Appendix 1: Education providers

New Zealand's education system has three levels – early childhood education, schooling, and tertiary education.

Under the Education Act 1989, administrative authority for most education service provision is devolved from central government to educational institutions, which are governed by individual boards of trustees (boards) at schools or councils at tertiary education institutions (TEIs). Board and council members are elected or appointed.

Schools and TEIs work within the framework of guidelines, requirements, and funding arrangements set by central government and administered by its agencies. Although educational institutions are diverse, the Ministry relies on national policies and quality assurance to provide continuity and consistency throughout the system.

Early childhood education providers

Early childhood education is for children under six. There is a high degree of participation in early childhood education (nationally, 85-95% of new entrants have had some early childhood education when they start school).³⁵

An early childhood education service is defined by section 310 of the Education Act, as:

... premises used regularly for the education or care of 3 or more children (not being children of the persons providing the education or care …) under the age of 6–

• by the day or part of a day; but
• not for any continuous period of more than 7 days.

Sections 315 to 317 of the Education Act also set out the licensing requirements and regulations that early childhood education providers must follow (unless they have a specific exemption from the Minister of Education). The regulations covering early childhood education services are called the Education (Early Childhood Services) Regulations 2008.

Most early childhood education providers are private not public entities, and, as such, the Auditor-General is not their auditor. However, the Auditor-General maintains an interest in the appropriate use of public funds distributed to early childhood education providers by the Government as a subsidy to their normal business. Early childhood education regulations set out eligibility and conditions for the subsidy. Regulations also provide for other aspects of government interests in early childhood education provision, such as the provision for the Minister of Education to set a national curriculum for early childhood education (Te Whāriki).

Schools

There are about 2460 state and 90 private schools, providing education to children between the ages of five and 19. Schooling is compulsory from the age of six to 16, but most students begin school at age five.

There are several different types of schools. Some are differentiated by the range of year levels to which they offer education (full, composite, or contributing schools) or by whether they are state schools or state integrated (operated as a state school, but with the particular religious or philosophical perspective of their owner), private (independent) schools, home schooling-based schools, or special education schools. Most school-aged children (96%) attend state schools.³⁶

Most schools are publicly owned and funded by the Government. Schools can also raise additional, non-government funding (for example, from donations, fundraising activities, international students' fees, or hostel fees). Boards are responsible for ensuring that the purpose of any fundraising is clear and that the donor understands the purpose for which the funds will be used.

Because all state schools are public entities, the Auditor-General is their auditor and maintains an interest in their financial and non-financial performance reporting. Schools follow a national curriculum but are self-managing and governed by locally elected boards. Boards are required to prepare individual charters and annual plans and to report their performance against these.

Tertiary education providers

Tertiary education in New Zealand is delivered by a variety of providers – universities, institutes of technology and polytechnics (ITPs), private training establishments (PTEs), industry training organisations (ITOs), wānanga, and other types of providers. The Education Act defines these various types of tertiary education organisations (TEOs) and the Tertiary Education Strategy (the Strategy) specifies core roles and expectations for each type. The Crown funds much of the education and training offered by TEOs.

The Crown has an ownership interest in TEIs, which include universities (eight), ITPs (18), and wānanga (three).

Many TEIs have subsidiary organisations to carry out activities consistent with the functions and duties of a TEI, having decided that these activities can be more sensibly managed in a separate legal structure. Examples of these include research companies, scholarship trusts, childcare centres, and student hostel accommodation centres. In June 2011, the TEI sector was made up of 147 entities, with 116 entities controlled by, or related to, TEIs.

TEIs are Crown entities under section 7 of the Crown Entities Act 2004 and section 203 of the Education Act. They are independently governed by councils whose functions are set out in the Education Act. However, only the provisions set out in Schedule 4 of the Crown Entities Act apply to TEIs.

Unlike some other classes of Crown entities, TEIs are not directly accountable to a Minister. However, the Crown monitors the performance and viability of the TEI sector through the Ministry of Education, the Tertiary Education Commission, and the New Zealand Qualifications Authority (see Appendix 2).

Section 159ABA of the Education Act sets out the planning, funding, and monitoring framework of the tertiary education sector. This framework requires TEIs to prepare investment plans that set out TEIs' responses to the Government's tertiary education priorities and to stakeholder needs. The investment plans establish the levels of Crown funding for TEIs. TEIs are also required to prepare an annual report that includes, among other information, audited financial statements and a statement of service performance.

TEIs are Crown entities, so the Auditor-General appoints their auditors and maintains an interest in their financial and non-financial performance reporting.

35: See "ECE participation" on the Ministry of Education's website (www.minedu.govt.nz).

36: See "NZ education system overview" on the Ministry of Education's website (www.minedu.govt.nz).