School Improvement and Governance Network

School Councils

Introduction

This guide about school finances is drawn from the Department's materials (for a list, see More information below) including Understanding School Finances and Making the Partnership Work, the Victorian Auditor-General’s 2009 report entitled Management of School Funds and the practical experiences of schools and school councils.

Acknowledgments

We wish to thank the many school council members, members of the Association of Business Managers in Victorian State Schools and personnel in Victoria's DEECD for their advice with this section. Following their further feedback, this section will evolve into a good practice guide.

School finances

The skilful management of school funds is obviously fundamental to the success of a school. The question of financial governance will also become increasingly critical to improving schools and learning outcomes. Likewise, the co-development of 'next practice' financial and strategic planning in schools will emerge as a powerful means to improve outcomes. More attention and support have been given historically, however, to financial management than financial governance. 

Responsibility for finances

The management of school funds is governed primarily by the Education and Training Reform Act 2006 and guidelines issued by the Department of Education and Early Childhood Development.

The Act requires schools to establish a school council to take responsibility for the governance and financial management of the school, and for DEECD to monitor the activities of school councils.

School councils are subject to the accountability and auditing provisions of the Financial Management Act 1994 and the Audit Act 1994. Financial statements have to be prepared, audited and presented in the school’s annual report which, in turn, must be provided to the school community. As well, although the Act does not permit schools to borrow funds, under the Co-operatives Act 1996 a school community can establish a cooperative for this purpose.

School funding sources

At June 2008, funds held by Victoria’s 1,595 government schools were around $705 million compared with $642 million at June 2007 and $409 million at June 2006. The majority of funding received by government schools is through the Department of Education and Early Childhood Development. Fundraising events and voluntary financial contributions from parents are the other main sources of school funding.

The Commonwealth Government and local councils also provide funds to schools. Local councils may also provide other resources such as in-kind support.

What is the Student Resource Package (SRP)?

The SRP has been the funding model for Victorian government schools since 2005. It is made up of:

  • Student-based funding
  • School-based funding
  • Targeted initiatives.

Most of the money is allocated on a per-student basis. About 94% of the SRP is provided as credit with the 6% as cash. The principal uses the credit part of the SRP to pay for the school’s staff.

Annual budgets and school councils

The annual budget is the financial plan for the calendar year. It tells people how the school is going to provide money so it can implement its strategic plan in that year. The strategic plan is used as a starting point to determine the strategies to be funded. The finance sub-committee produces its recommended plan and submits it to council for approval.

The annual budget makes sure that the school's resources (i.e., the people, programs, services and equipment) support the educational goals and priorities in the strategic plan. Once it is in operation, a council should regularly monitor the budget’s progress to make sure it is on track.

A school council's responsibilities

A school council must ensure that:

  • An annual budget is prepared and subsequently that a statement of receipts and expenditure is prepared
  • Proper accounts and records of financial operations and the financial position and operation of the council are kept
  • An internal control system is maintained and monitored to ensure operational efficiency and adherence to statewide requirements.

The Department’s Making the Partnership Work is also clear about the following:

  • The school council at each regular meeting should be provided with a report that summarises and seeks endorsement for receipts, payments and financial commitments made in relation to the school budget and drawn on school accounts
  • A report should also be provided on progress against the school’s budget plan
  • All cheques and negotiable instruments (whether electronic or otherwise) drawn on any account kept under the control of a school council must be authorised by both the principal and the president or a nominated signatory who is a member of school council nominated by council for this purpose
  • All withdrawals or transfers out of any account kept under the control of the council that are made by means other than cheque or negotiable instrument (whether electronic or otherwise) must be authorised in writing by both the principal and the president or a nominated signatory who is a member of school council nominated for the purpose
  • The school business manager cannot be nominated, even if he or she is a member of school council
  • Regular monthly and annual reporting is obviously a key part of keeping financial systems secure and successful.

The financial planning process

Good financial practice obviously means managing finances so that the budget and the school’s strategic plan (ideally with major goals focused on the future of education) are closely aligned. In a word, the main aim is to fund the school’s strategic plan. A school’s strategic plan maps out how it will get to where it wants to be over the next four years. It outlines:

  • What will be achieved (goals and targets)
  • How it will be achieved (what the school will do, i.e., strategies)
  • When it will be achieved (timelines).

A council’s annual budget is its financial plan for one of those four years - how the resources will run the plan for a year.

Program leaders have to work out what they need to do and how much money will be needed. This is balanced against estimates of the total money available.

The school council finance sub-committee then produces its recommended plan and submits it to council for approval.

A school council checklist

A school council member should be able to answer the following:

  1. I know and understand the formal financial responsibilities of our council
  2. I understand and carefully consider the financial reports provided at monthly meetings
  3. I know how our finances are linked to the strategic and implementation plans
  4. I understand how to monitor school accounts to decide if there are opportunities to invest surplus funds to earn interest
  5. I am a member of a council that knows how to "ensure that all money coming into the hands of the council is expended for proper purposes relating to the school" (Education and Training Reform Act 2006).

As well, the Department has a very useful internal financial control checklist which a school can use to make sure that it does not expose itself to financial risk. A school's treasurer and finance committee should be familiar with it.

More information

You will find useful information about school finances and management in the following DEECD links: