The NSW Board of Studies, Teaching & Educational Standards (BOSTES) has once again updated the 'Registered and Accredited Individual Non-government Schools (NSW) Manual' (Registration Manual). This marks the second time this year that the Registration Manual has been updated, the first being in May 2014. The new update is given immediate effect by the Official Notice.

The updates to the NSW registration requirements put NSW ahead by a nose in the race for the various States and Territories across Australia to achieve comprehensive school governance.

The background

In its May 2014 update, BOSTES foreshadowed that it would introduce requirements for 'policies and procedures for the proper governance of the school'. It stated that these policies and procedures should be in line with 'properly accepted community norms for school governance', and suggested that the AS 8000 Good Governance Principles standard would be an authority for measuring these norms. These standards were developed in 2003.

Before this, BOSTES did not directly regulate the requirements that school boards and councils needed to follow.

The changes

At a broad level, the Registration Manual mandates a set of six requirements that schools must follow in their governance policies and procedures. The relevant school managers and governors must:

• develop and implement policies and procedures for the governance of the school, including setting out a constitution and structure for the governing body;
• establish a standard and process for documenting conflicts of interest within the governing body;
• establish a register for 'related party transactions' (transactions with people whom there may be a conflict of interest);
• provide for professional learning for school managers and governors, including a minimum requirement of four hours of such learning;
• provide an induction process for school managers and governors; and
• ensure that school annual financial statements are audited by an independent body.

Each new requirement mandates specific obligations as evidence of compliance.

Interestingly, BOSTES has dropped its references to the now 11 year-old AS 8000 Good Governance Principles. We have written about the deficiencies of this standard in a previous article.

What are 'properly accepted community norms'?

The Registration Manual states that school governance must be 'consistent with properly accepted community norms for school governance'. This amorphous phrase is somewhat problematic as it is likely to confuse, rather than clarify requirements for schools.

What are 'community norms for school governance'? Is there a standard of governance accepted by school governors? Is there a community of school governors? And who must have 'properly accepted' them? Teachers, parents, company directors, courts, BOSTES or others?

This phrase was included in the previous amendments without further definition and the recent changes fail to provide clarity on its meaning.

Whilst the Registration Manual goes on to state that there are standards and authorities provided by the Australian Securities and Investments Commission (ASIC), the Australian Securities Exchange (ASX) and the Australian Charities and Not-for-profits Commission (ACNC), it also states that 'the policies and procedures will vary according to the context and philosophy of the school'.

One possible reference for schools may be the Guiding Standards for Governing by Australian School Boards recently published by a private consulting firm, interestingly named the 'Australian Institute for School Governance'.

Whatever benchmark NSW non-government schools choose to refer to, one thing is clear and that is the fact that the standards of governance expected of companies and not-for-profit organisations in Australia have been steadily increasing over the past 10 years. These expectations are likely to translate to increased community expectations of governance standards within schools over the next 5-10 years, especially in light of the findings of the Royal Commission into Institutional Child Abuse.

What are other States doing?

Before these changes, the various independent school regulators across Australia had not yet reached into the boardrooms of school governing bodies. The most comprehensive State in this regard has been Western Australia, which requires the supporting documentation that evidences governance structures (but not necessarily policies and procedures). Victoria requires evidence of the structure of the governing body, and also an outline of functions and responsibilities of managers and board members. It has also recently legislated to allow the independent school regulator to conduct 'financial health assessments' on the school, which we have detailed in this article.

Analysis

Although these changes add to the already considerable weight of the compliance burden shouldered by schools, those governing bodies who are already following best practice governance principles should not encounter anything unfamiliar.

In law, school governors already have obligations to ensure that they do not have conflicts of interests, and are already held to high standards as to their conduct and decision making. Dependent on the legal structure of the school, officers of the corporation or trust which governs the school also have specific obligations which flow from the constitution and laws governing such bodies.

In any case, all schools will be required to provide for professional learning for management and governors 'each year'.

What are your thoughts on the new NSW BOSTES registration requirements?