Latest Section 83C Updates: Amended Regulation and New Not-for-profit Guidelines for NSW Non-Government Schools
To be eligible for financial assistance, a non-government school in NSW must not operate for profit, as defined in section 83C of the Education Act 1990 (NSW) (the Act) and in the Education Regulation 2017 (NSW) (Regulation). A breach of section 83C may lead to a finding that a school has breached the not-for-profit requirements of the Australian Education Act 2013 (Cth) and jeopardise the provision of both state and federal funding.
In our article last year, we wrote about the NSW Department of Education’s review of the Not-For-Profit Guidelines for Non-Government Schools (Guidelines) and the new draft Regulatory Framework. In an earlier article this year, we wrote about the NSW Department of Education’s ongoing review into section 83C generally.
On 1 March 2024, new section 10B of the Regulation commenced (inserted by Education Amendment (Non-Government School Assets and Income) Regulation 2024.
Clause 10B of the Regulation sets out the circumstances in which a non-government school in NSW ‘providing certain education and care services does not operate for profit’ for the purposes of section 83C of the Act.
This specifically allows schools and proprietors to use their assets and income (even where they relate to the school) to provide a ‘recognised education and care program’ for children who attend the school or are otherwise eligible in accordance with the Minister’s Guidelines. The education and care programs include long day care programs, preschool programs, and out of school hours care (which includes care play and learning programs for school children delivered before and after school hours, during holidays and on student free days).
As a result, the Minister has now published new Guidelines (which also commenced on 1 March 2024, replacing the June 2019 Guidelines) that include a new section 9.2. This section is consistent with new clause 10B, and also provides additional circumstances in which children are eligible to attend education and care programs delivered by a non-government school without breaching section 83C.
Under the new Guidelines, children who are eligible to attend a non-government school’s education and care programs (other than those already attending the school) must meet the following criteria:
- children who are likely to attend the school; or
- children who will not attend the school by virtue of the school’s eligibility criteria, in circumstances where the recognised education and care program is delivered mainly for children likely to attend the school (for instance, a co-educational preschool provided by a single-sex non-government school); or
- children who do not attend the school, in circumstances where the recognised education and care program is delivered mainly for children who attend the school (for instance, vacation care provided for children who attend the school, and also offered to children from other schools); or
- children who will not or do not attend the school in circumstances where there are no other recognised education and care programs of the relevant kind in the geographic vicinity (for instance, delivery of a preschool program or out of school hours care in a regional or rural area).
However, this is also subject to the requirements in Clause 10B(2) which provides that ‘a non-government school operates for profit if:
a) financial assistance provided by the Minister under the Act, Part 7, Division 3 is used for a recognised education and care program, or
b) a payment is made by the school to a related entity or other person or body for property, goods or services—
(i) at more than reasonable market value, or
(ii) that are not required for the operation of the school or a recognised education and care program, or
(iii) in circumstances the Minister considers to be unreasonable, having regard to the fact that financial assistance is provided to or for the benefit of the school by the Minister, or
c) income received by the proprietor arising from the operation of a recognised education and care program is used for a purpose other than—
(i) the operation of a recognised education and care program, or
(ii) the operation of the school.
The recent update to the regulation and the Guidelines provides further guidance to schools providing education and care programs as ancillary services. As the general review of section 83C is still yet to be completed (and the draft replacement Guidelines which were previously open for public consultation last year are still incomplete and not yet finalised), non-government schools in NSW have been directed to have regard to the current March 2024 Guidelines.
We regularly advise independent schools in relation to the operation of section 83C and assist with structuring transactions to comply with the not-for-profit requirements in NSW and elsewhere. Please contact David Ford or Stephanie McLuckie if you require any assistance in this area.
