This Act provides Commonwealth financial assistance for schools. The financial assistance is provided to States under section 96 of the Constitution, and to Territories under section 122 of the Constitution.

Each school has an approved authority, which is approved by the Minister. For a government school located in a State or Territory, the approved authority is the State or Territory. For a non-government school, the approved authority is a body corporate that is approved by the Minister for the school.

Financial assistance is provided directly to a State or Territory for its government schools. Financial assistance for a non-government school located in a State or Territory is provided to the State or Territory which must give it to the approved authority for the school.

The amount of recurrent funding that a school attracts for a year depends on whether the school is a participating school or a non-participating school. A participating school is a non-government school, or a government school of a participating State or Territory. (A participating State or Territory is a State or Territory that is a party to the National Education Reform Agreement and has a bilateral agreement with the Commonwealth in relation to implementing that Agreement.) An approved authority for more than one participating school must develop an implementation plan that explains how the authority intends to implement those reforms.

Financial assistance for participating schools is worked out using the formula in Division 2 of Part 3. The financial assistance consists of a base amount for all schools, plus loadings for schools with students with greater needs. The base amount and most of the loadings are worked out by reference to an amount per student called the SRS funding amount. (SRS is short for schooling resource standard.)

Not all participating schools will attract the amount worked out using the formula immediately. Some schools will move to that amount over a period of time. A special transitional rule also applies for special schools and special assistance schools for 2014.

Financial assistance for non-participating schools located in a State or Territory is worked out by reference to the amount the non-participating States and Territories received for 2013 through the national specific purpose payment for schools under the Federal Financial Relations Act 2009 .

The Minister can determine other kinds of funding for any school under Part 5. The Minister can determine capital funding, which is ultimately provided to capital grants authorities and block grant authorities. The Minister can also determine funding for schools in special circumstances, and funding for non-government representative bodies for non-government schools. Non-government representative bodies are bodies that represent approved authorities for non-government schools. A block grant authority or non-government representative body is approved by the Minister.

The Minister may require an amount to be repaid, reduce an amount that would otherwise be payable, or delay making a payment, if an amount is owed to the Commonwealth under this Act (or other similar Acts) or there is a failure to comply with a requirement of this Act.