School Governance 101

• Schools face a number of challenges — and so do the boards that govern them. While concern about some of these challenges has fluctuated since 2014, high salary costs and school fees as well as compliance issues have remained top priorities for governors for almost a decade.

• Twelve key characteristics of effective school boards define healthy school governance and present opportunities to improve at every turn. By adopting most or all of these characteristics, schools can mitigate many of the issues they face today.

• School boards that pay close attention to their duties and obligations create better outcomes for students, school staff and themselves. Not every school gets it right, but when they do, it’s usually because the board made a conscious decision to ensure these outcomes.

When do schools fail? Failure doesn’t come down to educational issues, but rather governance and business structures or financial management failures

But school boards often make the same mistake of focusing solely on the academic side instead of looking at governance practices and processes. While educational programs are undoubtedly important, the number of school failures due to poor curricula pales in comparison to failures due to poor governance and financial management.

Survey data from the independent school sector management level shows some almost-unchanged priorities since 2014. But it is possible to establish healthy school governance — as evidenced by a number of core characteristics associated with effective school boards. There’s a definitive wrong way to go about governance, but also a clear right way.

The biggest challenges facing schools

A 2022 Bursars Forum study found that school business managers and CFOs have consistently reported that keeping school fees down and schools affordable has been the number-one priority since 2014. Even double-income families have found managing personal finances persistently harder, leading to a growth in requested grandparental support. Academic expectations are rising, and as schools feel it necessary to deliver, school fees are rising, too. At the same time, government funding isn’t keeping pace with increasing costs.

Finding quality teachers — and often board members — has also been a pressing concern. School boards without quality board members put the whole organisation at risk. To limit this risk, some school governors are establishing committees that search for and bring in nominees for board membership. Sustainably managing school fees is a huge challenge that only strong boards can effectively tackle.

Rising salary costs and compliance issues are of even greater concern than finding high-quality staff members. These are issues related to the Australian Tax Office (ATO), workplace health and safety (WHS) laws, the Australian Charities and Not-for-profits Commission (ACNC) and the Department of Education.

There are no magic bullets to solve these problems, but networking to find solutions together is a helpful starting point.

Healthy governance: Finding a pathway forward

The distinction between governance and management might not be immediately clear, but it is important for board members to understand:

• Management is reactive, administrative and task- and detail-oriented. It seeks to establish and carry out management policy based on the agenda. Management is focused on ‘how’ and concerns itself with the past as it informs the present.

• Governance is proactive and vision-oriented, initiating and setting the agenda for management to follow. Predictably, it seeks to establish and monitor governance policy — with a focus on ‘what,’ ‘who’ and ‘why.’ Governance looks to the present as it informs the future.

Vision statements are common for schools but should be thoroughly owned by the board and not fed to it by management. The board is appointed by an organisation’s moral owners to ensure it acts in accordance with its purpose.

Moral owners are company or association members who attend annual general meetings (AGMs). Although moral owners aren’t involved in daily governance, they are, nevertheless, a critical part of the organisation, and AGMs foster close relationships and communication between moral owners and the board.

There may be an overlap in roles if some individuals serve as both board member and moral owner. Both of these categories are distinct from personnel — including teaching and other staff members — and beneficiaries: students and their families. But board members, moral owners, personnel and beneficiaries alike all come together around shared values, vision and purpose — without which schools often fail. Equally, organisations without enough moral owners experience significantly greater challenges.

More frequent performance appraisals — for both the board and staff members — help identify weaknesses, communication breakdowns or misalignment of expectations. Community surveys for students, staff and the board also help identify organisational perception: Is it meeting and serving the purpose the stakeholders believe it should be?

The 12 characteristics of an effective school board

Dr. Robert Andringa (CMA) highlighted 12 characteristics of effective boards, which serve as an invaluable guide to practical school governance:

1. There is a clear understanding of respective board and staff roles, which means the board engages in governance and not management. Failure to understand this leads to organisational problems.

2. The board has a governance focus, which means looking forward with an obligation to ensure things are happening correctly today and avoiding organisational slowdowns and folds in the process.

3. Board members must understand their three roles as governors, volunteers and implementers. Respectively, these roles ask them to hold management accountable, (often) not be paid and help achieve the vision rather than dealing with daily management issues.

4. The board must be clear about and link with its stakeholders and moral owners in terms of the school’s purpose, activities and priorities, all of which must be consistent with what moral owners require.

5. The board must adopt clear mission goals, ensuring clarity for school principals and management about organisational priorities, and should not compete with management.

6. The school principal (or CEO, or executive) is the one agent for boards who is responsible for achieving the goals within the parameters the board sets. Board reports should be formatted in a way that complements this end and keeps CEOs on track and accountable.

7. The board should have a clear set of policies collated in a single document explaining the functions of the board, which is regularly reviewed and accessible on a board portal.

8. Board chairs critically ensure effective boards by “managing” them or administrating with support from the principal.

9. Board committees serve the board’s (not the staff’s) needs and should very rarely be delegated any decision-making responsibility — only in exceptional circumstances and in a limited capacity. They are not public communications teams.

10. Board meetings should be well planned with advanced materials provided (at least a week prior), good agendas, clear results and an opportunity for the board to get to know each other better.

11. Board members should be selected and well orientated based on thought-out criteria and with diverse skills, ages and genders to make them as effective as possible.

12. The board accepts responsibility for improving itself, not looking to company or association members or executives (i.e., principals) to help or educate it in best-practice governance.

When school boards apply these principles, effective and high-quality school governance is sure to follow.

How things go wrong — and why they go right

If school boards fail to ensure that they’re adopting the right principles for good governance, disaster may ensue.

One K-12 school in northern New South Wales (NSW) had 300 students, but its false census returns (for three years) confirmed 420. It got staffing levels for 420 students and increased but disproportionate cash flow. This was all thanks to an unengaged board that was responsible for improper financial reporting, weak staff checks and a lack of award compliance.

The board only met twice a year and was minimally accountable, with poor employment contracts and failure to pay staff their entitlements. With no checks and balances in place, the school ultimately ended up owing the Commonwealth and the state $2 million. It couldn’t pay and had to close, and the principal was jailed for three years.

This could all have been avoided with:

• An involved board;
• An appropriately scrutinising finance committee;
• A treasurer obtaining proper sign-off; and
• An external auditor with access and directly reporting to the board (not the business manager).

Even with good communities behind them, schools staffed by incompetent, overloaded or inadequately resourced administrative teams won’t last long, unfortunately.

Another K-12 school with 850 students based in Adelaide, South Australia, benefited from a very engaged board with a clear vision and mission, a strong leadership team, reasonable finances and a good student waiting list. As a result, they managed to purchase land and buildings with a replacement value of $66 million dollars alone for just $8 million. Thanks to detailed cash flow projections and a long-range financial masterplan, the school managed to double its site size (with spare buildings) and grow enrolments to 1,250 in just two years.

These two lessons serve to show how important governance is to schools’ functioning. With a weak board in place, schools can literally shut down, with individuals bankrupted or imprisoned. With the right board — demonstrating the twelve characteristics of good governance — schools can deservedly grow towards even improbable success, serving both local communities and wider society.

Further Resources

Reviewing Your Constitution – Food for Thought

Fulfilling Your Obligations as a Not-for-profit Director

Board Perspectives: Key Skills for Making Constructive Contributions

Good Governance in remote Australia – it’s closer than you think

This article was based on a presentation given by Resolve Consulting senior consultant Craig Harvey. Join Boardwise to watch Craig’s presentation and improve your school board’s governance skills and knowledge.