Student Resource Package – Managing the Budget

Credit Carryover Policy

Any credit surplus remaining against the school after the reconciliation process is completed has historically been carried forward to the following year.

• From 2024, under a staged transition plan, schools will no longer be able to carry forward the full amount of unspent credit funds into future years. The amount of carryover allowed will be capped based on a proportion of the total credit component of their SRP funding. Any surplus carried forward to the following year will form part of the total credit component for that year, noting that: in 2024, schools will be allowed to carry over up to 7.5% of the total credit component of their SRP into 2025. Any amount of surplus above that threshold will be withheld by the department.
• In 2025, schools will be allowed to carry over up to 5% of the total credit component of their SRP in 2026. Any amount of surplus above that threshold will be withheld by the department.
• In 2026, the threshold will remain at 5% of the total credit component into 2027, with the remaining balance to be withheld by the department.
• In 2027, the threshold will reduce to 3% of the total credit component of their SRP and remain at 3% ongoing.

The carryover threshold represents the maximum amount of funds a school can carry over at any given time.

Carryover threshold for small schools

In line with Small Schools Base Funding, small schools are defined as either primary schools with less than 80.1 students or secondary schools with less than 400 students.

In order to give protection to small schools and ensure they have sufficient flexibility to manage year-on-year enrolment and funding fluctuations, schools that have surplus balances that exceed the percentage threshold requirements will not have their surpluses reduced below $100,000.

Carryover threshold for specialist schools

A higher carryover threshold for specialist schools will be allowed to recognise the more unpredictable nature of their expenditure patterns.

From 2024, specialist schools will be permitted to carry over up to 10% of the total credit component of their SRP into future years. The 10% threshold will not change and will remain ongoing, though in common with mainstream schools, specialist schools will no longer be able to accumulate unspent credit funds over multiple years.

The threshold represents the maximum amount of funds a specialist school can have carried over at any given time.

Specialist schools that have surplus balances that meet the threshold requirements will not have their surpluses reduced below $200,000.

Schools will not be permitted to transfer credit funds to cash without a legitimate reason.

Formula

Any school that has a surplus balance that exceeds the threshold requirements will not have their surplus reduced to below $100,000, or $200,000 for specialist schools.

In other words, in year one of this policy:

• All schools: Maximum SRP credit that can be retained = the greater of:
  • Total Annual SRP Credit × 7.5% or $100,000
• Specialist schools: Maximum SRP credit that can be retained = the greater of:
  • Total Annual SRP Credit × 10% or $200,000

Accumulated balances

All credit surplus funds accumulated up until 2023 reconciliation will be quarantined from being withheld, but schools must spend all accumulated funds by the end of transition period (end of 2027 school year).

Any funds remaining from the accumulated balance after 2027 will be withheld by the department.

Deficit write-off incentive for small schools

In recognition of the difficulty in recruitment and managing staffing in small schools, coupled with the requirement to balance staffing over multiple years with smaller budgets, there will be an opportunity to have small deficits written off by the department.

Small schools that, in the spirit of trying to spend their SRP credit allocation in full for the benefit of the existing students, exceed their full allocation, thus pushing the school into a small deficit, will have an opportunity to have their deficits reduced by the department up to $50,000.

This incentive only applies to very small and small schools (in line with Small Schools Base Funding which defines small schools as:

• primary schools with less than 80.1 enrolments
• secondary schools with less than 400 enrolments
• specialist schools with less than 45 enrolments (to align with the size adjustment supplementation)
• primary/secondary schools with less than 400 enrolments. While the SRP treats primary/secondary schools based on their primary enrolment and secondary enrolments separately, for the purposes of the incentive, the primary/secondary threshold will align with the secondary enrolment threshold.

This incentive will automatically apply to all small schools. However, the incentive may be reduced if the school undertakes a CCT request that is above and beyond genuine cash flow need.

Schools should contact the Schools Finance and Resources Branch for further information on the deficit write off incentive via schools.finance.support@education.vic.gov.au

Support

Schools will be supported in managing their credit budgets and expenditure to ensure that, as far as possible, current year funds benefit current year students.
Schools can see their surplus through budget management reports and can contact their Strategic Financial Management Advisor (SFMA) if they wish to seek support and advice on managing their credit budgets. Each SFMA is an experienced former principal with an established record leading school improvement supported by highly developed technical financial leadership skills.

Schools that are likely to incur the most material credit underspends (either through their accumulated balances or through in-year underspend) will be identified through central tracking and offered assistance from an SFMA.

Support documentation, including FAQs, are available on the Resources tab.

Any queries or concerns regarding the policy can be directed to the Schools Finance and Resources Branch via schools.finance.support@education.vic.gov.au