Understanding the Equity Index (EQI)

The Equity Index: New Zealand's New School Funding Model

From January 2023, the New Zealand Ministry of Education replaced the long-standing decile system with the Equity Index (EQI). This guide explains the change, how the EQI works, and what it means for schools and families.

What Was the Decile System?

For over 25 years, every school in New Zealand was assigned a decile rating from 1 to 10. The decile measured the socio-economic status of the community surrounding the school, based on census data. Decile 1 indicated the highest level of community disadvantage, while decile 10 indicated the lowest.

The purpose was simple: schools serving more disadvantaged communities received more government funding. However, the system had two significant problems:

• Misuse as a quality measure: Despite being a funding tool, decile ratings were widely interpreted by parents as indicators of school quality. "High decile" became shorthand for "good school," reinforcing socio-economic segregation and white flight from lower-decile schools.
• Area-based inaccuracy: Deciles were calculated from census data about the area around the school, not from data about the students who actually attended. A school could have a high decile rating while enrolling many students from disadvantaged backgrounds, or vice versa.

How the Equity Index Works

The EQI addresses both of these problems by measuring disadvantage at the individual student level rather than the area level. The Ministry of Education links each student's enrolment record to administrative data held by government agencies. This data includes:

• Household income: Income data from Inland Revenue, including wages, salaries, and benefit income.
• Parental education: The highest qualification level of the student's parents or caregivers.
• Housing: Information about housing quality, crowding, and tenure (renting vs owning).
• Benefit receipt: Whether the household receives income support.
• Other factors: Additional indicators of socio-economic disadvantage.

Each student receives an individual disadvantage score, and the school's EQI is calculated as the average of its students' scores. This means the EQI reflects the actual students enrolled at the school, not the broader neighbourhood.

What the EQI Numbers Mean

The EQI is expressed as a number, typically ranging from around 400 to 520 or higher. Unlike the old decile scale (which had clear bands from 1 to 10), the EQI sits on a continuous scale:

• Lower EQI values (approximately 400-430): Indicate a school population with relatively low levels of socio-economic disadvantage. These schools receive less equity funding.
• Mid-range EQI values (approximately 430-470): Indicate a school population with moderate levels of disadvantage.
• Higher EQI values (approximately 470-520+): Indicate a school population facing significant disadvantage. These schools receive the most equity funding.

Because the EQI is a continuous measure, there are no sharp "cliff edges" in funding. Schools with similar levels of student disadvantage receive similar levels of funding, avoiding the abrupt jumps that occurred at decile boundaries.

How EQI Affects Funding

The EQI directly determines how much equity funding a school receives on top of its base operational grant. Every school in New Zealand receives a base level of funding. The EQI then adds an additional layer of funding that scales with the level of disadvantage in the school's student body.

Schools can use equity funding flexibly to address the needs of their students. Common uses include:

• Additional teaching or teacher aide positions
• Learning support programmes and interventions
• Pastoral care and wellbeing services
• Attendance and engagement initiatives
• Programmes to support Maori and Pacific student achievement
• Professional development for staff

How Often Is the EQI Updated?

The EQI is recalculated regularly — typically annually — using updated student enrolment data and the latest administrative data. This means a school's EQI can change from year to year as its student population changes. This is a significant improvement over the decile system, which was updated only after each national census (every five years).

What the EQI Is Not

It is essential that parents and communities understand what the EQI does not measure:

• It is not a quality rating. A high EQI does not mean a school is performing poorly. It means the school serves students who face greater socio-economic barriers.
• It is not a ranking. Schools should not be compared or ranked by EQI. Two schools with similar EQI values may have very different cultures, teaching approaches, and outcomes.
• It does not predict student outcomes. Many schools with high EQI values achieve outstanding results for their students, and many schools with low EQI values have areas where they need to improve.

The Ministry of Education has deliberately moved away from a simple numbered band (like the 1-10 decile scale) to discourage the kind of simplistic ranking that the decile system encouraged.

Privacy and Data Use

The EQI uses linked administrative data, which raises questions about privacy. The Ministry of Education has stated that individual student-level data is not shared with schools or the public. Schools receive only their overall EQI value — not the scores of individual students. Data is handled under strict privacy protocols, and the linking process is managed by Statistics New Zealand's Integrated Data Infrastructure (IDI).

The Bigger Picture

The transition from deciles to the Equity Index represents a significant shift in how New Zealand funds its schools. By measuring disadvantage at the student level, the EQI ensures that funding follows the students who need it most — not the postcode they live in. For parents, the key takeaway is straightforward: the EQI is a funding tool, not a report card. Judge a school by its teaching, its culture, its ERO report, and how it supports your child — not by a single number.

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