Regardless of their size, smaller schools are not exempt from the same stringent compliance standards expected of much larger K-12 or secondary schools that have budgets that exceed many millions of dollars. Smaller schools must meet the same standards with fewer staff, often with less expertise and less internal infrastructure.

Schools vary in size due to several circumstances including geographical isolation, such as for schools in very remote communities, educational preferences, such as for schools that offer different pedagogical practices, religious denomination, such as for smaller religious groups, and some schools prefer to remain small because that is their preference.

According to Independent Schools Australia:

“Independent schools are diverse, in terms of the communities they serve, their student population, their size and their nature. This diversity has long been considered a major strength of the Independent schooling system, serving well the needs of a geographically dispersed, socially mixed, multicultural and multi-faith population.”

If we use the figures from the table above from Independent Schools Australia’s summary document, Characteristics of Independent Schools, 38 per cent of all independent schools have 199 or fewer students which would define them as smaller schools. This is a very sizeable portion of all of the independent schools in Australia. In addition, we could very reasonably categorise a school with 300 or fewer students as a small school thus raising that percentage even higher.

What Are the Compliance Pitfalls and Risks? 

Anyone who has ever been involved in the governance or leadership of a school will immediately recognise the extent of the governance, risk management and compliance challenges that all schools face.

Not only do schools need to comply with a detailed set of registration guidelines, against which they are assessed at least every five years, they are also subject to multiple other legal obligations such as child safety, workplace health and safety and privacy. Regulators in each jurisdiction have been empowered to work with, or impose sanctions on, those organisations that don't comply, therefore heightening the issue of compliance for schools.

According to a 2019 School Governance article, Top Five Compliance Risks for Small Schools: Advice from the World of Small Business, the cost of compliance in many industries is proportionately higher for small businesses than it is for large businesses. This is because regulations often impose the same “fixed compliance costs” across the board, regardless of a business’s capacity to meet them. If this concept is applied to smaller schools, they must comply with the same regulations even though they usually have far fewer resources.

In addition, there is no doubt that in smaller schools the compliance burden is often dropped fairly and squarely onto the shoulders of the principal or sometimes the business manager or deputy principal. In a school with a small number of students in most cases there simply aren’t enough staff available to ‘spread the load’ of compliance requirements and reporting.

The compliance risks for smaller schools include:

1. A failure to understand legal requirements such as employment, work safety, environmental and financial regulations. Principals are trained as educators, not human resources or risk and compliance officers.
2. Failing to properly vet and employ staff, such as failing to conduct full due diligence on all new staff or struggling to fill positions due to geographical isolation.
3. Losing track of paperwork, when many compliance issues are managed via spreadsheets or other manual processes, or they are managed by one staff member and there is no succession plan.
4. A failure to keep up to date with legislative changes, registration changes and so forth, resulting in the ‘registration nightmare’ that many smaller schools experience very five years or so.
5. Trying to do everything themselves, because they just do not have a budget to outsource this type of work. Often the overloaded principal, who may also have a teaching load, must take on all of the compliance duties, often resulting in immense stress and possible burn-out.

In several Australian Principal Occupational Health, Safety and Wellbeing Surveys, many principals have indicated that two of the main causes for the stress, burnout and poor life quality are the sheer quantity of administrative work and insufficient time to be able to focus on their true leadership role teaching and learning. 

Furthermore, what happens when a key staff member involved with governance, risk and compliance (GRC) in a small school leaves? Under usual circumstances, they take all their knowledge with them, thereby leaving a compliance vacuum that creates a significant risk. Investment in a digital management GRC tool would vastly improve operational efficiencies, provide significant savings associated with time and staffing resources and reduce this succession planning risk considerably.

The ‘Registration Nightmare’ 

One of the biggest compliance tasks that all schools face is ongoing registration. Jurisdictional registration standards apply to all non-government schools regardless of size, denomination, education philosophy or the gender or age of their students. The re-registration audits, regardless of the size of the school, are time consuming, hard work and can be very stressful for those involved.

However, schools and their governing bodies are ultimately accountable for the safety of all students and staff and for the standard of education of the children that they educate. Schools are also accountable for the use of government funds (e.g. per capita), compliance (both registration and legislation), enterprise risk management, sound financial management practices, teaching and learning facilities and, above all, their own culture and their religious or educational ethos.

Therefore, although a re-registration audit may be a process that some schools face with a sense of dread (a nightmare), the audit ensures that each school, regardless of its size, is held accountable for delivering what they promise to provide to their students and parents.

In a 2020 School Governance article we noted that the regulators are acutely aware that they need to look under the surface and ensure that there is evidence of compliance. Many regulators publish information on the evidence that they are looking for.

The regulators generally seek:

1. Evidence that includes clear information about ‘the who, the how, the when, the where and the what’ of compliance. For example, evidence of mandatory reporting training for all relevant staff.
2. To engage closely with each school to examine and understand the school culture. They want to ensure that schools are creating a ‘culture of compliance’ in areas such as child safety, curriculum and behaviour management.
3. To see evidence of appropriate governance standards including the suitability of persons involved in the governance and management of the school such as governing body directors and school principals often referring to standards set by the ACNC or other similar bodies.
4. To see evidence of school systems and processes for the identification and management of risk including a risk management framework and overarching risk management policy, a risk register or registers, evidence that risk controls have been implemented and risks have been regularly reviewed and updated. 
5. Evidence of other essential compliance programs such as child safety, complaints management, privacy, and work, health and safety.

What Should Smaller Schools be Doing to Reduce the Risks?

 All schools should be moving from a ‘reactive’ state, where compliance issues and risk controls such as policies and procedures are updated only in the three to six months prior to a re-registration audit, to a process of ongoing compliance which is far more proactive and will greatly reduce the stress associated with registration audits.

This means using systems to help bear the heavy load of policy and compliance so that the principal and the staff can focus on teaching and caring for their students. Small schools may argue that this is easier said than done. It costs money to engage new personnel and to set up new systems, and it costs time and energy to break old habits and learn how to do things differently. Money, time and energy – three things that small schools can rarely spare.

However, with developments in technology, the cost of outsourced governance, risk and compliance (GRC) systems is dropping. At the same time, GRC systems are becoming simpler and more user-friendly. Of course, there is some effort involved in setting up a GRC system, but could your school manage a further six to 12 months of continued manual practices in our ever-changing legislative landscape?

In the long run, a good quality, fully implemented GRC system will save a small school time, money and anxiety and the principal can focus on what they do best, overseeing the culture and leading the teaching and learning, ensuring that the students and staff are safe and leading the school to achieve its mission.