School’s bad borrowing

A Manawatu¯ school in financial difficulty has been ticked off for bad borrowing and a conflict of interest, but its principal says the problems are in the past.

Principal Carwyn Caffell joined Bainesse School in 2016 and she it is trying to solve its financial problems.

‘‘We acknowledge that there is still some work to do to get the school’s finances in order again. We are working with the Ministry of Education and [NZ School Trustees Association] to ensure we are financially sustainable.’’

The small rural school south of Palmerston North posted an operating deficit every year from 2007 until the last available audited accounts in 2016, with the exception of 2013.

Since 2012, the school owed more money than it held in assets.

‘‘Between 2007 and 2012, the roll fell by almost 20 students. As the roll declined, the school’s operations grant was reduced. Staff and expenses, however, remained relatively static,’’ said ministry deputy secretary of sector enablement Katrina Casey.

In 2015, the ministry helped pay for an extra staff member for one year to cover staff leave, including bereavement leave. But the Board of Trustees was told not to spend more than the operations grant in the future and to reduce staff numbers, Casey said.

Then, in 2016, money was borrowed from another source by the school’s Board of Trustees to cover unexpected staff leave over Christmas.

The loan was against ministry rules, and to get permission, the school would have had to clear it with both the ministry and the minister of finance.

The loan burdened the school with repayments more than 10 per cent of its annual operations grant, Casey said.

As well as financial difficulty, the Office of the Auditor-general noted a conflict of interest at the school because a staff member had joined the Board of Trustees against the rules.

This means they became part of the team making employment and governance decisions about the school.

Both Caffell and Casey said they would not say how long the staff member was on the board or what role they held at the school, for ‘‘privacy reasons’’.

Caffell said the Auditorgeneral’s office contacted the school about the issue in May last year, and the staff member immediately resigned.

‘‘Our school has had a change in leadership and governance in 2016. The [Office of the Auditor General’s] report referred to reports on financial matters before this new leadership and governance team was in place,’’ Caffell said.

It was a shame the Auditorgeneral’s report did not provide space for schools to explain, Caffell said, but when asked by

Manawatu¯ Standard, he did not provide details about what was behind the issues, or what had been done as a result.

‘‘We acknowledge that there is still some work to do ...’’ Carwyn Caffell