Private school Gippsland Grammar facing growing financial pressure

One of Victoria’s top private schools is facing an uncertain future as it deals with mounting financial pressure, including a growing number of historic sexual abuse claims.

One of Victoria’s leading private schools is in a cash-flow crisis, with auditors warning there are questions about whether it can “continue as a going concern”.

Independent co-ed school Gippsland Grammar is only seven enrolments away from its bank calling in a multi-million dollar loan. It is facing financial pressure on a number of fronts, including a growing number of historic sexual abuse claims.

Last year it posted a loss of $504,705.

Independent auditor Rochelle Wrigglesworth from ForeFront said the school had a working capital deficiency of $3.4m which “indicate a material uncertainty exists that may cast doubt on the school’s ability to continue as a going concern”.

“The ability of the entity to continue as a going concern is dependent on maintaining or increasing student enrolment numbers; managing financial performance and current claims against the school; and the continued support of financiers,” she said in the school’s financial report.

Gippsland Grammar is facing financial pressure on several fronts. Picture: Supplied

As at December 2023, the school had a $4.7m outstanding loan with the National Australia Bank which is set to expire on July 31, 2025.

The five-year $7.8m loan was entered into by the school in 2022.

The loan agreement requires the school to advise the bank of student numbers, which are to be a minimum of 1013.

According to the My School website, Gippsland Grammar in 2023 had 1020 students.

The school’s student numbers have been growing in recent years, but were as low as 979 in 2019.

The school has repayments of $526,000 a year for the loan, but if numbers dip, the outstanding amount of the loan could become payable.

Ms Wrigglesworth also noted the “uncertainty related to the outcome of current legal claims” against the school.

Gippsland Grammar is currently managing six legal claims and is unable to estimate the total cost of settlements and legal fees.

Rightside Legal lawyer Laird MacDonald, who has acted for three historic abuse survivors at Gippsland Grammar, said the school “in the past had put the prestige of the brand over the safety of the kids”.

It’s understood that the school is at odds with its insurer over small amounts of money paid for historic sexual abuse claims, especially because it received warnings about the abuse at the time.

Mr Laird said the school was now working more constructively with survivors, but the legal fee and compensation bill could reach between $6m and 10m.

A source with close knowledge of Gippsland Grammar’s handling of sexual abuse claims said the school had “failed” in its duty of care in past years.

“The school’s former leadership dismissed serious student complaints of predatory sexual behaviour,” the source said.

“They protected the liability of the school and swept it all under a rug.”

Gippsland Grammar also recently opened a 1700sqm multi-million dollar visual arts and technology centre at its Sale campus. Although it was mainly funded by donations and grants, such projects have put further pressure on the school’s finances.

Principal Michele Wakeham said the school’s “financial viability is not in question”.

The school’s 2023 financial report notes the school “contemplates continuity of normal business activities”.