Student Resource Package – Managing the Budget

School Carryover Policy

To support timely educational and wellbeing outcomes of students, funding provided through the Student Resource Package (SRP) as cash or credit should be expended in the year it is received, consistent with the Financial Management Act 1994.

The credit allocation is to be utilised on salaries. The cash allocation is designed to be used for operational expenses.

This policy clarifies expectations on when funding should be spent and contributes to the efficient administration of school funding.

Credit carryover

Any credit surplus remaining against the school after the reconciliation process is completed has historically been carried forward to the following year. From 2024, the amount of carryover allowed has been capped based on a proportion of a school’s total credit component of their SRP funding. Any amount of surplus above that threshold will be retained by the department.

• In 2025, schools were permitted to carry over up to 5% of the total credit component of their SRP into 2026.
• For 2026, the threshold will remain at 5% of the total credit component of the SRP into 2027.
• From 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.

To support 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 were permitted to carry over up to 10% of the total credit component of their SRP into 2025. In 2025, the threshold will remain at 10% of the total credit component into 2026, with the remaining balance to be withheld by the department.

Under a staged transition the threshold for specialist schools will also decrease, with thresholds remaining higher than mainstream schools in recognition of the nature of expenditure patterns.

• From 2026, the threshold will reduce to 7.5% of the total credit component of their SRP which can be carried over into 2027.
• From 2027, the threshold will reduce to 6% of the total credit component of their SRP and remain at 6% ongoing.

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 2026:

• All schools: Maximum SRP credit that can be retained = the greater of:
  • Total Annual SRP Credit × 5% or $100,000
• Specialist schools: Maximum SRP credit that can be retained = the greater of:
  • Total Annual SRP Credit × 7.5% or $200,000

Accumulated balances

All credit surplus funds accumulated up until 2023 reconciliation will be quarantined from being withheld. 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 for reinvestment in the government school system.

Deficit write-off incentive for specialist and small schools

In recognition of the difficulty in recruitment and managing staffing in specialist and 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.

Specialist and small schools that exceed their full allocation will have an opportunity to have their deficits reduced by the department up to $50,000 for small schools and $100,000 for specialist schools.

This incentive only applies to specialist schools 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
• 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

Cash carryover

To prevent the build-up of SRP cash balances in schools, schools that have not used their prior year SRP cash will not receive their quarterly cash funding as cash and will instead receive this as credit.

From 2026, schools that have total cash expenditure less than their SRP cash allocation (inclusive of any credit to cash) at the end of the calendar year will be considered as having an SRP cash surplus in that calendar year.

In the year following (from 2027) the SRP cash surplus amount will be withheld from the school’s quarterly cash grant payment. An amount equal to the cash funds withheld will be provided as a credit to the school net of salary on-costs for long service leave and Workcover paid on behalf of schools.
Schools will continue to receive the same total amount of SRP funding to which they are entitled each year under this policy. The policy will only affect the proportion of cash and credit within existing allocation arrangements.

Any credit to cash transfer requests will be administered to ensure that the transfer does not result in schools accruing additional cash balances.

The department will periodically review funding allocations to ensure that credit and cash funding is allocated in line with the nature of the intended expenditure.

Schools can continue to retain sufficient cash in operating reserves being 2 months of average operating expenditure (see Financial Commitment Report in CASES21 (GLBANK11003)).

No revenue from fundraising will be impacted.

Bank interest received

All funds received by schools are required to be held in Central Banking System accounts with a State Purchasing Contract provider.

From January 2026, schools will receive interest based on the Reserve Bank of Australia (RBA) cash rate less 0.85% (85 basis points). The remaining 1% (100 basis points) of interest will be retained for reinvestment in the government school system.

Funds in a Central Banking System bank account are paid interest based on the RBA cash rate.

Cash balances and co-contribution to priority projects

Where a school holds cash funding above the lower of 6 times their operating reserve or $2 million, they may be required to make reasonable co-contributions to priority projects delivered in their school including maintenance and infrastructure projects.

Funds held by schools from 2 prior years of fundraising operations and funds held on behalf of families (that is, Camps Sports and Excursions Fund and School Saving Bonus) will be excluded from co-contributions.

Support

The intention of this policy is to actively support funding appropriated from Parliament being spent on today’s students. Schools will be supported in managing their cash or credit budgets and expenditure to ensure that, as far as possible, current year funds benefit current 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 of the Student Resource Package – Managing the Budget policy.

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