Part 1: Introduction

Ministry of Education: Management of the school property portfolio.

In this Part, we describe:

The Government’s “Tomorrow’s Schools” policy, implemented as part of the Education Act 1989, gives schools significant responsibilities and control over the way in which they operate. Section 75 of the Education Act 1989 states that −

Except to the extent that any enactment or the general law of New Zealand provides otherwise, a school’s board has complete discretion to control the management of the school as it thinks fit.

Elected school Boards of Trustees (school boards) have responsibility for overseeing management of the curriculum, staff employment, finance, and the property the school occupies, within overall guidelines set by the Ministry.

The Ministry is responsible to the Government for recommending and implementing policy to protect the Crown’s investment in school property and to actively manage risks to this investment. The Ministry allocates funding to school boards for maintaining school property, and provides funds for capital projects that it has agreed with school boards.

School boards and principals are expected to follow sound governance and management practices, defined in the National Administration Guidelines. The Health and Safety Code of Practice for State Primary, Composite and Secondary Schools specifies the health and safety requirements that school boards must comply with. The Ministry is responsible for ensuring that school boards are provided with the necessary support to do so.

Organisational arrangements within the Ministry of Education

The organisational arrangements for school property management within the Ministry are set out in Figure 1. Since our audit, the Ministry has begun to implement new organisational arrangements as part of an organisational development programme. Property management will become one of the responsibilities of the newly created post of Deputy Secretary – Schooling.

Figure 1
Ministry of Education’s organisational structure for the management of school property

Ministry of Education's organisational structure for the management of school property.

Shaded roles on the chart are the main points of contact about property matters that school boards have with staff of the Ministry.
* There are 5 Network Provision Managers, 6 local office Managers, 8 Network Development Officers, and 24 Network Facilitators employed throughout the country.

The Property Management Group, located in the Ministry’s national office, is the policy arm of school property management.

The School Property Business Case 2005/6 states that the Property Management Group is responsible for long-term planning for the school property portfolio. The business case is produced annually by the Property Management Group to identify funding priorities. It is presented to Cabinet for approval as part of the budget cycle. In preparing the business case, the Property Management Group “considers the issues facing the school property portfolio, and together with other parts of the Ministry and input from the sector, prepares a long term view to guide decision-making, including future funding requirements”.

The Property Management Group has 15 staff.

In 2001 the Ministry reviewed property management at a local level to achieve greater co-ordination between property and other operational activities.

This led to National Operations, which is within the Ministry’s Education Improvement and Support Group, acquiring operational responsibilities for school property management.

The Senior Manager, National Operations, has overall responsibility for property management services to schools. At a local level, operational responsibilities are carried out by network provision1 staff located in 4 regional and 6 district offices. They report to the Senior Manager, National Operations.

Network provision staff employed at a district level include Network Development Officers and Network Facilitators. Network Facilitators provide guidance and support about property matters to individual school boards. Network Development Officers have other property management responsibilities – such as managing school reorganisations, mergers, and closures; dealing with issues between schools; and overseeing major capital projects.

Network Development Officers and Network Facilitators are the main point of contact between individual school boards and the Ministry (see paragraphs 2.15- 2.30).

Additional network provision staff are appointed in areas of population growth as and when required. For example, 4 additional staff were appointed in the Auckland office in January 2005 to support roll growth work.

Network provision staff have other responsibilities as well as property management (see paragraph 2.6).

Planning and funding of capital projects and maintenance

The Ministry requires schools, as part of their management of property, to produce 10-year property plans that include two 5-year cycles of capital works and a cyclical maintenance plan.2 These plans must reflect educational goals, including the goals in the school’s strategic plan and charter. Schools are required to formally review and update these plans every third year, or when significant changes need to be made.

Schools are also responsible for producing 5-year property plans for improvements to their existing property up to their entitlement under the School Property Guide.3 For example, this can be for modernisation or to meet health and safety requirements. These are essentially the capital items included in the first half of the 10-year property plan. The plans form the basis of an agreement for 5-year funding of capital projects by the Ministry.

The 5-year property plans can be reviewed by schools at any time, such as when new education policy requires additional spaces or forecast roll increases do not happen. The school must agree any changes with the Ministry through a revision to its 10-year property plan.

Additional capital funding4 is available to schools facing major non-discretionary capital expenditure that will exceed or have a significant effect on the school’s 5-year property plan budget, such as boiler replacement. However, any additional funding received may be deducted from the funding the school can receive under future 5-year property plans.

Separate funding for capital projects is also available to a school that needs new space, either because of roll growth or because it is operating with less than its School Property Guide entitlement.

Maintenance funding is based on the area of the school, and is the amount that the Ministry assesses that school boards need to adequately maintain their property. The Ministry uses information held in its Property Management Information System to make its assessment.

Each school is allocated a fixed amount for maintenance as part of its annual operations grant funding (which is the funding given to the school board for the operational expenses of running the school).

Why we undertook our audit

Sufficient, suitable, and well-maintained property is important for supporting effective teaching and learning. The Crown has an interest in knowing that school property is managed effectively and efficiently, because poor property management can negatively affect the delivery of education services.

School property5 is the second largest publicly owned property portfolio in the country. Our assessment is that it comprises about 2125 state schools,6 and about 325 sites occupied by early childhood education services. According to the Ministry’s annual report for 2005, the portfolio has a total capital value of $7,000 million, including $5,500 million of improvements, and a total replacement value of about $11,000 million. According to the Ministry’s Statement of Intent 2005- 2010, costs associated with providing school property and houses owned by the Crown that are rented to teachers, principals, and caretakers account for about 72% of the Ministry’s operating budget. Based on figures provided by the Ministry, a little more than $62 million was allocated for maintenance in 2004-05.7

Poor management of a portfolio of this size can result in a significant financial cost. For example, poor maintenance can mean that additional expenditure is needed to improve or replace buildings that have fallen into a state of disrepair. This, in turn, can reduce the amount of funding available for other elements of children’s education.

We have undertaken a number of audits of school property in the past. Our 2 most recent audits were undertaken in 1998 and 2001.

In 1998,8 we examined the maintenance responsibilities of school boards, and found that a little more than half had comprehensive maintenance plans.

Our audit in 20019 examined how well the Ministry was managing the Crown’s ownership interests in school property in the compulsory education sector. We looked at 2 main aspects: accountability arrangements for school property management, and systems and processes for managing school property. In the main, the accountability arrangements – including the way relationships, roles, and responsibilities between the Ministry and school boards were defined – met our expectations.

At the time of our 2001 audit, the Ministry was implementing new systems for planning and funding school property. It was too early to assess their effectiveness, though we commented on the potential effect of the new regime and made some recommendations.

However, we were less than satisfied with the arrangements for maintenance, concluding that the Ministry needed to significantly improve the information it had about the maintenance undertaken by school boards and the condition of school property.

Objectives and scope of our audit

The objective of this audit was to assess the effectiveness of the Ministry’s organisational arrangements, systems, and processes for providing and maintaining school property, and for managing the school property portfolio in general. We concentrated on 3 important aspects of property management:

  • the effectiveness of organisational arrangements in place for property management within the Ministry, including the relationship between the policy-setting and operations arms of the Ministry, the role of Network Development Officers and Network Facilitators, and the support provided by the Ministry to school boards;
  • the effectiveness of the Ministry’s strategic management of the school property portfolio, including the alignment of property management with the Ministry’s wider education aims, and performance management; and
  • the effectiveness of the Ministry’s overseeing of schools’ capital projects and maintenance.

The effectiveness of property management by individual school boards was outside the scope of our audit. We decided to concentrate on property management by the Ministry because it is responsible for protecting and managing risks to the Crown’s investment in school property. We also did not examine the effectiveness of property management of integrated schools, because the Crown does not own this property.

How we undertook our audit

We examined documents, including Cabinet papers, Ministry strategic plans and business cases, Ministry procedures and guidelines, and other relevant documents provided to school boards by the Ministry’s policy arm.

We interviewed staff from the Property Management Group and National Operations. Our interviews included staff in the Ministry’s national office, and staff based in regional and district offices in Auckland, Napier, Lower Hutt, Christchurch, and Dunedin. We also spoke to representatives of the New Zealand Schools Trustees Association.

We visited schools, spoke to trustees of school boards and principals, and observed the interaction between Ministry and school staff.

1: “Network” is the term that the Ministry of Education uses to describe the system of education provision as a whole, rather than viewing schools as a series of isolated entities.

2: The process of producing 10- and 5-year property plans was introduced in 2000, with a phased introduction throughout the state (non-integrated) schools sector. By July 2004, all schools had 10- and 5-year property plans, and were therefore all able to access funds from their 5-year capital programme budget.

3: A guide produced by the Ministry to assess property funding entitlements of individual schools, based on roll number and existing space.

4: This is through “5-Year Budget Plus”, which is a separate fund held by the Ministry for capital projects.

5: “School property” is a general term for the physical assets of a school. It includes land, buildings, facilities such as playgrounds, and infrastructure such as boilers and drains. It excludes school contents, such as teaching materials.

6: This does not include integrated schools, which are private schools that (under the Private Schools Conditional Integration Act 1975) can integrate into the state school system while still retaining their special philosophical character. They receive some property funding from the Crown. However, the Crown does not own the property.

7: This does not include maintenance funding provided to state integrated schools.

8: Third Report for 1998 – Long-term Maintenance of School Property, parliamentary paper B.29[98c], pages 13-22.

9: Providing and Caring for School Property, August 2001, ISBN 0-477-02882-9.

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