The Islamic School of Canberra has had its federal funding reinstated after vowing to improve its governance and financial management.
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The news came as a huge sigh of relief to the embattled school in Weston, which was struggling to pay staff wages and bills since being stripped of $1.1 million of annual federal funding in April.
But federal Education and Training Minister Simon Birmingham stressed the continuation of funding was subject to a number of conditions including extra reporting requirements.
"This decision follows the school authority providing further information on a range of measures intended to improve their governance and financial management and also delivers financial and operational independence from the Australian Federation of Islamic Councils [which operates the school]," he said.
"Our stronger compliance conditions are intended to ensure that school governance at the Islamic School of Canberra is of the highest standard and funding is exclusively used for the education and welfare of students."
The federal government cut the funding to the Islamic School of Canberra at the end of Term 1 following a long-running investigation into its finances and connections with the Australian Federation of Islamic Councils.
Students returned to school in Term 2, after ACT Education Minister Shane Rattenbury confirmed the ACT government would continue to give $400,000 in annual funding to the school, providing it could demonstrate it can remain financially viable.
Chair Azra Khan said the parents, staff and students were extremely pleased that the challenging period of uncertainty had come to an end.
"They feel they can now think positively about the future and the board is equally very happy that we have been given this chance to show that we can operate as the school should, though there is still a lot of work ahead of us," she said.
"The monthly reporting requirements are quite new to the school but we see them as a good thing as they help the school to get its management practices in place."
In August, Ms Khan expressed frustration that the Commonwealth had reinstated funding for a number of other AFICs schools under investigation while the Islamic School of Canberra's future remained uncertain.
However, a timeline of correspondence between the Department of Education and the school showed the department had given the school multiple opportunities to provide requested information.
The department first notified the school of the proposed funding cut in November, and gave them until April 26 to appeal the cut after an extension was granted.
Further extensions were given after the department asked for additional information, and it is understood the Islamic School of Canberra have requested more time to meet the department's Tuesday deadline for further information.
Ms Khan had previously acknowledged that there was a long period of time where the school could not meet the department's requests, but that the new board had met all of the department's requirements since it formed in April.
She said the school's board was determined to reform the school's management, transparency and independence.
Mr Rattenbury said the school was valued by many in the community but that it must continue to meet its registration requirements to stay open, like all non-government ACT schools.
"ACT officials are working closely with the school and the Commonwealth government to update the financial position of the school following the Commonwealth's recent decision," he said.
"The school has applied to the ACT Government for renewal of registration from 1 January 2017."
