Chapter 6



6.3.1Legislative and Policy Framework


  • Auditor-General’s Act 12 of 1995 [AGA]
  • The National Education Policy Act, 1996 (Act No. 27 of 1996) [NEPA]
  • The Constitution of the Republic of South Africa (Act 108 of 1996) [SAC]
  • Employment of Educators Act 76 of 1998 [EEA]
  • The Public Finance Management Act, 1999 as amended by Government Gazette No. 38735 of 30 April 2015 (Act No 1 of 1999) [PFM]
  • The South African Schools Act, No. 84 of 1996 [SASA]


  • Exemption of Parents from the Payment of School Fees Regulations: Government Notice 1293 (Government Gazette 19347) of 12 October 1998 [NR 19347/1998]
  • Regulations relating to the exemption of parents from payment of school fees in public schools, Government Gazette No. 29311 published on 18 October 2006 [NR 29311/2006]
  • Amended National Norms and Standards for School Funding Government Gazette 43145 No. 366 of 27 March 2020 [NR 43145/2020]
  • Transfer of Funds and other Movable Assets of the State to Public Schools: General Notice 1423 (Government Gazette 20669) of 26 November 1999 [NR 1423/1999]
  • National Norms and Standards for Grade R Funding (GG 30679) of January 2008 (NSF-Grade R) [NR 30679/2008]
  • National Norms and Standards for School Funding as amended, Government Gazette Vol. 400, No. 19347, 12 October 1998 [NR NSSF]
  • Salary adjustment: ‘Improvement in Conditions of Service: Annual Cost-of-Living Adjustment for Educators Employed in terms the Employment of Educators Act, 1998 with effect from 1 April 2017 (GN 386 in GN 40815 of 28 April 2017) [NR 40815/2017]


Generally accepted accounting principles (a term used to refer to the standard framework of guidelines for financial accounting used in any given jurisdiction which are generally known as accounting standards.  GAAP includes the standards, conventions, and rules accountants follow in recording and summarising transactions and in the preparation of financial statements).

Tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 5) [Reference C TAX ISSUE 5]

6.3.2Framework for the Development of School Policy on Funds and Income

  1. The School Fund Account
    The South African Schools Act states that:

    • Section 1
      • A loan means any financial obligation based on agreement, which obligation renders a school liable for making payment in one or more instalments, in favour of any person, but does not include the payment of staff appointment by the Governing Body in terms of Section 20 (4) or (5).
    • Section 36
      • A Governing Body of a public school must take all reasonable measures within its means to supplement the resources supplied by the State in order to improve the quality of education provided by the school to all learners at the school.
      • A Governing Body may not enter into any loan or overdraft agreement so as to supplement the school fund, without the written approval of the Member of the Executive Council.
      • If a person lends money or grants an overdraft to a public school without the written approval of the member of the Executive Council, the State and the public school will not be bound by the contract of lending money or an overdraft agreement.
    • Section 37
      • The Governing Body of a public school must establish a school fund and administer it in accordance with directions issued by the Head of Department.
      • Subject to Subsection (3), all money received by a public school including school fees and voluntary contributions must be paid into the school fund.
      • The Governing Body of a public school must open and maintain one banking account, but a Governing Body of a public school may, with the approval of the Member of the Executive Council, invest surplus money in another account.
      • Money or other goods donated or bequeathed to or received in trust by a public school must be applied in accordance with the conditions of such donation, bequest or trust.
      • All assets acquired by a public school on or after the commencement of this Act are the property of the school.
      • The school fund, all proceeds thereof and any other assets of the public school must be used only for:
        • educational purposes, at or in connection with such school;
        • educational purposes, at or in connection with another public school, by agreement with such other public school and with the consent of the Head of Department;
        • the performance of the functions of the Governing Body; or
        • another educational purpose agreed between the Governing Body and the Head of Department.
      • Money from the school fund of a public school may not be paid into a trust or be used to establish a trust.
      • If a trust was established from a school fund of a public school or if such money was paid into a trust prior to 1 January 2002, such trust or payment is invalid and the money must be paid back into the school fund.
      • A Governing Body of a public school may not collect any money or contributions from parents to circumvent or manipulate the payment of compulsory school fees and to use such money or contributions to establish or fund a trust, and if such money or contributions of parents were paid into a trust prior to 1 January 2002, the trust must pay such money or contributions into the school fund.
  2. Sources of Income for the School Fund Account
    • Allocated funds by the State:
      • In terms of Sections 12 (1) and 34 (1) of the South African Schools Act, Provincial Departments of Education must provide public schools for learners out of funds appropriated for this purpose.
      • The funding of these schools must be on an equitable basis in order to ensure that the rights of learners to education are properly exercised and that past inequalities in the provision of education are redressed.
      • In redressing inequalities, the Norms and Standards for school funding were promulgated in 1998 and amended in 2006.
        • The intention of the Norms and Standards for school funding is to determine equitable criteria according to which schools will receive additional funds for redress purposes.
        • The Norms and Standards provide for a sliding scale to be used in allocating additional funds to schools.
        • SASA also states that provincial legislatures must annually provide sufficient information to schools about the additional funds to enable the schools to prepare their budgets for the following year.
      • SASA as amended by the Basic Education Laws Amendment Act 15 of 2011 in Section 12 (3) determines as follows:
        • A public school may be:
          • an ordinary public school;
          • a public school for learners with special education needs; or
          • a public school that provides education with a specialised focus on talent, including sport, performing arts or creative arts
      • Subject to the relevant provisions of this Act, the Minister must determine Norms and Standards for school funding and Norms and Standards for governance and educator provisioning for public schools contemplated in paragraph (a) (iii).
      • Funds to schools are allocated according to the condition of the school, the relative poverty of the school community and the previous year’s enrolment as indicated in the 10th day return. Schools in very poor communities and which are placed in the lower quintiles may apply to be declared no-fee schools.
        In terms of Paragraph 110 of the NNSSF, the National Targets Table published in
        Government Gazette No. 47756 Government Notice No. 2874, of 15 December 2022 is
        hereby updated to include 2025 target amounts. The no fee threshold will be R1,672 in
        National table of targets for the school allocation (2025 – 2026)
        2024 2025* 2025*
        NQ1 R1,672 R1,754 R1,836
        NQ2 R1,672 R1,754 R1,836
        NQ3 R1,672 R1,754 R1,836
        NQ4 R838 R879 R920
        NQ5 R289 R301 R315
        No fee threshold R1,672 R1,754 R1,836
        Small schools:
        National fixed
        R38,763 R40,662 R42.574
        *2025 and 2026* figures inflation adjusted – CPI projected inflation rate adjusted
      • The criteria for determining the poverty level of a school are:
        • average per capita income of the community;
        • dependency ratio (average number of dependants per bread winner in the community);
        • functional literacy level in the community;
        • proportion of households in the community with water supply; and
        • learner to classroom ratio
      • The allocated funds to self-managing (Section 21) schools will be paid into their bank accounts and must first be used for the following categories of expenditure:
        • purchase of Learning and Teaching Support Material (LTSM);
        • payment of municipal services; and
        • day-to-day maintenance of school buildings, grounds and equipment
      • Section 20-schools will receive a paper budget. This means that the funds will be held by the district office and all expenditure has to be requested by means of requisitions.
    • School fees
      • According to SASA, school fees may be determined and charged at a public school only if a resolution to do so has been adopted by a majority of parents attending a meeting (AGM) for the consideration and approval of the budget. [See NC Form to Parents: Resolution to Charge School Fees [See Reference C NC FEES].
      • Resolutions must be adopted to provide for the amount of fees to be charged and equitable criteria and procedures for the total, partial or conditional exemption of parents who are unable to pay school fees.
      • Subject to the approval of the parents at the AGM, the SGB has the right to charge school fees and the parent or guardian of a learner is liable for the school fees of a learner.
      • The Governing Body of a public school may by process of law enforce the payment of school fees by parents who are liable to pay in terms of section 40 of SASA. The SGB or school, however, may not disadvantage or discriminate against a learner whose school fees are in arrears.
      • Exemption from payment of school fees
    • Fundraising
      • Section 36 of SASA states that it is the responsibility of the SGB to acquire additional funds to improve the quality of education at the school.
      • All fundraising events should reflect the following characteristics:
        • Every fundraising event should complement the educational purpose of the school.
        • A sensitivity not to exploit learners, sending learners from door-to-door with sponsorship forms is not acceptable.
        • Fundraising should not interfere with teaching and learning.
        • Fundraising events should comply with the law (with reference to safety issues, liquor licensing, lotteries, noise levels, etc.)
        • Be sensitive to community values.
    • Investments
      It is a worthwhile strategy for SGBs to budget for money to be set aside for medium- or long-term projects at the school.  Since SGBs stand in a position of trust to the school, investments should be made in low risk accounts.
    • Trusts
      • SASA Section 37 (7) clearly states that money from the school fund of a public school may not be paid into a trust or be used to establish a trust. Parents may also not be required to make any form of compulsory donation to such a trust.
      • It is permissible, however, for a group of school supporters to voluntarily form an organisation to support the school by means of donated services, funds or material assets. The school may receive any unconditional donations and may even assist such an organisation in publicising its activities provided that the organisation serves the community in a non-discriminatory manner.
    • Sponsorships
      • Funds raised through sponsorships and advertisements
        • The private sector may be given the opportunity to support schools financially through sponsorship and advertisements and, thus, show their involvement in education in real terms.
        • Sponsorship and advertisements at a school may be seen as the granting of money or a means to make a particular activity possible to a school by an enterprise or an individual. This could help to cover expenses for sports meetings, sports tours or any other fundraising projects, such as a school fete which has been arranged to raise school funds, and for establishing, improving or maintaining sports and other facilities at the school or providing funds for other needs.  In turn, the school could give some recognition in favour of the enterprise or individual.
      • Educational requirements for sponsorships and advertisements at schools
        • The primary requirement for accepting sponsorships and advertisements, and the conditions attached, must be reconcilable with the educational nature and the aim of the educational institution.
      • Concluding agreements for sponsorship / advertisements
        • The SGB, in conjunction with the principal and staff, is to deal with the matter of sponsors and funds which are obtained from these sponsors and as a result of advertising on a local level as this is in the interest of both the school and the community.
        • An agreement should be entered into by the SGB for the duration of the function, sports meeting or sports season in question.
        • The tenure of such agreement should not exceed 36 months.
      • Dealing with funds obtained from sponsors and / or through advertisements
        • Funds obtained from sponsors and / or through advertisements are school funds and are to be paid into the school fund account or into a marked school fund account and administered in the school fund books of account in the normal way.
      • Acknowledgement of sponsors
        • Acknowledgement may be given to sponsors for contributions towards the erection of buildings and / or structures by naming these structures after them, for example, the BTV Computer Centre, the Hewlett Pavilion, etc.  Approval must, however, first be obtained from the Department.
      • Schools may also acknowledge sponsors and advertisers in one of the following ways:
        • Space may be provided in the school’s annual magazine or on sports programmes or an acknowledgement that a page has been sponsored may appear at the bottom of the page.
        • Mention may be made of the fact that a function or sports meeting has been made possible by the generosity of a particular firm or organisation.
        • Flags, banners, umbrellas and loose boards may be used during the meeting / function to acknowledge the sponsors. These banners, flags, boards and umbrellas are to be removed immediately after the meeting.
        • Mention may be made in the school’s newsletter that a certain firm or person is going to sponsor or has sponsored a particular activity.
        • No permanent link between the name of the school and that of a firm or sponsor concerned is permitted.
    • Tuckshop sales, school uniform sales, etc.
      • The proceeds of these must go into the school fund account to the benefit of the school and its learners.
      • It can be considered to outsource and run these ventures independently. A percentage of its profits or a fixed rental can be paid to the school on a monthly basis.
  3. Receiving Money
    • Issuing of receipts
      • A receipt is to be issued immediately for every amount received, including a cash surplus and regardless of the sum involved.
      • Receipts are to be issued in numerical sequence (Receipts must be pre-numbered).
      • The receipt is to be completed in duplicate.
      • Particulars are to be written in blue or black indelible ink (Ballpoint pen) in clear, legible handwriting.
      • The copy (copies) should also be clear and legible.
      • The receipt should differentiate between cheques or cash received.
      • Should a receipt be incorrectly completed, such receipt must be cancelled and a new receipt issued.
      • No alteration or erasure may be made on a receipt.
      • The following particulars are to be given:
        • name of payee (all initials and surname or full name of firm) and the name of the pupil for whom the payment is being made;
        • amount in words and figures (words and figures must agree);
        • nature of payment, e.g. cheque, postal order, cash;
        • date stamp or date and name of institution / office (the official must check that the date is stamped on all copies);
        • the official’s signature in full; and
        • the purpose of the payment (this must be clearly analysed and specified).
      • A receipt may not be issued when a cheque which has been dishonoured by a bank is redeposited, or cash or a new cheque is received in place of it.
      • The official responsible is to ensure that only one receipt is issued for a payment received to check that where provisional receipts are used there is a cumulative receipt on which the numbers of the provisional receipts are also written.
      • A receipt is to be cancelled by using a rubber stamp or ink to write “CANCELLED” in large letters right across the original, as well as all the carbon copies. Both the original and the copies are to remain in the book.
      • Where a firm or person other than the debtor makes a payment on behalf of a debtor, the receipt is to be made out to the payee and the name of the person for whom the payment is made is to be entered directly after the payee’s name.
      • Receipts are to be written up individually in numerical order, but where necessary receipts which are issued on the same day for the same category of money received may be grouped into one entry as long as the relevant serial numbers are entered on it.
      • Cancelled receipts are to be written up individually.
      • The receipt book is to be closed (preferably in red) when money is banked.
      • The date, series of receipt numbers and the amount banked are to be stated.
    • Issuing of 18A receipts for financial donations
      • 18A receipts are issued towards financial donations received by the school for which the donor requires tax exemption.
      • The school must apply to SARS to get permission to issue a 18A receipt.
      • It is recommended to first contact the District Office to find out if they have issued a circular addressing this matter.The following link refers to a Basic Guide to Tax-Deductible Donations (Issue 2) [Reference C TAX ISSUE 2].
    • Credit cards
      Where the SGB decides that parents may use credit cards to settle accounts, credit card payments should be accepted according to the following guidelines:

      • The facility is to be available only for receiving money.
      • The credit card machine is to be obtained through the bank where the school has a current account.
      • The bank is to provide training in the use of the machine.
      • The original slip is to be handed to the payee and the duplicate slip is to be retained by the school for record purposes. The triplicate slip is to be used to request the bank to transfer the money.
      • An official school fund receipt is to be issued for money received by credit card.
    • Safekeeping of money on hand
      • Money received (collected) after hours is to be counted and a written acknowledgement of it is to be made out by the official responsible for the strong room key to whoever hands over the money.
      • The duplicate of the written acknowledgement is to be placed in the strong room with the money.
      • On the following working day, the principal / person in control and the official responsible are to count the money and account for it in the receipt book.
      • Bearing in mind the possibility of theft, it is advisable to keep the amount of cash in the strong room to the absolute minimum.
    • Depositing and withdrawing money
      • This matter is to be dealt with in accordance with International Financial Reporting Standards (IFRS)
      • Deposit slips are to be completed in duplicate by means of carbon paper. The particulars are to be legibly written in blue or black indelible ink (ballpoint pen) and the copies must be clear.
      • Writing the following particulars next to the last receipt for which a deposit is to be made, is recommended:
      • series of receipts representing the deposit, e.g. 1303 to 1362;
      • number of cheques and the total amount according to the receipt book;
      • number of money orders and postal orders and their total;
      • cash account according to the receipt book; and
      • total sum of the deposit
      • For purposes of control, it is essential to complete the deposit slip according to the receipts and to check the cash against the deposit slip.
      • It is further recommended that the receipt number also be written on the back of a cheque before the cheque is deposited. (This is useful for subsequent reference, where necessary.)
      • Re-depositing a cheque which has been dishonoured by a bank, or depositing cash or a new cheque to replace it, is to be done on a separate deposit slip which is to be clearly marked ‘re-deposit’ and on which the number of the receipt is to be written.
    • Statement of daily income and deposits:
      Date:  __________________
      Cash on hand carried over:  __________________
      Received and acknowledged on receipts no. ___ to ___
      Cash on hand carried over  __________________
      Cheques returned
      Receipt no. _______  __________________
      Receipt no. _______  __________________



  4. Grade R National Funding Norms and Standards
    • The National Norms and Standards for Grade R Funding (NSF-Grade R) require the Department of Education (DoE) to provide Provincial Education Departments (PEDs) with the guidelines for basic minimum package of Grade R inputs.
    • Paragraph 208 of the NSF-Grade R states that “the per learner cost determined by the PED must cover the full cost of a basic package of inputs. This basic package of inputs must include the cost of an educator working as an ECD practitioner, teaching a class of a size deemed reasonable by the PED, as well as non-personnel recurrent inputs required by the Grade R learners such as learner support materials, minor building repairs, utilities such as electricity and water, administrative support, copying of materials and media collections.”  In order for schools and community-based sites to deliver a quality Grade R curriculum, they require the basic minimum educational resources.
    • Key elements to consider:
      • Paragraph 207 states that:
        “… Education White Paper 5 recommends that the total per learner cost for Grade R should be equal to 70% of the total per learner cost for Grade 1.  This recommendation should apply, though it is subject to future assessments by the Department of Education relating to the cost of delivering Grade R, based on research…..”
      • Par 209 further says that:
        “In order to cover a larger number of schools in the early years of the roll-out process, PEDs may determine a per learner expenditure 3 level down to a minimum of 50% of the Grade 1 per learner expenditure figure…”
      • An example explaining the above is as follows:
        • If it costs R 9 000 to fund a Grade 1 learner in a public ordinary school and a PED estimates the per capita cost for Grade R [i.e. 50%-70%] at 60% of the Grade 1 per capita cost then:
          60% of R 9 000 = R 5 400
        • If the total number of Grade R learners in a province is 100 000, then the province could make a rough estimate of:
          100 000 x R 5 400 = R 540, 000,000*
      • Par 214 says that: “…it is recommended that if expenditure on learners in the middle quintile (quintile 3) is indexed to 100, then learners in the poorest quintile (quintile 1) should be funded at a level of 120, learners in (quintile 2) should be funded at a level of 110 and learners in the least poor quintiles (quintile 4) should be funded at a level of 80, while those in (quintile 5) should be funded at a level of 20.
        The following table provides a detailed example explaining the above, using the R 5 400 estimated per learner cost in Grade R

        Number of Grade
        R learners in a
        Level of funding
        (%) at a per
        learner costs of
        Per learner cost (R)
        per quintile
        Estimated provincial total
        budget for Grade R per
        Q1 35 000 120 (R5 400 x 120%) 
        = 6 480
        (35 000 x R6 480)
        = 226, 800, 000
        Q2 30 000 110 5940 178, 200, 000
        Q3 20 000 100 5400 108, 000, 000
        Q4 10 000 80 4320 43, 200, 000
        Q5 5 000 20 1080 5, 400, 000
        TOTAL 100 000 R 561, 600,000*

        *Please note that totals (R 561, 000 and R 540, 000) do not balance due to the uneven learner numbers per quintile.
        *The target of public ordinary schools Grade R to independent Grade R (community-based sites) is 85:15.

    • Grade R teacher qualifications / requirements
      The recommended qualification for a Grade R educator is an ECD NQF level 4 Core Unit Standards.
    • For the sake of school policy, the following should be considered for a Grade R class of 30 learners:
      • mandatory / compulsory indoor equipment:
        • 10 pairs of blunt nosed scissors;
        • floor mat / ucansi / blanket;
        • paint, at least 3 colours, and paint brushes (enough for one group);
        • large wax crayons (10 packets);
        • 1 box of paper (computer or waste paper);
        • 10 story books (could be made);
        • paper glue (non-toxic);
        • 1 teacher resource poems / rhyme book;
        • 1 pack of shapes;
        • 1 set of blocks;
        • 6 x peg boards with pegs; and
        • balls (at least 3)
    • The items listed above could be made, collected or donated by parents and the community. Some of the equipment is only procured once every 5 years e.g. story books, floor mats, etc. whilst some need to be procured every year, e.g. consumables such as paint, glue, etc.
      • mandatory / compulsory outdoor equipment:
        • balls;
        • skipping ropes;
        • balance beam; and
        • bean bags
      • Other equipment to be provided (could be homemade or donated by parents):
        • cups and saucers;
        • posters (could be cut from old magazines);
        • puzzles (at least for 2 groups);
        • dolls;
        • maths blocks (at least 1 set);
        • wooden cars (enough for one group); and
        • first-aid kit
  5. No-fee Schools
    • SASA determines in Section 39 (7) that the Minister must by notice in the Government Gazette determine the national quintiles for public schools or part of such quintiles which must be used by the MEC to identify schools that may not charge school fees.
    • Section 39 (13) determines as follows in this regard:
      • “(13) Subject to Subsection (7), the Member of the Executive Council may, after consultation with the relevant Governing Bodies, annually by notice in the Provincial Gazette identify additional public schools within his or her province that although they have not been included in the list of schools contemplated in Subsection (I0)(c), may not charge school fees.”


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