school governance riot

In late 2017, parents at elite Brisbane girls’ school Somerville House staged a public protest outside the gates, demanding reform of the school’s governing body, the Presbyterian and Methodist Schools Association (PMSA). Parents were upset about the school’s governance and launched a social media campaign to remove the council. Several senior staff also resigned, and the school brought in a high-profile corporate communications firm (Cannings Corporate Communications).

Amid intense media coverage, Beyond PMSA, a splinter group of parents, old boys and girls, and business and community members from the four PMSA schools, emerged wanting to oust the governing council. The AICD was brought in to conduct a review and the association opened a full public consultation.

In February 2018, the elite Melbourne boys’ school Trinity Grammar became the centre of a public storm, following the deputy headmaster’s sacking by the school council for trimming a student’s hair on school photo day. After a rebellion by students, parents and alumni, the school called in eminent QC Ray Finkelstein AO to review the case. The council later reinstated the teacher and apologised. Trinity chair Robert Utter announced a review of the council’s governance model, constitution and composition.

What’s going on?

The issues schools are being forced to grapple with reflect a rapidly evolving societal and governance landscape, says Gabrielle Schroder FAICD, the AICD’s head of board advisory. The governance challenges go much deeper and are more disruptive than you might think. Schools are facing increased social expectations and tighter regulatory requirements and calls for greater transparency and accountability. And, following the Gonski 2.0 review, there is a focus on arresting the decline of Australia’s educational performance.

At the same time, parents and students are starting to become more active in their school communities. Combined with social media, this is shining a spotlight on institutions that were previously more hidden. The rapid rate at which such situations can turn toxic has many school council members wondering if being on a school board is actually worth the risk.

“If you look at schools, they are a classic flashpoint for these increasing expectations,” Schroder says. “It is almost foreshadowing what will become the norm in society in coming years. People are most passionate about their kids — and, understandably, they get fired up.”

Faced with increased legal and social expectations, greater scrutiny and calls for transparency and accountability, schools have become a container for the intense, often toxic issues emerging in a changing society. This is amped up by the emotions of time-poor parents who’ve invested hopes, dreams and a sizeable portion of their income on their offspring’s future — which adds social, reputational, health and safety risks to the already substantial financial risk of running large budgets.

“The responsibilities of school boards have elevated enormously,” says Libby Prell FAICD, who has been involved with school boards for 16 years. “School boards have a huge responsibility today. Expectations of parents, the community and government have heightened — it’s a serious governance business. Reputation and brand can be so easily tarnished by social media and everyone is looking for a scapegoat.”

The issues

There are four main issues: the degree of communication and consultation, the skills and composition of boards, the scale and financial risk.

Just as the review by David Gonski AC FAICDLife has raised the need for changes in how schools teach and students learn, it is clear the governance model that was set up in some cases a century ago is not fit for purpose.

School Governance

John Simpson MAICD, a member of the Monash University council and former board member of Melbourne’s Scotch College, argues many boards are “woefully inadequate” for the task of running what is in effect a big, complex business with all the fiduciary, audit, risk and capital management accountabilities you’d expect in any significant institution.

“A number of Australian independent schools have revenues in excess of $100 million and many more have revenues in excess of $60–$80m,” says Simpson. “Under today’s funding model, private schools also receive significant taxpayer funds from the Commonwealth, in return for which taxpayers and parents should demand a high degree of transparency in how decisions are made with respect to these funds. They are unambiguously a business, with the appropriate responsibilities. You have an obligation to run the place as businesslike as you possibly can. I frequently hear people say they wouldn’t care to sit on a public company board because the risks are now so high. Well, this view is starting to impact school boards as well,” he says.

Demand for action

The window for schools to respond to issues has shrunk dramatically, says Schroder. “Until recently, boards would take an audit approach to a governance review, maybe interviews with directors and executives. Now, typically there are expectations for full and rapid consultation — and action. Some of the systems and structures have been in place for 100 years and they are harder to shift, so you have to progressively work through things.”

And it’s not just major issues that can bring schools unstuck. Gaye McMath FAICD, a former board member of Methodist Ladies’ College Perth, says that a change in catering arrangements at the school canteen snowballed into a full-blown crisis that took months to resolve. If [the board] had done a risk analysis on the decision, it would never have come onto the board’s radar, she says. But that seemingly small issue was the “tip of the iceberg” in relation to dissatisfaction within the school community about executive decision-making.

McMath, a senior corporate advisor and non-executive director, says this showed her that when it comes to schools, “stakeholders are emotionally committed and genuinely committed” to the institution. Communicating with them about absolutely everything is vital.