Ministry of Education: Management of the school property portfolio.

School property is the second largest publicly owned property portfolio in the country. It includes land, buildings (such as classrooms and gymnasiums), facilities (such as playgrounds), and infrastructure (such as boilers and drains). The portfolio has a capital value of $7,000 million.

Having sufficient, suitable, and well-maintained school property is important for supporting effective teaching and learning. In 2004-05, $250 million was allocated for upgrading existing buildings and a little more than $62 million was allocated for maintenance.

The Ministry of Education (the Ministry) is responsible for the long-term planning of the school property portfolio, and for managing risks to the Crown’s ownership interest. It provides property to school Boards of Trustees (school boards) under the conditions set out in a Property Occupancy Document. The Property Occupancy Document identifies the respective obligations of the Ministry and school boards for managing school property.

School boards are responsible for maintaining their school property. They are also responsible for managing their own capital projects. However, they must comply with project management requirements set by the Ministry.

The Ministry allocates funding to school boards for maintaining school property. It also funds capital projects that it has agreed with school boards.

We have previously undertaken a number of audits of school property management. Our last audit in 2001 looked at how well the Ministry was managing the Crown’s ownership interests in school property. In the main, accountability arrangements for school property management met our expectations. However, we were less than satisfied with the arrangements for maintenance.

At the time of our 2001 audit, the Ministry was introducing new processes for planning and funding school property as part of the Government’s policy to give school boards greater management control. It was too early to assess the effectiveness of these new processes.

The objective of our current 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 aspects of school property management by the Ministry:

  • organisational arrangements;
  • strategic management; and
  • overseeing of capital projects and maintenance.

We decided to concentrate on property management by the Ministry because it is responsible for protecting and managing risks to the Crown’s investment. We therefore did not look at property management by individual school boards. Nor did we examine property management of integrated schools, because the Crown does not own this property.

Organisational arrangements

We looked at the Ministry’s arrangements for managing school property at national and local levels, and the support provided by the Ministry to school boards.

Relationship between the Ministry of Education’s policy and operations arms

The Ministry’s policy arm – the Property Management Group – is responsible for the long-term planning of the school property portfolio. The operations arm – National Operations – is part of Education Improvement and Support, and is responsible for implementing the Ministry’s policies and for providing guidance and support about property matters to individual school boards.

Robust formal and informal communications channels have been put in place between the Property Management Group and National Operations, and there was evidence the 2 arms were working closely on a day-to-day basis. There was also evidence of them working together on the preparation of specific policy initiatives.

However, collaboration could be better targeted to common goals. In particular, the strategic goals that are set by the Property Management Group need to be clearly aligned with the targets for property management set by National Operations.

The Ministry also needs to improve the effectiveness of the property management work of its operations staff by introducing documented business processes and by using management controls to ensure that these processes are complied with.

Operations management at a local level

Property management at a local level is carried out by Network Development Officers and Network Facilitators (network provision staff ), who are part of National Operations.

Network provision staff need to have flexibility in how they carry out their role, and we recognise that priorities differ between regions. However, the work practices of network provision staff in local offices need to be more consistent, their work priorities need to be set nationally, and documented business processes, including record-keeping requirements, need to be introduced.

Ministry of Education support to school Boards of Trustees

School boards have been given greater control of property management during the last 5 years. This has meant that school boards have needed to understand their new responsibilities and their changed relationship with the Ministry with regard to school property management.

The Ministry supports school boards in a number of ways, including by providing written guidance about property management that, overall, complies with good practice in the public sector. It also organises regular meetings for schools at a regional level to introduce new policies and to cover specific property management topics.

The role of network provision staff in providing advice to individual schools, including interpreting Ministry policy and assessing property entitlements, is of fundamental importance.

However, the capability and capacity of school boards to manage their school property is always going to be a risk that needs to be managed. We consider that the Ministry needs to regularly review and evaluate the training in property management provided to school board trustees, and that existing training needs to be enhanced.

The Ministry also needs to be more active in encouraging schools to share facilities and jointly contract for capital and maintenance work.

Strategic management of the school property portfolio

We looked at the alignment of the Ministry’s school property management strategies and plans with its education aims as described in its Statement of Intent 2005-2010. The 3 aims or “vital outcomes” are:

  • effective teaching for all students;
  • family and community engagement in education; and
  • development of quality providers of education.

We also looked at the Ministry’s property management performance, the availability of information about the school property portfolio to inform strategic asset management planning and day-to-day property management, and how quickly the Ministry disposes of surplus property.

Alignment of strategies and plans for managing school property with wider education aims

Clear, comprehensive, and co-ordinated strategic planning is essential in managing a large public property portfolio like school property. We expected to find a strategic plan for the school property portfolio that sets out objectives that support the Ministry’s wider education aims, and that is used by both the Property Management Group and National Operations to identify activities, responsibilities, targets, and performance measures as part of their annual planning processes.

The Ministry has had no strategic plan for school property for the last 4 years. This is a significant gap.

The Ministry recognises that it needs to address this situation, and is taking steps to produce a strategic plan for the school property portfolio.

We also acknowledge that the Ministry’s strategic plan for 1998-2002 contained objectives for introducing a major policy change that took until 2005 to implement. A range of strategic initiatives, such as the Performing Classrooms Initiative and Area Strategies, are also described in the School Property Business Case 2005/06.

Property management performance

The Ministry’s national office actively monitors and reports on performance targets for property management. Most of the targets are specific and measurable. However, a new strategic plan will need to identify performance standards and targets that are linked to strategic objectives.

Availability of information to support strategic and day-to-day property management

The Ministry’s principal source of asset management information is the Property Management Information System (PMIS), which records data about property at every state school.

Network provision staff consider the PMIS to be an excellent resource that assists them with the day-to-day management of capital projects. However, the Ministry recognises that there is a need for documented processes for users and an ongoing programme of formal training to ensure that users make the best use of the system.

Several interviewees expressed concerns that a significant amount of information held in the PMIS is inaccurate. We did not assess the extent of any inaccuracy, though we were given 2 specific examples where schools received incorrect funding based on inaccurate information in the PMIS.

The Ministry needs to arrange for regular, independent validations of data held in the PMIS to provide assurance that information used to make decisions about school property is up to date and accurate.

In our view, the overview of the entire school property portfolio provided by PMIS needs to be enhanced. For example, it does not contain information on the condition of property, and it has reporting limitations. The Ministry recognises that it needs to determine how systems to hold information about school property can be improved to assist its planning for, and decisions about, the school property portfolio.

Disposal of surplus property

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 planned. The Ministry has identified a number of reasons why this is the case, such as multiple titles and compliance with Treaty of Waitangi obligations. We consider that the Ministry should identify separate targets for property that can be disposed of quickly and for property that will take longer to dispose of because of complications.

Overseeing of capital projects and maintenance

We looked at the effectiveness of the Ministry’s overseeing of capital projects and maintenance. We also looked at how far the Ministry encourages environmental and economic sustainability in school property.

Overseeing capital projects

Schools are required to follow the Ministry’s Project Management System. This system complies in all significant respects with good practice for undertaking capital projects. The Ministry monitors the progress of capital projects, and payments to schools depend on the Ministry being satisfied that its requirements have been met.

Recently, the Ministry has begun a review to identify parts of the process where greater controls are required. This includes reviewing the checks by network provision staff that schools have complied with the Ministry’s requirements. The documented business processes that we have recommended for network provision staff should describe these checks. Management controls should be introduced to ensure that network provision staff comply with these processes, and to identify areas for improvement.

Each school is required to employ a professional project manager for projects costing more than $250,000. We consider that, in addition to this financial threshold, schools should be required to employ a professional project manager for any project where the Ministry considers there is a significant risk, whatever the project’s value.

The Ministry undertakes reviews of completed “good practice” capital projects to assess the reasons why the projects have been carried out effectively, and how staff and students view their success. It should now expand this to include reviews of the effect of completed capital projects on the overall condition of the school property portfolio, and the broader contribution of completed projects to the achievement of the Ministry’s objectives for property and vital outcomes.

Encouraging environmental and economic sustainability

Incorporating sustainable features into new or modernised properties can help to improve the environmental performance of those properties and significantly reduce ongoing operational costs. The Ministry needs to do more to encourage schools to improve the economic and environmental performance of their property by requiring them to calculate whole-of-life costs for capital projects. It also needs to provide guidance to schools on improving that performance through the decisions they make about maintenance.

Overseeing maintenance

The way that the Ministry oversees the maintenance of school property does not provide it with assurance that property is being adequately maintained.

The Ministry is confident that school property is being well maintained. However, because it lacks information about the condition of school property and what maintenance is being undertaken, it has no firm evidence to support this confidence.

The Ministry seeks some assurance about the standard of maintenance through the legislative requirement for schools to have a Building Warrant of Fitness. The Ministry is aware that it needs to improve information about how well schools are maintained and is taking action to improve its overseeing, initially through a pilot audit of a sample of schools. We consider that it is important for this pilot audit to provide information about the condition of school property.

The Ministry needs to systematically monitor how schools use maintenance funding, to ensure that maintenance is not being deferred and that the Ministry achieves value for money.

The Ministry also needs to monitor the tendering of maintenance contracts by schools to ensure that they comply with the Ministry’s tendering requirements. We would expect this to be done in the case of high-value contracts or when a large number of small contracts are awarded to one contractor by one or more schools.

The Ministry also needs to provide guidance to schools on assessing whether long-term maintenance contracts offer value for money.

Our recommendations

Our key recommendations are for the Ministry to:

  • devise common goals for managing school property within the organisation, to ensure that policy objectives are translated into operations performance targets;
  • 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;
  • 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;
  • monitor how schools are spending their maintenance funding to identify schools that are significantly under-spending, and to ensure that it achieves value for money; and
  • ensure that the pilot audit of schools’ maintenance (or another mechanism) provides adequate information about the condition of school property.

Our other recommendations for the Ministry are set out in the report.

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