SECTION 36 OF THE SA SCHOOLS ACT 84 OF 1996 A proposal for the re-wording of Section 36(2) is as follows:
36 (2) Despite subsection (1), the governing body may not enter into any loan or overdraft agreement so as to supplement the school fund, unless the governing body can provide security from its own resources for the repayment of the loan or overdraft which is acceptable to the lender and which security will not in any way encumber State-owned or State-controlled assets.
Our reasoning is as follows:
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Loans are an essential vehicle to provide assets which cannot be funded by school fees in any one year.
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We understand that schools must not place themselves in financial predicaments by way of loans and overdrafts that would have implications for the State and for future governing bodies. However, we feel that the Act should allow for the raising of loans where the governing bodies have sufficient means of securing the debt. The prohibition of incurring debt would severely affect the capacity of schools to deliver in terms of the objectives of the new national curriculum.
A prime example of this need is in the area of computerisation. In order to provide a relevant education to learners, schools are embarking on expansion or upgrading of their computer facilities. This is an on-going problem in the light of rapid technological changes, and the current costs to equip a single computer classroom are in the region of R300 000. The State=s resources have proved to be inadequate in attending to this. Schools may find it impractical to finance large capital projects such as this with >up-front= funds. Furthermore, parents now tend to insist on the principle of >user-pays=. The >up-front= accumulation of funds acts against the >user-pays= principle because the accumulation of the necessary funds may take several years which means that the project benefits future learners at the school. Also, inflation and volatile exchange rates continually place such projects out of reach. The raising of loans would enable schools to secure prices of such projects, and the repayments can be budgeted as part of annual school fees.
A further example is that of the physical buildings of the school. Faced with increasing numbers of learners, certain facilities are proving to be inadequate. Governing bodies might wish to embark on capital projects immediately in order to benefit the current learners and to avoid the effects of rising costs. The raising of loans might be a viable option in providing funds immediately.
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If the proposed amendments come into force, the State would have to assume the responsibility of making loans or advances to schools where needed. In the light of the State cut-backs in the staffing and funding of schools, it appears that the State is not in a position to assume this role.
SECTION 37 OF THE SA SCHOOLS ACT 84 OF 1996 A proposal for the re-wording of section 37 (4) (c) is as follows :
37 (4) (c) No governing body of a public school may collect monies or contributions from parents in lieu of school fees to establish or fund a trust, and if any such money or contribution of parents were paid into a trust prior to 1 January 2002, such monies or contributions must be paid by the trust into the school fund.
Our reasoning is as follows:
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Section 37 (4) states that money received in trust by public school must be applied in accordance with the conditions of such donation, bequest or trust. The proposed Section 37 (4) (c) would contradict the first paragraph in section 37 (4) as it would rule out contributions by parents making specifically dedicated donations to an established trust over and above school fees.
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However, we do appreciate trusts are susceptible to abuse. In order to obviate these problems, legislation could provide for trust deeds to be worded in such a way as to ensure a flow of funds from the trust to the school, instead of in the opposite direction.
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The setting of school fees is subject to several restrictions by way of the guidelines issued by the Minister in terms of the SA Schools Act. Schools are required to set school fees at a level which is affordable to the majority of the community, and to offer assistance to those who cannot afford such fees. However, there are parents who can afford more to pay more than the annual school fee set annually. They are prepared to make additional voluntary donations with certain provisos e.g. that these donations are earmarked to certain projects of lasting value. Such parents would be unwilling to donate further funds to be expended on normal running expenses which are funded by the general accumulated fund of the school.
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Trusts are a vital instrument in assisting to maintain the large plant inherited by governing bodies of many schools. The annual school fees tend to cover running expenses only. Trusts are vital in taking pressure off the school fund budget which can be set annually without providing for capital expansion.
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In terms of section 21 (1) (a) of the SA Schools Act, the governing bodies have a specific responsibility to >maintain and improve the school=s property, and buildings and grounds occupied by the school=. The restrictions placed on trusts in terms of the proposed section 37 (4) (c) as it is currently phrased, will severely curtail the ability of governing bodies to discharge this responsibility.
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We also feel that the amendments as phrased in Notice 828 with regard to trusts are inconsistent with rulings being issued by the SA Revenue Services which is now allowing the establishment of trusts for primary schools in addition to high schools. On the one hand, the Receiver of Revenue is issuing rulings which encourage the formation of trusts, while on the other hand, the proposed amendments to the SA Schools Act as they currently stand, would act against that principle.