The Victorian Department of Education has released the new Victorian Non-Government Schools Funding Agreement for 2026–2029. While there are several updates, three changes in particular will require schools to adjust their financial planning and reporting processes.
1. Earlier Financial Reporting Deadline (Timing Change)
What’s changed?
The annual Financial Acquittal Certificate deadline has moved forward from 30 June to 31 March.
Schools must now provide their Financial Acquittal Certificate to the Department by 31 March following the relevant funding year.
If a school’s audit is not complete by 31 March, schools may request approval to:
- Submit a school-certified certificate by 31 March, and
- Provide the fully audited version by 30 June.
The Department has committed not to unreasonably refuse these requests.
What this means for schools
This change brings financial reporting forward by three months and will likely require:
- Earlier audit planning
- Tighter internal financial close processes
- Better coordination with auditors and boards
Schools should review audit timelines now to avoid compliance risk.
2. Tighter Rules on “Commitment to Spend” (Underspend Risk)
What’s changed?
Funding is now only considered “committed” where the school has a legally binding obligation to pay (e.g. signed contracts, employment obligations, purchase orders). This more closely aligns with the Commonwealth Recurrent Funding requirements.
Funding is not considered committed if it is merely:
- Budgeted,
- Approved internally,
- Earmarked for a future project.
The Agreement also introduces a formal “Underspend” concept. If schools cannot fully expend or legally commit their Victorian recurrent funding within the calendar year, they must notify the Department. The Department may then:
- Require repayment of the underspend,
- Allow the school to retain it (with conditions), or
- Offset it against future funding.
This will particularly impact schools with:
- Low or no fee income,
- Rapid enrolment growth,
- Large October funding adjustments.
What this means for schools
Schools will need tighter:
- Year-end spending strategies,
- Contracting and procurement processes, and
- Cashflow and funding forecasts.
Late-year funding increases or project delays now carry real compliance and cashflow risk.
3. Stronger obligations for schools to notify the Department early of issues that may compromise the continuity of the schools’ operations
Independent Schools must immediately notify the Department if any of the following events occur:
- An insolvency event occurs, including:
-
- It has liabilities greater than assets,
-
- The school is unable to pay it’s debts as and when they fall due,
-
- The school defaults of a loan,
-
- Or any other event that may reasonably be considered to have a material impact on the School’s ability to meet the ongoing financial viability requirements of the Minimum Standards.
- Any of the school’s staff engage in or are believed to have engaged in fraud, collusion or improper practices that may impact the school’s financial viability,
- Any directors of the school become aware of circumstances that may affect the schools financial viability.
If the Department becomes aware of any such events, it may request that a proposed remediation plan be provided within 14 days.
Other Notable Changes
While timing and commitment-to-spend are the most operationally significant changes, schools should also be aware of:
- Change of control approvals – the Department approval is now required before governance or ownership changes,
- Increased monitoring powers – the Department and VRQA can request additional financial and compliance information,
- Expanded performance data sharing – Includes phonics, numeracy and VET data,
- Earlier disclosure obligations – Schools must notify The Department of risks to VRQA registration,
- NAPLAN clarification – Only required where relevant year levels are offered,
- Risk management attestation – A formal process is expected to be introduced.
What Schools Should Do Now
Schools should consider:
- Review reporting timelines,
- Reviewing how and when funding is “committed”,
- Strengthening year-end financial planning,
- Identifying any risk of underspends early,
- Reviewing governance processes for any upcoming changes.
Whilst the Funding Agreement is from 2026 – 2029, the Victorian Government financial assistance for non-government schools – 2026 guidelines, are only relevant for 2026 and are subject to change in the future.
How we can help
Saward Dawson has a dedicated Education Sector team, assisting clients in many areas, including financial reporting, compliance matters, audit and assurance etc.
