Additional School Costs for Families

Conclusions

Over time, parent payments have evolved from being used to support free instruction, to being essential to its provision. In effect, parents are being charged for items and activities that should be free under legislation and policy.

School principals point to the inadequacy of school funding as the cause. However, DET does not have a clear understanding of what an efficient and economical school looks like. In the absence of this fundamental information, it does not know whether school funding is or is not adequate. Without this information, it is poorly positioned to shape decisions made by both the Commonwealth and the Victorian Government about funding for schools.

Schools also request parent payments to run programs that reflect the aspirations of the school community—such as superior music programs and overseas trips. It is reasonable for schools to provide these optional programs on a user-pays basis in line with school community demand. However, parent payment requests are not sufficiently itemised by schools and consequently it is not clear to parents what they must pay for and what they can choose to pay. There is a need for greater transparency in how parent payments are requested by schools.

Despite having a devolved accountability system, there remains a need for sound governance arrangements and appropriate support and guidance. There must also be suitable checks and balances in place to keep schools accountable.

The findings of this audit show that DET has shifted responsibility onto school principals and councils without ensuring that the required checks and balances are in place and are effective. This is a fundamental failure in DET's internal controls.

Findings

School funding for free instruction

Parts of DET's parent payment policy are vague and not sufficiently prescriptive. Consequently, there is no shared understanding between DET and schools on the definition of free instruction in the standard curriculum or on the main elements of the three parent payment categories—essential education items, optional extras and voluntary financial contributions.

Despite one of the key principles of the Act being the provision of free instruction in the standard curriculum, parent payment requests by schools suggest that the delivery of instruction in the eight key learning areas increasingly relies on these contributions. Parent payments no longer just support free instruction, they have become essential to its provision. This means that the delivery of free instruction now depends on a school's interpretation of the parent payments policy. In the absence of a clear definition of free instruction, sufficient guidance and oversight from DET, free instruction now appears to have been watered down and limited in its application. Parents are increasingly being asked to pay for items that should be provided free.

DET does not know what the actual cost of free instruction is. It distributes available funds to schools based on an assessment of the needs of each school—predominantly based on a school's student population. Schools are not funded based on what it costs to deliver free instruction or to run an efficient school. The SRP should provide schools with sufficient funds for the provision of free instruction. However, DET cannot assure itself, schools or parents that SRP funding is sufficient. It is therefore not in a position to advise government on what funding schools require.

Accountability for school spending

Schools are largely autonomous and, as such, DET considers that it does not have the power to direct them on spending government funding or determining what payments are required of parents. Despite this, DET could, but has not, analysed how schools are using funding. Without this information it does not know whether the funds allocated through the SRP are sufficient and appropriate, and whether parent payment requests are reasonable. This is particularly important given that the SRP distributes funds based on relative need rather than actual cost. The oversight of school financial practices is essential to provide the government with assurance that its schools are complying with their legislative duty to provide free instruction.

Parent payment policies and practices

Schools continue to have difficulties in using DET's parent payment policy to develop and implement their own school-level policies. DET does not know how much money parents are being asked to pay to its schools, for what items, and whether this complies with requirements under the Act. Our survey of 366 schools identified that only 250 had parent payment policies. None of those fully complied with DET's policy requirements and the degree of their noncompliance varied significantly.

While recognising that it is not DET's role to define precisely what school-level policies should cover, noncompliance among some schools suggests that DET's policy:

• is unclear and is not well understood
• does not differentiate between what must be included in the school-level policy and what should inform a school's general understanding of parent payments—this means that essential elements of the policy, such as telling parents about the option to purchase items themselves, are lost among general parent payment advice and information.

DET should clarify its policy and guidance and define how it will verify school compliance with its policy.

Recommendations

Submissions and comments received

We have professionally engaged with the Department of Education and Training throughout the course of the audit. In accordance with section 16(3) of the Audit Act 1994 we provided a copy of this report to the department and requested its submissions or comments.

We have considered those views in reaching our audit conclusions and have represented them to the extent relevant and warranted. Their full section 16(3) submissions and comments are included in Appendix B.

1.1 The right to education—free instruction

The right to education is contained within the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights. As a signatory to these laws, the Commonwealth Government has agreed to uphold education as a human right in Australia. This commitment must, therefore, be reflected in Australian laws, policies and practices.

The premise of education as a human right relies on four principles, it must be:

• available—free and compulsory education for all
• accessible—free from discrimination
• acceptable—quality of teaching and learning
• adaptable—respond to interests of each child.

The Education and Training Reform Act 2006 (the Act) provides the legislative framework for education and training in Victoria. A key principle of the Act is that all young Victorians should have access to a high quality education. This includes access to free instruction in the standard curriculum program—eight key learning areas—for all young people under 20. Free instruction is not defined in the Act. The Department of Education and Training's (DET) Parent Payments in Victorian Government Schools policy defines 'free instruction' as including 'learning and teaching, instructional supports, materials and resources, administration and facilities required to provide the standard curriculum program'. Applying this definition allows for costs associated with teaching or instruction to be passed on to parents.

Throughout this report 'parents' is used to refer to parents or legal guardians.

1.2 Education funding and costs

Parents are required to pay fees, charges and parent contributions across all states and territories in Australia. However, there is limited consolidated data available that outlines how much parents in Australian government schools are required to pay. Information on the total amounts that individual schools receive from fees, charges and parent contributions is available on the My School website—administered by the Australian Curriculum, Assessment and Reporting Authority (ACARA). However, that information only shows what was collected, rather than what schools asked for under their policies.

Figure 1C
Average fees, charges and parent contributions per school in 2012

Source: Victorian Auditor-General's Office based on Australian Curriculum, Assessment and Reporting Authority data.

ACARA data indicates that on average in 2012, each Victorian government school derived over $205 000 in parent payments. However, the payments shown in Figure 1C cannot be used as an indicator of individual parent payment costs across states as school size and student population variations affect school parent contribution figures.

DET's own financial data cannot be compared directly with the ACARA data due to methodological differences. However, it shows a similar trend to ACARA's data—that parent payments in Victorian government schools have risen by $70 million since 2009, a 29 per cent increase.

Figure 1D
Total parent fees, charges and contributions received by Victorian government schools

Source: Victorian Auditor-General's Office based on Department of Education and Training data.

The amount of parent payments schools receive varies according to the school's socio-demographic. Figure 1E shows that schools with more disadvantaged students derive less income from parent payments. DET uses an index called the Student Family Occupation (SFO) to determine the socio-demographic status of its schools. It is calculated based on the occupation categories reported by the school's parents—the lower the range, the lower the disadvantage.

Figure 1E
Average parent payment by Student Family Occupation range for 2013

Source: Victorian Auditor-General's Office based on Department of Education and Training data.

1.4 Equity and the effect of exclusion

The audit objective was to assess whether DET and government schools are managing parent education costs economically, efficiently and effectively and in accordance with legislation and policies. To assess the objective, the audit examined:

• funding for the delivery of free instruction
• departmental oversight of school approaches to parent payments
• parent payments to support free instruction.

The audit scope focused on DET's parent payment policies and procedures and school funding policies and procedures that relate to parent payments.

This audit was commenced under the Department of Education and Early Childhood Development (DEECD). On 1 January 2015, machinery of government changes took effect and the responsibilities of the former DEECD transferred to the Department of Education and Training (DET).

The report is structured as follows:

• Part 2 examines the sufficiency of DET's school funding model
• Part 3 examines the adequacy of DET's guidance and oversight of school spending and parent payment practices
• Part 4 assesses the appropriateness of school parent payment policies and practices
• Appendix A. Victorian school funding explained

2.1 Introduction

The Student Resource Package (SRP) is meant to provide schools with sufficient funds to provide free instruction. However, DET cannot assure itself, schools or parents that funding is sufficient to provide free instruction. Nor can it advise government of the funding schools require.

DET's parent payment policy is vague in parts and not sufficiently prescriptive. Consequently, there is no shared understanding between DET and schools on the definition of free instruction in the standard curriculum or on the main elements of the three parent payment categories—essential education items, optional extras and voluntary financial contributions.

The types of payments requested by some schools suggest that parent payments no longer just support free instruction, they have become essential to its provision. Free instruction now appears to have been watered down and limited in its application. Essentially items that are free to some students are not free to others.

2.3 DET's definition of 'free instruction' is unclear

The SRP should provide schools with sufficient funds to provide free instruction. However, DET distributes available funding based on the relative needs of schools rather than actual cost of delivering free instruction.

DET has not sought to fully understand the actual costs of providing free instruction, an activity that could lead to securing further funding for its schools. It has not sought to provide government with any advice on the adequacy of government school funding in recent years. DET has not been able to provide assurance that the overall funding for schools is in fact adequate.

All the principals interviewed during the audit said that SRP funding is inadequate and does not reflect the real cost of delivering free instruction. This view is also supported in several position papers produced by the Victorian Principals Association, which outline concerns about the inadequacy of school funding in areas including:

• cleaning provision in schools
• cuts to frontline services
• facilities and maintenance provision
• grounds allowance
• occupational health and safety requirements.

Attempts by principals to apprise DET of this have had no impact.

Inadequacies in DET's financial databases—CASES21 and eduPay—make it difficult to examine the overall adequacy of SRP funding and schools' use of specific SRP components. These systems do not record expenditure based on the same categories that the funding is allocated under, meaning that components such as student-based funding and equity funding cannot be examined.

One component that can be examined is funding provided for school infrastructure activities, such as cleaning, maintenance and utilities. These items are readily identifiable in both the SRP funding allocation and school expenditure records.

Figure 2C compares infrastructure funding and expenditure in 2013 for the 24 audited schools. It shows how much schools are underspending or overspending as a proportion of their allocated SRP amount. For the majority of schools visited, the SRP allocation was insufficient to cover the actual operating and maintenance costs, with some schools spending up to 248 per cent over their allocated budget. Across the 24 audited schools, there was a net overspend of almost $3.5 million. Only three schools underspent their infrastructure budget.

Figure 2C

2013 SRP allocation and recorded school expenditure of 24 schools for school infrastructure activities

Source: Victorian Auditor-General's Office based on unaudited school data from CASES21.

This is not the first time we have reported this issue. In our 2012 report Implementation of School Infrastructure Programs we highlighted that government schools received only 32 per cent of the recommended level of ongoing investment. Figure 2C illustrates the continuing pressure this places on schools. We are currently examining DET's response to the findings of our 2013 report as part of our follow-up program.

School-based funding provides for school infrastructure and programs specific to individual schools. DET provided a total of $348 million of school-based funding to schools in 2014. This is an average of $616 per student.

2.6.1 Maintenance and minor works funding

All schools are provided with recurrent funding for maintenance as part of the SRP. The funding formula distributes 50 per cent of the available maintenance funds based on each schools current and/or projected enrolment as a proportion of the state total. This formula is flawed as it is calculated based on student numbers rather than the school's actual building footprint.

The remaining 50 per cent of funds is distributed based on each schools building construction material and relative condition. This formula if flawed as funds are distributed based on relative need, not on the actual costs of maintenance.

DET acknowledges that maintenance funding is below the recommended threshold. However, DET maintains that its focus has been on maximising the effectiveness of the available funding in maintaining the $16.2 billion asset base. Of the $420 million in investment required to bring the buildings up to an acceptable standard in 2012, DET committed $50.1 million in 2013–14, and $94 million in 2014–15. Its stated strategies include targeting resources to the assets in greatest need of repair and providing emergency funding to schools that require serious maintenance.

Under the government's school autonomy model, each Victorian Government School Council, with the assistance of the principal, determines how to spend allocated government funding and how much to request from parents. In order to be efficient, effective and economical, schools require strong management teams who, among other things, are capable of sound budget and financial management. The Department of Education and Early Childhood Development (DET) believes its role is primarily to provide guidance and support—rather than oversight and regulation—to schools in relation to budget and financial management.

3.2 Conclusion

DET does not collect detailed information on how much schools ask parents to pay and how much they do pay. DET's financial database, CASES21 does not enable schools to record parent payments according to the three types of payments—essential educational items, optional extras and voluntary financial contributions. Instead, they can be recorded as subject contributions, sale of class materials, camps/excursions/activities and donations. With the exception of donations, these categories do not reflect DET's policy definitions of the parent payment categories. Our attempts to analyse CASES21 data also identified that parent payment data cannot be easily and accurately extracted, mainly because subject contributions and sale of class materials are recorded inconsistently across schools.

Further complicating matters, some schools use additional systems to manage their budget and finances. These systems sit separately to CASES21 and contain greater detail about the school's management of funds. DET does not have access to these systems nor even an awareness of which schools are and are not using them.

Without a breakdown based on the three parent payment categories, DET cannot undertake a fundamental analysis of parent payment amounts and trends, and cannot know if schools are complying with policy and the Act.

3.4 Student Resource Package funding allocation

DET's School Council Financial Audits (SCFA) have shown that schools are not accountable for their practices. If the autonomous schools model is to be successful, DET needs to exercise its own oversight role by providing clear guidance to schools and hold them to account for their efficient, effective and economic operation, as well as their educational performance. DET has been aware of schools' deficient parent payment practices since at least 2011. However, in 2014, school noncompliance is still rife.

DET conducts an annual SCFA. The 2013 SCFA looked at 451 schools and found:

• errors in coding transactions in CASES21
• a lack of compliance with DET policies and procedures
• administrative errors or oversights
• a lack of management oversight by principals
• a lack of school council governance and monitoring
• inadequate internal controls and poor financial management.

The SCFA noted that 27 per cent of business managers in audited schools lacked a basic understanding of accrual accounting procedures. In line with its 2012 findings, the audit found that:

• some business managers lacked the skills required to undertake their role
• not all principals, despite having responsibility for reviewing financial information, had adequate financial knowledge
• school councils were not supported by adequate financial reports, there were insufficient school council meetings and inadequate minutes of school council decisions
• some schools had inadequate internal controls, such as cash handling and segregation of duties procedures.

These findings were particularly evident in small schools.

DET is attempting to address the issues identified by the SCFA by promoting financial training to principals, business managers and school council members. It has also provided additional financial support to schools in need of assistance. However, despite DET's training being of a high standard, it does not know how many current principals and business managers have completed the training, nor does it have the capacity to identify those that have not.

DET's financial support to schools is provided through its technical leadership coaches for principals and by school financial liaison officers for business managers. There are only 2.5 full time equivalent technical leadership coaches and four full time equivalent school financial liaison officers to service all schools in Victoria. Through necessity, their roles have evolved into a reactive, rather than proactive one—helping schools that have been identified as being in wage deficit or identified by the SCFA as requiring assistance.

Given that the issues identified in the 2013 SCFA are similar or the same as those identified in 2012, it is imperative that DET do more to assist schools to improve their financial management practices. Further, it is essential that DET evaluate the outcomes of its attempts to address school noncompliance. Without such evaluation, DET cannot assure itself that its strategies have achieved greater compliance or whether further work is required.

An analysis of the training manuals DET uses to provide financial management training to principals and business managers indicates that the training is thorough and appropriate. Some school principals and business managers involved in the audit also confirmed that the training was useful, however, not all principals and business managers have completed it.

While the training is appropriate, it is concerning that the 2013 SCFA found business managers and principals lacked financial management knowledge and skills.

DET is currently in the process of formulating an accreditation process for business managers. The project aims to professionalise the business manager role in recognition of its important school management function. As this project has not been finalised, this audit could not analyse its outcome. However, the project should, if implemented successfully, lead to greater access to training for business managers. Given training and accreditation will be provided online, DET could use the training process to gather data on business managers' knowledge gaps, and inform future training strategies.

In 2011 DET engaged a contractor to conduct a review of whether school-level policies and payment requests complied with DET policy. Thirty-seven schools were surveyed in the following areas:

• continuation of services to students
• Education Maintenance Allowance
• payment administration
• funds management
• school-level policy
• communication to parents.

The audit concluded that schools were generally both aware of and complied with DET policy. However:

• school-level policies do not always comply with DET's policy
• requests for parent payments are not always correctly categorised and itemised
• schools do not always provide appropriate notice for payment requests
• parents are not always provided with the option to purchase essential education items themselves.

The most common cause of noncompliance was misinterpretation of the requirements of DET's policy due to its complexity. Accordingly, the review recommended that DET refine and simplify the policy and provide a clearer description about what information should be included within school-level policies.

The review identified a number of examples of good practice, including using DET templates and processes surrounding the Education Maintenance Allowance.

In response to the review's recommendations, DET restructured its parent payment policy and developed additional support materials for schools. However, the guidance remains confusing and vague.

The review did not examine schools compliance with all areas of the policy, including:

• the processes undertaken by schools to determine costs
• the amounts schools are requesting from parents
• whether these amounts are appropriate
• whether schools are using payments for purposes for which they were sought.

Without an analysis of these areas, there are significant gaps in DET's understanding of the practices of schools. It also cannot identify what the potential causes of noncompliance are, their implications or what needs to be addressed.

4.1 Introduction

School councils are required to create and administer school-level parent payment policies and practices that comply with the Department of Education and Training's (DET) policy. This includes determining what items and amounts are charged to parents.

Under a devolved school model, it is important that compliance and better practice be driven by DET to ensure schools administer parent payment requests appropriately.

4.2 Conclusion

Schools continue to have difficulties developing and administering parent payment policies that fully comply with DET's policy requirements and the requirements of the Education and Training Reform Act 2006. Our survey of 366 schools revealed that only 250 had school policies, and none completely complied with DET's policy requirements. The degree of these noncompliances varied significantly.

This is not a new issue. A DET review conducted in 2011 identified that schools were not complying with all the requirements then. Almost four years later, compliance with this policy remains poor. The lack of accountability by DET for the collective failure of its schools to consistently and fairly administer a parent payment policy is poor public administration.

DET's policy is not sufficiently clear and remains poorly understood by some schools. Given the significance of these issues and the lack of incentives for the schools to address them, DET needs to take decisive action.

4.3 Schools' parent payment policies

Schools are required to have a parent payment policy that has been ratified by its school council. These policies should provide a clear school position regarding parent payments, should promote transparency and should make schools accountable for their decisions about what to charge parents for. Despite this, not all schools have a parent payment policy. Of those that do, not all policies are ratified by the school council or compliant with DET policy. Of the 366 schools surveyed, 68 per cent had a policy and 31 per cent of these were not ratified by the school council.

DET provides guidance materials to support schools in developing their school-level policy, including a policy template, payment request template and parent communication templates. However, in spite of this assistance, an analysis of 250 school policies, detailed in Figure 4A, shows that no school complied with all elements of DET policy.

Figure 4A

School-level parent payment policy compliance with DET policy requirements

Source: Victorian Auditor-General's Office survey of government schools.

In 2011, DET conducted a compliance review which found that 78 per cent of school policies did not entirely comply with its policy. DET has not reviewed school parent payment policies since its 2011 review and has not sought assurance that its findings have been addressed.

Our analysis of 250 school policies, found that even schools that mostly follow DET's policy template still excluded some elements from their school-level policy. Examples of excluded elements include:

• 'commits to not coerce or harass parents for payments'
• 'commits to not using debt collectors'
• 'commits to keeping costs to a minimum'
• 'items will be accurately costed'
• 'parents can purchase essential items themselves'.

These exclusions demonstrate a deliberate departure by some schools from elements of DET's parent payment policy requirements.

Clearly, even where DET has sought to clarify its parent payment policy, school compliance has not improved and DET needs to address this as soon as practicable.

4.4 Parent payment requests

Regardless of the quality of the school's parent payment policy, no parent payment requests reviewed during the audit included all of the information required by DET. This was the case regardless of whether the school's policy included or excluded most of DET's policy requirements. Essentially, a school's parent payment policy is not a reliable indication of their intention or actions, or whether DET's policy requirements are being applied.

Figure 4B

School parent payment request compliance with DET policy requirements

Source: Victorian Auditor-General's Office survey of government schools.

The parent payment requests examined did not align with the categories outlined in DET's policy—essential education items, optional extras and voluntary financial contributions. Essential items were often classed as compulsory contributions—parents should be allowed to obtain these from other sources. However, more often, essential and optional payments were grouped together as levies, charges or contributions. These are often difficult to interpret.

Examples include:

• 'materials for learning and teaching levy'
• 'common levy'
• 'learning program and curriculum charge'
• 'student requisites and materials payment'
• 'student services contribution'.

Requests often do not provide an explanation of what parents must pay and what items they can choose to pay. Of the 331 payment requests reviewed, 36 requests provided a total dollar amount due, which included the voluntary component.

The surveyed schools that did not use DET's three payment categories, used alternative titles to categorise voluntary requests. These were:

• 'grounds levy/grounds maintenance levy'
• 'IT/computer levy'
• 'fundraising levy'
• 'head lice levy'
• 'school improvement'.

The administration of some of these levies and charges varied greatly. For example, in four schools surveyed, a grounds keeping or maintenance levy was requested in lieu of attending a working bee. These schools had a variety of ways of administering these, including requiring parents to pay the fee up front then re-crediting them if they attended working bees. Some issued credit vouchers while others would be invoiced during the year if they failed to attend a working bee.

The requests examined rarely included an explanation about what items parents must pay for or source themselves and what items they can choose not to pay. For example, 301 schools, surveyed did not advise parents of the option to purchase their own essential education items.

DET is aware of this school noncompliance. Its 2011 compliance review identified a number of areas of weakness, and also identified that the amount of support and guidance provided by DET directly impacts on the level of school compliance with its policy.

The review concluded that overall, schools are generally both aware of and compliant with DET's parent payment policy. However, it identified actions required by schools and DET to address areas of weakness. The review specifically found that:

• requests for parent payments are not always correctly categorised and itemised
• schools do not always provide sufficient time for payment
• parents were not always provided with the option to purchase essential education items themselves.

Despite its awareness of these issues and efforts to clarify its guidance material, DET has made no progress in improving school compliance and has not followed up on the outcomes of its responses to the review.

4.5 Parent payment amounts

DET's policy requires school councils to ratify all parent payment requests. Its finance training for school councillors advises that school councils should consider the following when deciding what payments to request from parents:

• clear reason for requesting payment
• what is a reasonable payment to request—what the school community expects and will think is reasonable
• fully communicating to all parents what the schools wants to do with the payment.

Beyond this basic advice, there is no further guidance on how school councils should determine what a reasonable payment is. It then becomes a subjective assessment for each school council.

There are inconsistencies in how schools determine parent payments. Our survey asked schools what information they considered when deciding how much to request from parents. It found that 82 per cent of schools considered how much they had charged parents in previous years. Three quarters looked at the available school budget, parents' ability to pay and previous payments received.

There are some schools that devise parent payments based on their aspirations for the school rather than an assessment of need. Examples provided in these circumstances included overseas excursions and superior music programs. Drivers for this included a need to compete with other schools for enrolments and to meet parent expectations.

A common practice is for schools to look at fees charged by similar schools. Some schools made the decision to deliberately set their fees lower or around the same level as their counterparts. While this method may reflect what is a reasonable amount to expect from the community, it is more likely to reflect what parents are prepared to pay, rather than representing an accurate costing of what a student consumes or possesses.

Some schools based their fees on the Education Maintenance Allowance, ensuring that all parent payment requests could be met. Since the audit commenced, the then government announced that it would replace the Education Maintenance Allowance with $42.5 million paid directly to schools through the Student Resource Package. It is currently unclear how schools will use these additional resources, including whether they will attempt to provide additional support to disadvantaged students—including reducing or waiving parent payments.

Parent payment amounts requested and received varied between school types, Student Family Occupation ratings and regional location.