In brief - Schools not immune to financial difficulties
Escalating debt levels due to blowout of operational costs and
unpaid school fees can threaten the viability of schools.
Establishing a nationwide regulator would allow greater scrutiny of
the financial position of schools.
Financial management of schools impacting on education of
Victoria has recently seen a worrying pattern of schools
acquiring high levels of debt, leaving them with no option but to
go into administration and close their doors to students. In
Victoria over the last six months alone, three schools have gone
While the reasons behind the decisions to go into administration
have been different, strictly speaking, no one problem is the sole
cause of the financial difficulty. Evidently problems in the
financial management and feasibility of schools are impacting upon
the education of children.
Board of directors and management of schools responsible for
Schools receive the bulk of their funding from governments. Part
of the funding is then generated by the schools themselves from
school fees, donations and fundraising. Over time, there has been a
shift in the way a school's financial position is managed.
Schools have become business enterprises and schools are now big
businesses. The responsibility for the debt and money owed to the
school rests with the school's board of directors and
management, with business managers and accountants often forming
part of a school's staff.
The idea is to strike a balance: to find the best way to educate
Australian children within a cost effective system. This is a
difficult task and it may not always be possible. As the cost of
running a school increases, escalating debt levels and the ability
of schools to furnish these debt levels become problematic in
circumstances where operational costs blow out and unpaid school
fees become tricky to manage.
Establishing a nationwide regulator would protect our education
Last year, an Australian government consultation paper suggested
that a nationwide regulator for non-profit schools would allow for
greater scrutiny of a school's financial position. Although it
is unusual for schools to collapse, it is apparent schools are
certainly are not immune to financial pressure.
Any regulator set up to scrutinise a school's financial
position should be extended to all schools, both government and
non-government. This would protect Australia's education
system, give due respect to the decades of fundraising and support
local families have poured into their school in the past and
safeguard the education of the generations of children of the
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