School closure delivers a lesson in governance

Teachers are swamped with similar reactions: What will happen to my students? What happens to my job? The shock waves spread, to families and friends and the wider community, including leaders of other schools.

All these emotions and questions have emerged since the news that the Colmont School (formerly Kilmore International School) risked insolvency and had called in administrators to take charge of all school operations, leading to closure, with some 360 students losing their school.

There’s no simple and immediate answer to the first question – how could this have happened? This is a question about an institution and how it is governed and managed, and how it was unable to meet its obligations to ensure it remained viable and sustainable, at a time when it had recently talked of expanding.

Colmont was a member of Independent Schools Victoria and we, too, have been buffeted by the shockwaves caused by its closure. On a human level, our staff share the distress and disappointment that this disruption has caused to students, their dedicated teachers and parents, and to the wider community.

We’ve also faced questions about our limited ability to influence the circumstances confronting the school. To answer those questions, it’s first necessary to understand our role. ISV does not own, manage or control its Member Schools. We are a member services organisation, not an administrative body. We represent our members and provide support, advice and information to them on the whole range of school operations, including governance and finance. We can advise and inform, but we can’t direct.

Colmont School, like most Independent schools, is (or was) autonomous and self-governing, with its own board with extensive statutory obligations to oversee all aspects of its operations, including approval of expenditure and budgets to ensure the school is viable and sustainable. Like all Independent schools, it was subject to an extensive range of legislation and regulation, including a requirement that it submit annual audited financial statements to government.

In the second half of June, ISV became aware that the school was seeking government assistance. It wasn’t until the end of June that the school’s leadership approached ISV staff to outline its circumstances and enquire if it could access financial support through the Australian Government’s Choice and Affordability Fund (CAF). At this meeting we learnt the school was seeking up to $4 million to deal with a looming cash flow problem and maintain operations until the end of this year.

The CAF was set up by the former Coalition Government in 2018 to assist non-government schools affected by changes to the way the government funds them. Applications to draw on the fund by Victorian Independent schools are administered by ISV, which is required to meet government regulations and guidelines.

The fund includes provision for schools facing ‘special circumstances’, including those ‘affected by pandemics, drought or other natural disasters’. Schools must meet criteria to show their circumstances were unexpected and could not have been reasonably foreseen, were short term and could be overcome.

At the meeting with Colmont representatives, ISV staff explained that, under ISV’s current CAF workplan which has been approved by the federal Department of Education, Skills and Employment, funds allocated by ISV to meet all Victorian schools facing ‘special circumstances’ this year amounted to $270,000.

The school would need to formally apply for funding, demonstrate a need matching government guidelines, and produce a detailed business plan to resolve its difficulties. It could not use the funds for capital works, nor could they be used to support the education of full fee-paying overseas students, such as those enrolled at Colmont, who are not entitled to receive government funding.

All of this was outlined to Colmont representatives, and the school was invited to apply addressing the guidelines. Colmont did not lodge an application. Nor did it submit a plan outlining how it would use the transition funding allocation ($47,000) it was already entitled to receive under the CAF in 2022.

Even if it had applied, it is not clear it would have met government guidelines. What is now clear, unfortunately, is that, even if eligible, the limited funding available would not have resolved the school’s parlous financial position. It’s also now apparent that the school’s position is a result of a complex range of factors, including its unique asset leasing arrangements and the impact of COVID-19 on its enrolments and financial position. Adding to the stress of the Colmont community in recent days have been unfounded expectations that donors would come to the rescue.

I’ve gone into this detail because of public and official misunderstandings about the role of ISV.

Since news of the school’s demise our focus has been on the immediate urgent human task of supporting the students. We have worked closely with the school regulator (the VRQA), the Victorian Department of Education and Training, representatives of Catholic education, and our Member Schools to find alternatives for the students. We have liaised with the International Baccalaureate Organisation to assist affected senior students who face particular challenges.

More than 30 Independent schools across Victoria offered to help. The schools, in metropolitan and regional areas, have indicated they can enrol at least some of the students, depending on their year levels. Most have already been placed.

This has been a heartening response, involving schools rearranging classes and staff, making adjustments for individual students, and welcoming them to unfamiliar classes and new classmates. Some schools have offered fee concessions and provided uniforms and other resources. This has provided some reassurance to young people and their parents at a time of stress and anxiety.

None of this explains how Colmont reached this disastrous situation, and if early warning signs were missed. But there are some immediate lessons. This episode reinforces the fundamental need for those governing and managing non-government schools to ensure they build on solid foundations. This means planning to make them sustainable, with sound financial health that can withstand external shocks and internal failures, using tools to monitor and mitigate risks. That’s why advice on issues of governance and management are central to ISV’s work.

Michelle Green was Chief Executive of Independent Schools Victoria from 2002–2023.