Part 1: Summary and recommendations
1.1
The Ministry of Education (the Ministry) has, since 1994, contracted with the Māori Education Trust (the Trust) for the administration of certain publicly
funded scholarship schemes. As part of the tertiary education reforms, a
process began in July 2003 to transfer responsibility for the contract
administration from the Ministry of Education to the Tertiary Education
Commission (the Commission). This process is not yet complete.
1.2
In anticipation of a handover, staff in the Commission became familiar with the
contract arrangements and processes followed by the Trust and the Ministry.
As a result, the Commission raised concerns about the quality of the Trust’s
financial management and the Ministry’s monitoring. These concerns were
then conveyed to the Secretary for Education.
1.3
The funds involved were significant; the Ministry was appropriated $5,544,000
in the 2003-04 financial year for these scholarships.
1.4
To ensure an independent process, in February 2004, the Secretary for
Education asked the Auditor-General to consider an investigation. We decided to conduct an inquiry into the management and monitoring arrangements for
the scholarship programmes.
Our findings
1.5
Overall, the serious concerns raised by the Commission have not been
substantiated by our inquiry. However, we did find that the Ministry’s contract
management and monitoring of its contracts with the Trust has been variable
since it contracted with the Trust in 1994 for the administration of a number of
Māori education scholarships.
1.6
No payments were made without the required milestone report, and there were
periods when the standard of file documentation was high. There was also
evidence of some analysis by Ministry officials for the majority of milestone
reports. However, practice has not met our expectations in the following
respects:
- variable monitoring of the value of scholarship payments made through the Trust scholarship schemes;
- no clear process for approving the schedule of Trust scholarship schemes to which the Crown subsidy can be applied;
- no clear policy regarding the nature of income items able to attract the Crown subsidy; and
- variable levels of follow-up inquiry when milestone reports did not meet contractual reporting requirements.
1.7
The overall funding arrangements for the Trust scholarships comply with the
relevant Parliamentary appropriations. In our view, the operational policy that
has provided for the historical practice of paying scholarships to students
studying at private training establishments is, under the Manaaki Tauira
contract, in breach of the contract requirements.
1.8
The clarity of the contractual arrangements between the Crown and the Trust
(including the processes that support the ongoing operation of the scholarships
contract) needs to be improved.
1.9
The Trust has, in the main, complied with its contractual obligations for
awarding scholarships in which the Crown has an interest. However, the
Trust’s reporting against the contracts did not always address all of the
reporting requirements, and, most particularly, its milestone reports did not
clearly outline its use of the Crown subsidy or its administration costs.
1.10
The Māori and Polynesian Scholarship Regulations 1973 need to be reviewed.
1.11
The process of attempting to transfer responsibility for contracts with the Trust
from the Ministry to the Commission could have been better managed.
1.12
We have been advised that the Ministry intends to complete the transfer to the
Commission, pending the outcome of this inquiry. However, as the Ministry
remains responsible for the contracts with the Trust until the transfer is
completed, we have addressed most of the recommendations to the Ministry.
Recommendations
We recommend that the Ministry and the Commission agree a schedule for completing the transfer of the contracts with the Trust from the Ministry to the Commission. This should be conveyed to the Trust as a matter of priority. (Recommendation 1, page 11.)
We recommend that the Trust and the Ministry clarify whether awards of Māori and Polynesian Scholarships for Higher Education are payable for the duration of a programme of study when an interim NZQA-recognised qualification is awarded. (Recommendation 3, page 20.)
We recommend that the Ministry:
- complete the review of the Regulations associated with the Māori and Polynesian Scholarships for Higher Education, to ensure that they are up to date, as a matter of priority (Recommendation 2, page 19);
- ensure that the Board of the Ngārimu VC and 28th (Māori) Battalion Memorial Scholarship Fund approves the list of eligible applicants before the Trust makes any scholarship payments (Recommendation 4, page 24);
- ensure that any payments to Ngārimu VC and 28th (Māori) Battalion Memorial Scholarship recipients are made in a manner consistent with the Ngārimu VC and 28th (Māori) Battalion Memorial Scholarship Fund Act 1945 (Recommendation 5, page 24);
- address whether students studying at private training establishments should be eligible for Manaaki Tauira scholarships and amend the Manaaki Tauira contract as necessary (Recommendation 7, page 27);
- clarify, in the scholarships contract, that the subsidy is based on qualifying income (Recommendation 8, page 29);
- clarify, in the scholarships contract, the nature of income items that are able to attract the Crown subsidy (Recommendation 9, page 30);
- ensure that reporting meets contractual requirements (Recommendation 12, page 36);
- ensure that the costs incurred by the Trust in administering the Manaaki Tauira scholarships are reported on by the Trust in its milestone reports (Recommendation 13, page 36);
- keep full and complete records of its engagements with the Trust as part of any contract renegotiation, and/or monitoring of the performance of the Trust against the contracts (Recommendation 14, page 37);
- routinely monitor the value of scholarships awarded by the Trust from schemes listed in Appendix 3 of the scholarships contract, and monitor the amount of Crown funds held by the Trust for future use (Recommendation 15, page 37);
- establish a process for approving the schedule of Trust schemes to which the Crown subsidy can be applied (Recommendation 16, page 37).
We recommend that the Trust:
- cease processing scholarship applications where the institution of study is not identified (Recommendation 6, page 26);
- seek to recover overpaid GST from the Inland Revenue Department. Any funding returned should then be used to make scholarship payments (Recommendation 10, page 31);
- confirm the institution and course of study of all proposed scholarship recipients with the New Zealand Qualifications Authority before processing any scholarship payments (Recommendation 11, page 34).