Non-government schools in NSW that receive State and Commonwealth funding are required to comply with the Education Act 1990 (NSW) (Act) and the Education Regulations 2017 (NSW) (Regulations). The Department of Education has also published Guidelines to help schools understand their obligations under the Act and Regulations.

Earlier this year (March 2024) the Regulations were updated and a new set of Guidelines were published. We briefly summarise the changes below.

Changes to the Regulations

On 1 March 2024, a new clause 10B was introduced into the Regulations. This clause provides that schools will not be considered to be operating for profit if they use their assets and income, as far as they relate to the school, to provide a “recognised education and care program” (program) for children that attend the school or children who are eligible as set out in the Guidelines. Examples of an eligible program include a preschool program, long day care and out of school hours care.

However, schools would be considered to be operating for profit if:

(a) they use the financial assistance they receive from the Minister for the recognised education and care program, i.e. the school must use funds for the program from other sources;

(b) they make a payment for property, goods and services, at more than reasonable market value, if the payment is not for the operation of the program, or in circumstances the Minister considers to be unreasonable; or

(c) the income the school receives from the operation of the program is used for a purpose other than the operation of the program or the school.

Updated Guidelines

The March 2024 Guidelines replace the previous June 2019 Guidelines. The main change to the Guidelines is the introduction of a new section 9.2, which replaces the previous section on “ancillary services”. In summary, section 9.2 set outs:

(a) the additional criteria to determine the categories of children that a program may care for, including the recognition that the children who attends the program may not end up attending the school;

(b) the matters that the Minister may consider in determining whether a program is for children who attend the school or who meet the specific criteria;

(c) the matters that the Minister may consider in determining whether a property, good or service is required for the operations of the program; and

(d) examples of records or policies to be kept by the school in relation to the program.

The Guidelines also remind relevant schools that clause 10B of the Regulations only deals with the use of school assets and income for the provision of programs by the proprietor of the school. It does not apply to programs provided by a third party or related entity. Other sections of the Guidelines and section 83C(2) of the Act generally deal with use of school income and assets (e.g. leasing of school buildings to third parties).

Non-government schools that rely on State and Commonwealth funding and who operates or is considering operating a service that may fall into the definition of a program will need to consider the provisions of clause 10B of the Regulations and section 9.2 of the Guidelines carefully. We recommend that legal advice tailored to the specific circumstances of such be obtained by such schools as part of the governance and risk management process.