The Government has abandoned its proposed global funding model for schools, following months of opposition from teachers.
Education Minister Hekia Parata made the announcement on Friday morning.
"Feedback from around 90 meetings the ministry had with the sector and from the funding review advisory group indicated that the sector is not ready for the level of flexibility and accountability that comes with a global budget," she said in a statement.
"I have therefore recommended, and Cabinet has agreed, that the global budget proposal not proceed."
The two largest teachers' unions, the New Zealand Educational Institute (NZEI) and the Post-Primary Teachers Association (PPTA), overwhelmingly opposed global funding. They said it was a return to the "bulk funding experiment" of the 1990s.
A vote in September saw 99 percent of members vote against global funding.
The PPTA and NZEI called Friday's decision "good news for learners", because bulk funding "led to fewer teachers, larger class sizes and narrower subject choices for students".
"Now that the distraction of bulk funding has been removed we can begin the real work of developing an equitable funding model that works for every child," said PPTA president Angela Roberts.
Labour deputy leader Annette King says the reversal was inevitable.
"It started off - as Hekia has on a number of occasions - as a directive - then there was a backlash, and then there was consultation, and then there was a bigger backlash - and not just from unions, there were parents who were concerned," Ms Kind told Paul Henry on Friday morning.
"I think the being the Minister of Education is a tough job, but Hekia had a tendency to go in like a bull in a china shop with her policies - barge in and then have to back off."
National MP Judith Collins, also talking to Paul Henry, said it's a "sensible move" to back off from global funding.
"What Hekia's done is listened and decided it's not worth it. I think it's a really good example of meaningful consultation rather than just say, 'I'm going to tell you I'm going to consult and then I'm going to make the same decision I started with.'"
A review of how schools are funded will still go ahead however, Ms Parata saying the decile system will likely be replaced.
"There is strong support in the sector and the wider public for a better way of funding schools and replacing the blunt decile system with a mechanism that delivers funding to where it is most needed."
Instead, she's proposing using a "risk index", based on each child's background. The New Zealand Herald reports these will include the age of their mother, how many siblings they have, their father's criminal history if he has one, the child's ethnicity and their household income.
Schools would be told how much funding they qualify for under the system, but not which students are generating it.
"As part of the first phase of the funding review, the Ministry of Education and I have been working with the sector to explore proposals for changes to the education funding system which place the progress of children and young people at the centre," says Ms Parata.
NZEI president Louise Green warned no funding scheme would succeed without putting more money in to the "chronically underfunded" education system.
Ms Parata says no "final commitments" have been made.
"Designing the detail of a new education funding system will be challenging and some aspects will be easier to progress than others.
"I am confident that we all share a common purpose of ensuring the progress and achievement of every young New Zealander."