Carry Forward (Schools) Procedure
Direction and guidance on the treatment of State Consolidated funds held in school budgets at the end of each school year.
Audience and applicability
NSW public school principals and staff responsible for school budget management. Education support staff working with NSW public schools in relation to budget management.
| Version | Date | Description of changes | Approved by |
|---|---|---|---|
| V02.0.0 | 2/11/2023 | Clarification of actions and responsibities. Transitional arrangements for State Consolidated Accumulated Balance (Fund 6101) extended to December 2025. Converted to new template. | Chief Financial Officer |
About the policy
Principals are expected to manage their annual budget allocation to achieve the strategic directions and improvement measures set within their school’s Strategic Improvement Plan.
Unspent allocated funds at the end of the school year pose a risk to achieving improved student learning and wellbeing outcomes.
The procedures outlined in this document are aimed at establishing long-term robust financial management practices that mitigate the risk that State Consolidated Funds will be significantly underspent in schools.
| Term | Definition |
|---|---|
State Consolidated Fund (Fund 6100) |
All money schools receive in the annual School Budget Allocation Report (SBAR), as well as budget adjustments, intercompany journals and sundry tax invoices received throughout the year under Fund 6100. |
Carry forward |
The process of transferring unspent State Consolidated Funds from the end of one school year to the beginning of the following school year. |
| Automatic carry forward | The capped amount that schools can carry forward from Fund 6100 without requesting approval. |
State Consolidated Accumulated Balance |
The balance of Fund 6101. |
Operating expense budget |
SBAR adjustments allocation, excluding all staffing amounts in the base school allocation (base, targeted and other). |
Principals:
- establish and manage their school budget revenue, expenditure and carry forward adjustments within the calendar year in line with the School Excellence policy and these Carry Forward (Schools) policy procedures
- identify and manage potential underspends/overspends
- inform Directors, Educational Leadership as soon as possible when it is not possible to manage potential underspends/overspends within their existing budget.
Directors, Educational Leadership:
- monitor financial performance of schools and identify potential underspends/overspends
- approve Strategic Improvement Plans including plans for investment of Fund 6101 – Consolidated Fund Carry Forward
- work collaboratively with schools and Finance directorate to recommend carry forward requests, where exceptional circumstances exist
- provide advice and support to principals on the carry forward adjustment process.
School Infrastructure NSW – Asset Management Unit:
- works collaboratively with schools and Finance directorate to manage capital projects.
Finance directorate:
- provides strategic financial advice and analysis, assists with annual planning, reporting, complex decision-making and applying financial policies in schools
- works collaboratively with Directors, Educational Leadership to prepare and recommend carry forward adjustments to the Chief Financial Officer and NSW Treasury (if required)
- reviews exceptional circumstances carry forward applications for consideration by the Chief Financial Officer.
Chief Financial Officer:
- approves carry forwards, except where approval by the NSW Treasurer is required
- endorses carry forward adjustment requests and submits these for approval by the NSW Treasurer (if required).
Overview
- Managing State Consolidated Fund (Fund 6100)
How schools should manage their State Consolidated Fund (Fund 6100). - State Consolidated Accumulated Balance (Fund 6101)
Positive balances accumulated prior to 2021 have been transferred to Fund 6101 for schools to use before December 2025. - Using Fund 6101 for capital projects
How schools use Fund 6101 for capital projects. - Automatic carry forward
A small amount of any unspent 6100 budget will be automatically carried forward each year until the end of 2024. - Exceptional circumstances carry forward
Schools may apply to carry forward additional unspent funds from Fund 6100 only where exceptional circumstances exist.
What needs to be done
State Consolidated Funds allocated via the Schools Budget Allocation Report (SBAR), budget adjustment or other sources should be spent within the calendar year in which they are received to uplift learning outcomes for students enrolled in that year.
Each school receives a new budget allocation each year, regardless of whether they fully expend the prior year’s budget allocation. Not spending the allocated funds by the end of the school year poses a risk to achieving improved student learning and wellbeing outcomes.
The Carry Forward (Schools) policy presents a new way of operating for schools.
This procedure only applies to school budgets. It does not apply to carry forward adjustments in corporate areas of the department.
This procedure only applies to State Consolidated funds (Fund 6100) held in school budgets (including Fund 6101). Commonwealth (Fund 6200) and School & Community funds (Fund 6300) are out of scope.
1. Managing State Consolidated Fund (Fund 6100)
Each year, schools are allocated an annual budget via the Schools Budget Allocation Report (SBAR) process. These funds are allocated to Fund 6100 State Consolidated Fund. Fund 6100 may also be supplemented with budget adjustments, intercompany journals and sundry tax invoices received throughout the year.
These procedures require that all 6100 funds are to be spent within the calendar year in which they are received. Schools are encouraged not to underspend to save or accumulate funds. The balance remaining in Fund 6100 at the end of the school year will no longer carry forward into the following year’s operating balance.
Principals must:
- plan to expend their full 6100 budget in the year allocated, in alignment with their Strategic Improvement Plan
- plan their budgets early in the school year
- monitor their expenditure regularly throughout the year to identify any potential overspend or underspend of that year’s budget
- in consultation with their Director, Educational Leadership, adjust plans to manage potential overspend or underspend within their existing budget
- begin recruitment as early as possible to ensure staffing is in place as soon as it can be
- begin procurement processes early in the year to ensure that the purchases are delivered and finalised in that calendar year. This is especially important for major purchases.
Beginning January 2022, all unspent 6100 balances from the previous school year will not be carried forward, except that schools may carry forward some unspent 6100 funds to the following year through:
- an automatic carry forward – this only applies at the end of years 2021 to 2024
- an approved exceptional circumstance carry forward (see the section below on exceptional circumstances).
Total carry forward (automatic plus exceptional circumstances carry forward) at the end of any year can never exceed the closing balance of 6100 for that year.
Example: The automatic carry forward for a school is calculated at $18,000. However, the closing balance of their Fund 6100 was only $7800. Their carry forward to the following year will be $7800. The school would not be eligible to apply for any exceptional circumstances carry forward.
Consumption rules are applied monthly. Corporate Finance perform this function as part of month end processes. No action is required by schools.
Consumption will affect end of month funds available balances displayed in the Schools Overview Report when applied, by realigning the balances of some funds as per the consumption rules.
2. State Consolidated Accumulated Balance (Fund 6101)
The State Consolidated Accumulated Balance (Fund 6101) comprises:
- positive balances in Fund 6100 as at December 2020 that were transferred into Fund 6101
- any additional amounts carried forward.
Fund 6101 Consolidated Fund Carry Forward is available to support schools to identify and track their State Consolidated Accumulated Balance.
The balance held in Fund 6101 will be available to schools until December 2025. During this time, the balance of Fund 6101 held by schools will automatically carry forward each year. This automatic process will cease at the end of December 2025, when unused 6101 funds will not be carried forward. From 2025 onwards, unspent balances in Fund 6101 will not be carried forward at end of each year.
Schools are expected to spend all their accumulated state funds held in Fund 6101 by the end of year 2025. That includes any additional amounts placed into Fund 6101 over the period 2021 to 2025 as a result of carry forward processes.
Schools must:
- ensure Fund 6101 has adequate funds available before posting transactions. When the Fund 6101 balance reduces to zero, schools must stop transacting against that fund
- use Fund 6101 to meet student learning and wellbeing needs and improve student learning outcomes, in alignment with their school Strategic Improvement Plan
- plan and use their 6101 balances evenly over the period to December 2025
- not transfer funding from other fund sources into Fund 6101
- not spend the balance in Fund 6101 on activities that will lead to additional ongoing future costs, such as creating new additional permanent positions.
3. Using Fund 6101 for capital projects
To purchase assets using funds from Fund 6101, schools must use the new capital Fund 6501 Recurrent Capital Carry Forward.
Each school with an opening balance in Fund Code 6101 at the start of 2021 will have a Capital School Asset WBS code CSA/XXXX00-40 created and ready for use (XXXX represents school code, and the -40 at the end of the WBS code represents funding from Fund 6101).
When schools self-manage their own capital project, they must request a Capital School Project WBS code in accordance with existing asset processes.
If the funding for the capital project comes from Fund 6101, schools should receive a WBS code represented by CSP/XXXX01-40 (see Create a capital schools project and related WBS elements for a constructed asset – QRG).
For capital projects funded from multiple funding sources, including Fund 6101, schools must use the existing asset and settlement rules and allocate proportions to each relevant funding source. When using funds from:
- Fund 6100, settle the asset using WBS code ending with -10
- Fund 6300, settle the asset using WBS code ending with -30
- Fund 6101, settle the asset using WBS code ending with -40.
If an Asset Management Unit (AMU) managed capital project is using funds from Fund 6101, and the project spans multiple years beyond 2025, schools must ensure the full cost of the project is paid to the AMU before December 2025.
For support on this process, schools need to contact their AMU officer. If the AMU officer can’t resolve the issue, the AMU officer will contact their Schools Infrastructure NSW finance officer.
Further information can be found at the following links:
4. Automatic carry forward
As part of transition arrangements, the Carry Forward policy allows for a small automatic carry forward amount per school, to help schools adjust to new ways of operating.
Until the end of 2024, a small amount of each year’s Fund 6100 balance will automatically carry forward into Fund 6101 (see below). No action is required from schools to automatically carry forward unspent 6100 budget.
Some of Fund 6100's balance will automatically carry forward into Fund 6101 over the 4 years 2021 to 2024, as described in the table below.
| Year end | Automatic carry forward amount |
|---|---|
2021 |
At the end of December 2021, schools will carry forward unspent funds to the value of 3% of their SBAR Adjustments. The automatic carry forward is capped at a maximum of $100,000, with a floor limit of $15,000 per school. The total carry forward amount is also capped at the school’s closing balance in Fund 6100. |
| 2022 | At the end of December 2022, schools will carry forward unspent funds to the value of 3% of their operating expense budget. The automatic carry forward is capped at a maximum of $50,000, with a floor limit of $10,000 per school. The total carry forward amount is also capped at the school’s closing balance in Fund 6100. |
2023 |
At the end of December 2023, schools will carry forward unspent funds to the value of 2% of their operating expense budget. The automatic carry forward is capped at a maximum of $40,000 with a floor limit of $5,000. The total carry forward amount is also capped at the school’s closing balance in Fund 6100. |
2024 |
At the end of December 2024, schools will carry forward unspent funds to the value of 1% of their operating expense budget. The automatic carry forward is capped at a maximum of $30,000 with a floor limit of $5,000. The total carry forward amount is also capped at the school’s closing balance in Fund 6100. |
This table provides examples of how the caps are applied in year 2. In scenario 1, the 3% of operating expense budget is less than the automatic carry forward cap, so that is the amount of automatic carry forward. In scenario 2, 3% of operating expense budget is above the automatic carry-forward cap, and so that cap is applied. In scenario 3, the 3% of operating expense is above the automatic carry forward cap, but also above the Fund 6100 closing balance, in which case the total carry forward cap is applied.
| Scenario | School’s 2022 operating expense budget | 3% of operating expense budget | Automatic carry forward cap | School’s Fund 6100 closing balance at Dec 2022 | School’s automatic carry forward at Jan 2023 |
|---|---|---|---|---|---|
| 1 | $1,000,000 |
$30,000 |
$50,000 |
$30,000 |
$30,000 |
2 |
$2,500,000 |
$75,000 |
$50,000 |
$60,000 |
$50,000 |
3 |
$3,000,000 |
$90,000 |
$50,000 |
$7,000 |
$7,000 |
This table provides examples of how the automatic carry forward floor is applied in year 2. In scenarios 1 and 2, the 3% of operating expense budget is below the floor limit, and so those schools would both receive the floor limit. In scenario 3, the 3% of operating expense budget is below the floor limit, but above the Fund 6100 closing balance, in which case the total carry forward cap is applied.
| Scenario | School’s 2022 operating expense budget | 3% of operating expense budget | Floor limit | School’s Fund 6100 closing balance at Dec 2022 | School’s automatic carry forward at Jan 2023 |
|---|---|---|---|---|---|
1 |
$300,000 |
$9,000 |
$10,000 |
$17,100 |
$10,000 |
2 |
$280,000 |
$8,400 |
$10,000 |
$16,000 |
$10,000 |
3 |
$200,000 |
$6,000 |
$10,000 |
$4,200 |
$4,200 |
All other unspent funds from Fund 6100 will not be carried forward, unless the Chief Financial Officer approves an exceptional circumstances carry forward request.
5. Exceptional circumstances carry forward
Schools may apply to carry forward additional unspent funds from Fund 6100 only where exceptional circumstances exist.
Exceptional circumstances are unusual circumstances, typically beyond the school’s control, that prevent or delay the use of operational funds in a given year in such a way that cannot be managed by the following year’s school budget allocation. Applications for exceptional circumstances carry forward will approved only in rare and truly exceptional cases. Repeated applications for the same reason will typically not be approved.
Schools may apply to carry forward unspent 6100 balances where all the following conditions are met:
- the requested carry forward amount exceeds the automatic carry forward
- the total carry forward (automatic carry forward plus the requested exceptional circumstances) is not greater than the closing balance of Fund 6100
- the school has spent more than 50% of the balance placed into Fund 6101 at the beginning of 2021.
Information about exceptional circumstances carry forward applications will be published in the Staff Noticeboard during Term 3. Schools must apply to carry forward 6100 funds in the form determined by the Chief Financial Officer. The Chief Financial Officer will consider and approve applications to carry forward 6100 funds at their sole discretion. The Chief Financial Officer may consult with School Infrastructure NSW or the relevant Director, Educational Leadership regarding any application for exceptional circumstances carry forward. Approval to carry forward 6100 funds in excess of the automatic carry forward will only be granted in rare and exceptional circumstances.
Applications for carry forward must support student learning outcomes, clearly outline the purpose for using accumulated funds, and be aligned to achieving the strategic directions and improvement measures set within a school’s Strategic Improvement Plan.
Schools do not need to apply for exceptional circumstances carry forward for the following:
- unspent funds from other fund codes (6200 or 6300)
- the balance of Fund 6101 at year end 2023 or 2024.
Supporting tools, resources and related information
- Joint Funding of Capital Works in Schools policy
- School Excellence policy provides direction for schools to lead strategic improvement planning and annual reporting, to self-assess, and undertake external validation using the School Excellence Framework.
- Financial delegations list the powers granted to specific staff by the Minister or Secretary under various Acts, to perform financial functions on their behalf.
- Constitution Act 1902 (NSW), s39, provides that all public money (including all revenue, loans and other moneys whatsoever) collected or received by any person (including a NSW Government agency) for or on behalf of the state is to be paid into the Consolidated Fund.
- Government Sector Finance Act 2018 (NSW), s4.6, provides that money must not be paid out of the Consolidated Fund except under the authority of an Act.
- Government Sector Finance Act 2018 (NSW), s4.7 (PDF 520 KB), identifies deemed appropriation money as government money that a GSF agency receives of a kind prescribed by the regulations that: (a) forms part of the Consolidated Fund, and (b) is not appropriated under the authority of an Act.
- Government Sector Finance Act 2018 (NSW), s4.8, provides that every unused [JM1] appropriation for an annual reporting period for the NSW Government lapses with the exception of an unused appropriation under section 4.7.
- NSW Treasury Circular (TPG 22-05 – Carry Forward Policy) (PDF 520 KB) outlines the Carry Forward criteria and the assessment and approval process for the various categories of Carry Forwards as part of the State Budget process.
Policy contact
Director, Schools Planning, Budgeting and Reporting
SSR@det.nsw.edu.au
The Chief Financial Officer monitors the implementation of this policy, regularly reviews its contents to ensure relevance and accuracy, and updates it as needed.
| Reference number | PD-2021-0475-01-V02.0.0 |
|---|---|
| Implementation date | 22/04/2021 |
| Last updated | 2/11/2023 |
| Publicly available | Yes |
| Policy cluster/s | Finance |