Charter schools pay hundreds of thousands in governance fees.

Some of the country's flagship charter schools are paying their owners hundreds of thousands in governance fees to help manage average rolls of just 70 children.

An analysis of audited financial returns has shown administration and management at the publicly funded, privately run schools form a large part of their costs - up to 40 per cent of total salaries.

Principals from state schools say the proportion they spend on administration staff ranges between 10 and 25 per cent.

All of the $14 million of charter school funding came from the Government, with none of the first five schools partnering with business or other private backers in the way envisaged under an election deal between National and the Act Party.


The Government has this month sought to encourage more reliance on outside investment - meaning less risk for the taxpayer - by reducing the amount to be provided for any future schools. However, critics of the controversial model say there is still cause for concern because that will not affect those already in operation.

"There is no justification for the levels of management dividend being drawn out of these charter schools," said Labour's education spokesman, Chris Hipkins. "It's money that should be going into kids' education, not lining the pockets of managers or to parent companies and trusts in all directions."

Charter schools aim to lift the educational achievement of "priority" students - Maori, Pasifika and those with high needs - by using funding flexibly to provide innovative education. Five opened in 2014 and four more this year, with applications now open again.

Accounts for the first five schools show that four made "related party" payments to their sponsor trusts or companies last year.

One school, Vanguard Military School, paid $309,391 for management, over and above what it paid its principal. The money went to the Advanced Training Group. Both entities are owned by the Hyde family.

Vanguard chief executive Nick Hyde said the payment was for the day-to-day running of the 93-student school, allowing the principal to focus on staff, students and the curriculum. It went towards a chief executive, his staff, payroll, accounts, administration and the support from directors and board members.

He said splitting governance and management had led to success so far, including a 100 per cent NCEA Level 2 pass rate.

Those figures, however, were based on participation rates. The Ministry of Education's website showed only 60 per cent of those leaving the secondary school completed Level 2.


South Auckland Middle School paid $260,000 in management fees to its parent, Villa Education Trust, over 15 months. The trust did not answer questions from the Weekend Herald about what services were provided for the fee. It has not filed its accounts with the Charities Commission on time. The school, which had 111 students last year, also paid $187,321 in administration salaries. With $574,159 spent on teaching staff, administration and management combined was 40 per cent of total salaries.

Terenga Paraoa paid $174,564 in "corporate costs" in addition to administration and consultant fees. Te Pumanawa o Te Wairua paid its sponsor $12,260. Its administration salaries were almost 40 per cent of its total $767,000 staff costs. It is now under new management.

Rise Up Academy's accounts were too closely aligned with their partner trust to analyse properly, but it did not pay board members.

The head of the Post-Primary Teachers' Association, Angela Roberts, said hard questions needed to be asked about how the schools were able to "skim off" so much for management and still resource their classrooms, and provide uniforms and trips for free.

"As a parent you hope that as much cash as possible is actually in the classroom," Ms Roberts said. "These schools are not putting their money directly into learning."

Save Our Schools' Bill Courtney, who completed the account analysis, said it had been clear for some time the funding model was flawed, which the Government had partially recognised in its recent changes.

Undersecretary for education David Seymour, an Act MP, released the changes to the model, which will tie funding more closely to the number of students and reduce start-up grants. Documents show that if these changes had applied last year, one of the schools would have received $1million less. As it stands, that school, Terenga Paraoa, had a $2.5 million surplus at the end of last year.

Asked if he was hoping the schools would now seek outside investment, Mr Seymour said it was up to each individually.

"Our focus is on the learning outcomes the schools produce."