Independent school over-claimed $23 million in disability funds

A Melbourne-based independent school, Hester Hornbrook Academy, faces a potential repayment of nearly $23 million in disability funding it received from the federal government. The school, which serves students disengaged from mainstream education, claims it was wrongly assessed by the Education Department and will contest the demand. The issue comes amid a nationwide effort by the Australian government to address what it calls "inaccurate claiming" of disability funds, a move aimed at saving hundreds of millions of dollars over several years. Hester Hornbrook Academy announced sweeping cost-cutting measures following notification from the Education Department that it had improperly claimed $22.9 million in disability funding. The school, which operates multiple campuses across Melbourne, has been ordered to return the money, marking the largest known case of alleged over-claiming since the government intensified its audits of schools receiving such funding. This amount far exceeds the $12 million recovered from approximately 300 schools over the previous four years. Principal Sally Lasslett informed staff that the school does not accept the department's findings and plans to challenge the decision. However, she acknowledged in a "change impact statement" that increased governmental scrutiny would significantly reduce the school's financial resources moving forward. Employees are scheduled to attend meetings to determine whether job losses are necessary due to the impending financial strain. The auditors dispatched by the Commonwealth Department of Education discovered that Hester Hornbrook had categorized more than 90 percent of its students into the highest "extensive" category of disability support needs. This figure contrasts sharply with the national average of 2.8 percent. The school, established in 2017 by Melbourne City Mission, provides educational services to students who are not enrolled in traditional schooling systems, charging no tuition fees and relying heavily on government grants. Over the past few years, the school has expanded rapidly, growing from fewer than 40 students at one location in South Melbourne to over 700 students spread across five campuses. Its Commonwealth grant revenue, which constitutes 82 percent of its overall income, rose from just under $21 million in 2023 to more than $36 million in the previous fiscal year. In 2024, each student at Hester Hornbrook received around $64,000 in funding, three times the average for students in Victorian government schools and surpassing even the most expensive private institutions like Geelong Grammar. According to regulations, schools can nominate students for disability payments based on their discretion rather than requiring formal medical diagnoses. Nevertheless, they must justify how these funds are utilized to make accommodations for the students' needs. Education Minister Jason Clare and his department aim to save approximately $463 million over four years through stricter oversight of funding allocations, with $40 million designated in the May budget for enhanced monitoring and accountability mechanisms. Clare's office has not commented on the specific audit involving Hester Hornbrook, while the Education Department has stated it will not publicly discuss compliance issues. A representative from Melbourne City Mission, which continues to own the academy, emphasized the institution's commitment to adhering to the Nationally Consistent Collection of Data (NCCD) framework. They expressed disagreement with the department's preliminary conclusions and indicated they are evaluating various legal and administrative responses to the situation. The controversy surrounding Hester Hornbrook Academy underscores the complexities of managing and auditing substantial public funds intended for specialized educational needs. As the school navigates the implications of the audit, its future operations and the livelihoods of its staff remain uncertain.