The Federal Minister for Education Simon Birmingham has announced that six non-government schools have been issued with notifications of non-compliance following concerns with their financial management and governance arrangements. In a media release, Senator Birmingham stated that the Australian Education Act 2013 (Cth) (‘the Act’) “requires all school authorities to operate not-for-profit, be a ‘fit and proper person’ and ensure that funding provided is used only for school education”. A review found that the schools failed to have adequate management and accountability arrangements as required by the Commonwealth Government and are now at risk of losing Commonwealth funding.
The Act specifies basic requirements for eligibility for Commonwealth funding. All non-government school authorities must be:
These requirements aim to ensure that school governance is of the highest standard and funding is used for the benefit of students. The school’s authority must also develop an implementation plan to distribute the funding that complies with the regulations as part of their ongoing obligations.
Non-compliance notices were issued to six schools affiliated with the Australian Federation of Islamic Councils (AFIC):
We discussed the Federal Government’s decision to audit these schools in an earlier article, which was prompted by a series of dismissals among senior staff and other concerns with the way in which the schools were managed.
The non-compliance notices have been issued, and the schools now have 28 days to respond to the notices and demonstrate their compliance with the Act. If they fail to do this, they will be deemed non-compliant.
Under the Act, the Minister may take one or more of the following actions if it is found that a school is non-compliant with their obligations:
Schools must be active in ensuring their compliance with their registration requirements and their obligations under the Act if they wish to maintain State or Territory and Federal funding. If the Department of Education and Training has reason for concern, they may conduct a review into a school’s governance structures to ensure that the school meets all the requirements to be eligible for funding.
Although this may not impact the registration status of a school directly, it is possible that any issues identified by the Federal Government regarding the financial management or governance arrangements of a school may demonstrate a lack of compliance with State or Territory registration requirements. There is a great deal of overlap in some of the State or Territory requirements and the Federal requirements in these areas, and so schools have a significant incentive to ensure that they are meeting all of the standards.
ABC News reports that a Supreme Court challenge to the sacking of the Islamic College of South Australia’s board has been abandoned this week, in a separate legal dispute associated with the audit and non-compliance events. The former chairman, Farouk Khan, began an action for unlawful dismissal following the upheaval that was partly responsible for triggering the Federal Government’s audit.
The claim and allegations have been withdrawn, which has brought a resolution to the proceedings and enabled the school to move forward under the leadership of the caretaker board. However, this incident demonstrates the potential for conflict and confusion that can exist when schools fail to implement adequate financial management and governance arrangements. Schools must also ensure that they follow correct procedures when dismissing staff members. As Mr Khan has withdrawn his claim, it appears that the school in this instance had lawfully dismissed the board.