In brief - Schools should adopt contemporary governance standards
Schools should review corporate governance structures and constituent documents such as Rules of Incorporation, Articles of Association or Constitutions, to ensure compliance with contemporary expectations and to ensure the efficient running of school operations and business.
Royal Commission's observations on school governance
The role of school councils or boards is generally to establish the strategic direction of the
school, monitor and review school performance, and report on the school’s management and operation to the relevant government education authority. Another central role is to ensure effective policies and practices are in place to fulfil the council’s or board’s legal obligations, including protecting children at school. Boards might ensure school principals are committed to child safety, invite student representatives to board meetings, and engage with parents and the community about issues of safety, bullying and identifying child abuse.
Poor leadership, flawed governance and unhealthy school cultures, particularly in nongovernment schools, emerged as a strong theme throughout our case studies, private sessions and research. We heard that school leadership, governance and culture had a strong influence on the way child sexual abuse was prevented, identified and responded to.
It is apparent from our case studies and research that where institutions have embedded principles of good governance, including transparent and consultative processes for making and implementing decisions, it is more likely that they will respond effectively and appropriately to allegations of child sexual abuse.
Out-of-date school Rules/Constitutions
While the Royal Commission's observations were made in the context of its reporting on historical child sexual abuse, they apply broadly and impart an important lesson: namely, avoiding a governance structure which is unclear against a backdrop of rules, articles of association and constitutions that are antiquated and in desperate need of being overhauled.
Legal duties of directors/committee members of schools
There are important duties that the law imposes on directors/committee members of schools which apply regardless of the school's size or governance structure.
The four main legal duties that apply are:
- the duty to act in good faith in the best interests of the organisation and for a proper purpose
- the duty to act with reasonable care, skill and diligence (including the duty to prevent insolvent trading)
- the duty not to improperly use information or position, and
- the duty to disclose and manage conflicts of interest.
Non-compliance with these duties can lead to significant penalties. It is therefore critical that the school's governance structure and its Rules/Constitution reflect best practice so as to increase the likelihood that the legal duties of directors/committee members will be met.
Common governance problem areas
The most common areas where a lack of a good governance structure supported by modern documentation leads to difficulties include:
Troublesome school members
A number of school rules we have reviewed do not deal adequately with members who, while not on the board/committee, seek to have an undue influence in the running of the schools of which they are members. The effect of this is to sidetrack the board/committee from pursuing what should be its main roles of setting the school's strategic direction and in developing broad policies in the most important areas of the school's activities.
Schools should give close attention to the criteria for members to be members of the school. For example, a simple but desirable change is to make it clear that for a parent to be a member that person must be a parent of a current student who has actually signed the student's enrolment documentation.
In addition, schools should have a simple but effective method of removing members where that is the last resort.
Troublesome directors/committee members
We have found on a number of occasions that in an unsophisticated governance structure, common features of the Rules/Constitution are that the board/committee is narrowly comprised (for example, directors/committee members are drawn from particular interest groups such as past parents, alumni or staff) and there is insufficient allowance for directors/committee members to be replaced.
School boards/committees should be comprised of men and women with the business skills and experience to run sophisticated schools with substantial revenue and many employees operating in a complex and highly regulated industry.
The Rules/Constitution of the school should set out the role of the board/committee to make the distinction between the roles and function of the board/committee and those of the principal well understood. In a Catholic school setting, it may also be important to ensure the responsibility and duties of the parish priest, if any, are made clear.
Limits should be placed on the tenure of directors/committee members so there are constant opportunities for renewal and fresh thinking.
As for troublesome members, in the unfortunate situation where a director/committee member is not satisfying his or her obligations and is engaging in conduct that is prejudicial to the school, a clear pathway needs to be contained in the Rules/Constitution to bring the tenure of that director/committee member to an end.
Use of Technology
Many old Rules/Constitutions (formerly Articles of Association) do not contemplate the efficient running of meetings using technology, such as teleconference and audio visual facilities. This has the effect of hampering the efficient running of boards/committees and tends to limit the capacity of the board/committee to respond to events as they arise. It is critical that contemporary methods of technology communication are provided for in the Rules/Constitution of schools.
Given the sophistication of modern schools and the potential demands on the time of directors/committee members, it is unrealistic to expect that they can devote sufficient time to all of the discrete areas of the school's activities. Older Rules/Articles of Association do not cater sufficiently for the creation of specialised sub-committees (for example, finance, governance and professional learning). They also do not address membership of these sub-committees, the tenure of members, nor the appointment and removal of sub-committee members.
Formation of a disciplinary sub-committee can also be useful as a method of ensuring removal of directors/committee members. This would provide objectivity and independence in the process and ensure that the procedural requirements and rights to appeal are clearly delineated.
Lack of diversity in the school board/committee
The composition of the board/committee should be considered carefully as the board/committee often regulates and manages various aspects of the school.
It is important that the directors/committee members bring a range of diverse skills, experience and qualifications and that there is an appropriate balance in age range, gender and ethnicity. This assists in ensuring a wide skills matrix is utilised in determining the strategy and vision of the school. Further, a lack of diversity can also hinder the school's growth and ability to generate revenue and operate efficiently.
Checklist of governance issues to consider
- What is the current governance structure in place and would the school's purpose and functions be better served by utilising a different legal structure?
- Are the Rules/Constitution reflective and conducive to the purpose and vision of the school?
- Do the Rules/Constitution provide specific powers or does the school board/committee have general powers to act in order to fulfil its purpose?
- Do the Rules/Constitution and general governance structure of the school make it clear what the duties and responsibilities of the directors/committee members are?
- Is there a clear distinction in the roles of each of the principal, school board/committee and parish priest (if applicable)?
- Is the school board/committee functioning and conducting meetings in the most efficient way possible, including through:
- the utilisation of technology
- the implementation of sub-committees, and
- the delegation of roles as needed?
- Do the Rules/Constitution provide a means of removing troublesome directors/committee members or general members?
If you answered no to some or all of the above questions, you should seek legal advice about modernising your corporate governance structures consistent with contemporary expectations.
This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal or financial advice. Please seek your own legal or financial advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.