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A Melbourne independent school accused of over-claiming tens of millions of dollars in federal government disability funding is now facing a governance takeover by its parent organisation.
Melbourne City Mission is moving to take over the governance of its subsidiary Hester Hornbrook Academy, as more leaked documents show the school’s principal warning staff that their claims for federal funding to support disabled children risked attracting the attention of Commonwealth government investigators.
Hester Hornbrook Academy, a special assistance school, has been asked to repay almost $23 million in funding after a federal audit found it was claiming the highest “extensive” bracket of funding for 90 per cent of its students.
The Melbourne City Mission board met on Wednesday evening, as the charity moves to transfer authority away from the school’s current leadership and investigates allegations of misconduct made against principal Sally Lasslett by current and former staff.
A leaked document, circulated to staff by Lasslett and seen by The Age, shows a list of students alongside their level of Commonwealth funding, with notes urging staff to “see if we can get 1 or 2 more extensives” to secure additional funds.
An email Lasslett sent to staff in August 2024 advises staff not to work on boosting some students’ funding as it could alert authorities.
“It’s OK not to have everyone as extensive, let’s not work on the red! I am worried that this will draw attention to us and pull us for an audit,” Lasslett wrote.
The federal government began a crackdown on disability funding as part of its 2023-24 budget initiative to increase transparency for funding to non-government schools. This year it committed $40 million to claw back $463 million in disability funding over four years.
Hester Hornbrook received $10 million less from Canberra in 2026 than in 2025, when it received a total of $36 million and recorded a financial surplus of almost $8 million.
The school, founded in 2017 by Melbourne City Mission, caters for young people who are disengaged from mainstream education, charges parents no fees and is largely funded by grants from the state and federal governments.
The academy has grown rapidly, from fewer than 40 students at one site in South Melbourne, to more than 700 enrolments across five campuses last year.
Melbourne City Mission has disputed the federal government’s claim that $23 million was wrongly claimed and is considering its options to fight the bill.
It also said it had launched an investigation into claims relating to disability funding compliance in April, after several staff members wrote to Melbourne City Mission chief executive Paul Wappett with concerns over Lasslett’s leadership.
Lasslett declined to comment.
Wappett said the issues raised were considered serious enough to warrant a full investigation.
“We engaged relevant independent professional advisers to assist us to forensically investigate the matters raised. This process is continuing,” he said.
Wappett said Melbourne City Mission’s governance review of Hester Hornbrook was part of an evaluation of all the charity’s entities and involved reviewing the “operational relationship between the school and the MCM Group” to establish a long-term governance and operational structure.
“This project is continuing, and we will provide updated information on this project once all the details are agreed and confirmed. It is complex work and must be done properly,” he said.
In response to a question from this masthead, Wappett said Lasslett’s ongoing position at the school was a matter for the Hester Hornbrook board.
“As we work through these issues with the school, our collective priority is to minimise
disturbance to the day-to-day delivery of the school’s educational services to our students – who are, and will always be, our priority,” he said.
“These are young people who need our support, and the support of the wider community. We do not intend to let them down.”
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