A Director s Manual SAMPLE NOT FOR DISTRIBUTION. Managing an early education and care service in NSW. Lisa Bryant Leanne Gibbs
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3 A Director s Manual Managing an early education and care service in NSW Lisa Bryant Leanne Gibbs Chapter 3 How do we provide education and care in NSW? 1
4 Managing Editor: Editing: Design: Production: Printing: Lisa Bryant Camille Howard Deborah Kelly and Madeleine Preston ARMEDIA Pegasus Printing A Director s Manual: Managing an early education and care service in NSW First published in 2013 Community Child Care Co-operative Ltd. (NSW) 2013 (except where otherwise indicated) ISBN Community Child Care Co-operative Ltd. (NSW) Building 21, 142 Addison Road, Marrickville NSW 2204 Phone: (02) Freecall: Fax: (02) Web: info@ccccnsw.org.au Disclaimer The content of this manual is provided for information purposes only. Although all care has been taken, no claim is made as to the accuracy or authenticity of the content of the manual. Community Child Care Co-operative (NSW) does not accept any liability to any person for the information or advice (or the use of such information or advice) provided in this manual or incorporated into it by reference. The information is provided on the basis that all persons using the manual accept responsibility for assessing the relevance and accuracy of its content. No responsibility is taken for any information obtained from listed websites.
5 A Director s Manual Managing an early education and care service in NSW Acknowledgments Community Child Care Co-operative (NSW) acknowledges the contribution of the following people and organisations in the production of this manual. Authors Lisa Bryant and Leanne Gibbs Contributors The staff of Community Child Care (NSW) and Children s Services Central, whose knowledge of the education and care sector in NSW informed every page. Special thanks to Phillipa Maher, Carolyn McGuiness and Laura Sportelli for their work on the forms section. The Directors of education and care services in NSW whose experience and expertise was continuously mined in the creation of this manual. Authors of prior Community Child Care (NSW) manuals whose words have been reproduced or adapted, particularly Anthony Semann, Colin Slattery and Lorraine Madden for the chapters on quality service provision, marketing and promotion, project management and handling customer complaints. The organisations who granted permission for their work to be reproduced or adapted for this manual. Funding Community Child Care (NSW) acknowledges funding support from the Department of Education and Communities (DEC) under the Early Childhood Education and Care Grants Program, which helps provide professional development and training, research and advocacy for the not-for-profit early childhood education and care sector. Community Child Care (NSW) also acknowledges funding from the Australian Government through the Department of Education, Employment and Workplace Relations (DEEWR) as part of the Inclusion and Professional Support Program (IPSP). Support Community Child Care (NSW) gratefully acknowledges financial and other support from Guild Insurance and Educational Experience. This assistance allows us to expand the benefits available to members.
6 Contents Introduction Community Child Care Co-operative (NSW): your partner in management 7 Community Child Care C0-operative (NSW) 10 Your guide to using this manual 12 Chapter 1 A Director s management responsibilities 13 Directors management responsibilities 16 Chapter 2 Education and care in NSW: an overview 23 A. Types of education and care services 26 B. Management models, governance and business structures 31 C. Roles of government 38 D. Funding of education and care services: Australian Government 44 E. Funding of education and care services: NSW Government 48 F. Other parts of the education and care sector 53 G. The National Quality Framework 58 Chapter 3 The importance of good management 63 A. The National Quality Standard 66 B. Quality service provision 72 C. Quality improvement 77 D. Community-based management 79 Chapter 4 Managing money and resources 85 A. Financial basics 88 B. Budgeting 98 C. Child Care Benefit, Child Care Rebate and the Child Care Management System 101 D. Taxation and superannuation 107 E. Insurance 110 F. Marketing and promotion 114 G. Project management 121 Chapter 5 Managing staff 125 A. Recruiting and retaining good staff 128 B. Ethics 144 C. Industrial relations and employers responsibilities 149 D. Managing for good performance 158 E. Professional development for Directors and staff A Director s Manual Managing an Early Childhood Education and Care Service in NSW
7 Chapter 6 Managing compliance 171 A. Compliance: why and how 174 B. The Education and Care Services National Law and National Regulations 176 C. Family assistance legislation 199 D. Work health and safety laws 201 E. Child protection 206 F. Other legislation 216 Chapter 7 Managing planning and policy 219 A. Vision and philosophy 222 B. Policy development 225 C. Planning 231 D. Quality Improvement Plans 237 Chapter 8 Managing children s safety 243 A. Health and safety resources (you must have at your service) 246 B. Specific health and safety issues 250 Chapter 9 Managing the challenges 259 A. Handling customer complaints 262 B. Critical incidents 267 Chapter 10 Managing action, advocacy and activism 273 A. Understanding advocacy 276 B. Stories of advocacy 285 Chapter 11 Leadership 293 Effective leadership 296 Chapter 12 Resources to support management 307 A. Essential documents, manuals, books and websites 308 B. Where to get more help 311 C. Glossary of acronyms 316 D. Sample forms 323 E. References and resources used in this manual 370 5
8 Online resources used in A Director s Manual There are many online resources and websites referred to in A Director s Manual. All of these are listed in one location for easy reference. Go to: 6 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
9 Introduction Community Child Care Co-operative (NSW): NOT your FOR partner in management Introduction Community Child Care Co-operative (NSW): Your partner in management 7
10 8 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
11 introduction Community Child Care Co-operative (NSW): your partner in management There are many peak organisations in NSW supporting the work and operation of early education and care services. Community Child Care Co-operative (NSW) is one of the largest of these and is active in promoting, supporting and advocating for quality education and care services so they can meet the needs of children, their families and the community. Established in 1978, Community Child Care (NSW) is a not-for-profit organisation and provides a range of services, including advocacy, publications, resourcing, and professional development for educators and managers of education and care services across NSW. Although its focus is on community-based services, Community Child Care (NSW) also resources for-profit children s education and services. Community Child Care (NSW) is the lead agency of Children s Services Central, the Professional Support Co-ordinator for education and care services in NSW, runs a Registered Training Organisation offering nationally recognised education and care services qualifications, and has established a separate independent not-for-profit company, Children s Services Community Management, to operate education and care services. Community Child Care (NSW) represents and supports all the components of an education and care service: the management (whether this is a management committee or other provider), the staff and the families and children it serves. We recognise the importance of good management of education and care services, and recognise this is often the responsibility of service Directors. We would like all service Directors to think of Community Child Care (NSW) as their partner in management. Introduction Community Child Care Co-operative (NSW): Your partner in management 9
12 Community Child Care C0-operative (NSW) Community Child Care Co-operative (NSW) is a non-profit organisation working in the education and care services sector. Our aim is to inform and inspire early education and care services, and influence government policy, practices and programs so children within NSW have access to quality education and care services that meet the needs of their communities. We advocate for education and care services, especially those run on a not-for-profit basis by local communities. We provide professional development and support for all education and care services and we work to assist services to provide high quality early education and care. We also advocate for the provision of accessible, affordable and high quality education and care services for children and their families in NSW. We are funded by the NSW and Australian Governments, and we also earn income through membership, the sale of resources and publications, and professional development and consultancy services. Our office is located in Marrickville, Sydney. Community Child Care (NSW) is a diverse organisation that runs programs for education and care services in NSW. Programs include: Advocacy and peak: Community Child Care (NSW) advocates for the right of children and their families to access quality affordable education and care. We believe community-based, not-for-profit services should be funded and supported to provide this education and care. We are funded as a peak organisation for community-based early education and care services to represent and act on behalf of these services when lobbying government and to promote the interests of our members. Both community-based and for-profit services can become members of Community Child Care (NSW) but community-based members get full voting rights. Professional Learning: Children s Services Central: Community Child Care (NSW) is the lead agency of Children s Services Central, the Professional Support Co-ordinator for NSW, which is responsible for providing professional development and resourcing for all education and care services across the state under the Australian Government s Inclusion and Professional Support Program. Under this program, Children s Services Central provides the Bicultural Support Program, Specialist Equipment, free telephone support and access to calendared professional development courses for education and care services. Professional development and support: Community Child Care (NSW) offers a range of customised training and professional development opportunities for early education and care services. Some of this training is offered under the banner of Children s Services Central. We also provide a range of resources, especially management resources, for education and care services. Registered Training Organisation: Community Child Care (NSW) is a Registered Training Organisation offering nationally-recognised, accredited education and care and management qualifications for people working or wishing to work in the education and care sector. Children s Services Community Management: The Board of Community Child Care (NSW) has established a controlled entity, Children s Services Community Management (CSCM) to assume the operation of education and care services where the existing management is unwilling or unable to continue to manage the service. 10 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
13 Publications: Community Child Care (NSW) publishes magazines, newsletters and books within the education and care sector. Our most well known publications are Shortside, the sector s most popular e-newsletter, Broadside our monthly must-read newsletter, and Rattler our quarterly, in-depth journal. In addition we have published a range of books, including this manual! Community Child Care (NSW) gratefully acknowledges the financial assistance provided by the NSW Government through the Department of Education and Communities (DEC) and the Australian Government through the Department of Education, Employment and Workplace Relations (DEEWR). This funding supports the work of Community Child Care (NSW) in providing a broad range of professional development, resources and support services to education and care services across NSW. Membership of Community Child Care (NSW) is open to both individuals and education and care services. Membership has the following benefits: free 12-month subscription to Rattler, Broadside and Shortside free access to NQF in a Box, the authoritative online guide to the National Quality Framework free listing of job vacancies on the Community Child Care (NSW) website, exclusively for members free access to the member-only content on our website, where there is a range of resources on current issues training voucher: services insuring with Guild Insurance may receive a voucher entitling them to training/consultancy from Community Child Care (NSW) equal to 5 per cent of the base value of the cost of their insurance policy opportunities to attend consultations on issues impacting education and care services access to analysis of government policy relating to education and care services practical advice on the way government policies impact education and care services 20 per cent discount on all purchases from Educational Experience 10 per cent discount for on-response training run by Community Child Care (NSW) for your service 10 per cent discount on any customised consultancy work undertaken by Community Child Care (NSW) for your service 10 per cent discount on all Community Child Care (NSW) publications 20 per cent discount on fees for the waitlist management program MyWait List discounted membership to Jobs Australia Community Sector Industrial Relations Service. Community Child Care C0-operative (NSW) For more information: Community Child Care Co-operative (NSW) Children s Services Central Phone: (02) or freecall Freecall: Fax: (02) Website: Website: info@cscentral.org.au info@ccccnsw.org.au Membership information Membership is open to education and care services and individuals working in them. The types of membership are: Community-based Services Individual Membership Associate Services Associate Individual Associate Student Membership. To join Community Child Care (NSW), go to: Introduction Community Child Care Co-operative (NSW): Your partner in management 11
14 Your guide to using this manual This manual can either be: read from cover to cover like a book (by really, really eager Directors!) dipped into when you need more detailed information on a particular area. Watch out for: Tips and information that are especially important! You can either: Where you can go to obtain more information websites, addresses and phone numbers Refer to the index or the table of contents to work out where to find the information you are looking for or consult the quick guide below. Quick Guide Chapter 1: An overview of the responsibilities of the Director Chapter 2: The sector as a whole service types, funding, structures, National Quality Framework Chapter 3: Quality service provision in NSW, the National Quality Standard, importance of quality Chapter 4: Looking after money, resources, tax, super, government payments, insurance, marketing Chapter 5: Staffing recruitment, retention, performance management, professional development Chapter 6: Laws and compliance to them Chapter 7: Planning and policy philosophy, policies, strategic plans, Quality Improvement Plans Chapter 8: Health and Safety Chapter 9: Tackling challenges customer complaints, critical incidents Chapter 10: Action, advocacy and activism Chapter 11: Leadership Chapter 12: Acronyms, sample forms and documents you need to have 12 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
15 Chapter 2 Education and care in NSW: an overview In this chapter: a Types of education and care services B Management models, governance and business structures C Roles of government D Funding of education and care services: Australian Government E Funding of education and care services: NSW Government F Other parts of the education and care sector G The National Quality Framework Chapter 2 Education and care in NSW: an overview 23
16 24 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
17 Chapter 2 introduction Education and care in NSW: an overview Education and care services aim to meet the care, education and development needs of children. There are different models of education and care services in NSW the majority of these are regulated by the NSW Department of Education and Communities, under either national or NSW regulations. Education and care services are often referred to in the general community as childcare, preschool or day care, but the name education and care services more accurately reflects the role of these services. Generally, children using education and care services are under the age of 13. Early education and care services refers to those delivered to children below school age. One key factor to be aware of is that while the Australian Government has traditionally taken responsibility for provision of childcare, the NSW Government has constitutional responsibility for provision of preschools. Chapter 2 Education and care in NSW: an overview 25
18 section a Types of education and care services There are different types of services: centre-based: long day care centres, preschools, multipurpose services, outside school hours care, occasional care centres, Multifunctional Aboriginal Children s Services home-based: family day care and in-home care services and mobile education and care services. There are differences in the regulation, funding and operating requirements for each type of service. Some services offer education and care under one model, others may operate as a combination of one or two models. Centre-based education and care services Centre-based education and care services cater for four or more children in permanent premises. These services include: long day care centres preschools outside school hours care services occasional care centres. Long day care centres Long day care centres are approved to operate by the NSW Department of Education and Communities (DEC) under the Children (Education and Care Services National Law Application) Act 2010 and are regulated by the Education and Care Services National Regulations. Long day care centres are aimed primarily at providing all-day or part-time care for children aged between birth and school age from working families and the general community, and are provided in a non-residential environment by qualified staff. Educational, care and recreational programs are provided and are based on the developmental needs, interests and experience of each child. All long day care centres in NSW offer early childhood education programs and the majority are required by regulation to employ university-qualified teacher/s. Primary school children may also receive care before and after school, and during school vacations, within long day care centres. Long day care centres: are open for at least eight hours each day from Monday to Friday cater for children aged from six weeks to six years, although not all centres cater for the entire age range are approved to cater for a maximum number of children as specified on the Service Approval must operate for a minimum of 48 weeks per year 26 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
19 generally, in NSW, provide a preschool program for children in the two years before school are eligible to be Australian Government Approved Child Care Services, which means they can receive approval under family assistance law for the purposes of Child Care Benefit are approved to operate under the legislative framework of the National Quality Framework. (This is sometimes referred to as being in-scope of the National Quality Framework.) Long day care centres are managed by a diverse range of operators in NSW, including: standalone not-for-profit community-based services: Managed by organisations based in the community through a membership made up of community members (for example, the parents). The membership elects a management committee or Board which is accountable to the membership. No profit is distributed to the management committee or the members, and any surplus funds are redirected to the service. sponsored not-for-profit other organisations: Managed by not-for-profit organisations such as charity organisations and church groups. Examples in NSW are those services operated by Goodstart Early Learning, KU Children s Services, Uniting Care Children s Services and Children s Services Community Management. Preschools private/for-profit services: For-profit services provided or managed by a company or private individual. These operators may own a single service, a number of services or may be part of a chain of services operated by a corporate group. employer: Run by a corporation or by a provider for a corporation, often on the workplace premises. local government: These are services managed by local councils for people that live or work in the local government area. Preschools are approved to operate by DEC under the Children (Education and Care Services National Law Application) Act 2010 and are regulated by the Education and Care Services National Regulations. Preschools sometimes known as kindergartens provide an educational program in a dedicated setting, catering for children aged generally between three and five years of age. These services are delivered to children in the two years before they commence full-time schooling. Most services operate between 9am 3pm, during school terms only. Children may attend a number of days per week, usually in a fixed attendance pattern. Some preschools offer extended hours care, which consists of the preschool program plus additional care before and after the program, for example, from 8am 9am or 3pm 4pm. Types of education and care services There are two major types of preschools in NSW: community-based (not-for-profit) preschools: There are around 800 preschools managed by community based organisations in the same way as community-based long day care centres either by standalone parent run organisations or by not-forprofit organisations such as charity organisations and church groups. DEC preschools: There are 100 DEC preschools attached to state government primary schools across NSW. These preschools cater for children for one year prior to enrolment in school. There are also a small number of for-profit preschools and preschools operated by private schools. Chapter 2 Education and care in NSW: an overview 27
20 Occasional care centres Occasional care centres are approved to operate by DEC under the Children (Education and Care) Supplementary Provisions Act 2011 and are regulated by the Children (Education and Care Services) Supplementary Provisions Regulation Occasional care services are usually provided at a centre on an hourly or sessional basis for short periods or at irregular intervals for parents who need time to attend appointments, take care of personal matters, undertake casual and part-time employment, study or have temporary respite from full-time parenting. These services provide developmental activities for children and cater primarily for children aged from birth to five years. Permanent bookings are usually not made in occasional care, however, families usually join the service through an enrolment process and then call to advise when they wish to use the centre. For example, after enrolling in the centre, families may wish to use it for a morning, afternoon or full day, provided the centre has vacancies at the time. Multifunctional Aboriginal Children s Services Multifunctional Aboriginal Children s Services (MACS) are not-for-profit community-based services funded to meet the social and developmental needs of children from Aboriginal and Torres Strait Islander backgrounds. They are approved to operate by DEC under the Children (Education and Care) Supplementary Provisions Act 2011 and the Children (Education and Care Services) Supplementary Provisions Regulation Care is provided for preschool and school children and can include long day care, playgroups, outside school hours care, vacation care and cultural programs. Outside school hours care Outside school hours care services are approved to operate by DEC under the Children (Education and Care Services National Law Application) Act 2010 and are regulated by the Education and Care Services National Regulations. Outside school hours care is provided for primary school children aged from five to 12 years. As the name implies, it is provided before and after school hours during school term and through vacation care programs in school holidays. Care is sometimes also provided on student free days. Outside school hours care is provided on school grounds or on nearby premises outside of the school. Outside school hours care services can be managed by: school councils parent committees community-based organisations sponsored by local government or charitable organisations for-profit operators. Some long day care services provide places for before and after school care, particularly for siblings of children using long day care. In NSW, outside school hours care services have traditionally been called out-of-school hours services (OOSH services). 28 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
21 Home-based education and care services Home-based education and care services are regulated education and care services provided from a home setting either an educator s home, or a family s home. These services include: family day care in-home care. Family day care Family day care schemes are approved to operate by DEC under the Children (Education and Care Services National Law Application) Act 2010 and are regulated by the Education and Care Services National Regulations. Family day carers must register with a licensed scheme. Types of education and care services Family day care is a network of educators who provide care and education in their own homes for other people s children. Care can be provided for children aged from birth to 12 years and at hours agreed by the scheme and families. Family day care schemes can be: managed by community-based organisations sponsored by local government or charitable organisations managed by for-profit operators. The care is primarily for children aged from birth to five years; however, primary school children may also receive care before and after school, and during school vacations. Central co-ordination units organise and support a network of carers. In-home care In-home care is a flexible form of childcare provided by an approved educator in the child s home. In-home care can be provided where the carer or child, or any other child with whom the child lives, has an illness or disability, or lives in a rural or remote area. It is also available to families where family members work hours that exclude other forms of care and to families that have three or more children under school age. Other service types Mobile education and care services Mobile education and care services are approved to operate by DEC under the Children (Education and Care) Supplementary Provisions Act 2011 and the Children (Education and Care Services) Supplementary Provisions Regulation Focusing on the care and education of children, mobile services aim to ensure that children and families in isolated and disadvantaged communities in rural, urban and remote areas have access to good quality and safe education and care services. A mobile service, generally, operates from a van or other vehicle that travels through a particular geographic area and sets up an education and care service in a local hall, school or other premises. There are several types of mobile education and care service, responding to the unique needs of their communities. Mobile education and care services are often located in rural and remote areas, or in new Chapter 2 Education and care in NSW: an overview 29
22 urban development areas, and may provide flexible childcare sessions, playgroup sessions, vacation care, on-farm care, parenting and social support for families, toy and video lending libraries, and parent resource library services. Mobile education and care services provide children with an opportunity to mix with other children and participate in early childhood education that would not otherwise be available to them. They also provide flexible, responsive and innovative services to children and families experiencing social, geographic, cultural or economic isolation. Multipurpose services Multipurpose services are those designed to provide flexible care to meet the needs of their communities. They offer an integrated service delivery model where more than one type of care is available. Care types can include a mix of other service types. Children and family services Under the Indigenous Early Childhood Development National Partnership Agreement, 38 Children and Family Centres are to be established across Australia by June These centres are designed to provide a range of services, including childcare, supported playgroups and early learning for children and support for parents and families. They are to be located in urban, regional and remote areas that are disadvantaged and have a high Indigenous population. What s in a name? Sometimes service names may unintentionally mislead as to their service type, especially in the case of preschools and long day care centres. A long day care service could be called Apple Preschool, or services of any type may call themselves generic names, such as Apple Kindy. Generally, the best way of distinguishing between a long day care service and a preschool is when they are open preschools generally do not operate in school holidays. For more information, go to: ccservicehandbook.aspx Most types of education and care services also have specific peak organisations relating to their service type. Contact details for these organisations can be found in Chapter 12: Resources to Support Management. Information in this section is adapted from the Child Care Service Handbook, Department of Education, Employment and Workplace Relations, A Director s Manual Managing an Early Childhood Education and Care Service in NSW
23 section b Management models, governance and business structures Education and care services in NSW are managed under a number of different management models, depending on the ownership of the service. These include incorporated associations, co-operatives, companies, sole traders, partnerships and trusts. Services should choose the structure most appropriate to their situation and should obtain advice about the structure that will most appropriately meet their needs. Education and care services are managed by NSW and local governments, community-based not-for-profit organisations, for-profit providers and corporate providers. Around 43 per cent of all education and care services in NSW are community managed. Thirty per cent of long day care services are community managed; 67 per cent are privately managed; and 3 per cent are managed by local government. Around 80 per cent of preschools are community managed; 10 per cent are government managed; and 10 per cent are privately managed. Generally, community-based and government managed services are not-for-profit services, where the surplus or retained earnings are re-invested in the service, while for-profit and corporate services are operated with the intention of profits being returned to the owners or shareholders. Management models, governance and business structures Management models Education and care services in NSW are managed under one of the models outlined below. In 2012, the Australian Bureau of Statistics defined different service providers within the early education and care sector. Although the names are not commonly used in the sector to describe different management types, we have provided them in bracketed italics after the more common names below, as they will become commonly used in government data collections, and in other official situations. Community-based not-for-profit model: The community-based not-for-profit model reinvests any profits or surplus funds back into the service or services. There are two major types of communitybased not-for-profit services: 1. standalone [private, not-for-profit, community managed]: The service is managed by a committee comprising parents and community members. The Approved Provider is the incorporated body, represented by the management committee which is elected each year. The committee makes all major legal, financial, employment, planning and policy making decisions. These services are usually incorporated as a company limited by guarantee, an association or a co-operative 2. sponsored [private, not-for-profit other organisations]: A number of services are managed by an organisation, sometimes with advisory committees comprised of parents and community members. The Approved Provider is the sponsor body which makes all major legal, financial, employment, planning and policy-making decisions and is guided by the Chapter 2 Education and care in NSW: an overview 31
24 elected advisory committees. Sponsor organisations may only run education and care services or may also manage other community services. Examples of sponsor bodies include Children s Services Community Management, SDN Children s services, KU Children s Services, Big Fat Smile, CareWest and UnitingCare Children s Services. Sponsor organisations can be incorporated as a company limited by guarantee, an association, a co-operative or under a special act of Parliament (for example, UnitingCare children s services). Council sponsored [state and territory and local government managed]: These services are either under the direct management of a local council or operated independently as a committee of a council. Services that come under a council s direct management may have a committee that has a range of roles, ranging from fundraising to basic decision making. Where centres operate under a committee of council, a range of roles and responsibilities apply that relate to the Local Government Act. These services are usually not-for-profit and identify as community-based. State government services [state and territory and local government managed]: These services are operated by the NSW Department of Education and Communities as preschools attached to infants and primary schools. Employer sponsored: Services may be based in the workplace or operated off site. They may be directly managed by the employer, a committee of employees as established by the employer, or a separate organisation contracted to manage the service (for example, KU Children s Services). These services may be operated either on a profit or not-for-profit basis. For-profit model [Private for-profit]: These are services that are privately owned and managed. The proprietor has responsibility for overall legal, financial, employment, planning and policy making decisions. The proprietor may also fill the roles of Approved Provider, Nominated Supervisor and Director, or these positions may be held by a number of different people. A for-profit centre may belong to a publicly listed corporation, a partnership or sole trader, or to a proprietary limited company. Governance Governance is the system or process by which organisations are directed, controlled and held accountable to ensure the right decisions are made. Becoming the Approved Provider of an education and care service means accepting the legal responsibilities associated with establishing and administering the service. The provider of an education and care service has many obligations. The provider has a legal responsibility to: be the Approved Provider of the service and comply with the Education and Care Services National Law and Education and Care Services National Regulations be an operator of the education and care service under Commonwealth legislation including complying with family assistance law (in particular, to reduce fees in accordance with notices issued by Centrelink [formerly the Family Assistance Office] and the Department of Education, Employment and Workplace Relations Australian Government Approved Services only) appoint a Nominated Supervisor, an Educational Leader and a Director/co-ordinator for the service be an employer comply with funding agreements where in place ensure the service remains financially viable and can meet its debts and other obligations as they fall due complete a Quality Improvement Plan for the service and update it at least annually comply with all other NSW and Australian governments legislation that impacts upon the management and operations of a service. 32 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
25 What makes an organisation be considered as a not-for-profit? The Australian Taxation Office accepts an organisation as not-for-profit where its constituent or governing documents prevent it from distributing profits or assets for the benefit of particular people both while it is operating and when it winds up. These documents should contain acceptable clauses showing the organisation s not-forprofit character. The organisation s actions must be consistent with this requirement. A not-for-profit organisation can still make a profit, but this profit must be used to carry out its purposes and must not be distributed to owners, members or other private people. Examples of acceptable clauses that indicate not-for-profit character include: not-for-profit clause: The assets and income of the organisation shall be applied solely in furtherance of its abovementioned objects and no portion shall be distributed directly or indirectly to the members of the organisation except as bona fide compensation for services rendered or expenses incurred on behalf of the organisation dissolution clause: In the event of the organisation being dissolved, the amount that remains after such dissolution and the satisfaction of all debts and liabilities shall be transferred to another organisation with similar purposes which is not carried on for the profit or gain of its individual members. What is governance? Governance is about the big picture providing leadership and direction to the organisation and ensuring that the proper processes and structures are in place so that it can operate effectively and ethically. Corporate governance is often thought about in the context of not-for-profit organisations. However, it is just as important for privately held, small businesses such as early education and care services to adhere to good corporate governance policies and practices. In essence, good governance consists of: acting in the interests of the organisation and accepting responsibility for all aspects of the organisation; developing (or establishing) and guarding the organisation s vision, values and assets. being honest and careful Diligence ensuring the organisation has a current strategic direction and being informed about progress Responsibility ensuring financial accountability and management Accountability protecting the integrity of the organisation and declaring any conflict of interest Probity. Management models, governance and business structures Committee members and service owners are responsible for the governance of their organisation and need to satisfy themselves that an appropriate governance structure and strategies are in place. Good governance means that the management committee members or owners accept responsibility for all aspects of the organisation. The accountability requirements are ever increasing and to ensure the legality and effectiveness of education and care services, it is essential to maintain good governance processes. There are a number of models of governance and no one model is appropriate for all organisations or businesses. However, there is broad agreement about the principles of good governance. An effective management committee or owner operates with skill, efficiency and cohesion to achieve the aims of the organisation; has a clear understanding of its/their role, responsibilities and processes and works on behalf of all stakeholders. Governance is the system or process by which organisations are directed, controlled and held to account to ensure that the right decisions are made. Chapter 2 Education and care in NSW: an overview 33
26 What does good governance entail? Good governance Leadership and vision building Legal responsibilities Ethical codes and practices Board structure and board Organisational plans and operations Risk assessment and management Governance is the system or process by which organisations are directed, controlled and held to account to ensure that the right decisions are made. Performance monitoring and management In order to ensure good governance, the management committee or owner needs to pay attention to the following matters: Leadership and vision building It is the responsibility of the management committee or owner to provide strategic direction and establish and maintain the values and principles on which the organisation/business is built. Legal responsibilities The management committee or owner needs to ensure that its/their legal obligations are met. Ethical codes and practices This includes codes of conduct and practice for the management committee/owner and employees as well as conflict of interest matters and any other processes that ensure that management committee members and owners behave with honesty, diligence and integrity. Management committee structure and management committee operations Structure relates to the composition of the management committee, the selection and appointment of management committee members, succession planning, and management committee roles and responsibilities. Management committee operations refer to maintaining and improving management committee processes, clarifying the responsibilities of the management committee and the Director/co-ordinator/ Nominated Supervisor and delegations of authority. Organisational plans and operations The management committee or owner needs to ensure that the organisation operates within a comprehensive policy framework that includes an overarching strategic plan and operational plan. Risk assessment and management The management committee or owner needs to ensure that careful processes of risk assessment and management are implemented and reviewed. 34 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
27 Performance monitoring and management The management committee or owner is responsible for monitoring both its own performance and that of the Director/co-ordinator/Nominated Supervisor and for taking steps to address emerging issues. Ensuring good governance? 1. Policies To maintain effective governance, the management committee or owner needs to ensure that a comprehensive set of policies is in place related both to the management of the service and in an organisation, for the operation of the management committee itself. This includes ensuring that policies comply with all relevant legislation. 2. Compliance measures The management committee or owner needs to ensure that there are ways to assess that the organisation s policies are implemented effectively. A compliance report is a tool that assists the management committee to ensure that it is meeting its governance responsibilities. In order to monitor compliance it is helpful for the management committee or owner to have checklists that ask: Is the relevant policy in place? On what date was that policy last reviewed? Does it comply with relevant legislation and regulations? Has somebody been allocated responsibility to carry out tasks associated with that area of liability? If so, who has that responsibility? What processes are in place to check whether the policy is being satisfactorily implemented? Is there any issue that has arisen since the last meeting that needs to be addressed? 3. A compliance calendar The management committee or owner needs to ensure that a compliance calendar is in place so that its members can be reminded when particular governance matters need to be addressed. For example: When are insurance premiums due? When do annual performance reviews of staff commence? When are funding acquittals due? When is the annual statement sent to NSW Fair Trading or the annual return sent to the Australian Securities and Investments Commission? Management models, governance and business structures The Good Practice Guide, published by the NSW Family and Community Services, outlines the following best practice guidelines and performance measures for management committees: management committee accepts accountability for the service evidence of strategic and business planning evidence of strategic risk management evidence of good communication compliance with the regulatory environment compliance with the relevant policy framework a defined service structure. Chapter 2 Education and care in NSW: an overview 35
28 Business structures When establishing an education and care service, there are seven main business structures to choose from: sole trader, partnership or limited partnership, trust, proprietary limited company, company limited by guarantee, incorporated association and co-operative. The act of incorporation creates a legal entity that is separate to the individual members. Members of unincorporated bodies face the possibility of being sued as individuals, in the event of any impropriety. Incorporation provides a certain amount of limitations to members liability, as long as they follow accepted business and community standards. Proprietary limited company A proprietary limited company is an independent legal entity able to do business in its own right. Shareholders own the company and Directors manage the company. The Directors of a company, as well as company employees, can be shareholders. A proprietary limited company s operations are subject to the Corporations Act 2001, legislation which is overseen by the Australian Securities and Investment Commission. Under this structure, the company is the licensee of the education and care service. This is a common structure for a for-profit education and care service. A company limited by guarantee A company limited by guarantee is a type of public company which is also an independent legal entity, able to do business in its own right. Its operations are also subject to the Corporations Act 2001, legislation which is overseen by the Australian Securities and Investment Commission. The feature that distinguishes this structure from a proprietary company limited by shares is that a company limited by guarantee does not have the power to issues shares. Instead, the members of the company agree under the constitution of the company to guarantee the obligations of the company, up to a maximum amount set out therein, in the event that the company is wound up. Under this structure, the company is the licensee of the education and care service. Generally speaking, this form of structure is not suitable where the members intend to profit. However, not-for-profit education and care services that are not incorporated as associations are often companies limited by guarantee. Incorporated association For small not-for-profit groups, forming an association is a viable alternative to operating under a company structure. An association has similar advantages to a company but is not as expensive to create or legally maintain. An association can trade like any other structure but this cannot be its main objective. Any profit (or surplus) from its trading is placed back into the association and is not distributed to its members. Not-for-profit education and care services can choose to incorporate as an association, a co-operative or as a company. Under this structure, the association is the Approved Provider of the education and care service. Co-operative Co-operatives are businesses that are owned, controlled and used by its members. They are distinguished from other forms of incorporation by their participative ownership, democratic structure and use of capital for mutual, rather than individual, benefit. Under this structure, the co-operative is the Approved Provider of the education and care service. Sole trader A sole trader is the simplest business structure and consists of an individual trading on their own. They may operate under their own name or with a registered business name. The sole trader controls 36 A Director s Manual Managing an Early Childhood Education and Care Service in NSW
29 and manages the business and is responsible for all debts and liabilities. Under this structure, the sole trader is the Approved Provider of the education and care service. Partnership A partnership is defined by the Partnership Act 1892 (NSW) as the the relationship which exists between persons carrying on a business in common with a view to profit. A partnership involves an agreement between two or more parties to have a legally-binding business relationship. Under this structure, the partnership is the Approved Provider of the education and care service. Trust A trust is a business structure where the trustee holds property and earns and distributes income on behalf of the beneficiaries. One of the most common types of trusts is a discretionary trust. Finding out which structure best suits the needs of an education and care service can be a complex process. Community Child Care (NSW) recommends seeking legal or other professional advice be sought prior to establishing a new education and care service or changing the structure of an existing one. For more information, go to: Choosing a structure: BusinessstructuresinNSW.aspx Associations: associations.html Co-operatives: Companies: Management models, governance and business structures Information in the Governance section is adapted from the Good Governance information sheet, NSW Council of Social Service Management Support Unit, 2011: Chapter 2 Education and care in NSW: an overview 37
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