The O'Farrell government appears set to back down from a decision to make extra cuts in funding to Catholic and independent schools.
A senior government source has told the Herald that the funding cuts for non-government schools would be capped at levels set for 2012-13. Independent and Catholic schools now receive 25 per cent of the amount given to public schools.
Plans to strip an additional $150 million from the non-government sector appear to have been shelved in response to protests from Catholic bishops and the private school lobby.
However, Stephen O'Doherty, the chief executive of Christian Schools Australia, said this was still bad news for the sector because it suggested the funding nexus between non-government and government schools would be broken.
"This is no backdown," he said. "It confirms my worst fears. It breaks the historic nexus between increasing costs and funding support for non-government schools.
"Achieving this stability of funding was a key achievement of the Greiner government. This represents a historic break in the Coalition's traditional support for non government schools.
"It takes us back to the bad old days of the late 1980s when we went cap in hand to the government every few years to argue for indexation."
Mr O'Doherty said the rumoured changes to schools funding would amount to about a 6 per cent cut in funds to independent schools at a time when enrolments and teacher salaries were increasing.
The Coalition government source said cabinet had decided to increase TAFE fees and introduce "massive cuts" to public schools.
A Liberal MP told the Herald yesterday that cabinet discussed the issue yesterday afternoon.
Meanwhile, the NSW Greens offered to join forces with the government to cut funding to Catholic and independent Schools, while the Labor Party said it would strongly oppose such a move.
Premier Barry O'Farrell yesterday refused to discuss his plans to cut school funding and said a decision had not yet been made. However, he said all government departments would need to "tighten their belts" to collectively achieve $2 billion in savings.
The Liberal MP, who asked not to be named, said Education Minister Adrian Piccoli had lost the loyalty of his Coalition colleagues, with a decision that had angered many of their constituents.
It is understood the government was planning to cut funding to Catholic and independent schools by $150 million over four years. This was on top of a cut of $80 million.
The head of the NSW private school lobby said Mr Piccoli told him of a plan to cut an extra $150 million over four years from independent and Catholic schools at a confidential meeting last Tuesday.
Geoff Newcombe, executive director of the Association of Independent Schools of NSW, said this amount was in addition to a cut of $80 million.
He said this suggested state schools would lose $320 million over a four-year period. Under the existing funding structure, independent schools automatically receive 25 per cent of the amount given to public schools.
Dr Newcombe said Mr Piccoli told him independent and Catholic schools would lose a total of $231 million in state government funding over four years.
The state government would need to introduce new legislation to change the level of funding for independent schools relative to what public schools received.
Dr Newcombe and the Catholic Education Commission's Brian Croke said they had been told the loss to both sectors would be $67 million in the first year.
"If it was just the flow-on amount from the cuts to public schools that we were losing, it would be hard to argue against," Dr Newcombe said.
Labor Party leader John Robertson said he was seeking the support of cross-bench members to stop any cuts to school funding.
"I am seeking the support of all cross-bench members to stop the Premier's cuts to school funding," he said.
"Barry O'Farrell's decision to target Catholic and independent schools is a divisive move designed to pit communities against communities, rather than raising standards for all NSW students.
"The Greens should drop their out-dated ideological position on this issue and back Labor's campaign to improve funding for all schools."
Greens MP John Kaye said NSW funding for Catholic and independent schools had grown by 25 per cent over the past decade.
"Taking back $150 million over the next four years is equivalent to slowing the growth in the state government's private school funding by just 10 months," he said.
"It is extraordinary that the private and Catholic sectors can raise such a fuss over a relatively minor setback.
"John Robertson has decided it is more important to appease the Catholic Church and the wealthy private-school lobby."
Liberal Party MP for Baulkham Hills, David Elliott, has written to people in his electorate saying he is opposed to any cuts.
In an email obtained by the Herald Mr Elliott says his parents sacrificed home ownership to give him a private-school education.
"I will vigorously oppose any cuts to non-government school funding," he said.
President of the NSW Teachers Federation Maurie Mulheron said the employers of private schools protested loudly when they lost government funding, but the NSW Department of Education fell silent in response to cuts to public schools.
A spokeswoman for federal Education Minister Peter Garrett said state governments should not use the Commonwealth's willingness to invest more money in schools funding as an excuse to cut their own spending.