Guidance on ELCs in Schools expected start of 2020

As flagged in a letter published by Education Minister James Merlino last week, the Victorian Education Department will be publishing further guidance for schools on the Education and Training Reform Regulations 2017 in early 2020.

Many schools have sought our advice on these Regulations, and the VRQA’s restrictive requirements regarding the use (or non-use) of school funds in the operation of ELCs. The specific Regulations in question relate to not-for-profit status (school funds only for the school, ie not the ELC) and “prohibited arrangements” (all transactions to be commercial and for direct benefit of the school).

The proposed changes may involve amendments to the Regulations.

In recognition that many ELCs are fundamental to schools, the Minister has stated independent and Catholic schools “should be able to use both privately generated funds and offer space […] for the operation of related, not-for-profit early learning centres”.

This letter provides a timeframe but does not provide immediate guidance on:

  • How separate the accounting must be, particularly noting the funding mix between private (tuition fees) and government funding;
  • Whether the reference to “related” imposes a form of connection (and what this might be – for example, whether childcare for staff and the ELC be treated differently).

We expect that the basic framework of the Regulations will not change and that there will continue to be an emphasis in them on both:

  • use of funds – currently worded as “solely for the conduct” of the school; and
  • the need for schools to acquire services at market rate to avoid being “prohibited”.

For ELCs, we’d expect there may be further guidance on how to run these, with certain principles relating to commerciality and transparency being emphasised. These could include:

  • requirements for documentation between school and ELC;
  • requirements for recording and passing of funds between school and ELC; and
  • limiting liability of the school.

How we can help

We will continue to monitor, as will Independent Schools Victoria, noting in the meantime, schools should maintain separate accounts for schools and ELC, and have a MOU in place between schools and ELC including provisions (at a minimum) regarding services and liability.

Cecelia Irvine-So is a Practice Leader at Moores, she advises extensively on regulatory compliance in education, reviews and agreements. Cecelia is also a parent of children at an independent school and a school board member. If you would like to discuss any of the above, please do not hesitate to contact us.