Submission to the Taskforce for the Review of Tomorrow's Schools

We have decided to publish our submission to the Independent Taskforce carrying out a review of Tomorrow's Schools.

21 August 2018                                                                                                              

Mr Bali Haque
Independent Taskforce
Tomorrow’s School Review

Dear Mr Haque

Submission to the Taskforce for the Review of Tomorrow’s School

Thank you for the opportunity to make a contribution to the taskforce carrying out a review of Tomorrow’s Schools. In the attached submission we explain the work of the Office of the Auditor-General, the accountability of schools, and why this is important. We also set out some of the observations from our work in the school sector.

It is important to us that the review considers how schools remain accountable to their communities for their performance, and addresses areas where accountability could be improved.

Our role gives us a broad view of the education sector, particularly in relation to governance, financial management and property matters in schools. You will find more detail in the submission, but our main observations are set out below.

Governance and management of schools

Good governance and management are essential for a school to perform well. We have found that some Boards of Trustees (Boards) do not have the right skills, capability and support to govern well. Funding schools based on the size of the school roll can drive competitive behaviour between schools, which may result in resources not being used effectively.

A lack of Board capability can result in Boards deferring to the Principal, who is responsible for the day to day running of the school. This can increase the risk of issues of probity arising, if the Board does not carry out its monitoring role effectively, to ensure the Principal’s actions are appropriate and consistent with the Board’s policies.

Parent representatives on Boards may also focus on the period that their child attends the school. This can present a challenge to Boards planning for the long term.

Many Boards will rely heavily on external specialists. We often see this for property and finance. It can be helpful to use specialists if Boards lack the necessary skills. However, there is a risk that Boards delegate their responsibilities without the necessary oversight.

School Principals are the Chief Executive of a Crown Entity, not just a head teacher and, some Principals do not have all the right tools and training to carry out all their responsibilities. Our recent work on school property identified a lack of training for Principals around managing property matters, and we have been told that it is the same for financial matters.

Schools are mainly funded based on roll numbers, which can lead to schools competing for students. We have seen schools fund the transportation of students from other areas to boost their rolls, and funding. This often leads to financial difficulties for a school, as using its operational funding for transport is not sustainable.

The Ministry of Education’s role with schools

Schools are all autonomous Crown entities funded via the Ministry of Education (the Ministry). It is a devolved model, and requires the Ministry to effectively monitor schools, provide support and guidance, and intervene when schools aren’t performing.

Our recent report on school property and our annual audit of school payroll, found weaknesses in the Ministry’s monitoring role. For example, the Ministry does not monitor whether a school uses its property maintenance funding to maintain the Ministry’s buildings.

The Ministry receives funding to provide support and guidance to schools. We have raised concerns with the Ministry in recent years about the support available to schools on financial matters. Even though Ministry resources were recently increased, there are only 7 regional Financial Advisors for more than 2400 schools. We had similar concerns about the support provided by the Ministry for property matters. One of the recommendations of our 2017 school property report was to increase capability and capacity of school property advisors to improve frontline services to schools.

The Ministry has some statutory interventions available to it to intervene if a school is performing poorly. In a 2008 report on how well the Ministry monitors and supports Boards, we found there was not a clear process to follow to decide what support was best for a school. We also found that it took a long time before interventions were put in place. We have not formally followed up this report, but our 2017 school property report recommended the Ministry establish interventions in schools that are not maintaining their property to the required standards.

Issues in different types of schools

The state school system has different types of schools with different issues. We highlight in our submission issues specific to; state-integrated schools, kura kaupapa Māori (kura) and small rural schools.

For state-integrated schools potential conflicts of interest with proprietors can be an issue. Because of the close relationship between the proprietor and Board of a state-integrated school, the finances and governance can become blurred. Sometimes it is difficult for parents to see that a school has used fees and donations for the purpose for which they were given.

There are 73 Māori language immersion schools or kura. A study we carried out in 2011 showed that 20% of kura did not have good financial policies and processes. At the time the Ministry told us that it would be developing targeted guidance for kura, but to date has not done so. We continue to raise concerns each year about the financial management and appropriateness of spending in some kura as a result of our annual audits.

New Zealand has many small rural schools which face different challenges to other schools. These schools may find it difficult to recruit and keep staff. They are often a stepping-stone for new Principals, who can struggle with parts of the role, such as finance and property, for which they have not had prior experience.

Small rural schools can also face financial challenges. Schools have some fixed costs that they have to pay, irrespective of their size, yet school’s operational funding is roll based. Also, property maintenance funding is based on the number of students, size of the school buildings and land occupied by the school, rather than the nature and condition of the buildings.

Opportunities for schools

There are opportunities for schools to work together, and for them to be accountable and report in more meaningful ways than they do at present.

Communities of Learning have brought schools together to work on educational goals, and this could lead to schools sharing functions (such as finance or procurement), or assets (such as gyms or halls). Further, recent changes to the Education Act have made it easier to combine Boards, which may help to improve the quality of Boards, and the breadth of their skills in future.

Since the 2015 financial year, schools have had to report under a new accounting framework established by the External Reporting Board. The framework establishes different tiers for reporting, depending on an entity’s size. To achieve consistency of reporting, the Ministry has elected that all schools will report in tier 2, unless they meet the size criteria for tier 1. We estimate there are about 1200 schools that otherwise would be able to take advantage of simplified reporting, at lower compliance costs, because they meet the size criteria for tier 3.

Any changes to the Tomorrow’s Schools model need to consider how schools will remain accountable. There should be opportunities for making financial and performance reporting by schools more understandable, valued and accessible.

If you would like any more information on any of the matters raised in our submission, please contact my Sector Manager for Schools, Jane Rogers. You can contact her at or on 04 917 1594.

Yours sincerely

John Ryan
Controller and Auditor-General