Report reveals which Bay of Plenty schools are in the red

Bethlehem College was one of the Bay of Plenty schools flagged as being in "serious financial difficulty" by the Ministry of Education. Photo / File

It is no secret that many schools are under the financial crunch in New Zealand, but just how deep in are our local schools and why is a school that gathers thousands of dollars in tuition fees in the red? Jean Bell reports.

A Bay of Plenty state-integrated school that charges at least $2300 in annual school fees per student is in "serious financial difficulty" according to the Ministry of Education.

Co-ed Christian school Bethlehem College posted a deficit of more than $530,000 last year, yet the Christian Education Trust which owns the school posted a $2.21 million surplus and purchased land worth $3.5m to establish a preschool in that same year.

The financial results include those of satellite school Bethlehem College Chapman, which is based in Rotorua.

However, Bethlehem College disputes the school is in "serious financial difficulty" and says the trust is a separate entity so its operations are separate from the school's.

Last year's school audits report from the Office of the Auditor-General showed Bethlehem College was among 18 schools nationwide that were flagged as "relying on the continued support of the Ministry of Education to meet its obligations as they fall due in 2018".

According to the office's report, those schools required a letter of support from the ministry to confirm it was a going concern, meaning it could continue to operate into the near future.

"If we consider a school's financial difficulty to be serious, we draw attention to it in the school's audit report," the report read.

Bethlehem College Chapman. Photo / File

Ministry of Education sector enablement and support Katrina Casey said a school was considered to be in serious financial difficulty when its working capital deficit was more than 20 per cent of its annual operational funding.

Casey said the auditor may request a letter of support from the ministry if there was doubt about the school's ability to operate.

She said the letter confirmed the school was "essential to the network" and the ministry would continue to provide resourcing, such as teacher salaries and operational funding, for at least 12 months from the date of the letter.

"A deficit does not always mean a school is in financial difficulty, and more than one deficit over a number of years does not always mean a school is no longer a going concern.

"[Bethlehem College's] board of trustees is committed to improving its financial position and has a clear plan in place to achieve this. We are working with the school to support them," Casey said.

Bethlehem College received $11,432,573 in government grants and posted a $530,934 deficit last year, according to the school's statement of comprehensive revenue and expense.

Te Wharekura o Mauao. Photo / File

In 2017, the school received $10,509,323 from the government and posted a $392,137 deficit.

Bethlehem College board of trustees chairman Paul Shakes said: "While it is correct that the auditor of Bethlehem College sought a letter of support from the ministry as part of our 2018 audit, we do not consider that 'serious financial difficulty' is an accurate representation of our position."

Shakes confirmed the school's deficit was $530,934 in 2018, but said the school had a surplus of $120,701 before non-cash depreciation of $651,635.

"There were a number of initiatives that were undertaken that contributed to the result in 2018, these were all funded by cash reserves that had been accumulated for these purposes," he said.

These initiatives included the acquisition of Chapman College as a satellite school, leadership team restructure, classroom refurbishment and technology updates.

Shakes said the school received Ministry of Education funding for staff at the same level as state schools, but the board believed this "funding is insufficient to deliver the programmes with the breadth and quality that we want to provide and our community expect".

"To deliver education at the level we do requires us to employ staff in excess of the funding we receive from the ministry targeted for staffing, this necessitates us funding these staff from our operations grant or other sources of funding as almost all other schools would do."

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Bethlehem College is one of four entities owned by the Christian Education Trust (CET).

CET posted a $2.21m surplus in its 2018 annual report, which was up from $1.78m in 2017.

The 2018 annual report said although Bethlehem College's funding and financial management was independent of the trust, it "nevertheless has an active interest in ensuring the sound financial welfare of the college".

The report goes on to say that the financial affairs of the school were reported separately and were not contained within the "consolidated results of the Christian Education Trust". CET was in a "sound financial position and is further supported by way of substantial property".

CET general manager Tim Collins said the trust was comfortable with the financial position with the school. He said CET supported initiatives the school had undertaken in 2018 which were funded out of cash reserves accumulated for these purposes.

Last year, CET purchased 3ha of land in Ōmokoroa for $3.5m to establish a preschool.

Collins said CET saw this purchase as "a strategic move to have a presence in the growing Ōmokoroa community".

All students at Bethlehem College are charged $2300 including GST per year to attend, according to the school's 2020 financial schedule for domestic students.

The schedule also includes a "special character" voluntary contribution of $1400 for primary pupils and $1600 for secondary students per family, per year.

Shakes said attendance dues were collected by the school for "the provision of land and buildings" and were not counted in the school's income.

"There are regulations which govern the proprietor providing funds for items other than land and buildings."

He said the special character contribution was used by the board of trustees to "fund programmes and initiatives that are core to who we are as a Christian college".

Other Bay of Plenty schools in the red

The school audits report from the Office of the Auditor-General showed six other Bay of Plenty schools were in the red.

Ōropi School, Rotorua's Owhata School, Pahoia School, Pukehina School, Matatā's Saint Joseph's Catholic School, and Te Wharekura o Mauao were also flagged by the Ministry of Education as being in "serious financial difficulty".

Owhata School principal Bob Stiles said a combination of factors contributed to the school's deficit last year, including paying staff to work extra hours to support children with behavioural needs, an interest-free government loan for solar heating for the school pool and an ongoing lease for IT equipment.

He said the school started working with Ministry of Education financial advisers in August 2018 and had a projected surplus of $7000 in 2019.

Te Wharekura o Mauao heamana (chairman) Graham Cameron said overspending in day-to-day transport for students and using operations grant funds to support extra teaching staff were among the reasons for the deficit.

Funding streams ... do not take into account the individual and growing needs of tamariki that are enrolling in many of our schools.

Shane Cunliffe

Due to "financial strategies" put in place at the end of 2018, Cameron said the school was projecting a "small surplus" for 2019 and 2020.

Pukehina School principal Indra Thomas said there had been "prudent monitoring" of the school budget since she became principal in term three last year.

She said the school was working with the Ministry of Education and she was confident the school would be financially stable by the end of 2020.

Acting chairman of Western Bay of Plenty Principals Association Shane Cunliffe said he could not comment on individual schools but said schools had long been under-resourced to cater for the growing needs of the community.

". . . especially when funding streams are based on fairly blunt instruments such as school size and outdated census data and do not take into account the individual and growing needs of tamariki that are enrolling in many of our schools."

Ministry of Education sector enablement and support Katrina Casey said roll size and census data were just two of the many factors considered when calculating operational funding.

This funding included allowances for anticipated growth and if a school did experience roll growth, the school board could apply for additional funding under the extraordinary roll growth application process.

The Bay of Plenty Times also contacted Ōropi School, Pahoia School and Saint Joseph's Catholic School for comment but these schools did not provide a response before publication.