Many independent and Catholic schools are feverishly working on their budgets for September approval. In a year like no other, the balancing of competing concerns has never been more challenging or perhaps more important.
In this article, we discuss three key areas schools need to be across as they plan for Budget 2022.
Employee salaries
As in every year, salaries paid to government teachers have a bearing on salaries for other schools. As at the date of publication, the salary negotiations for state government teachers are not yet concluded and look to escalate in the coming months. The teachers’ union has made an opening claim of a 21% increase over 3 years (that is, 7% a year from 2021) as well as pursuing an increase to superannuation contributions from the current rate to 16.5%.
Salaries this year have a particular sensitivity where many schools froze salaries last year and relied on the goodwill of staff to bear this freeze due to the COVID-19 pandemic.
For independent and Catholic schools that have enterprise agreements in place, many of those ‘freezes’ were achieved through majority agreement with employees (which is necessary in order to apply for a formal variation to an enterprise agreement under the regulatory framework). Some schools may have offered commitments to their people to secure an agreement, such as a commitment to minimise job cuts during the pandemic.
As schools approach their next round of enterprise bargaining when current agreements are due to expire, many will need to consider the impact of any prior freezes on employee expectations such as the potential for expectations of higher pay increases to compensate for foregone increases in the past year.
Some schools may also be considering how to build in mechanisms into new enterprise agreements to respond to crisis events, such as a pandemic, should they occur in the future. This may impact terms such as stand down, types of leave and how the leave can be taken, mechanisms to vary pay increases or delay pay increases and/or consultation requirements in the event of urgent change requirements.
Tuition fees
Many schools need to increase tuition due to caps or refunds last year, combined with the fact that some schools’ funding is expected to drop under the DMI funding model. At the same time, schools need to be mindful of parent expectations and the ongoing general insecurity in the community. A few issues which we have seen crop up repeatedly in relation to tuition fees are:
| No | Issue | Moores comment |
|---|
| 1 | Parents claiming a refund for reduced hours in remote learning | Your enrolment is not a per-hour service, and in most cases is holistic, ie you provide a service in exchange for fees.
Having said that, many enrolment agreements need to be more explicit regarding the promises made about contact hours and outcomes. Many schools are choosing to add specific enrolment contract provisions which make it clear that remote learning is the same level of “service”.
Don’t forget that your “enrolment contract” could be interpreted to include your marketing materials and any handbooks. Beware of being held accountable in relation to promises of “one on one” time or specific academic achievement which may be found in those documents. |
| 2 | Increased numbers of parents on payment plans | If you’re allowing parents to pay outstanding fees over time, ensure they are subject to a written payment plan, and that the consequences of breaching that plan are clear (eg back to original terms? Termination?). The scope of the agreement also needs to be clear (just old debt? Applies to all students in the family forever?) as does the obligation of parents to advise if and when their circumstances change, if the payment plan was subject to a hardship application. |
| 3 | “Upfront” paying parents move to your school, then “ghost” the school when further payments are sought | Some parents respond to market volatility and move schools and offer to pay some fees upfront. Sometimes, later payments are not forthcoming. |
| 4 | Increased demand for scholarships | Some schools require re-payment of foregone fees if a student breaches the terms of the scholarship. Be aware, these re-payment clauses need careful legal drafting to be enforceable. Your application terms also need to be clear, including whether current students are eligible, and including whether decisions can be appealed. Note the VRQA’s April 2021 readiness tool requires a provision on enrolment decision appeals. |
| 5 | Increased demand for bursaries | The desire to support students has led to a growing use of tax-deductible funds to provide bursaries to students. Please note that the rules of tax-deductible funds are strict. Some require advertising to the public and cannot be assumed to be available only to currently enrolled students. They are often also limited to fees and cannot be used for camps or uniform etc. On this topic, ensure your donations are voluntary. Only voluntary donations attract tax deductibility. (And on a related subject, check the restrictions on your canteen permit before you start catering to the broader community!) |
In addition to the issues which come about in relation to tuition fees, we also note some further considerations for schools when managing outstanding accounts and debtor parents in our article School Debt Collection – front page news.
Insurance
There are some sleepers in relation to insurance. With the resumption of travel, policies need to be carefully checked for COVID-exclusions and the availability of refunds in the event of cancellations due to COVID.
A number of policies are also tightening with respect to historical sexual abuse claims, and the conditions for molestation cover.
To do now
As you prepare your budget, we encourage you to consider:
- Staff salaries – obligations and expectations;
- EBAs – whether this EBA needs revision to account for ongoing pandemic uncertainty (or future pandemics!);
- Your enrolment documents, payment plans, scholarship and bursary arrangements; and
- Insurance coverage, and any related changes needed to risk framework, and whether provision needs to be made in budget.
How we can help
Please do not hesitate to contact us if you have any questions on the above.