A school already in financial strife spent almost half a million dollars on company shares - to get the milk from its dilapidated school farm collected.

Northland College was in the red when it bought the Fonterra shares without the required approval from the Ministry of Education, which it owed money to.

The $450,000 cost came before the Government's decision to appoint a commissioner to the Kaikohe school in April 2012. The commissioner removed the board of trustees and appointed new principal Jim Luders.

The spending on the shares was flagged by the Auditor-General this week in a report on audits of 2012 school accounts. Northland College was one of 61 schools that breached the Education Act.


"There were a myriad of complex issues within the school to do with performance, and finance was one of them," Mr Luders told the Weekend Herald. "The school has an attached farm, and as part of the agreement with Fonterra you have to have a number of shares to be able to get the milk tankers in, and so on.

"The school was needing to buy shares to operate the farm, basically."

Commissioner Chris Saunders overhauled the farm's management and it is now turning a profit for the first time in 10 years, thanks to a partnership with Lincoln University.

The farm is made up of a 143ha dairy platform, 50ha of dry stock and 264ha of pine forest.

Milk-solid production has soared 70 per cent one year into the partnership with Lincoln.

Katrina Casey, head of the ministry's sector enablement and support, said it was working with Mr Saunders to explore options to transfer the farm to a trust. "We will also be working closely with the school's representatives to look at granting retrospective approval for the purchase of the Fonterra shares."

23 May, 2014 10:15am
2 minutes to read

The ministry allows schools to buy securities, with approval, if there is deemed to be no risk to Crown funds and significant benefit to the school or board. "We believe that this is the case in respect to Northland College."

She said the decile one school was still under some financial pressure, mainly as a result of a declining roll.