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Reasons for Limited Statutory Manager at MBAS:

bad budgeting, bullying and a blowout on ‘whare’ upgrade

After months of speculation about exactly why the Ministry of Education appointed a Limited Statutory Manager (LSM) to oversee aspects of Mercury Bay Area School, the Informer now has the answers…or some of them at least.

Last September Val Wenham was named LSM to take control of a number of important functions at the school, having been appointed as specialist adviser to assist the school in April.

According to an official notice at the time in the New Zealand Gazette, the Government’s newspaper, she assumed all functions, duties and powers of the Board of Trustees as an employer and also in relation to property management. She would also advise on financial matters and board policies and procedures.

With little or no further information forthcoming as to why such draconian action was taken, The Informer applied to the Ministry of Education for documents under the Official Information Act. Those documents, which were made available last week, don’t go into minute detail, but they do paint a picture of a school in some strife.

Various Ministry reports talk of poor financial management, offers of help allegedly being refused, advice on over-staffing allegedly being ignored, (referring to support staff), $50,000 spent on laptops when there was little money in the bank account and a blowout in upgrading the Maori whare at the school from $117,000 to over $197,000.

And Ministry officials frankly admit they simply have no idea how that overspend occurred. According to the documentation, MBAS has featured regularly on the Auditor General’s reports because of its precarious financial situation. So bad was it that the school feared it didn’t even have enough money in the kitty to advertise for a new principal when the previous one, John Wright, announced he was retiring at the end of last year.

One example of the parlous state of MBAS’s financial situation was summed up by Marcus Freke, the Director of Education for Waikato in an email to the Principal in March last year.

“Mercury Bay Area School is in significant financial difficulty,” he wrote, adding that there was/is no evidence of a plan being implemented to address the financial challenges or that any significant actions had been taken.

Another document dated March 18 last year said that Ministry representatives had met with the school a number of times concerning the school’s ongoing finances, ways of operating and reliance on international students’ income. “Of concern, none of the remedial actions or recommendations have been implemented by the school over the past years,” the document said.

MBAS had featured in the Auditor General’s Report (2020, 2021) “highlighting their poor financial position and lack of working capital”. There were also allegations of bullying and numerous complaints by parents which took a long time to get a response or resolve.

“Further, a number of the community do not wish to complain to the Board as they feel they will not be heard and that there will be consequences for speaking up given the small nature of the community,” the report said. Complaints concerned alleged bullying (students and staff), staff performance and conduct, poor communication, lack of adhering to and fairness around code of conduct, students being isolated from others, poor adherence to behavioural plans, fighting, intimidation, unfairness and favouritism.

By far the most revealing document was a Statutory Interventions Scoping Report, written by Val Wenham in June last year. In relation to the MBAS’s strengths, she noted that the school’s executive officer had a very good understanding of the school’s financial situation and the Board of Trustees was willing to work with her to address the situation.

By way of illustration, she gave a brief outline of some of the issues that had put the school in such a fragile financial position. In her analysis, Val Wenham said that, as at December 31 the previous year (2021), the school had a cash flow deficit of $149,000.

Its operating budget for 2022 was $5627, which was “too small” for a school of MBAS’s size and the budget was not approved until mid-April when ideally it should have been completed in November the previous year. She said that the monthly finance report for the end of May 2022 showed a cash deficit of $31,167 “most likely” caused by the purchase of 150 chrome books for a total of $58,177, which were ordered in 2021 and paid in January 2022.

While the school had adequate skills and strengths in the executive officer, the systems, process and accountabilities needed to be strengthened. “Information from the Executive Officer to the Principal is not utilised. Despite concerns from the Executive Officer and lack of funds, the Principal has insisted that purchases are made,” Ms Wenham said. She added that the school would not reach a surplus budget, “unless the Principal and Board stop purchasing and agree to purchases only once the funds are available. This appears to have been a major contributor to the school being in the financial situation they are to date,” the LSM said.

She went on to say that the signing of a contract in March 2019 for the development of a whare at the school was “of significance”.

“Part of the contract was the carving of the entrance way and several pou to the whare for a cost of $118,150. Trust Waikato had approved a contribution of $70,500. The school has covered the shortfall from their operational grant which has blown out to $117,300.

“For reasons unknown, the cost associated with this project have blown out to $197,800,” the report said.

It is unclear whether the causes of this blowout were ever determined.

In a later report in October, Ms Wenham said that after a meeting with the Ministry’s Property Advisor, it was highlighted that there were many changes to decisions and agreements.

The size of the school meant there were multiple projects requiring oversight, and it appeared that not enough time had been spent on understanding ministry requirements and processes – “increasing risk to the Board. Examples include: Wharenui (and carving), solar panel installation, building removal, etc.”

The LSM said that there had been a number of transactions on the school’s credit card over the past few years for items including include lotto tickets, coffee vouchers, visits to the local bar, koha (petrol vouchers) etc. under the title of “staff appreciation”. This was not considered an appropriate use of the school’s operational grant funding, as it did not benefit the students directly for teaching and learning.

The report added: “The Board needs to be informed that the school should not be spending any money if there are no funds available in the school account. There have been several examples where spending has happened before the funds are obtained and secured into the school account. As a result, money has had to be borrowed from other school sources to cover expenses.”

Among her recommendations from the LSM were that the Executive Officer become part of the school’s senior leadership team; complaints be dealt with in a timely manner with training provided by the LSM; and Board members receive training on systems and processes. As for advertising for a new Principal, the LSM gave advice on how it could be done economically, including advertising in the Education Gazette.

The Ministry declined to make any comment.

These OIA responses are now accessible on the Ministry website.

Editor's note

MBAS has a new Principal, Ross Dunn. This can't be an easy undertaking for him. To add to all of this, there is the niggling matter that MBAS is a large area school, and there would be different aspects of the school’s life - in terms of costs - curriculum, shared facilities across a wide age range, plus travel that would be more extensive than any city or suburban school.

There is also the matter of the school’s reliance on the fees on overseas students which seemed to supplement the income for the school but which disappeared altogether for covid and after covid. Does the Education system in our country expect schools to rely on overseas fees rather than see them as icing on an already modest cake?

Caption: Mercury Bay Area School whare, opened in May 2022. The whare stands at the front of the school and is used for a variety of classes.


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