation Index changes. From 2024 any reduction in funding will be capped at 5% per annum of a kura or school’s 2022 operational grant, to ensure funding is phased out over time.

What measures are included?

The Equity Index uses four types of measures and 37 variables in total. These measures include:

Parental socio-economic indicators

Studies have shown that educational success depends very strongly on the socio-economic status of a student’s parents (Ainley, Graetz, Long, & Batten, 1995).

Child socio-economic indicators

Children who have experienced poverty, abuse or neglect are more at risk of poor educational achievement.

National background

The national background or immigration status of parents has also been found to be an important mediating variable on the effect of socio-economic status (Portes & MacLeod, 1996).

Transience

Research suggests that students who move home or school frequently are more likely to underperform in formal education when compared with students that have a more stable school life (Webber & Loader, 2020; Dixon, 2018; Hutchings, et al., 2013).

How the Equity Index works

An Introduction to the new Equity Funding system for schools and kura [PDF, 771 KB]

How do you have access to this information?

Statistics NZ has strict controls to protect the data it holds in the Integrated Data Infrastructure. After integrated data has had identifying information removed, only vetted and approved researchers can access selected, de-identified datasets for their specific project. This research must be for the public good. Users can only access the data in secure research facilities. Stats NZ also check research results before they're released to make sure individuals can't be identified. You can read more about these protections on Integrated Data Infrastructure - stats.govt.nz.(external link)

How can I find out if my local school is a good fit for my child?

There are lots of different kinds of schools and kura in New Zealand, but your own choices will depend on where you live and the needs of your child and your family. Most children in New Zealand go to government funded state or state-integrated schools, but there are also private schools available in some areas. 

Some of the things you might want to consider when making your decision include:

When will deciles be removed? 

Schools will receive their first payment based on the Equity Index on 1 January 2023. Deciles will no longer be used for equity funding and will be phased out for other uses over time.

I’ve received my EQI number and it’s very different from what I expected. Why is that?

The EQI tells us the extent to which a kura or school’s students might face socio-economic barriers that could get in the way of them achieving at school. A higher EQI number tells us that students at that school face greater socio-economic barriers to achievement relative to other schools and kura.

While schools know their own communities really well, what the EQI allows us to do is have a much better picture of the socio-economic status of each school relative to all other schools and kura.

Can I review my EQI number?

We are providing transitional funding for the first four years of implementation. Our focus will be on making sure that the impacts of any yearly recalculation are well-managed. This is why we are introducing a funding curve, rather than the stepped funding approach used under the decile system.

It also wouldn’t be possible to run the same ‘family survey’ model that the current decile review process follows due to the greater range of variables in the EQI and the different methodology used to calculate the EQI.

We are considering whether a review process could apply, and if so, what that might look like noting that the Equity Index is both more up to date, uses actual anonymised student-level information, and is calculated within the Statistics New Zealand Integrated Data Infrastructure. 

How will the Equity Index address new schools and kura?

As with the decile system, we will need a process for determining Equity Index numbers for new schools and kura. We’re working through the exact details of how this will work and will have more information to share in the coming months. New schools will know their Equity Index number before opening.

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