Office of the Auditor-General Briefing to the Education & Science Committee Vote Education 1 2016/17 Year 15 June 2016
2 Assistance to the Committee The Education & Science Committee is conducting an Estimates examination of Vote Education for the 2016/17 financial year in accordance with Standing Order 338. The Controller and Auditor-General provides Parliament with assurance on the performance and accountability of public entities. The Office of the Auditor-General s assistance to select committees with their Estimates examinations is guided by the Code of Practice for the Provision of Assistance by the Auditor-General to Select Committees and Members of Parliament. To identify lines of enquiry in this briefing we have reviewed the following documents: the 2016/17 Estimates of Appropriations (Estimates); the 2016/17 SOI for the administering department (Ministry of Education (the Ministry)); the 2015/16 Annual Report of the administering department (the Ministry); and the Minister s response to the Standard Estimates Questionnaire (SEQ). We have also drawn from other sources, including information we have received as the statutory auditor of the administering department and of other entities in the sector. In some cases, we checked factual information with the department or other entities to ensure that our advice to the committee is accurate. We did not give the entities any contemplated or actual advice in this briefing. If the Committee would like further explanation or elaboration of any aspect of this report, please contact Mark Evans, Sector Manager, on (04) 917-1500 or email on Mark.Evans@oag.govt.nz at the Office of the Auditor-General.
Summary of Key Issues 3 Overview of Vote Education Vote Education is administered by the Ministry of Education. The Minister of Education, the Hon. Hekia Parata, is responsible for the appropriations within the Vote. The Ministry of Education, Careers New Zealand, the New Zealand Qualifications Authority, and the Education Council of Aotearoa New Zealand incur expenditure under the Vote. Total annual and permanent appropriations sought in 2016/17 for the Vote are $11,044,598,000, up $257,746,000 from 2015/16 ($10,786,852,000). 1 Budget 2016 - new initiative and new funding Budget 2016 provides new funding or additional funding: To schools to support children most at risk of not achieving. The Committee may want to know how the funding will be allocated. To support students with special needs, including additional funding for the Ministry s In- Class Support, Ongoing Resource Scheme and Intensive Wraparound services. The Committee may want to find out more about these services and, in particular, whether the additional funding meets all demand for the services. To meet the additional demand for assistive technology for students. The Committee may want to know the criteria students must meet to qualify for assistance. For the second and third New Zealand schools public-private partnerships. The Committee may want to know whether commenced projects are on-track to be completed on time and time frames for the completion of new projects. For the school property growth package including two new schools (in Auckland and Tauranga), 480 new classrooms, two school expansions (Auckland and Hamilton) and the rebuild of a kura kaupapa Māori. For the Christchurch Schools Rebuild programme. This programme will construct 13 new schools, rebuild 10 schools on existing sites, partly redevelop 34 schools and redevelop 58 schools. The Committee may want to know the delivery risks involved with the programme. To provide funding for Christchurch Schools to earthquake-strengthen buildings. The Committee may want to know how the Ministry will assess applications to the fund. 1 The Estimates of Appropriations 2016/17 Education Sector B.5 Vol 2, page 11.
4 1 Overview of Vote Education 1.1 Total annual and permanent appropriations sought in 2016/17 for the Vote Education are $11,044,598,000 which comprises: Departmental output expenses - $1,810,353,000. This includes funding for policy advice, school property portfolio management, support and resources for education providers, support and resources for teachers, interventions for target student groups, and stewardship of the education system; Departmental capital expenditure - $859,933,000. This includes funding for the construction of new schools and purchase of land; Non-departmental output expenses - $372,441,000. This includes funding for the provision of information and advisory services, quality assurance, school managed network funding, school transport, secondary school assessments, curriculum support and professional development and support; Non-departmental benefits or related expenses - $41,851,000. This includes funding for boarding allowances, national study awards, home school allowances, teacher trainee scholarships and Puawaitanga scholarships; Non-departmental other expenses - $7,029,097,000. This includes funding for the delivery of childhood, primary education and secondary education, special needs support and support for early childhood providers; Non-departmental capital expenditure - $37,560,000. This includes funding for the provision of school furniture and equipment; and Multi-category expenses and capital expenditure - $889,363,000. This includes funding for the support and resources for teachers, curriculum support, professional development and support, interventions for target student groups, and special needs support. 2 Change in vote structure 1.2 Following a review of Vote Education appropriations, a change in the appropriation structure has been made from 2015/16, which include the establishment of two multicategory appropriations as follows: Departmental output expense (Support and Resources for Teachers) and two non-departmental output expenses (part Curriculum Support and all Professional Development and Support) have been combined in a multi-category appropriation Improved Quality Teaching and Learning, with an overarching purpose to improve the quality of teaching and learning for children and young people aged 0-18 years; and Departmental output expenses (Interventions for Target Student Groups and part Curriculum Support subsequently renamed Students Attendance and Engagement), non-departmental output expense (Service Academies) have been combined into a multi-category appropriation for Target Student Groups, with an overarching purpose to improve outcomes for targeted student groups. 3 2 The Estimates of Appropriations 2016/17 Education Sector B.5 Vol 2, pages 7-11. 3 The Estimates of Appropriations 2016/17 Education Sector B.5 Vol 2, page 24.
Trend in the Vote Figure 1: Trend in appropriations for Vote Education 2011/12-2019/20 5 10,000M 8,000M 6,000M Multi-Category Expenses and Capital Expenditure (MCA) Capital Expenditure 4,000M Other Expenses 2,000M Benefits or related expenses Output Expenses 0 2011/12 Actual 2012/13 Actual 2013/14 Actual 2014/15 Actual 2015/16 Est Actual 2016/17 Vote 2017/18 Est 2018/19 Est 2019/20 Est 1.3 Pages 18 to 22 of the Estimates of Appropriations 2016/17 Education Sector B.5 Vol 2, provide analysis of the significant trends in departmental and non-departmental appropriations from 2011/12. 1.4 In summary, total appropriations have increased from $9,153,929,000 in 2011/12 to an estimated $11,044,598,000 in 2016/17. Over the same period, capital expenditure has increased from $497,770,000 to $897,493,000 as a result of the Ministry s school property works programme 4. Also, non-departmental other expenses, such as the delivery of childhood, primary education and secondary education, special needs support and support for early childhood providers has increased from $6,120,899,000 to $7,029,097,000 over the same period. 5 2 2016 Budget summary 2.1 Budget 2016 will allocate an additional $1.44 billion to Vote Education - $75.1 million in operating funding in 2015/16, $640.5 million in operating funding in 2016/17 2019/20, and $727.3 million in capital funding. 6 4 The Estimates of Appropriations 2016/17 Education Sector B.5 Vol 2, page 20. 5 The Estimates of Appropriations 2016/17 Education Sector B.5 Vol 2, page 19. 6 http://www.education.govt.nz/ministry-of-education/budgets/budget-2016/
6 3 Budget 2016 - new initiative and new funding in detail Operational grant increase to support children most at risk of not achieving 3.1 Budget 2016 provides funding to schools to support children most at risk of not achieving. The Budget funding is: 7 $ millions 2016/17 2017/18 2018/19 2019/20 Total Operational grant increase to schools to support children most at risk of not achieving (operating funding) 6.177 12.374 12.331 12.271 43.153 3.2 The funding will increase discretionary funding to state and state-integrated schools to increase schools support for children most at risk of not achieving. Social investment factors will be used to determine each school s additional funding. 8 3.3 The Committee may wish to ask: The Committee notes Budget 2016 provides for an operational grant increase of $43.15 million to support children most at risk of not achieving. What Social Investment factors will be used to determine eligibility? What does the Ministry s modelling show in terms of the schools most likely to receive the additional funding under the proposals? When will schools know their extra funding? Forecast changes in early childhood education, primary and secondary education and property values 3.4 Budget 2016 provides additional funding to meet the costs of increases in the forecast number of children in early childhood education. It also funds an increase in depreciation as a result of the increasing value of the school property portfolio. 3.5 The Budget funding is: 9 $ millions 2015/16 2016/17 2017/18 2018/19 2019/20 Total Forecast changes in early childhood education, primary and secondary education, and property values (operating funding) 75.332 88.074 73.922 73.177 164.846 475.351 3.6 The Committee may wish to ask: The Committee notes that Budget 2016 provides additional funding to meet changes in early childhood education, primary and secondary education as well as funding to meet increases in depreciation. How many extra student hours and students will the additional funding fund? How much of the increased funding is for depreciation? 7 8 http://www.education.govt.nz/ministry-of-education/budgets/budget-2016/highlights-budget-2016/ 9
Increasing access to In-Class Support 3.7 Budget 2016 provides additional funding of $15.28 million over the 2016/17 2019/20 fouryear period for the Ministry s In-Class Support programme. 10 7 3.8 In-Class Support funding is for identified students with special education needs who will benefit from additional individual support in their classroom. The funding provides schools with 5 hours a week of teacher aide time per student. The hours can be used flexibly to support the learning of identified students within the school s teaching programmes. 11 3.9 Students receiving funding are likely to be in regular classes in primary or secondary schools throughout New Zealand. They re likely to be having difficulties with learning, but not have high enough needs to qualify for Ongoing Resourcing Scheme funding (see below). Students who may be eligible for In-Class Support include those with: a learning disability, autism, ADHD, dyslexia, or other such condition; a hearing or vision impairment; and communication or behaviour support needs. 12 3.10 The Committee may wish to ask: The Committee notes that Budget 2016 provides additional In-Class Support funding. How many additional students will the additional funding support? What is the extent of the unmet demand, if any, for this service? Increasing access to Intensive Wraparound services 3.11 Budget 2016 provides additional funding of $8.88 million over the 2016/17 2019/20 four year period for the Ministry s Intensive Wraparound services. 13 3.12 The Intensive Wraparound service delivers intensive support for students with the highest and most complex behavioural and learning needs. The challenging behaviour could be social, emotional, and educational, and its cause may involve an intellectual learning difficulty. 3.13 The service is for students in Years 3 to 10 and is run from Special Education regional offices. The service began in January 2013 and currently supports a total of 285 students per year. The additional funding from Budget 2016 will allow expansion of the service to an extra 50 students. 14 10 11 http://www.education.govt.nz/school/student-support/special-education/in-class-support-funding-for-students-withspecial-education-needs/ 12 http://www.education.govt.nz/school/student-support/special-education/in-class-support-funding-for-students-withspecial-education-needs/ 13 14 2016 Vote Education Minister of Education Standard Questionnaire, page 12
8 3.14 The Committee may wish to ask: The Committee notes that Budget 2016 provides additional funding for the Ministry s Intensive Wraparound service. How does the Ministry measure the success of the service? Additional support for the Ongoing Resourcing Scheme 3.15 Budget 2016 provides additional funding of $16.49 million over the 2016/17 2019/20 fouryear period for the Ministry s Ongoing Resource Scheme. 15 3.16 The Ongoing Resourcing Scheme (ORS) provides additional support for students with the highest level of need for special education. ORS provides services and support, including: Specialists such as speech-language therapists, psychologists, occupational therapists, physiotherapists, advisers on deaf children, special education advisors, orientation and mobility instructors and others; Additional or specialist teachers who work directly with students and prepare resources for them Teacher aides to support teachers to include students in class programmes and activities; and Consumables small items such as computer software, extra-size pens and pen grips, Braille machine paper, laminating pouches, or CDs and DVDs. 16 3.17 The Committee may wish to ask: The Committee notes that Budget 2016 provides additional funding for the Ministry s Ongoing Resourcing Scheme. How does a student gain access to the Scheme? Increasing access to Assistive Technology 3.18 Budget 2016 provides additional funding of $1.45 million over the 2016/17 2019/20 four year period to meet the increase demand for Assistive Technology. 17 3.19 This funding is to meet the increase in demand for Assistive Technology. Assistive Technology is the specialised equipment and technology that students with special education needs use to participate and learn in class. The Ministry states that only students with the highest need are eligible for Assistive Technology through the Ministry. 18 15 16 http://www.education.govt.nz/school/student-support/special-education/ors/overview-of-ors/ 17 18 http://www.education.govt.nz/school/student-support/special-education/assistive-technology/introduction-to-assistivetechnology/#eligible
3.20 The Committee may wish to ask: The Committee notes that Budget 2016 provides additional funding for increasing student access to Assistive Technology. What is the annual budget for Assistive Technology? What criteria must a student meet to receive assistance? In 2015/16, how many applications for Assistive Technology assistance did the Ministry receive? How many grants did it make? 9 New Zealand schools Public Private Partnership project two and project three 3.21 Budget 2016 provides new funding for both the New Zealand Schools Public Private Partnership project two and project three. 3.22 $151 million of capital is provided for the New Zealand Schools Public Private Partnership project two. $177 million of capital and $20 million in operational funding is provided for the New Zealand Schools Public Private Partnership project three. 19 3.23 We understand project three involves three new primary schools in Auckland, one new primary school in Hamilton and the relocation and co-location of Shirley Boys and Avonside Girls high schools in Christchurch. 20 3.24 The Committee may wish to ask: The Committee notes that the third public private partnership involves three new primary schools in Auckland, one new primary school in Hamilton and the relocation and co-location of Shirley Boys and Avonside Girls high schools in Christchurch. What are the expected completion times for each school development or redevelopment? School property growth package 3.25 Budget 2016 provides funding for new schools and classrooms as follows: Two new schools Auckland and Tauranga; 480 new classrooms; Two school expansions Auckland and Hamilton; and The rebuild of a kura kaupapa Māori. 21 19 20 Hon. Hekia Parata and Hon. Nikki Kaye media release 13 December 2015 21 Hon. Hekia Parata and Hon. Nikki Kaye media release 26 May 2016
10 3.26 The Budget funding is: 22 $ millions 2016/17 2017/18 2018/19 2019/20 Total School property growth package 8.417 16.857 25.971 29.104 80.349 (operating funding) School property growth package (capital funding) 106.148 108.692 55.237 0.500 270.577 Christchurch Schools Rebuild programme 3.27 Budget 2016 provides funding for Christchurch Schools Rebuild programme. 3.28 The Budget funding is: 23 $ millions 2016/17 2017/18 2018/19 2019/20 Total Christchurch schools rebuild (operating 1.254 8.886 15.264 15.264 40.668 funding) Christchurch schools rebuild (capital funding) 21.000 106.790 0 0 127.790 3.29 The Christchurch Schools Rebuild programme was agreed to by Cabinet in 2013 and is worth $1.137 billion. It involves the construction of 13 new schools, the rebuild of 10 schools on existing sites, the part redevelopment of 34 schools, and the redevelopment of 58 schools over 10 years. 24 3.30 We note that the Canterbury Earthquake Recovery Authority (CERA), established to lead and coordinate the Government s response and recovery efforts following the Christchurch earthquakes has now been disestablished. Regenerate Christchurch is now overseeing the long-term development and enhancement of the Central City, residential red zone, New Brighton and other potential regeneration zones. 3.31 The Committee may wish to ask: The Committee notes that Budget 2016 provides additional funding for the Christchurch Schools Rebuild programme. What are the current delivery risk for the programme? What effect, if any, does the disestablishment of CERA have on delivery of the programme? Christchurch integrated schools building strengthen 3.32 Budget 2016 provides new funding which state-integrated schools in greater Christchurch can apply to earthquake-strengthen their building. 22 http://www.education.govt.nz/ministry-of-education/budgets/budget-2016/vote-education-initiatives-summary/ 23 24 http://www.education.govt.nz/ministry-of-education/budgets/budget-2016/vote-education-initiatives-summary/
3.33 The Budget funding is: 25 $ millions 2016/17 Total Christchurch Integrated Schools Building Strengthening (operating 6.00 6.00 funding) 11 3.34 The Committee may wish to ask: The Committee notes that the government has established a fund which stateintegrated schools in greater Christchurch can apply to, too earthquakestrengthen their buildings. How will the Ministry assess applications for the earthquake-strengthening funds? 25
12 Glossary The following information is sourced from the Estimates of Appropriations, a Guide to the Public Finance Act (PFA) and a Guide to Appropriations 26. Appropriation Benefits and Other Unrequited Expense appropriations Capital expenditure appropriations Explanation of Movements in Departmental Net Asset Schedules Output Expense appropriations A parliamentary authorisation for the Crown or an Office of Parliament to incur expenses and capital expenditure, for a specified purpose. Appropriations are limited by their scope (limits on what the appropriation can be used for), amount (the maximum amount of expenditure allowed), and period (the timeframe over which the appropriation applies usually annual or multi-year). Authorises expenses incurred by the Crown (generally made to individuals for their benefit) for which no direct exchange of value is expected in return. Examples are the unemployment benefit and student allowances. These appropriations are non-departmental. Departmental: Authorises capital expenditure to be incurred by a department to acquire or develop assets for use by the department. Departmental capital expenditure funded from a department s balance sheet (proceeds of the sale or disposal of any of its assets together with any working capital held) is authorised by a permanent legislative authority (PLA), under the PFA. The department can seek additional funding for capital expenditure (shown as capital injections in the net asset schedule in the Estimates). Non-departmental: Authorises capital expenditure to be incurred by the Crown (excluding departments) to acquire or develop Crown assets, including the purchase of equity or a loan to a person or organisation that is not a department. Examples include equity injections for Crown entities, and Residential Care Loans to older people. A schedule showing the opening balance, projected movements, and closing balance of a department s net assets. Specifically, it includes the details of any retained surplus, capital injections, or withdrawals. Departmental: Authorise expenses to be incurred by a department in providing a class or type of outputs (goods and services). Non-departmental: Authorises expenses to be incurred by the Crown (excluding departments) in purchasing a class or type of outputs (goods and services) from Crown entities or other third parties. Multi-class Output Expense appropriation (MCOA) A single appropriation that covers more than one class of output expenses. 26 Published by the Treasury in August 2005 and November 2008 respectively.
Other Expense appropriations Outcomes Minister responsible for appropriations Responsible Minister Vote Departmental: Authorises expenses to be incurred by a department not related to producing outputs. An example is the cost of the disposal of decommissioned Defence assets. Non-departmental: Authorises expenses to be incurred by the Crown (excluding departments) that are not output expenses, benefits, or borrowing expenses. An example is the cost of providing primary education. States or conditions of society, the economy, or the environment, including changes in those states or conditions. The Minister responsible for specific appropriations within a Vote. As several Ministers may now hold appropriations within a single Vote, each appropriation has a tag (M1.2 etc) identifying the Minister responsible for that line item. The Minister responsible for the financial performance of a department or Crown entity. In relation to an Office of Parliament, the Office of the Clerk and Parliamentary Service, the Speaker is the Responsible Minister. A grouping of one or more appropriations that are the responsibility of one or more Ministers and are administered by one department. 13