Mr. Seamus McCarthy:

The State, through the Department of Education and Skills, provides student support grants which totalled €366 million in 2013 and €372 million in 2014. Grants are payable in respect of tuition and other fees and as a contribution towards an eligible student’s living costs. In addition to funding, the Department has overall responsibility for ensuring students receive the support to which they are entitled on a timely basis.

Up to and including the academic year 2010-2011, there were three means-tested grant schemes for third level students and a separate means-tested scheme for students attending post-leaving certificate courses. The schemes were administered by 66 agencies, namely the 33 local authorities and the 33 vocational education committees. The Student Support Act 2011 enabled the consolidation of the four schemes into a single unified statutory scheme. The Act also enabled the Minister to designate one or more public bodies as a grant-awarding authority for the consolidated statutory scheme. The Department issued a call for proposals from statutory agencies interested in taking on the role. City of Dublin VEC, now City of Dublin Education and Training Board, CDETB, was selected in April 2011 as the single national awarding authority for student support. Plans were made for CDETB to take on the administration of the scheme for all future new applicants for grants, commencing for the academic year 2012-2013.

The ETB established a separate internal unit named Student Universal Support Ireland, or SUSI, to administer the scheme. SUSI was expected to deliver a better service to grant applicants through streamlined processes, greater consistency in dealing with applications, faster processing due to economies of scale and the implementation of an online applications system. However, many of the expected benefits of the new centralised process did not materialise in 2012 to 2013. In fact, significant operational issues emerged for SUSI in its first year of operation resulting in substantial delays in the processing of claims and payment of grant support, which caused serious difficulties for many students and their families. I am happy to note that the initial problems were dealt with by the end of its first year of operation and that the performance of SUSI was much improved in the 2013 to 2014 academic year.

The operational issues that occurred in 2012 to 2013 were comprehensively documented in a consultancy report commissioned by the ETB and prepared by Accenture. That looked mainly at SUSI's internal processes and the management of the implementation project. In general, my office's examination does not revisit those issues. Instead, it reviews how the overall reform of the system was managed from initial planning through to the go-live date of SUSI's online application system. It considers in particular the extent to which the serious operational issues in 2012 to 2013 were a consequence of the earlier planning process. The funding and administration costs of SUSI are also reviewed.

The process of moving from 66 awarding authorities to a single grant authority required detailed planning and commitments across a range of areas to ensure systems and processes were fit for purpose, that sufficient and experienced staff resources were in place, and that the new arrangements were adequately communicated to students. Based on its own detailed proposal, the ETB was recommended as the awarding authority in April 2011 and it commenced preparation for the implementation of SUSI. The proposal envisaged that the system would go live by March 2012 to handle new grant applications and payments for the 2012 to 2013 academic year. While the onus was on the ETB and SUSI to implement the plan, there was regular reporting to the Department on the development and delivery of the project. However, the ETB was only formally appointed as the statutory awarding authority in May 2012. In my view, certain elements necessary to ensure successful project delivery were not adequately planned. This resulted in key risks not being identified, key planning assumptions not being tested, and a final implementation plan not being put in place until April 2012. There was no formal monitoring of delivery of milestones by the project implementation group, nor were there any formal escalation procedures in the event of adverse outcomes. These weaknesses in planning contributed to the serious operational issues that arose after the system went live in June 2012.

One of the expected benefits of centralisation of the grant administration was the possibility of data sharing with other State agencies, primarily to reduce the onus on applicants to provide to SUSI documentation and information already held by public bodies. Such data sharing arrangements were not in place for the 2012 to 2013 academic year. Delays in securing all the required documentation were a significant problem for SUSI and these contributed in turn to delays in deciding on applications and commencing payments. In addition, when data sharing operations were eventually put in place, the ETB identified that in 2012 to 2013, 790 students already in receipt of the back to education allowance from the Department of Social Protection had also received grants from SUSI to which they were not entitled at a cost of approximately €1.9 million. The ETB also discovered a number of other categories of overpayments in 2012 to 2013 totalling a further €2.2 million.

Redeployment is a central feature of public sector reform. It offers the potential to increase effectiveness across the public sector through better utilisation of resources and knowledge transfer. In sanctioning SUSI, the Department of Public Expenditure and Reform stipulated that required staff be sourced through redeployment. However, after six months of engaging in the process, only 13 positions from an expected 36 had been filled through redeployment. Temporary staff had to be contracted in urgently to deal with applications and, in the end, it took 17 months until an adequate level of redeployment happened.

The Department is responsible for ensuring there are adequate arrangements for the administration of the student grant scheme. However, when SUSI was launched, it did not put in place a formal service level agreement with the ETB incorporating relevant performance indicators. This was only done in February 2013 to specify performance indicators for the 2013 to 2014 grants. Following a tender process, the ETB outsourced the provision of document management and contact call centre operations for SUSI in December 2011. However, it departed from good procurement practice in a number of areas. Although the outsourced provider commenced service in January 2012, the contract with the service provider was not signed until February 2013, which was 13 months later. Furthermore, no penalty mechanism is specified in the contract with the service provider to cover the event of a failure to provide the contracted level of service.

Up to June 2013, there were appeals of decisions by over 11% of applicants with a rate of 74% turnover of initial decisions on appeal. This raises concerns about the quality of the initial assessments and the level of quality control. In fact, what had happened was that staff were moved from quality control duties to front-line claims assessment in response to greater than expected demand, and this may have reduced the overall quality of decision-making on applications. I further note that the funding mechanism for SUSI, coupled with the delays in processing applications and making payments, resulted in the ETB holding very large bank balances at the end of 2012.

The administration costs of SUSI for the year ended 31 December 2012 totalled €7.16 million. However, because of operational difficulties at various stages in the process, significant administration costs were also incurred in early 2013, which related to the first year of operation. These were primarily outsourcing costs. From commencement of SUSI up to March 2013, these totalled €5.9 million compared with a budgeted amount of €1.8 million. The achievement of potential economies and efficiency gains was part of the business case underpinning the proposal to establish a single awarding authority. However, the projected benefits were not quantified and the baseline cost and operational performance of the existing system had not been identified. As such, it is not possible to evaluate whether the projected benefits have been fully realised. Both the level of staffing allocated to SUSI and the level of outsourced services are significantly higher than originally envisaged. While there have been reductions in the overall number of staff employed in VECs and local authorities, the extent to which this is attributable to SUSI is not known.