Hekia misleads the House on charter school funding

Fact Checker: Hekia misleads the House on charter school funding

Minister of Education, Hekia Parata, misled the House yesterday in response to questions about the large surplus accumulating in one of her charter schools.

The Minister attempted to explain away the $2.5 million surplus which has accumulated inside only 15 months, by saying that:

“As I advised the House yesterday, the school is leasing premises while it secures land, if it is able to do so; upon which it will build a school if it is able to do so.”

But Hekia, the charter school funding model that you developed is a leasing model. It was never supposed to be so generous that it would fund a charter school sponsor in the purchase of property.

Here is an extract from the paper, titled “Resourcing Partnership Schools” that Hekia Parata took to Cabinet in February 2013:

“17. I propose that the Crown should not provide a capital funding stream sufficient to purchase land and build a new school. Since Partnership Schools will belong to the sponsor, this would be a significant cost for an asset that the Crown does not own.

18. It is assumed that many Partnership Schools will rent premises…

19. I propose using the Cash for Buildings model as the basis for the property support funding stream for Partnership Schools…. “

The paper is published on the Ministry of Education website, in the section on information releases:

http://www.education.govt.nz/assets/Documents/Ministry/Information-releases/Partnership-schools-information-release/12CabinetPaperResourcingPartnershipSchools.pdf

But what has the Cash for Buildings model produced for Paraoa? An amount of $737,936 per annum compared to the school’s total property costs of $239,097 in 2014. This means the taxpayer is pumping an extra half a million dollars a year – every year – into the Sponsor’s bank account.

Clearly the funding model is flawed and does not even remotely approximate actual leasing costs, as the Minister’s paper argued it would. Instead, it is the main source of the 2014 operating surplus of $637,170.

And what has happened to the exceedingly generous one-off Establishment Payment of $1,880,693?

The 31 December 2013 He Puna Marama Trust accounts state the following:

“…the Trust received a one-off Establishment Payment from the Ministry of Education in recognition of the costs that the Trust will need to incur to ensure the school is operational for the 2014 year. Expenditure of $123,160 was incurred for Kura development. In addition, operating costs of $5,151 were incurred prior to balance date.”

So, with the school opening on schedule in February 2014, the establishment period is now complete and expenditure has proven to be nowhere near the level indicated by the magnitude of the Establishment Payment.

It was never the intention of the Establishment Payment to be held back and used for later property or other capital purchases and Hekia Parata knows this.

There are several other examples of how flawed the charter school funding model is proving to be.

The controversial Whangaruru based school, now known as “Wairua”, received enough funding in advance from the Ministry to buy the farmland where the school is based. But even though they now own that property, the charter school still receives $412,287 per annum as the “Property & Insurance” component of its annual operational funding from the Ministry. Why?

The Minister is clutching at straws and trying to defend the indefensible.

Hekia Parata stated quite clearly that the Crown should not provide a capital funding stream but the practical effect of her charter school funding model is that this is precisely what is happening.

Save Our Schools reiterates its call for an urgent review of the charter school funding model.

There are flaws in the model’s policy base, the method of funding and the amounts it is allocating to individual schools.

ends

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