Structuring school funding according to whether or not children are deemed "at risk" could stigmatise those children and make it even harder for them to do well at school, the government has been warned.
The government is looking at [http://www.radionz.co.nz/news/national/298961/school-decile-funding-system-may-be-dropped
alternatives to the current decile system], but it says that is still in the very early stages.
However it has not ruled out a model under which children could be categorised according to factors including whether their parents have been to prison, or are long-term beneficiaries.
At the moment schools are put into ten decile groups - those with a higher proportion of children from lower socio-economic neighbourhoods receive more funding.
Education Minister Hekia Parata said the government had not settled on the final option.
But she said there were common factors for children who were struggling at school.
"[They] come from multi-generational benefit dependency, parents who have been in the corrections system, they've been referred to CYFS.
"These are a range of issues that we need to take care of early, and give them the best chance to be successful."
Labour's Chris Hipkins agreed the current system was not ideal, in part because of the stigma attached to low decile schools.
But he said funding targeted to a risk profile could make that worse.
"One of the risks, with an even more targeted approach to decile funding, is that you actually move the stigma away from the school and you place that stigma on the individual child and I think that could be really, really damaging.
"If you look at how damaging the stigma associated with being at a low decile school already is, imagine that then personalised to the children."
However, Maori Party co-leader Te Ururoa Flavell said any risk of that would be outweighed by the benefit.
"Well the bottom line is somebody's thinking about putting something into the kids that really need it, the focus on the need should be the most important and how we go about dishing out resources that give a hand to those who are at the severe end of hardship."
ACT Party leader David Seymour said the decile system had its limitations, and the government now had the ability to better target funding.
"Today with modern data we can better identify who the kids who are need, if we can invest in helping them earlier, then we should."
The government said it did not intend to rush through any changes, or to proceed without the support of the education sector.