2008 ECE Funding Rate Mistake: results of the Ministry’s internal audit
A message from the Secretary of Education
Tena koe
As you are aware, a mistake in setting the ECE funding rates effective from 1 July 2008 resulted in an increase of 8% for the cost of teachers’ salaries, instead of a 4% increase. The mistake was discovered when the Ministry of Education was doing costings for the 2009 Budget.
When the mistake was discovered, I requested:
- An immediate review of the ECE baseline since 2004, to check for other significant variances. None was found.
- A detailed review of the ECE funding rates for 2009/10, to make sure those announced by the Minister of Education on 1 July 2009 were fully quality assured and accurate. This review satisfied me that this year’s rates are correct.
- An internal audit of Ministry processes to establish how the 2008 mistake happened, along with recommendations for avoiding any such mistake in future. That audit has now been completed.
Audit findings
The internal audit of Ministry processes found a number of contributing causes. The overarching factor, however, was the lack of a single point of accountability, along with an inadequate quality assurance process. In summary:
- When the 2008 rates were set, the costing model was used incorrectly. The resulting figure was an 8% increase to teaching rates, rather than a 4% increase.
- Subsequent quality assurance processes did not pick up the error.
- Four different business groups were involved in setting the rates, but there was no single point of accountability for the accuracy of the final rate.
The internal audit identified the need for more formal and rigorous business processes, quality assurance, and accountability.
Ministry actions in response to the audit
Accountability
There is now a single point of accountability for setting ECE funding rates. This is with the Deputy Secretary, Early Childhood and Regional Education.
Policy costing and rate setting
A wider review of policy costing and funding rate setting will address any underlying factors that may have contributed to the mistake. The review’s project board includes key senior managers in the Ministry, representatives from The Treasury and the Ministry of Social Development, and an independent advisor.
Business processes and quality assurance
A review of Ministry business process and quality assurance systems, supported by independent advice, will recommend any necessary system improvements. These processes and systems will be reviewed and strengthened by 30 August 2009.
Implementation and training for strengthened processes and systems will be included in staff and managers’ performance agreements for 2009/10. Final accountability for quality assurance processes will sit with Deputy Secretaries.
External audit
As part of the 2008/09 audit, the Ministry’s external auditor will assess whether the changes above have addressed the issues that contributed to the mistake.
It is vital that the sector has confidence in the Ministry’s processes and systems. I am confident that the measures I’ve outlined will result in more rigorous business processes, quality assurance, policy costing and funding rate setting, providing the confidence that the sector requires.
Naku noa
Karen Sewell
Secretary of Education