NZ Herald editorial: Schools' discretionary grants still public funds

Blockhouse Bay Intermediate was one of schools being too generous to departing principals. Photo / Doug Sherring

The Prime Minister is by no means alone in finding some of the spending of school boards of trustees "hugely surprising". The latest audit of school finances by the Office of the Auditor-General has shown one board spent $10,000 on gifts for a departing principal, another gave its principal an $8500 ride-on mower as a leaving gift. Another spent $7000 on a farewell party for its principal and a further $3000 on his gift.

The vast majority of schools have received clear audits for 2016 but as many as 29 were assessed to be in serious financial difficulties and not all of them were in low income zones. Among those in difficulty were Wanganui Collegiate, St Patrick's College, Silverstream and Waiheke Primary School. Oddly, the schools being too generous to departing principals were in Mangere, Puhinui and Blockhouse Bay.

Boards of trustees are given charge of a school's operations grant which is supposed to cover all its essential educational expenses except teachers' salaries that are paid directly by the Ministry of Education. When the system was set up, the autonomy of boards was emphasised and they were encouraged to spend the operations grant as they saw fit.

Indeed, the whole rationale of Tomorrow's Schools was to made education more responsive to the particular needs and circumstances of different communities.
In a few cases it seems the school has lost sight of the fact that while it is free to spend the grant as it thinks fit, it is nevertheless spending public money. The implications should not need to be spelled out.

The money comes from taxpayers, it is not earned from voluntary paying customers. Commerce might be able to justify generous rewards for work it appreciates and can measure in earnings, but taxpayer-funded schools are not in the same position. If they want to acknowledge a departing principal with more than a modest gift, they had better raise the money in voluntary contributions.

And when they raise voluntary funds they must use the proceeds for the stated purpose. The Audit Office found one school did not pass on donations it had collected for Fiji flood victims. Another raised funds to send 250 students, staff and caregivers to Rarotonga but when the donations and family contributions did not cover the full costs, the school paid the shortfall of $250,000. And its operations budget was already in deficit.

Some schools struggle to recruit board members with financial expertise but the basic principles of public finance ought to be obvious. The money is entrusted to the board. Its members are trustees for national taxpayers as much as for the school's community. The purpose of every public dollar spent needs to withstand the scrutiny of the Audit Office.

The school that spent $10,000 on its departing principal was acknowledging his success in turning its finances around. When he arrived, explained the board chairwoman, "We had no reserves but when he left we had over a million in reserve. If we want a new programme the money's available."

Principals sit on their school board and provide most of its advice. Most do a fine job and when they do, they need to remind grateful parents the money is not theirs.