Loans Sought by Parents and Citizens' Associations

Version Number

3.2

Implementation Date

15/12/2015

Scope

All state schools

Purpose

​Borrowing and loan approval processes for Parents and Citizens’ Associations of state schools.​​​​​

Overview

​A Parents and Citizens’ Association at a Queensland Government school may borrow funds for the provision of resources or services for the benefit of students at the association’s school.

Parents and Citizens’ Associations (P&C) are classified as statutory bodies. Under the Statutory Bodies Financial Arrangements Act 1982, a statutory body may obtain loans with the Treasurer’s approval.

Finance Branch of the Department of Education and Training (DET) will undertake an assessment of the information provided by the P&C to determine whether the loan is recommended for approval. The assessment focuses on the following factors in making a recommendation:

  1. Whether the P&C has the necessary upfront cash contribution for the project/s; and/or,
  2. Whether the amount of borrowings sought can be repaid by the P&C.

The purpose for which the borrowings have been requested is not assessed by Finance Branch, but project/s to be funded by the P&C through borrowings should provide resources or services for the benefits of students at the school.

To qualify for a loan, a contribution from the P&C of at least half of the total project cost is generally required. 

Loan applications are subject to a rigorous financial assessment by the department and the lender is to be the Queensland Treasury Corporation (QTC), unless the Treasurer approves a loan from another institution.  In exceptional cases the Assistant Director-General and Chief Finance Officer has authority to reduce the required amount of contribution on request.

Responsibilities

Principal:

  • ensures the P&C seeks prior approval, as appropriate, before entering into a loan agreement.

Parents and Citizens’ Association:

  • initiates contact with Finance Branch to start the application process
  • provides all relevant documentation to Finance Branch.

Finance Branch:

  • assists the P&C with the application process
  • assesses each loan application to ascertain whether the P&C has the ability to meet loan repayments in addition to its normal operating costs
  • advises the P&C if approval is or is not granted.

Assistant Director-General and Chief Finance Officer:

  • approves loans obtained from (QTC) for 50% or less of the total project cost on behalf of the Minister
  • seeks the Director-General approval for a loan of more than 50% of the total project cost
  • guarantees loans obtained from QTC on behalf of the department.

Director-General:

  • approves loans obtained from (QTC) for more than 50% of the total project cost on behalf of the Minister.

Minister for Education and Training:

  • approves loans obtained from lenders other than QTC as delegated by the Treasurer.

Treasurer:

  • provides loans to P&Cs from the QTC, provided that departmental approval and guarantee have been granted
  • approves and guarantees borrowings from other institutions.

Process

​Seeking and Approving a Loan

Principal:

  • ensures the P&C seek prior approval, as appropriate, before entering into a loan agreement.

Parents and Citizens’ Association:

  • contacts Finance Branch to start the application process
  • provides all relevant documentation as indicated by Finance Branch. Documentation includes evidence that a proposal to borrow funds has been accepted at a meeting of the association
  • provides full details of the project, including total estimated cost and any subsidy applicable
  • provides a copy of the building compliance certificate from the relevant authority (e.g. Department of Housing and Public Works where required as indicated by Finance Branch
  • provides a copy of the joint development agreement where other organisations make significant contributions to the project
  • Where the proposed lender is not QTC, the association is to provide a copy of a quote from the proposed lender indicating the loan amount, interest rate and term (not exceeding ten years), and amount of the annual repayment (including interest).  Where a government guarantee is to be granted for the loan, the interest must be either at the normal bank overdraft rate in Queensland or a lesser rate agreed upon in writing by lender.
  • provides a copy of the association’s audited financial statements for the previous three completed years
  • provides bank statements indicating the association’s current bank balances (including investments)
  • provides details of any current loans held by the association
  • provides details of the association’s proposal for servicing the loan, supported by evidence of past fundraising and the proposed contribution to the project, which is generally 50% of the total cost of the project
  • provides a statement that the association has on hand sufficient funds to contribute to the project and meet annual operating expenses.

Finance Branch:

  • forwards a letter specifying the application and evaluation process to the P&C
  • assists the P&C with the application process
  • assesses each loan application to ascertain whether the P&C has the ability to meet loan repayments in addition to its normal annual operating costs
  • in relation to QTC loans:
    • makes a recommendation to the Assistant Director-General and Director- General of the department
    • advises the P&C, QTC, and Treasury of the outcome from the approval process
  • in relation to non-​QTC loans:
    • prepares a submission to the Minister for Education and Training (the Minister), which includes a recommendation in respect of the approval or otherwise and guarantee of the loan
    • if the loan is approved, completes a standard guarantee document (available from Treasury) and includes this in the submission for the approval of the Minister or Treasurer; and
      • advises the P&C and Treasury
      • advises the lender and provides the signed guarantee document
      • requests the lender to provide a copy of the guarantee stamped by Office of State Revenue
  • if the loan is not approved, advises the P&C
  • updates the loan register.

Assistant Director-General and Chief Finance Officer:

  • seeks the Director-General approval for a loan application to an association for an amount greater than 50% of the total project cost and the reasons for the decision.

Director-General:

  • approves the loan application to an association for an amount greater than 50% of the total project cost and the reasons for the decision.

Minister for Education and Training:

  • approves loans obtained from lenders other than QTC as delegated by the Treasurer. The Minister will grant approval where:
    • associations provide all required information outlined above
    • associations have sound capacity to service the loan
    • loans provide resources or services for the benefit of students at the association’s school
    • term of the loan does not exceed ten years

Note: The Minister will guarantee such loans provided that:

  • approval has been granted to enter into the loan
  • loan is for constructing a school swimming pool, school activity hall, or school assembly hall
  • the interest rate charged on the loan is competitive relative to market interest rates
  • the guarantee is in the form agreed to between Queensland Treasury and the Department of Education and Training (DET).

Treasurer:

  • provides loans to P&Cs from QTC, provided that departmental approval and guarantee has been granted
  • approves and guarantees borrowings from other institutions other than for swimming pools or halls, on special request from DET.

Online Resources

​Not applicable.

Review Date

16/12/2017
Attribution CC BY
​Not applicable.