These earlier reports should be used for historical perspective – many of our more recent reports replace these and are more current and up to date.
During 2005 and 2006 ERO investigated schools’ use of operational funding. The findings from these evaluations have been presented in two reports. ERO’s first report, Schools’ Use of Operational Funding, December 2006, was about school income and expenditure, and the processes used by schools to manage their operations grant and other sources of income. This second report focuses on schools’ financial decision-making. Together both reports give an overall picture of school income and expenditure and the factors that have an impact on financial management in New Zealand schools.
For the purposes of these reports, operational funding is defined as the total income available to a school. It includes the operations grant and each school’s locally raised funds. The operations grant is the money schools receive from the Government to meet their organisational goals and to pay for day-to-day running. It is calculated on the basis of several factors including roll size, the decile of the school, the Year level of students and the number of Māori immersion students. It does not include funding for teachers’ salaries or major capital works, which are funded separately.
The first evaluation found that many different factors influenced the way schools used the money they received from the Government, including:
- the amount of local funds they raised;
- the overhead costs associated with running schools;
- the amount of targeted funding for education achievement (TFEA) some schools received as part of their operations grant;
- community expectations; and
- their access to financial and strategic capability.
ERO found most schools had satisfactory financial systems and were in a satisfactory financial position. However, while the day-to-day running of schools was being managed efficiently, the links between financial and strategic planning and boards’ knowledge of student needs - gained through student assessment and evaluation information - were weak. As a result, a board’s knowledge of student achievement often did not drive its financial decision-making.
This second evaluation builds on these findings by describing how some school boards and managers make financial decisions. It describes examples of good practice but, at the same time, also identifies some of the financial challenges and risks facing these same schools, and how these risks are being managed. The information in this report will help school managers and trustees to review and improve the processes they use to make decisions about spending their operational funding. The report highlights the value of having accurate information about student achievement when trustees and school managers make such decisions.
Methodology
Evaluative framework
ERO used the framework below to evaluate the quality of schools’ financial decision-making when planning, prioritising, implementing and evaluating school expenditure.
Information was gathered on the extent to which each school had:
- analysed information about the particular characteristics of its students and community;
- gathered and analysed information about student achievement and used the results in planning to meet the identified learning needs of students;
- prioritised between competing areas of spending by focusing on what made a difference to teaching and learning;
- analysed and used the wide range of financial, personnel and curriculum resources available to support teaching and learning programmes;
- monitored and reviewed the effectiveness of teaching and learning programmes and school-wide support systems; and
- developed reporting systems that met the needs of all stakeholders, including students, parents, trustees, staff members, the wider community and the government.
Schools in this study
For this second evaluation ERO chose 27 schools from the 218 schools used in the initial study, and made additional visits to these schools in Terms 1 and 2 of 2006.
ERO’s selection represented a range of different school types. There were 11 secondary and 16 primary schools. Six of these were rural, and the remaining 21 were urban. There were six low decile schools, 10 mid-decile schools and 11 high decile schools. During the first evaluation of operational funding, ERO had identified useful examples of good financial practice in many of these schools, and most of them had efficient financial systems and were in a sound financial position. Other schools were selected because they faced particular financial challenges that boards were working to overcome. ERO decided that some further investigation in these areas would be helpful and instructive.