Local schools are divided about whether replacing the established decile system with a Risk Index will make much difference.
Education Minister Nikki Kaye confirmed on Monday that the Government would implement more targeted funding to better support those students most at risk of not achieving due to disadvantages.
"For too long schools have been stigmatised and wrongly judged by their decile number. Children and young people deserve to take pride in their school and we need to better target funding to where the need is greatest to support all children to achieve," Ms Kay said.
The Government would also replace the equity index used to allocate disadvantage funding in early childhood education with the Risk Index.
Decile funding currently accounts for less than 3 per cent of a school's resources.
"Rather than allocating this funding on the basis of neighbourhood characteristics as the current decile system does, the Risk Index will instead provide fairer funding that better reflects the needs of children in our schools and services.
This will mean extra resources are better targeted to support schools to lift achievement."
The specific factors to be used in the index are subject to further analysis before being finalised but some being considered include ethnicity, mother's age at child's birth, father's offending and sentence history and the mother's and father's income in the previous five years.
Ms Kay said they will be the indicators that evidence had shown has had the greatest influence on student achievement.