By Sonya Parsons, Partner and Katie Zheng, Law Graduate

Background

The recent review into s83C of the Education Act 1990 (NSW) promised changes to help clarify the not-for-profit rules for non-government schools in New South Wales.  The Education Regulation 2017 (NSW) has recently been amended to provide greater transparency as to when schools will not be operating for profit in certain common situations for schools, particularly those involving interaction with the wider community.

Summary of changes

Reg 10C – Joint use arrangements

Joint use arrangements refer to arrangements between non-government schools and another person for the acquisition, development, upgrading or maintenance of facilities owned by the school or jointly owned with another person, and where the joint owner is entitled to use the facilities if it does not adversely affect the school.

Non-government schools will not be operating for profit if payments, assets or income relating to the operation of the school are made and/or used under a joint use arrangement.

This might include a scenario where a faith-based school upgrades a car park with a contribution from the neighbouring church, and it is intended that the school and the church will both use the car park.

However, these arrangements will still infringe s83C if they:

1. exceed reasonable market value,
2. are not required for the school’s operations,
3. are considered to be unreasonable by the Minister, or
4. are not proportionate to the benefit incurred under the arrangement.

Reg 10D – Future use of facilities 

Future use arrangements refer to arrangements between schools and another person for the acquisition, development, upgrading or maintenance of facilities to be owned by the other person but which the school is entitled to use.

Non-government schools will not be operating for profit if payments, assets or income relating to the operation of the school are made/used under a future use arrangement.

This might include a scenario in which a school assists with payments towards a swimming pool by a commercial operator where it is intended that the operator will own the pool, but the school can use it (presumably at a discounted or nil cost).

The arrangements will also infringe s83C in the circumstances set out under reg 10C.

Reg 10E – Community use of school premises

Non-government schools will not be operating for profit if the school’s facilities are:

1. made available at no cost or below reasonable market value to schools, local councils, government agencies, not-for-profit organisations, or
2. made available to the public for recreational purposes or for the benefit of the local community.

Non-government schools will be considered for profit if the use of the facilities limits or restricts the school’s operation.

This might include a local dance group using the school hall on the weekend, but would not include the group using the hall during the school day such that the concert band could not use it.

Reg 10F – Donations of depreciated or redundant equipment

Non-government schools will not be operating for profit if they donate depreciated or redundant equipment to another school, charity or local council, or have made a payment to cover any reasonable costs associated with the equipment.

Reg 10G – Charitable fundraising

Non-government schools will not be operating for profit if they use their own assets to raise money for charity without adversely affecting the school’s operations. Money donated to charity cannot include income of, or relating to the school.

This means that a fundraising BBQ held on school grounds during the weekend will not infringe s83C, despite not being required for the operation of the school.

What can you take away from these changes?    

The amended Regulation provides clarity for non-government schools around not-for-profit requirements. It provides some sensible carve-outs from the otherwise strict application of s83C that prevented schools from undertaking useful, community-focussed operations.