Schools are dependent on parents and the community for a third of their funding, a new report says.
The Ministry of Education Review of Schools' Operational Funding and the Education Review Office's report into School's Use of Operational Funding, both released today, show difficulties schools have in making ends meet.
The ministry report was commissioned by the Government a year ago after concerns about how much funding schools were getting.
It found while operational funding had increased by 50.2 per cent between 1995 and 2004, fund-raised money made up 34 per cent of gross school revenue in 2004.
Schools faced new cost pressures that came out of different expectations of schools, increased support staff costs, information and communication technology (ICT), compliance costs and changes to implementing curricula.
The report found the majority of schools were financially viable using operational and locally raised funds.
"However, an increasing but still small percentage of schools are faced with ongoing deficits."
It said the sector as a whole performed well on measures of financial position, with strong growth in working capital, equity and fixed assets.
But "the percentage of schools with negative working capital has grown and the gap between schools performing well financially and struggling financially has widened as the average size of both school surpluses and school deficits grows".
* That Government grants constituted a smaller percentage of total revenue in 2004 than in 1995 and fund-raised money was a higher percentage of total revenue.
* Total revenue for medium deciles schools increased less than for low or high decile schools.
* Government grants revenue increased at a faster rate for lower decile schools.
* Total revenue for small and rural schools increased more slowly than for bigger and urban schools.
* Estimates of how much money could be fund-raised showed lower growth with secondary and middle decile schools struggling.
The report recommended that the ministry better consider costs before imposing new requirements, improve communication and policies to ensure management ability within schools and provide more support. It said the operational funding criteria needed to be clarified and funding better targeted.
It also said the ministry should make it clear what the funding was to be used for and focus on getting sector-wide ICT funding, look at how to best help with support staff and reduce compliance costs.
The ERO report found all schools fund-raised to make ends meet and some were dependent on it.
There were problems with such funding -- it could be tagged for projects that were not the board's priorities.
ERO found lower decile schools more likely to lack financial expertise and some schools put money into projects that didn't add to education, for instance beautifying projects.
It recommended schools improve how they evaluated what to spend money on and get financial expert help. Also they needed to ensure spending was resulting in better education.
ERO said the ministry should recognise the complexity of schools better through its funding.
Education Minister Steve Maharey said the ministry's review group would do further work in response to findings such as work on improving management, simplifying financial reporting and reducing compliance costs and report to him early next year.
"We recognise that there are pressures for schools and we will continue to engage closely with the sector on these issues. The process to date has been collaborative and constructive and we will continue to work with the sector in this way."
Mr Maharey said there were always pressures on school funding and schools needed support to best manage resources.
Decisions about additional funding would be part of consideration for the next budget.
The New Zealand Schools Trustees Association President Lorraine Kerr said the reports showed schools were struggling and dependent on fund-raising.
"Boards will be expecting that the 2007 budget will provide for some financial relief as a temporary measure."
In future she said future imposed costs should automatically be funded through an agreed annual adjustment.
NZEI president Irene Cooper said it appeared that Mr Maharey did not see the problem with how dependent schools were on fund-raising.
The Post Primary Teachers Association (PPTA) general secretary said the bottom line was schools needed more money.