Part 3: Strategic management of the school property portfolio

Ministry of Education: Management of the school property portfolio.

3.1
In this Part, we examine:

Alignment of strategy and plans for managing property with the Ministry of Education’s wider aims

3.2
Clear, comprehensive, and co-ordinated strategic planning is essential to managing a large public property portfolio like school property. It serves a number of purposes, including identifying strategic objectives for the property portfolio, defining roles and responsibilities, providing for consistency and co-ordination in planning and managing the property portfolio, and, in this case, providing information and guidance to schools and other external stakeholders about the Ministry’s school property portfolio objectives.

3.3
We expected that:

  • the Ministry would have a long-term strategic plan for managing the school property portfolio that supported (and was explicitly linked to) the Ministry’s wider education aims, including its 3 vital outcomes;
  • there would be a clear alignment between the strategic plans produced by the Property Management Group and Education Improvement and Support Group;
  • the long-term strategic plan for managing school property would be translated into annual plans for both the Property Management Group and National Operations that identified activities, responsibilities, targets, and performance measures;
  • the long-term strategic plan would form the basis for preparing the annual school property business case and for planning and implementing the various strategic initiatives that are being carried out by the Ministry;
  • the long-term strategic plan would have been prepared after consultation with other stakeholders, including other groups within the Ministry, regional and district offices, and schools (school boards, principals, teaching staff , and the wider school community); and
  • the Ministry would dispose of surplus property promptly.

3.4
We found that:

  • The Ministry has a strategic planning framework in place. It has 3 vital outcomes (see paragraph 2.3), which are translated into objectives and targets for each function within the Ministry.
  • The Ministry has had no strategic plan for the school property portfolio for the last 4 years.
  • There are policies and initiatives for the school property portfolio and these appear sound. However, these have not been linked through the strategic planning framework to the Ministry’s vital outcomes.
  • The Ministry recognises that it needs to address property strategic planning and is taking steps to do so. We acknowledge that the Property Management Group has been primarily focused on implementing new capital funding arrangements for schools during the last 5 years. This is a major policy initiative, and was a key objective of the Ministry’s strategic plan for 1998- 2002.

3.5
Figure 3 sets out the Ministry’s strategic planning process. The lack of a strategic plan for property management is a significant gap (see paragraph 2.12).

3.6
The Education Improvement and Support Group (EIS), of which National Operations is part, has an Annual Business Plan for 2005-06. This is clearly linked to the Ministry’s vital outcomes.

3.7
National Operations’ Annual Business Plan for 2005-06 shows how it supports the objectives described in the EIS Annual Business Plan. Each of the regional and district offices that are part of National Operations has produced an Operating Plan. These plans are linked to higher-level plans within EIS.

3.8
The EIS and National Operations plans include some objectives and targets for school property operations management. However, without a strategic plan for school property, it is not clear how plans produced by the property operations arm support high-level strategic objectives for school property management.

3.9
Policies and initiatives have been produced by the Property Management Group, such as the Performing Classrooms Policy, property for children with special needs, and the Area Strategies initiative, which are described in the School Property Business Case 2005/6. These policies and initiatives appear sound. However, again, without a strategic plan for school property management, it is difficult to determine how far they support overall Ministry policies and plans, and the links that may exist between them. In addition, these policies and initiatives for property are not referred to in the current business plans of EIS or National Operations, even though the operations arm has an important role to play in their delivery.

Figure 3
The Ministry of Education’s strategic planning framework

Figure 3.

3.10
We recognise that, during the last 5 years, the Property Management Group has focused principally on implementing changes to the way that capital funding is provided to schools. This is a major policy change introduced as part of schools’ self-management under the “Tomorrow’s Schools” policy. This has included introducing the 5-year property planning process to all schools and producing the School Property Guide (see Figure 2). These were important objectives of the last strategic plan for school property (1998-2002).

3.11
The Ministry now recognises that it needs to resume strategic planning of school property management. We acknowledge that it has recently employed a consultant to assist it. In preparing the strategic plan for school property management, it will be important for the Ministry to consult with other stakeholders, including other groups within the Ministry, regional and district offices, and schools.

Recommendation 7
We recommend that the Ministry of Education produce a strategic plan for school property management that is clearly linked to the Ministry of Education’s wider education aims, including its vital outcomes.

Recommendation 8
We recommend that the Ministry of Education explicitly link delivery targets included in the Education and Improvement Support Annual Plan to aims and objectives in the school property management strategic plan.

Property management performance

3.12
We expected that the Ministry:

  • would have property management performance standards and targets based on objectives for property set out in the strategic plan for school property management; and
  • would be actively monitoring and reporting actual performance against its targets.

3.13
The national office actively monitors and reports on property management performance against targets. This monitoring includes producing a monthly monitoring report by the Group Manager, Property.

3.14
Property performance targets are included within the performance agreements of Network Development Officers and Network Facilitators, and used as part of their performance assessment.

3.15
Most performance targets are specific and measurable – for example, the date is in place by which all schools must have a signed 5-year property plan.

3.16
However, the Ministry needs to explicitly demonstrate how performance targets are based on the strategic objectives and outcomes sought for school property management. This is something that the Ministry will need to address when it produces a strategic plan for school property management.

Recommendation 9
We recommend that the Ministry of Education, as part of its strategic planning for school property management, identify performance targets to use as a basis for measuring the achievement of objectives and outcomes.

Availability of information about the school property portfolio to support strategic and day-to-day property management

3.17
We expected that:

  • the Ministry would have up-to-date and accurate information about the whole of its property portfolio that had been independently validated;
  • this information would underpin strategic asset management planning at a top level; and
  • network provision staff would use this information as part of day-to-day management of school property.

3.18
We found that:

  • The principal asset management database used by the Ministry is the Property Management Information System (PMIS).
  • There is currently no independent validation of the information within the database, and its accuracy needs to be improved.
  • The PMIS is used for asset management planning at Ministry level, but it does not contain property condition information. Its ability to provide reports about the whole property portfolio needs to be improved, and it needs to be better integrated with the Ministry’s financial management system.
  • Network Development Officers and Network Facilitators consider the PMIS to be an excellent resource to assist them with day-to-day management of capital projects. However, there is a need to improve consistency in the way data is entered. This could be achieved through documented processes for users and an ongoing programme of formal training.

The Property Management Information System

3.19
The PMIS is a computerised database kept by the Ministry that records assets, including buildings and land, at every state school.

3.20
Fixed assets are also recorded in another database.

3.21
The PMIS is used for a number of purposes: to calculate a number of budget allocations, including the maintenance funding of individual schools; to value property, calculate depreciation charges, and determine new property requirements; and to support the management of capital projects by network provision staff.

3.22
To undertake revaluations, valuations must be downloaded from the PMIS to a spreadsheet, and then loaded back into the PMIS and the other database. Adjustments to 5-year property plans also have to be done manually.

Use of the Property Management Information System by network provision staff in local offices

3.23
Network provision staff use the PMIS primarily to record information about capital projects and to process payments. Overall, the Network Facilitators we interviewed considered the PMIS to be an excellent resource, with a good onscreen help facility.

3.24
However, we were told that there were inconsistencies in the way that staff enter data. There is currently no ongoing training programme, and new staff are instructed in the use of the PMIS through a “buddy” assigned to them. However, the Ministry tells us that it has scheduled training at regional forums for staff later this year, and that this will be followed by a more detailed analysis of training needs so that individual training can be provided.

3.25
There are also no documented procedures for using the PMIS. However, we understand that the Ministry plans to incorporate core procedures for PMIS as part of the written procedures for network provision staff that it is producing.

3.26
There is a long process from creating projects to processing invoices through the PMIS. A large number of approvals are required, which creates the risk that staff will try to find ways to bypass control mechanisms. However, this has been recognised by the Ministry, and the Finance and Systems Manager is devising new procedures based on identifying controls for activities that carry a high risk.

Accuracy of data

3.27
Schools are responsible for informing the Ministry of any amendments that need to be made to information held in the PMIS once changes to property have taken place (for example, alterations to existing buildings or demolition of old buildings), and for submitting Completion Certificates to the Ministry for new buildings. Network provision staff then use this information to update the PMIS records. It is important that schools do this, so that information about the school property portfolio held by the Ministry is up to date and accurate. A number of funding allocation decisions, including the maintenance funding component of the operations grant for individual schools, are based on the information held in the PMIS.

3.28
A number of Network Facilitators commented that it was often difficult to get schools to submit information in a timely way. Information is entered into PMIS by staff at local offices, and they have responsibility for ensuring that it is accurate. However, network provision staff that we interviewed observed that they had seen a lot of information that was inaccurate or out of date – for example, information about buildings that was duplicated or missing, wrong calculations, and capital works claims for maintenance. We were also provided with 2 specific examples where schools had received incorrect funding based on inaccurate information held in the PMIS.

3.29
We did not make an assessment of the extent of inaccuracy of the information held in the PMIS as part of our audit. However, we found that currently no independent, external validation of data held in the PMIS is undertaken, and local offices have adopted different approaches to checking data.

Interface of information in the Property Management Information System with other Ministry of Education information management systems

3.30
Interfaces exist between the PMIS and the Ministry’s financial management system and the database that holds information about fixed assets.

3.31
Information entered into the PMIS is automatically updated in the fixed assets database. However, the Ministry considers that the PMIS and the financial management system could be better integrated.

3.32
We consider that the Ministry should prepare a plan to improve the integration of the PMIS with the financial management system. As far as possible, there should be one main source of asset data. This would improve the speed at which information can be extracted and help to ensure its accuracy.

Property Management Information System reporting function

3.33
We expected to find that information about property held in the PMIS is used to underpin asset management planning at a top level, including preparing and implementing a strategic plan for school property management. For example, we expected the PMIS data to be used to provide information about the overall condition of school property, to assess the maintenance backlog, and to determine the funding required for implementing new policies.

3.34
The PMIS is used to provide information to support specific policy initiatives (for example, the Replacement Buildings Policy) and to review the effect on property of planned changes to teacher and student ratios for junior classes. However, a number of interviewees in local offices considered that the PMIS reporting function is limited and very transaction-based (for example, recording buildings and the money spent on them). Network Development Officers and Network Facilitators made suggestions for how they would improve the reporting functionality of the PMIS – for example, by enabling it to identify the proportion of schools that have 5- and 10-year property plans, and to analyse schools’ spending against capital budgets.

3.35
We are concerned that no information is held about the condition of school property. This hampers the ability of the Ministry to have an ongoing overview of the whole school property portfolio that can be used both for strategic planning and to make decisions about the school property portfolio.

3.36
The PMIS was enhanced in 2000 as a project management system, when the Ministry was directly responsible for managing capital projects. The Ministry told us that it would be possible for the PMIS to be enhanced to further improve its functionality. However, this would be costly and take time. The Ministry recognises that there is a need for an infrastructure management system with a strategic reporting function. It plans to undertake an assessment of user requirements with a view to either improving the functionality of the PMIS or replacing it with a system that meets the Ministry’s current business needs.

Recommendation 10
We recommend that the Ministry of Education arrange regular independent validations of information held in the Property Management Information System, and introduce consistent internal procedures for checking data.

Recommendation 11
We recommend that the Ministry of Education determine how to improve systems that are used to hold information about property so that it has a better overview of the entire school property portfolio, to assist it in planning and making decisions about property at a portfolio level.

Recommendation 12
We recommend that the Ministry of Education determine how to improve the integration of property information with its financial management system.

Disposal of surplus property

3.37
The Ministry is responsible for the sale of surplus school property. Surplus school property is described in the Ministry’s 2005 Annual Report as closed schools and bare land properties. We expected that the Ministry would dispose of surplus school property as quickly as possible.

3.38
In 2004-05, the Ministry exceeded its financial target for disposing of surplus school property, though the rate of disposal of this property was slower than the targeted rate.

3.39
The Ministry states in its School Property Business Case 2005/6 that in 2004-05 it had surplus school property worth $52 million. It achieved sales of $8.7 million against a target of $5.4 million. However, these sales took 32 months on average to complete, against a target of selling this property within 20 months of it being declared surplus.

3.40
The Ministry has identified a number of reasons why it has not been able to meet its target – for example, complications caused by subdivisions, multiple titles, and compliance with Treaty of Waitangi obligations.

3.41
The Ministry has measures in place to discourage schools from retaining surplus property. For example, schools with more than 4 classrooms above their School Property Guide entitlement will not receive 5-year property plan funding unless they have a Ministry-approved plan to reduce surplus property.

3.42
The Surplus Property Disposal Incentive Scheme, in which schools receive a proportion of the proceeds of a sale, also provides them with an incentive to identify surplus property for sale.

3.43
Schools may also seek approval to make use of surplus classrooms for “other educational uses or legitimate use”. The Ministry’s Five Year Property Programme Guidelines state that, as a “general rule of thumb”, educational uses that will qualify are activities that receive specific funding from the Ministry, for example, special needs units and satellite kura kaupapa Māori.

3.44
Removing buildings for use by other schools, demolishing buildings, or decommissioning buildings (which the Ministry becomes responsible for maintaining) are other ways to dispose of surplus school property.

3.45
Disposing of surplus school property is contracted to an external agent, and recently the Ministry has appointed a new agent. The Ministry’s view is that this has improved the rate of disposal of surplus property.

Recommendation 13
We recommend that the Ministry of Education, in determining targets for the disposal of surplus school property, identify separate targets for property that can be disposed of quickly and for property that will take longer to dispose of because of specific complications it has identified.
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