28 Nov 2019

Extra teachers, IT leases, overseas trips put schools in financial trouble

6:02 pm on 28 November 2019

Auditors have revealed that 37 schools were in serious financial difficulty last year and 66 broke the law, mostly by borrowing too much.

A computer classroom fit to teach a new generation of students.

The report said 66 schools broke the law last year including 42 that borrowed more than they were allowed to and 10 that lent money to staff. Photo: 123rf

The Auditor General's report on the results of audits of schools' 2018 accounts said the Education Ministry had to write letters guaranteeing financial support for 36 schools and a 37th, an integrated school, required a letter from its proprietor.

It said the schools in financial difficulty often had falling enrolments, had overused their entitlement of ministry-funded teachers, or used a lot of their operations' grant to pay for extra teachers.

"Most of the schools in financial difficulty use the equivalent of more than half of their operations grant to pay staff (overall, an average of 81 percent). This was higher than the average for all schools that used the equivalent of 60 percent to 71 percent (depending on decile) of their operations grant to pay staff," the report said.

It said 12 of the schools had needed letters of support in 2018, 2017 and earlier years. They included Avondale Intermediate, Cambridge Intermediate, and Golden Bay High School. It said six schools needed such letters in both 2018 and 2017 including Albany Junior High School and Bay of Islands College.

The report said the bank balances of the more than 2000 schools that were audited ranged from a debt of $20,458 to $7.1 million "in hand" and schools on average had $339,200 in investments, though about a third had no investments at all.

The report said 66 schools broke the law last year including 42 that borrowed more than they were allowed to and 10 that lent money to staff.

It said the number of schools breaching borrowing limits had been growing in recent years.

"As demand for digital devices in education increases, schools are entering into more equipment leases. Many equipment leases, including most copier contracts, are 'finance leases', so they are classed as borrowing. Because of this, we have seen more schools coming close to, or breaching, the statutory borrowing limit," the report said.

The report said 13 schools were unable to provide evidence that they had enough money to cover regular maintenance, up from two schools in 2017, and there were indications the number could grow further.

It said of 293 schools likely to need to paint their buildings soon, only half had enough money to pay for the job and about 38 had less than half of the required money.

"If a school does not know what future maintenance its buildings need, it might not adequately plan so that funds are available to carry out that maintenance when it is due," the report said.

Trips to Hawaii, Mexico

The report was critical of spending on overseas trips by several schools.

Clendon Park School School spent $153,580 on a trip for 26 students including three who do not attend the school, 17 parents/caregivers, and seven staff to Hawaii as part of its Urban Hapuu Initiative.

"The students and families contributed $100,209, and the school contributed $53,371. The school's contribution is significant considering the small number of students and families involved. It was also inappropriate for the school to fund travel for students from other schools," the report said.

Te Kura Kaupapa Māori o Te Koutu's 2017 annual report was audited this year and it showed the kura spent more than the board approved on an educational trip to Mexico for students to learn the Spanish language and Mexican culture. The kura funded this from locally raised funds and $105,425 of other funds controlled by the school board.

The report said Blue Mountain College did not provide enough information to explain $52,200 of $306,113 it spent on an overseas trip.

Kura need more support against fraud

As in previous years, the report said kura kaupapa Māori had a disproportionately high number of outstanding audits, with 18 of 73 kura audits outstanding, and it recommended the ministry provide the schools with more support.

"Making the audits more timely means the kura are properly accountable to their communities. It also provides an opportunity for auditors to suggest improvements, where necessary, on a more timely basis to help the kura protect against error or fraud," the report said.

The report said 773 schools had failed to publish their 2017 annual reports online by the time auditors were completing their 2018 audits and 457 schools had published their reports late - usually, once the auditor reminded them.

It said 170 school audits had not been completed by the end of September, a similar number to last year.

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