Oireachtas Joint and Select Committees
Thursday, 16 November 2017
Public Accounts Committee
2016 Annual Report and Appropriation Accounts of the Comptroller and Auditor General
Vote 26 - Education and Skills - Reform of Education and Training Boards/SOLAS
SOLAS 2016 Financial Statements
Comptroller and Auditor General Special Report No. 99 - Public Sector Financial Reporting for 2015
I welcome from the Department of Education and Skills its Secretary General, Mr. Seán Ó Foghlú; and from the Department of Public Expenditure and Reform, Ms Marie Mulvihill, who is from the education expenditure and policy unit. Our meeting today relates to the education and training board sector. Last week we discussed correspondence dated 24 October 2017 from the Department of Education and Skills providing follow-up information, as requested by the committee, on the transfer of properties as part of the redress with regard to the cost of the child abuse inquiry. This matter has been ongoing for 15 years and the committee has had difficulty bringing clarity to the position with respect to moneys and properties transferred to the State as part of that redress.
For that reason the committee is agreed to allocate 15 minutes for a follow up on the correspondence we received two weeks ago, before we proceed with the main business of the meeting.
Mr. Seán Ó Foghlú is accompanied by Mr. Hubert Loftus, assistant secretary, Ms Mary Cregg, principal officer, and Mr. Aongus Ó hAonghusa, assistant principal officer. I am not proposing to have a full round of questions on this issue. Deputy Connolly has indicated. I call Deputy Connolly to address this specific issue.
I have been given three letters and I am working on letters from the Department dated 26 July and 24 October 2017, where the Department attempts to clarify the premises that have been transferred under the 2002 indemnity agreement and the agreement in 2009. I would like a general comment as to why the transfers have not been completed some 15.5 years later.
Before we do that, I wish to know what is outstanding, both moneys and buildings, under the 2002 agreement and the reasons the buildings have not been transferred. I request a clear list of all outstanding moneys and buildings, if Mr. Ó Foghlú does not have such a list today.
Mr. Seán Ó Foghlú:
Under the initial agreement, only a sum of €4.9 million is outstanding. When the Comptroller and Auditor General did his report, there was some €21 million outstanding, however when we appeared before the committee in April, the figure had decreased and it has been decreased further since then. There are six properties outstanding.
Mr. Seán Ó Foghlú:
Yes. In five of the six properties, we are still pursuing the property transfers, we are not pursuing the property transfer of the sixth property in the initial agreement. In the case of all of the five properties, the five properties are all in full use already by the State. In respect of each of the five properties, there are a number of outstanding title issues. In the case of Mounthawk in Tralee, the main issue is litigation around the boundary. The Chief State Solicitor's office is awaiting confirmation that the matter has been resolved and it is likely there will be a qualification on title. In respect of Waterpark primary school, in Waterford, there are minor qualifications on title, including one relating to planning and these qualifications have been accepted in principle.
I welcome the progress from April to October 2017. I welcome the letter setting this out. I deplore that it has taken this long, but that is a matter for another day. I will move on to the 2009 voluntary offers. Will Mr. Ó Foghlú help me with this one. In the letter of 26 July 2017, some 18 premises are listed.
On 26 July, Mr. Ó Foghlú gave all committee members a list, running to three and a half pages. I count 15 premises, not 18. In the letter of October 2017, there are 13 premises listed. Some of the premises in the October list were not on the previous list. I am becoming totally confused. Am I correct that some 18 premises are to be handed over under the 2009 agreement?
I am not here to score a point or embarrass officials. I am here because premises that were to be handed over in 2009 have not been handed over by 2017. I know this because one of the buildings in Galway has simply remained empty since 2009, but to my horror, that is not the only building. I tried to trace it up with the help of the Comptroller and Auditor General, who highlighted in a very good report what was outstanding, and I am following up on the information.
Mr. Seán Ó Foghlú:
The three properties on the list are as follows: a former primary school in Ballyjamesduff, County Cavan, from the Sisters of St. Clare; a child care facility in Drumcondra from the Sisters of Our Lady of Charity, and from the Presentation Sisters, St. Bernard's group home in Fethard, County Tipperary.
That is great. When I look at the letter from Mr. Ó Foghlú dated 24 October 2017, under the heading of 2009 properties, and I compare the information with that in the letter from July 2017, the first five properties on the July list do not appear at all on the October list. Mr. Ó Foghlú has explained today that we asked for information on the properties owned by the Sisters of Mercy, which he provided in the letter of 26 October. It is hard to follow and to correlate the information.
We have a heavy agenda and I must be brief, could Mr. Ó Foghlú provide a list of the 18 properties? Was any moneys involved in the 2009 offer or was it limited to premises?
It would be very helpful to the committee, if somebody were to write out a comprehensive letter, setting out the 18 premises outstanding since 2009, the position at which they are at, what money has been given over from the €110 million? Caranua was set up under statute and did the €110 million go to Caranua?
Mr. Seán Ó Foghlú:
No, there are no other outstanding moneys, but as well as the 18 properties offered, there is the Christian Brothers' offer of the share in the playing fields. This is an offer of a share in the ownership of a property, rather than an offer of ownership of a property. They did not offer to transfer the property to us; they offered to transfer a share of the ownership of it to us. When they initially made this offer, we engaged with them and we indicated the terms under which we would want such a transfer to happen. They indicated that they did not wish to advance along those lines. However, they have made further contact with us since our most appearance before the Committee of Public Accounts. They said they had reconsidered the offer and were now offering an arrangement under which the State would be entitled to receive 50% of the proceeds in the event of the sale of any the lands in question. They are meeting us to discuss the reconsideration they have indicated.
I want us to be clear. We want a list of all the properties, a list of the moneys that are outstanding, details of the categories they are in and details of what is happening in respect of them. What exactly is happening in the case of the building that was rejected? Has the Caranua review been completed?
That is fine. I appreciate that although I have to say it is not a way to behave. I do not mean that personally. We are waiting for a review that was promised. It had to be done under statute and it is being dragged out. I will give an example. A building in the Lenaboy area of Galway has remained empty. We have sent three letters to try to extract the details of this case. The building in question was offered in 2009. The Department has confirmed that it has nothing to do with the dereliction of the building and its loss of value. The building remains with the owners, who are the Sisters of Mercy. Is that right? A building that was offered in 2009 remains empty in 2017. The Department is now saying that it has nothing to do with this case because it is the responsibility of the local authority. The local authority did not come in on this building until the past three years. Its status from 2009 until 2014 was that it had been offered to the State.
Mr. Seán Ó Foghlú:
It was offered to the State in 2009 and was accepted by the State in 2011. We accepted it on the basis that Galway City Council was taking it. The building has been empty since 2011, when the HSE left it.
No. Mr. Ó Foghlú has to appreciate that it is now 2017. I understand the building became vacant in 2009. I may be wrong, but it certainly became vacant some time between 2009 and 2011. It has remained vacant since that time. The State was supposed to take it over, but it did not do so. The local authority has not yet taken it over. The building has remained there. Is this an example of what has happened with some of the other buildings?
I have some quick questions. I could understand it if there was an outlier among the number of buildings, perhaps because of unclear title issues. The length of time it is taking for the whole group suggests there is some other reason for the delay in getting these buildings into State ownership. In addition to the list that has been promised, can we be given some indication as to when we are likely to see a conclusion? What is being done, or what remains to be done, to get to a conclusion in all cases? Perhaps that can be indicated on the list or spreadsheet we are to be given.
I am aware that one of the Department's documents indicated that a sizeable amount of administrative time was being spent on this. I presume that the longer this goes on, the heavier that investment will be. Is somebody who is dedicated to this initiative working on it in the Department, or is it an intermittent thing? What is going on to cause it to take so long? Is a different kind of focus required to get this over the line? We are going to keep coming back to this. As Deputy Connolly said, if a building is sitting there idle, it is not improving. The buildings that will be received by local authorities or the Department when they come into public ownership will end up needing to have money spent on them by virtue of the fact that they have been empty. Can we have some sort of an indication? Who is doing what? When are all of these matters likely to come over the line? It seems like it is taking an inordinate length of time. These problems are not confined to just one building. This seems to be a trend in most cases.
Mr. Seán Ó Foghlú:
We will endeavour to respond to the Deputy's queries to the greatest extent possible. The transfers of a number of these properties are on track to be completed within the next year. There are major issues to be resolved in a small number of cases. We cannot give a definitive commitment on dates in those cases. As I said to Deputy Connolly, the building in Galway is the only fully unoccupied building that the State will be using. Most of the buildings are already in use by the State, but not all of them are in full use. We will come back to the committee on that. I accept that there have been difficulties and challenges from the perspective of resources. Along with the local authorities and the HSE, we have invested specific resources in the transfer of these buildings. We have invested an additional resource into the advancement of these cases. That is why we have seen the progress we have seen since the Office of the Comptroller and Auditor General worked on this matter.
I apologise for interrupting the Chair. I am getting confused at this point. Some €110 million was provided to Caranua under section 42 of the Residential Institutions Statutory Fund Act 2012. Is that correct?
Mr. Aongus Ó hAonghusa:
Section 42 of the 2012 Act provides that transfers from charitable trusts can be made. It is not quite an exemption to the Charities Acts. It provides legal cover for charities that wish to transfer properties to the State. It does not necessarily have to be used in the case of every property transfer. It depends on-----
As I said earlier, we are getting a brief update on the transfer of properties as part of the redress with regard to the cost of the child abuse inquiry. I thank Mr. Ó Foghlú and his colleagues for that update. We look forward to getting an up-to-date response to the questions that have been raised here this morning. I will suspend the meeting briefly while some of the officials from the Department who are not involved in the rest of the meeting leave the room and the officials from SOLAS take their seats.
Sitting suspended at 10.30 a.m. and resumed at 10.35 a.m.
Today's meeting is focused on the education and training board, ETB, sector. People may recall that earlier this year the Committee of Public Accounts engaged with the third level sector and produced a report which focused on seven third level institutions. Financial accounts were examined by the committee, as was the voted expenditure and the appropriation account from the Department of Education and Skills, as well as the financial accounts of the Higher Education Authority. The committee held five public meetings to consider the matter. In recent weeks the University of Limerick report, authored by Dr. Richard Thorn, has been released. Many of the serious issues discussed by Dr. Thorn were raised and discussed at this committee in our engagement with him before he was requested to carry out that work by the Department.
Our concerns in relation to the education sector in general are rooted in issues raised by the Comptroller and Auditor General on the publishing of accounts and statements by education bodies. A fundamental difficulty is the fact that in this sector the accounts of many bodies are not published until two or three years after they are due. Some ETBs continue to go back every year to the Department or SOLAS for an allocation of funding, and the Department and SOLAS continue to fund them without having seen the audited financial statements of the prior years. That is a major concern for this committee.
Our focus on the education sector, as the Comptroller and Auditor General will also comment, is because a report was produced on the timeliness of reporting in the entire public sector, which includes the 300 bodies that he audits, and the education sector came out bottom of the class. It is surprising that so many of the organisations referred to for late production of financial statements were in the education sector. In simple English, we ask that the Department of Education and skills practises what it teaches when it comes to financial matters.
The production of annual accounts in a timely fashion is a requirement, and is important in the interests of public accountability that they be published and available for discussion in a forum like this. This committee has signalled that it will not tolerate a continuation of this situation next year. This applies not just to the education sector, but right across the public sector. We will ensure that all organisations meet their requirements, statutory or otherwise, and have their fullaccounts presented within three months of the year end with the objective of having them certified by the Comptroller and Auditor General within six months. All public bodies should send their accounts to the Comptroller and Auditor General by 31 March 2018. That is five months away. They are now on notice and have five months to get it right. There is no good reason that this cannot be done by the end of March of the coming year.
Today we will focus on the ETB sector. We also have representatives from the Department of Education and Skills and SOLAS, which are the funders and as such have oversight responsibilities. Our first session will be with the Department and SOLAS, followed by two further sessions with Dublin City ETB and Kilkenny ETB , and then Tipperary and Kildare-Wicklow ETBs. The representatives of those organisations are in the Gallery today. They are free to come and go. However, because what is being discussed here affects a range of ETBs, we hope it will be a learning process for everybody involved in the sector. We will look at the good points and the pitfalls we have encountered.
To begin, our first session will deal with SOLAS and the Department of Education and Skills, and the Comptroller and Auditor General will make an opening statement regarding his report. I welcome the representatives of the Department of Education and Skills to this session, including the Secretary General, Mr. Seán Ó Foghlú, Mr. Hubert Loftus, Ms Ann Fitzpatrick, Mr. Eamonn Cusack and Mr. Phil O’Flaherty. From SOLAS, we have Mr. Paul O’Toole, chief executive, who is accompanied by Mr. Connor Dunne and Mr. Ciarán Conlon.
I remind members, witnesses and those in the Gallery that all mobile phones must be switched off. It is important that phones are put into flight mode because just putting them on silent will not prevent them from interfering with the recording system in the Oireachtas.
I wish to advise the witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable.
Members of the Committee on Public Accounts are reminded of the provisions of the Oireachtas Standing Orders that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.
I ask the Comptroller and Auditor General to make an opening statement about the Department and SOLAS.
Mr. Seamus McCarthy:
My opening comments will set the context for the examination of the education and training boards, ETBs. Under the Education and Training Boards Act 2013, the 33 vocational education committees, VECs, were dissolved on 30 June 2013 and all their assets, liabilities and approximately 13,000 staff were transferred to 16 new education and training boards which were established on 1 July 2013. Most of the ETBs were formed through the amalgamation of two, or in some cases three, adjoining former VECs.
The ETBs manage and operate second level schools, further education colleges and a small number of community national schools. They are also responsible for a range of adult and further education centres in line with their predecessor VECs. In addition, 19 former FÁS training centres were transferred to the ETBs in 2014. This involved the transfer of around 800 staff to the ETBs from SOLAS, which had taken on FÁS’s training responsibilities. In 2016, the combined payments of the 16 ETBs were just under €2 billion. The primary source of funding for the ETBs is the Vote for education and skills, with expenditure from a number of different subheads. SOLAS, which itself is funded from the Vote and from the national training fund managed by the Department, also provides significant funding to the ETBs.
The Minister for Education and Skills is responsible under the Education and Training Boards Act for setting the financial reporting framework for the ETBs. The Act specifies that draft financial statements are to be presented for audit by 1 April following the period of account. Timely production of audited financial statements has been a challenge for many of the ETBs from the outset. The first period of account for ETBs was the 18 month period from July 2013 to the end of 2014. In April 2015, the Department established a working group to develop the format for the financial statements. The group completed its work in October 2015. While audit work was progressed as far as practicable on an interim basis, the initial audits could not be completed until final form statements were available. Other causes of delays in one or more of the ETBs were the incompatibility of financial management systems when amalgamating some former VECs, challenges arising from the integration of the training centres, which also had a different financial management framework, and the impact in some ETBs of the moratorium on recruitment on their capacity to generate financial statements and to service the demands of the audit. The combination of challenges resulted in only seven of the 16 ETBs being in a position to present their first financial statements before the end of 2015. One ETB, Mayo, Sligo and Leitrim, is only now in a position to complete its first financial statements.
As I outlined in my special report published last week, some progress was made by the ETBs in advancing the timeliness of financial statement production for 2015. As a result, 11 of the 16 had 2015 financial statements ready for presentation by the end of 2016. In the two cases of Limerick and Clare ETB and Mayo, Sligo Leitrim ETB, there continue to be problems in producing accounts and back-up to a standard that is sufficient for audit purposes. We are working with those ETBs to bring the outstanding audits to completion as soon as possible. In three cases, matters which came to light during audits of draft 2015 financial statements have required further inquiries and explanations and this has resulted in protracted audits. The table on the next page of my written submission and which can be put up on the screen now aims to summarise the position, as of last Friday, in relation to the audit and presentation of ETB 2015 financial statements. Some key points for committee members to note are as follows. Only Kilkenny and Carlow ETB met the statutory date for presentation of draft 2015 financial statements. For Limerick and Clare ETB, the audit was only able to commence on site around July 2017. We expect to complete that audit by the end of this year. For Mayo, Sligo and Leitrim ETB, we received draft 2015 financial statements only in July 2017. We are currently working on both the 2013-14 and 2015 audits and expect to complete the process for 2013-14 by the end of the year and for 2015 in the first quarter of 2018. For a number of ETBs, we were able to complete the 2015 audit process from commencement on site to my clearance of the file for signing in a timeframe of six to 12 weeks. By comparison, however, in the case of Louth-Meath ETB, the audit process has already continued for more than 15 months. We understand the ETB is in contact with the Department and SOLAS about certain issues we raised and we now expect to be able to complete that audit early in the new year.
We have prepared a similar table to give an overview of progress to date in relation to the production of audited 2016 financial statements. Again, I ask for that to be brought up on screen. The table gives the picture as of last Friday as to where we are with the individual audits. The table indicates that a number of ETBs have moved closer to meeting the statutory submission date for their draft financial statements. Already for 2016, three ETBs have audited financial statements while two more will be completed in the next few days. We expect that the financial statements of six further ETBs will be signed off by the end of the year. That leaves five ETBs which are likely to be in an arrears position for 2016 at the end of 2017.
My office recognised early on that there were significant challenges for the Department and ETBs in putting in place effective accounting and financial reporting systems for the sector. Our main focus has, naturally, been on the format of financial statements and advancing the timeliness of certification of financial statements. We were represented on the financial reporting working group for the sector and we are in regular contact with the Department about the current status of audits within the sector and to discuss any emerging sectoral issues or concerns. We also meet with ETB senior managers as a group in ETB Ireland forums. Members may wish to note that the reform process for the ETBs is still ongoing. During 2016, the corporate structure of most of the ETBs was enhanced with the appointment of three new senior posts at director level. The directors have responsibility for specific broad areas, including further education, organisation support and development, and schools. In line with the Government's public service reform plan, a number of back office functions in ETBs are planned to move to a shared services model. The first function to be transferred is payroll and this is expected to happen over the next six months. The Secretary General will be able to provide the committee with an update on progress of these reforms. I will introduce the blocks for each of the ETBs as it is called.
Mr. Seán Ó Foghlú:
My opening statement focuses on two main areas, namely, the reform programme and the challenges facing the ETB sector and the steps being taken to enable it to meet its requirements for submission of accounts.
There is an exciting and ambitious reform programme under way in the ETB sector. Through a series of Government decisions, 33 VECs were amalgamated into 16 ETB in July 2013 and SOLAS was established as the new further education and training authority in October 2013 to provide strategic direction, co-ordination and funding to the further education and training sector. The reduction from 33 to 16 entities gives better scale for the delivery of education services in an efficient manner. The reform also brings better cohesion to the further education and training sector and enables it to be transformed into a strong and vibrant fourth pillar of education and training. This is one of the most ambitious reform programmes occurring throughout the public service and it involves transformational change including the disbandment of the VECs and FÁS, the mergers of former VECs through the establishment of ETBs and the transfer of training functions from SOLAS to the ETB sector. It is also the case that positioning ETBs to respond effectively to demand for well-designed and high quality education and training programmes involves significant and ongoing organisational change within and between ETBs and ETB Ireland and increased interaction with bodies such as SOLAS and Qualifications and Quality Assurance Ireland. In addition to managing significant change, the ETBs, along with SOLAS, have played a key role in our economic recovery. Many ETBs are also involved in developing and delivering new apprenticeships and traineeships and supporting the upskilling of people in employment. Mr. Paul O’Toole, chief executive of SOLAS, will outline the further education and training reform programme in more detail.
I take this useful opportunity to clarify for the committee the role of Education and Training Boards Ireland, or ETBI, which is recognised in legislation as the national representative body for the 16 ETBs to enable it to provide a single voice for the sector in its engagement with the Department and others. This single voice for the sector was particularly important in helping to work successfully through the transition from VECs to ETBs and the integration of training functions.
The Department engages and works closely with ETBI on a number of fronts particularly in relation to the implementation of the ETB reform programme and the development of shared services. Another important aspect of the reform programme is the introduction of the payroll and finance shared services projects for the sector. Payroll and finance are operated at individual ETB level using outdated systems which results in inefficiencies and duplication and is a contributory factor to the delays in completing accounts in time. A robust project governance model has been put in place to develop shared services for both the payroll and financial services needs of all ETBs. This will be a transformational change for the sector. As part of this process, the Department had significant engagement with a range of Government offices prior to initiating the tender process for the payroll shared services solution. These tenders are currently being evaluated. The ETBs will be migrated into shared services in three waves to commence early next year and with a target to have fully migrated all ETBs to payroll shared services by the fourth quarter of 2019. The finance shared services project is currently drafting the request for tender with a plan to publish in the second quarter of 2018. The target is to have fully migrated all ETBs to finance shared services in 2020.
It is not satisfactory that ETBs have not finalised their accounts within the required timescales. Several factors have contributed to this. The transition from VECs to ETBs, including the transfer in of training functions, centres and employees, represented a momentous restructuring of the sector and was a major contributing factor in the delay in producing accounts in most cases. The most significant issues can be categorised as relating to systems or human resources capacity. Some of these are still live and will take time to fully work through. They include compatibility issues arising from the variety of IT and financial systems in operation in former VECs and in former FÁS training centres; connectivity at server level between centres within an ETB; the added complexity arising from the transfer of training functions; the 18 month period for the first set of accounts; the impact of the moratorium on recruitment in the public sector; and the need for ETB staff to support the development of a number of shared services and other sectoral reforms.
I have provided members with a graph to give a visual representation of the progress made by ETBs over the past three years in relation to getting their accounts submitted to the Comptroller and Auditor General. The statutory deadline in the ETB for submission of accounts to the Comptroller and Auditor General for audit is 1 April in the year following the period of account. There has been progress in the timing of submission of accounts and this is encouraging. While just two ETBs submitted their 2016 accounts by the 1 April deadline, a further eight ETBs improved the date of submission of their 2016 accounts compared to 2015. The progress made over the past three years can also be assessed by the average time it took ETBs to submit their accounts. It took ETBs an average of about ten and a half months to submit their initial 2013-14 accounts. This average reduced to about eight months for the 2015 and was reduced to about six months for 2016 based on 14 of the 16 which have been done to date. However, further improvements need to be made and efforts redoubled to ensure that, as we move out of the period of establishment and restructuring of the sector, all ETBs comply with the deadline.
The Department is very concerned about the delays in relation to ETB accounts. These delays are not acceptable and the Department is working closely with the ETB sector and through its regular engagement with officials in the Office of the Comptroller and Auditor General in order to ensure that statutory timelines can be achieved. The Department has tried to address challenges and reduce delays by focusing on two key areas, namely, improvements in systems and in staffing. In relation to systems improvements, the long-term plan, in line with public sector reform, is to move the ETB payroll and finance systems to a shared services model. While this is in progress, a significant number of interim measures have been implemented by the Department in co-operation with the sector to supplement the existing systems. These interim measures included merging of systems and supporting ETBs by the provision of additional functionality, all of which are helping the ETB sector to reduce delays. Other non-IT related system improvements include supporting reconfiguration of functions in ETBs; strengthening the internal audit function; supporting the work of the audit and finance committees through the provision of briefing sessions for committee members; working with ETBs and the Comptroller and Auditor General on the format of the accounts; regular meetings with individual ETBs on staffing and financial matters; strengthening the role of ETBI in supporting the ongoing ETB reform programme; professional advice and support to individual ETBs by the Department’s accountant; and regular liaison with the Comptroller and Auditor General, and consequently with ETBs, regarding the timing of submission of accounts and issues arising during audits.
In relation to personnel improvements, this involved strengthening the senior management team in the ETB sector; filling of critical vacancies; additional support for Mayo Sligo Leitrim ETB to enable it to catch up with the submission of accounts to the Comptroller and Auditor General; and close engagement with ETBI in relation to the phase two organisation design project which will provide a robust framework for assessing staffing requirements in the ETB sector over the short to medium term. Considerable work is being done by the Department, ETBI and at individual ETB level to ensure ETBs are better positioned to meet their statutory obligations in relation to the submission and completion of their annual accounts. I will be happy to discuss this in more detail as well as other queries the committee might have.
I thank Mr. Ó Foghlú. I will call Mr. O'Toole to make the opening statement on behalf of SOLAS in a moment. Before that, in order that anyone in the Gallery or watching at home understands the big picture regarding ETBs, will Mr. Ó Foghlú tell us the total funding from his Department in 2016 for the ETB sector? Will he give us a break down of where that figure is in his Department's accounts?
Mr. Hubert Loftus:
Most of that €800 million funds salaries. It is for payroll costs. Some 85% of the payroll costs relate to teacher salaries, so it is funding provided by the Department to the ETB sector to pay for the teachers in the schools run by ETBs. About 4% of salary costs relate to special needs assistants in the schools and the remaining 10% is split between support staff in schools, such as secretaries, caretakers and cleaners, and then other head office support staff. The bulk of the funds are for payroll and the balance of some €65 or €70 million relates to grant funding which reflects the needs of the ETBs to run their head offices. The funding is predominantly for schools and is similar to the capitation type funding which is provided to the primary and voluntary sectors.
I looked at the appropriations and I cannot see where these figures come from. I know it costs hundreds of millions to run the ETB but the Department gets its Estimates and appropriations so it starts with the Accounting Officer. We will get down to individuals in the ETB shortly but I cannot see this figure in the appropriation accounts for the Department. The figures are not visible.
Mr. Ó Foghlú mentioned a figure of €1.8 billion. The job of the Committee of Public Accounts is to account for the money going to the ETB sector. I am asking the Accounting Officer to tell me how much this is but I cannot get the figure. We are working towards it but I find it very strange. The Accounting Officer should be able to tell me the payments to the ETB sector and where they come from. That is the starting position but we are having difficulty getting to the starting blocks.
The City of Dublin ETB processes the payments. We will not get into a discussion on the SUSI figures but we might just get the figures. How much in SUSI payments goes to people in the ETB sector, as compared to the university sector or the institutes of technology?
That is the figure I have here. To put this in context, the simple question I asked was how much goes to the ETB sector from the Department of Education and Skills. Mr. Ó Foghlú has told us that €816 million goes to the running of the schools; €538 million goes to SOLAS; and payments to SUSI, processed by the City of Dublin ETB, come to a total of €410 million. Not all of the latter concerns grants to the ETB sector as some of it goes into grants for the university sector. That is fine, we will leave that breakdown for now. This then comes to an overall total of €1.764 billion. Did the Comptroller and Auditor General think it was higher?
Mr. Seamus McCarthy:
No, I think there are difficulties in pulling these figures out of the financial statements. This is something we should be able to see, however. I think that some of the SUSI figure might go to local authorities. Some residual payments still go through the local authorities. Almost all of the SUSI funding is for third level.
Mr. Seamus McCarthy:
No. The City of Dublin ETB is the agent for making those payments. I am also not sure if the €40 million we talked about for superannuation is included in that total figure. We are certainly talking about a figure somewhere in the ballpark of €1.8 billion. The major bloc that we might be able to put to one side here is the €390 million figure for SUSI.
It took 18 minutes to answer what I would consider to be the simplest, most basic and most obvious question, namely, how much does the Department pay to the ETB sector?
I will now call on Mr. Paul O'Toole, chief executive of SOLAS, to make a short opening statement and we will then go straight to Deputy MacSharry for questions. I am sorry it has taken 18 minutes to get our first question answered here today. It is obvious that the way in which the accounts are presented is not user-friendly. As Accounting Officer, it must be very difficult for Mr. Ó Foghlú to account for all of this, given that the accounts are difficult to work out. We will now move on to the rest of the meeting. I just needed to get that information onto the public record before proceeding any further because it was not made available or even referred to in any of the opening statements.
I again call on Mr. O'Toole.
Mr. Paul O'Toole:
My colleagues and I are pleased to assist the committee's consideration of the SOLAS 2016 Financial Statements in the context of the ETB sector. During 2016 SOLAS provided a net €538.2 million in funding to education and training boards, ETBs, to support its provision of a suite of further education and training opportunities to more than 300,000 learner beneficiaries. This provision was delivered to meet learner, enterprise and community needs and opportunities across the full spectrum of further education and training. For example, an estimated 14,000 learners undertook specific skills courses in areas with employment opportunities and more than 40,000 learners received support to improve their literacy and numeracy.
The delivery of this provision took place against the backdrop of the wide-ranging and continuing reform of the further education and training sector. Since the establishment of SOLAS in late 2013 and the transfer of training responsibilities and associated resources to education and training boards during 2014, SOLAS has worked with education and training boards and in conjunction with the Department of Education and Skills to improve further education and training in Ireland. A body of reforms and improvement programmes have been initiated, are completed or are in train. We expect this process to continue.
The ultimate objective of the reform of the further education and training, FET, sector is to achieve better, measurable improvements to the outcomes for FET learners in terms of their employability, their progression to other further or higher education options, and their participation in life-long learning, as well as societal equity for those experiencing disadvantage in this respect. The achievement of these goals will yield demonstrable benefits to employers seeking employees with FET level skills, as well as benefits for communities in general. In pursuit of this reform programme a range of measures have been put in place and are being implemented. Details of these have been provided in the briefing note for today’s meeting and my colleagues and I will be happy to provide further detail or clarification as may be required by the committee.
While SOLAS does not have a role in the institutional governance of education and training boards as statutory bodies in their own right, we clearly understand and accept our responsibilities in respect of the grants provided by SOLAS to the ETBs. We adopt a multi-layered approach in respect of the governance and oversight of the funding we provide. Key elements of this approach include the preparation and issue by SOLAS of a national parameters and guidelines’ document to each ETB which sets out a framework of requirements arising from policy objectives of the Department of Education and Skills and other Departments, together with a range of reporting and other requirements. These policy instruments include the action plan for education 2016 to 2019; the further education and training strategy 2014 to 2019; the national skills strategy 2025; the action plan for jobs; pathways to work; and a number of social inclusion polices such as the comprehensive employment framework for people with disabilities.
ETBs are requested to develop a proposed response to the above in respect of their catchment areas and taking into account local conditions. They are provided with an initial financial ‘envelope’ to assist planning. Actual financial allocations are not confirmed until the end of the process. This approach seeks to combine a top-down approach reflecting national priorities with a bottom-up approach which reflects local needs and opportunities. Further steps will be outlined later in this statement. On completion of the planning process, which involves significant interaction between SOLAS and ETBs, individual service plans are agreed for the provision of FET activities in each ETB and combined to produce an annual FET services plan. The SOLAS board approves this plan and the individual block grant to each ETB. A detailed review of expenditure and activity is carried out mid-year, in May; at the end of the third quarter, in September; and at year end, in December. ETBs declare funding which is no longer required or may seek additional funding. Their grant allocations are then adjusted accordingly and with board approval.
This is within the financial year in question and subsequently. This ensures that SOLAS and education and training boards, ETBs, apply the claw back principles envisaged under the Department of Public Expenditure and Reform, Circular 13/2014.
The reporting process is subject to a significant level of review. SOLAS receives an annual, formal, declaration regarding further education and training, FET, expenditure from each ETB, which is signed by its CEO and finance officer. This confirms that all funds received by the ETBs have been spent appropriately and in line with requirements, terms and conditions by SOLAS. ETBs also provide their final audited accounts and these are used for review and final reconciliation purposes by SOLAS, comparing previous returns with the audited accounts and making any final funding adjustments that may be required.
SOLAS is represented on the ETB internal audit committee and has access to relevant findings and reports in respect of further education and training. SOLAS participates on the ETB-SOLAS programme management board operated by the Department of Education and Skills and also contributes to a number of specific projects being undertaken by the programme management office.
While very substantial progress has been achieved since 2014 in the reform of further education and training, SOLAS recognises that the process of reform must continue. A series of enhancements to improve the effectiveness of further education and training, through its continual improvement, are in train and include the introduction of new strategic performance agreements with ETBs, a revised funding model and the adoption of appropriate outcome targets.
People are getting more than 15 minutes to do basic sums so bear with me. I welcome all the witnesses today. At the outset I must say there is a good bit to get through for everyone, especially if time is short, so at times the debate may become robust and I may cut off some speakers. It is not personal, it is just the nature of the beast. I hope this is okay.
I will start with the Department of Education and Skills. At any given time there may be a series of court cases ongoing on with ETB teachers or teachers generally around dismissals and grievances and so on. This is a potential cost to the State if it loses and in terms of legal fees etc. In this context, there are Department circulars, such as Circular 59/09 which deals with complaints around teacher competence and Circular 99/08 which relates to sick leave. I will not go into the detail of these but will the Department confirm that they exist and that they govern these areas?
I have the circulars to hand. It is not about what the circular contains. Obviously there are many circulars - and Mr. Ó Foghlú has said they are too numerous for him to recall - but I am mentioning two. The witness can take it that they exist because I have them in front of me. Are these circulars for the discretional use of ETBs and schools or are they to be followed to the letter of the law by ETBs and schools?
No, there are Department circulars. If the Department issues a circular and, for example, I am an ETB, and Deputy Shane Cassells is a teacher I want to get rid of, do I have to follow that circular under the law or is it discretional for me to choose not to follow it?
I am trying to establish if the circulars are discretionary because there are court cases that have concluded - there may be other cases before the courts but I am referring to those that have concluded - where the circulars were not followed and the courts' interpretation of the circulars was that the circulars were discretional. I want to know what is the Department's position.
Mr. Ó Foghlú might do that. I have written to him about it specifically, and to the Minister also to answer this question - it was not for consideration here today - and the reply to me was that the matter was not one for the Department, it was for the ETBs. This exposes the State to costs, aside from also exposing individual teachers to costs if they lose. Mr. Ó Foghlú might come back to me on that because I believe the legal status of circulars with guidelines around these matters to be very important. Despite what Mr. Ó Foghlú says, it appears that the courts see the circulars as discretional but the Department sees them as something that has to be followed. In reality - to the objective bystander - it would appear to be discretional when it is not allowing the house to win and it is not discretional when the house is in danger of losing. I would like Ó Foghlú to look at this point.
I will mix and match my queries between SOLAS and the Department. While the Department officials consider that matter, I will ask the SOLAS representatives about the rules that govern payment of fees to board members. The witnesses are aware that the one person-one salary rules came in during November 2011. Are these rules followed to the letter of the law?
About €11,000. I am sorry to bring up an historical matter but in 2012 FÁS had paid the then president of Cork Institute of Technology their board fees. How was that authorised and have we sought to reclaim that?
Mr. Paul O?Toole:
A circular issued from the Department of Public Expenditure and Reform, I believe at the end of 2011. It reinforced the point of one person-one salary, and that in the event of the circular not being applied, then the practice had to change. That was the general thrust of the circular back in 2011.
Mr. Paul O?Toole:
The circular said that anybody who was already in receipt of a public sector salary and who was on the board of an organisation should not receive a fee for their participation on the board. That was the thrust of the circular. In 2012 we had one board member at the time who was still under his warrant of appointment. The circular said that the arrangement should be put in place as soon as was practicable. The board member in question received a board fee in 2012, under his then warrant of appointment, but did not receive a fee in 2013.
Indeed, he might have used the €13,000 for his retirement party, but he chose not to. He actually approved his own expenditure, but we are not here to talk about Cork Institute of Technology. By the way, does the Department have guidelines on retirement parties and their cost?
Mr. Seán Ó Foghlú:
It would not be normal for Departments or agencies to have retirement parties for staff. We do not have guidelines on it but I would think it appropriate to celebrate when a senior leader of an organisation is retiring after a number of years. It is important for the institution in question to recognise the achievements of a leader over a period of time.
Sure. Normally when someone retires or is getting married in here, a non-binding circular goes around asking people for contributions to acknowledge the contribution of, say, Deputy Cassells who is retiring, getting married or having a new baby. Would that not be a good way forward? There would be a circular, which perhaps would be binding. Instead of approving €13,000 for one's own party, if one happens to be the president of an institution, with €5,500 for the tables, frames, drapes, carpet and audiovisual set-up, would be a little bit much for the taxpayer to expect, perhaps we could look at putting in a circular.
Why would Mr. Ó Foghlú not be at it? I believe many politicians were at it. I can hardly hold the guests responsible for the costs of the party. I am not saying Mr. Ó Foghlú, having attended, is responsible for it, but I would say it was some bash at €13,000 out of the taxpayers' purse.
Everyone here, from all parties and none, will attend Christmas parties between now and Christmas which they will fund themselves. Ours is on 13 December and it is €50 each. If he were invited and asked to, would Mr. Ó Foghlú not have stumped up to acknowledge the great contribution of this man or would he prefer that the tax payer stump up €13,000 for drapes, frames and audiovisual set-up?
Given that Mr. Ó Foghlú is the Accounting Officer divvying out all this money, which it took 12 to 14 minutes to add up, would it not be reasonable for him when giving out this money to say, "By all means, buy a glass of wine, but maybe do not dish out €13,000 of the taxpayers' money to acknowledge the greatness of someone's contribution"?
The clerk might hand to Mr. Ó Foghlú, so that he can see it for himself, the approval and breakdown of a party costing €13,000 which he attended. I do not hold him responsible for having attended it. Why would he not attend if he was invited? Many politicians were at it. It is not the guests' fault. However, I wonder whether he would have stumped up €50 towards the cause if he had been asked. He may have. However, perhaps the Department could consider issuing a circular to those in charge of taxpayers' money which states that we do not throw good money after bad.
Clearly, they are not being followed and they are not sufficient. If €13,000 can be thrown away on ice sculptures for a party to acknowledge the greatness of someone, when that person was himself the person acknowledging and saying it is okay to spend the money, I am saying to Mr. Ó Foghlú quite respectfully that it is wrong. For 12 minutes some other day, those in the Department might sit down, put their heads together and issue a circular stating that those who are responsible for money the Department is giving out on the people's behalf should not spend it like that when we could be making school and university books available to people. That money would go a long way towards that.
I want to move on. How many ETB, university or IT sector disclosures or whistle blowers cases are there? Does Mr. Ó Foghlú know?
As we do not have the time for it today, will Mr. Ó Foghlú give the Committee of Public Accounts a breakdown of the number of disclosures coming from each area, that is, ETBs, universities and institutes of technology, so that we could see it? Also, is there a process?
To go back to SOLAS, although I have to say FÁS-SOLAS, because I will refer back to Mr. Ó Foghlú's previous appearance here. The legislative mandate part of the accounts speaks of the code of governance, corporate health and safety, risk, data protection, protected disclosures and so on. As things have progressed, does Mr. O'Toole feel that the public and I could have confidence in the governance of his organisation.
I know that, and Mr. O'Toole said "Yes", so I will take that. I want to go back to Mr. O'Toole's previous attendance here in 2014 when he was not in a position to give information at the time. This relates to an article on an export being appointed to probe into bullying claims at SOLAS. Mr. O'Tolle will recall the person's name was Una Halliday. What happened to this whistleblower? Does she still work for FÁS-SOLAS?
Mr. Paul O'Toole:
When we were here before, what was being investigated was matters raised by that individual. That person had made a number of assertions or allegations about individuals which were investigated and a report concluded. The person was made aware and was part of that process. It moved on and the individual concerned, as I said, has transferred to and, to the best of my knowledge, continues to work in Louth-Meath Education and Training Board.
Two more questions and then I will finish. I think I am on 16 minutes for the record. I am timing myself here. Can I ask, and I know it will not be available today, if the Committee of Public Accounts can have a breakdown in terms of fees, travel and subsistence and interview attendance for each ETB member? We do not have that. It is possible to get total numbers but what I am interested in is how much is individual A getting in terms of fees, travel, subsistence and attendance to carry out interviews.
Could I also ask that a note be provided to us, and again not now, as to how one determines the qualifications of the ETB member selected to sit on an interview panel.
Finally, back to SOLAS-----
Mr. Paul O'Toole:
My salary, and I have a personal assistant who works with me for about four days a week, and we then have a team of people who act as the secretariat to the board. There are six or seven people in total. They provide the secretariat to the board, they provide support to the Department in respect of parliamentary questions, freedom of information, representations from politicians and then they also provide a communications service about communicating, which is our obligation under the Act, about further education and training. We have a task to do that, trying to advocate, promote and promulgate the importance of further education and training.
Again, not to be holding up the meeting but could we have a more detailed breakdown of payroll costs overall? We have the CEO, communications and secretariat, and the witness has given me a breakdown of the €618,000 but there is also "strategy and knowledge", "skills development and central programmes", and "resources". If the witness could provide that information to us in a note that would be good.
My last question is on consultancy charges. A figure of €94,000 was charged to direct programme costs. Who was that to?
Mr. Paul O'Toole:
What we call programme costs are our own activities. The bulk of our funding goes to education and training of course and 90% is by way of grant. However, we run and co-ordinate certain programmes and we also are doing a range of development projects, the reforms that I spoke about. Within part of that, and we will get the breakdown to the Deputy to the extent that he wishes it, we have introduced a new strategy on technology enhanced learning, so for adult education we are bringing technology into the mix. We have done work in respect of professional development in conjunction with education and training boards, devising a plan to upskill all of us in terms of further education and training and there are a range of other programmes like that. I can get precise details for the Deputy.
I will do my best. Can I try and capture something that is of concern to me in relation to a number of different things that come together.
At the beginning of the meeting we talked about the transfer of properties under the redress scheme and the witness said that following the Comptroller and Auditor General's report progress was accelerated. We then had the universities in and we did a special report, late last year and earlier this year, and we will be returning to that. We did that because, just like the ETB sector, we were seeing that they were outliers.
Today we have the ETBs in because there is a significant lag in time in presenting accounts and having accounts audited to the point that it is very difficult for us to do the job that we are asked to do on the Committee of Public Accounts because the information is so out of date. There seems to be a very relaxed approach in the Department, in regards to the fact that all of these are the one Department. I have got to say that for me is incredibly concerning.
When we look at the ETBs for example, and the witness has given us a lot of reasons, and I completely understand that there are amalgamations and changes, and when one is trying to amalgamate different financial management systems that poses problems in addition to the backdrop of human resources and all of the rest of it. However, some of these ETBs were not amalgamated. There was continuity. One cannot say that all of the issues are down to amalgamations, but the same profile is there. What kind of sanctions are imposed in the Department for not conforming with the production of accounts in a timely way? What kind of financial controls are in place in the Department if it cannot be anticipated what might be overruns, what might be the requirements by virtue of the fact that the Department is not getting the accounts in a timely way?
Mr. Seán Ó Foghlú:
On an overarching point we have put a huge amount of work into governance and consistent governance approaches within the education sector. We have established a sub-committee of our management board including the chief executives of SOLAS and the HEA and an external former account.
Mr. Seán Ó Foghlú:
In 2015 I think. One of the things we have been trying to do is to have consistent and coherent approaches to governance across the sets of agencies that we have. I think that is very important to have coherent work whether it is on codes of practice with our national agencies, with the ETBs or with the higher education institutions. The concept of the rolling review, that the HEA would have initiated on procurement, would have been discussed at this group and came out of the work of that group and we will be having further rolling reviews arising from that.
We rely on a number of different mechanisms across our expenditure range for the ETB sector. We get monthly returns on the schools' expenditure. We get quarterly returns on staffing. We relate the quarterly returns to the monthly returns so that we are aware of where things are at. We have a range of arrangements which SOLAS has in place which relates to the further education and training spend. Then we also have sets of arrangements on capital projects, whether they are major or more minor capital projects, with different arrangements for ensuring that we understand and there is sign-off before money is allocated.
How does the witness account for the fact that as all that information is being received, and it is available on a monthly basis, there would be such a delay in producing accounts, particularly for ETBs that were not amalgamated and where there would not have been that kind of conflict in terms of financial management?
Mr. Seán Ó Foghlú:
Deputy, that comes back to the challenge they have had. There were three education and training boards, ETBs, where there were no amalgamations but they took on significant training functions from the former FÁS. There were challenged on a number of factors, which I referred to in the opening statement. I can certainly talk through those in more detail. We have tried to assist them with a number of interim measures to ensure they were supported both on a system basis and on a staffing basis to the greatest extent possible. Yes, they have been finding it difficult. Yes, they are improving and yes we need them to improve more.
It appears to be quite pedestrian given the time lags. Let me revert to a previous report of the Comptroller and Auditor General in 2010 which dealt with Kildare Vocational Education Committee. A number of failures were found relating to procurement, ICT, five purchases where there was no evidence of the three quotations being sought. This goes back quite a long time. Of the overall expenditure of €1.9 million, payments of more than €400,000 were made to one company that was formed by a person who had worked part-time in the VEC. The then chief executive officer of the VEC at the time claimed that the details of tenders could not be located but he was satisfied that the procurements requirements had been followed and the documents were probably misfiled. As Deputy MacSharry said, the Department circular states that in the VEC sector that competitive tendering is the normal process. The Comptroller and Auditor General's report at the time states that the Department will continue to insist on adherence to proper procurement practices in VECs and reminds VECs of their obligations in that regard. What happened subsequent to that? We are all aware that an inquiry is taking place and we know the terms of reference. What did the Department do that would ensure that what had been found in that report would be complied with and that it would not happen again?.
Mr. Seán Ó Foghlú:
Following a period of time after the hearing of the Committee of Public Accounts and the report of the Comptroller and Auditor General, the audit unit for the VEC sector, as it was at the time, the Vocational Support Services Unit, VSSU, did a follow-up procurement audit to ascertain that the recommendations made by the Comptroller and Auditor General and committed to by the ETB had been completed. This audit was carried out in November 2012 and the final report, including management responses was issued in September 2013. A number of finding were made and management confirmed that the corresponding recommendations would be implemented. Specifically, there was a follow-up audit to follow up on it. On procurement more generally, we have put arrangements in place with ETBI for a central hub to support ETBs in their procurement so that procurement practices can be put in place. As well as that procurement in the buildings area, we have put in place a framework agreement for major project and more detailed arrangements for devolved projects to make sure that there are clear procedures in place for ETBs to follow.
We have audited the implementation of the small projects on the building side ourselves and arising from those audits, strengthened the procedures.
Mr. Seán Ó Foghlú:
The make-up of the membership of the ETB board is set out in legislation and was debated in the Houses of the Oireachtas. An arrangement was put in place arising from that. The boards of the ETBs comprise local authority members and arrangements are in place for the nominations to the board from panels. In particular, on the question of governance in regard to financing and auditing, when the new code of practice was put in place, the Department in conjunction with ETBI, put briefing sessions in place for the members of the finance and audit committees.
I am aware of a degree of frustration among some of the members of the Kildare-Wicklow ETB on being free to perform their functions. I think there is an issue in regard to oversight of the financial role because if that oversight is not as it should be there is a sizeable failure of governance.
Mr. Seán Ó Foghlú:
The code of practice would set out the arrangements for audit and finance committees. Normally they would have to work through the audit plan and a number of other arrangements on the audit committee. Typically there would be a senior member of staff present but typically there would also be an audit committee hearing or a period of an audit committee hearing without a senior member of staff present. There should be opportunities, whether on the board or on the various committees for members to make their views and concerns known and to seek assurance.
Mr. Seán Ó Foghlú:
If a Chairman of an ETB board wished to raise an issue with the Department, of course, we would engage with the Chairman. We would have had a case in a former VEC which was discussed here, where a member of the board of the VEC who had been on an audit committee raised concerns directly with the Department. The Department would have looked into them.
Mr. Hubert Loftus:
May I clarify for the Deputy that ETBI provides good central support for the ETB as well and would have provided training for the Chairpersons. There are many supports available through ETBI and direct contact with the Department as well in terms of dealing with individual issues when they arise.
Let me revert to the 2010 report of the Comptroller and Auditor General which states the State injected €20 million into the VEC following the non-completion of the sale of property which was intended to fund the transaction. Was that property subsequently sold and what is the situation in that regard?
I have a lot of questions I hope to get through. The Chairman, in fairness to him, has been consistent in his wish to examine this whole sector, and I can see exactly why from his opening question. However, the response from the Department's Accounting Officer was incredible and, indeed, scary. It was the most basic question the Secretary General could have been asked, and he should reflect on that and on his response. If this is the manner in which financial control, oversight and management of the various sectors over which he has purview is conducted, it is very worrying. Our job in this committee is to examine financial controls to ensure everything is correct and up to speed, but our function also concerns looking at processes, value for money and quality of service, the latter of which is incredibly important. That the Accounting Officer was not able to answer the Chairman's question, and was not even prepared for the question, really worries me.
Before beginning my questions, I draw the Chairman's attention to the fact I have known Mr. Paul O'Toole for a considerable amount of time. In fact, he used to be my boss in Bord Fáilte.
It was 15 years or so ago but I am putting it on the record for transparency purposes. The documentation we have indicates that the education and training boards have significant discretion in respect of the block grant they receive. Is the Department of Education and Skills happy to allow that sort of openness?
Mr. Seán Ó Foghlú:
The ETBs must operate within the future allocations and SNA allocations that are made and in line with the permissions they obtain for the number of staff at various grades. They have discretion in terms of the allocation of staff across their schools but they do not have discretion as to the number of staff allocated for all the schools.
I will get back to that. The ETBs have been in operation since 2013. I do not expect Mr. Ó Foghlú to have a figure to hand - unlike the other figure which he should have been able to give but was not - but will he provide the committee with a break-down of the savings that have been made as a consequence of the establishment of the ETBs, at both a national level and also by ETB area? Will he convey that information to the committee within the next two weeks?
I am anxious to ensure I get precisely the information I am requesting. I submitted a parliamentary question on this issue and the answer was not great. I realise it cannot exactly be a case of apples with apples and oranges with oranges, but I am asking, in the context of the remit of the former vocational education committees and the broader remit of the ETBs, for a breakdown of the savings that have been made financially, both nationally and for each ETB area. It is a simple question but I do not expect Mr. Ó Foghlú to be able to answer it today.
I would like to be absolutely sure, from an educational point of view, that there is not a loss across the whole ETB sector in respect of the capacity of ETBI to do other things arising from its total budget of €1.268 million plus. If each ETB is providing €40,000 or so, we are probably talking about approximately €1.6 million or €1.7 million?
I understand that, but I see it as similar to the Local Government Management Agency, with which I had dealings as Minister. Why can the Department not do this particular work instead of having an additional layer?
I will get back to shared services. What performance indicators does the Department use for measuring the performance of the ETBs? Presumably key performance indicators, KPIs, have been in place since 2013. Will the delegates provide a copy of them to the committee or otherwise publish them?
I will ask the question again. I assume the Department has had KPIs in place since 2013 to assess the impact of the massive change in the educational sector in Ireland which was the introduction of the ETB sector. Putting such measurements in place is a basic thing to do at management level. Will the Department provide those measurements to the committee and the findings made in respect of them for 2013, 2014 and 2016?
Mr. Seán Ó Foghlú:
The capacity of the ETBs to operate with schools parallels the capacity of the secondary schools sector and the Association of Community and Comprehensive Schools, ACCS, sector to work with schools. The quality assurance mechanism we have in place for that is the inspectorate, supported and added to by surveys such as school completion.
That does not fill me with any confidence. In fact, it is the total opposite. I would request, as of today, that the Department operate a similar model as they do in the other sectors because I am afraid that in hindsight we could have issues purely because such a model was not in place. From an ETB perspective, I would like to see key performance indicators and I would like to see measurements in place going all the way up to Mr. Ó Foghlú as accounting officer and across the whole ETB sector.
All the more reason to put them in place. If they are not in place how can the Department measure the improvement in governance capacity, measure proof of the performance of the ETBs, and measure capacity to be fully aware of the educational performance that is going on?
I have made a request. I would request that Mr. Ó Foghlú write back to the committee in the next two weeks on his decision. When it comes to shared services, the witness spoke of having created one shared service already and he went into detail with that. Where is the Department going in relation to shared services because Mr. Ó Foghlú has not mentioned what is No. 2 , No. 3, No. 4, No. 5 or whatever.
No, I am talking about the ETBs now. The witness has spoken about what is being done in relation to one shared service. I am asking if there are other shared services. Again, I repeat, I used to be a Minister in charge of local government and I know about the roll-out of shared services across the board. Presumably, other areas are going to be moved into that as well.
Mr. Hubert Loftus:
May I clarify for the Deputy, the ETBI is also housing some shared service supports for the ETB sector as well, particularly in relation to legal services and legal support and helps to provide centralised advice and support to the individual ETBs in that area and also it helps with the procurement process in terms of-----
Okay, sorry for interrupting you again and it purely because of time. I still just want a basic answer. Mr. Ó Foghlú has told us that the Department is moving in one area. I do not get this by the way, the witness has told us that the Department is creating shared services on one side and the ETBI are creating shared services on the side. I do not understand that. Yes or no, are-----
In his statement Mr. Ó Foghlú said that in regard to how the Department was going to improve its performance in relation to the ETBs, the Department was going to have individual meetings with ETBs. Is that correct?
When it comes to the actual ETBs themselves, presumably all information in regard to individual ETBs, for data protection purposes if nothing else, would be maintained in their headquarters and, if not, is that not a huge risk?
It is a very simple question. All data that is sensitive data, management information, accounts, human resource information, all data that is critical to the running of the organisation is presumably held in the one location which would be their head office. If it is not, given data protection as one reason alone, would that not be a serious risk?
Mr. Seán Ó Foghlú:
Well, between the ETBs who have more than one office, they have a head office and sub-offices, so there would be different functions leading in the different areas so if the human resource function was not in the head office the human resource information would probably still be where the human resource function was located.
I think it is a risk, and I would ask Mr. Ó Foghlú to reflect on that and look into that as a Department and come back to the committee. I will have to come in again because I have a number of other questions. In relation to the chief executives of all the ETBs, I absolutely presume that their records and their files and data that is to do with their jobs would be held in their head offices?
I thank the Chairman and have just a few quick questions. It is a big Department with a big spend. Mergers have taken place as vocational education committees, VECs, becoming ETBs. Is Mr. Ó Foghlú happy with the changeover and is it a good policy to move on to 16 ETBs instead of 33 VECs? I would just like a general overview of what Mr. Ó Foghlú thinks of the new system.
Mr. Seán Ó Foghlú:
As I said in my opening statement, I am really excited by the change process under way. To add to that, I am really excited by the potential for ETBs to deliver in education and training programmes, both in schooling and in further education and training that is relevant for development of Irish society and the Irish economy. I think it is really good that we now have education and training amalgamated in 16 areas in the country and there is huge potential for the benefits that can bring in the years going forward.
Mr. Seán Ó Foghlú:
I think that the number of VECs that we had initially, 38 and then down to 33, meant that they were just too small to be able to make a difference. Indeed, as well as that they did not have responsibility for the training that was delivered by FÁS.
The combining of those two areas has meant there is much more coherence in having both a bottom-up local planning approach and a strategic approach from SOLAS on the further education and training side.
Was there any fallout, personally or individually, in the transition from the 33 vocational education committees, VECs to the 16 education and training board, ETBs? In my area there was an amalgamation in terms of the Carlow-Kilkenny ETB? Were there any bad feelings about the transition process?
Mr. Seán Ó Foghlú:
There were many difficult challenges, including political challenges, in moving ahead with these proposals, but we got general agreement on the direction in terms of the manner in which there was a reflection on which VECs would be amalgamated and the manner in which all that would be advanced. We are working closely with the ETBs. The Education and Training Board Ireland, ETBI, greatly helped in bringing that coherence and agreement on the structures we have in place.
I want to move on to the issue of corporate governance. There is a big spend in each ETB, The reason we have representatives of the ETBs before us today is that some of them are performing very well in audits and are up to date. I can hold up Carlow-Kilkenny ETB in my area as an example. I am delighted it has submitted its audits for 2015 and 2016. It is leading the way in that respect. However, there are other ETBs that have not completed accounts for 2015 or 2016. It is now 2017 and we are heading into 2018. Is is fair that some ETBs are making an effort to be up to date in their audits and to keep in line with the system, while other ETBs are not doing so? These ETBs are looking for money for 2018 and we have not seen how the money they were allocated has been spent in 2015, not to mention 2016 or 2017. That is not right. I am self-employed and if I did not submit my accounts by the end of last month, I would incur a surcharge from the taxman and would have to pay through the nose. Why are we allocating taxpayers' money to people who are not performing and not submitting audits? How does the Department know what way they are performing or spending their allocated money when it does not have audits to prove it is being spent? The Comptroller and Auditor General has not looked at some of their books. We do not know what is happening in them when they have not provided audits. This is a big mistake and a penalty should be imposed on boards that do not come up with their figures and submit their audits. If they were only paid on a quarterly basis until they submitted their audits, perhaps they would up their game. Any corporations or bodies should be preparing audits and showing how they are spending the money they have been allocated. It is a significant amount of taxpayers' money. The details of the way it is being spent should be before us for us to scrutinise on behalf of the people who are paying their taxes.
Mr. Seán Ó Foghlú:
I share the Deputy's concern about the delay in having the accounts both submitted to and processed by the Comptroller and Auditor General. We need to work with the sector to help it to achieve that. I do not believe that if we withheld money from this sector, that would be effective because the students in schools have an entitlement to education and we should not be limiting the funding for those schools nor indeed limiting the funding for further education and training.
Mr. Seán Ó Foghlú:
We have looked at this in the context of higher education and the review of the funding of higher education. We are putting in place a governance reward, with a positive support for good governance and a penalising of governance that is not as good. To achieve that in this sector would be much more difficult. We are going to look at it in terms of governance and performance in the context of further education and training and that is an option that we examining. I do not think that financial penalties would be effective in this sector but we are certainly reflecting on what additional steps we can put in place to ensure compliance by the sector with the requirements of the State.
What excuses have the ETBs that have not submitted accounts going back to 2015 and 2014 given for not submitting them and showing where and how they are spending their allocated money? I do not want any student to suffer because of mismanagement by the boards, but there should be some mechanism in place to ensure people are efficient and come up to scratch. Can we pinpoint why they have not submitted their audits? What reasons have they given? Is it that they do not have the required personnel? What is the problem?
Mr. Seán Ó Foghlú:
We could probably narrow it down to two main areas in terms of systems issues and personnel and staffing issues. In terms of systems issues, with the bringing of former VECs together with different systems, there was a good deal of recoding manual work to be done at individual ETB level and the bringing in of the training function brought in another management system that had to be integrated to enable them to complete their first set of accounts. There was quite a significant amount of networking, improved IT systems and the strengthening of those, which was a key challenge. That remains a challenge but good progress has been made in terms of stabilising systems and improving them to a point whereby the shared service model that is coming down the tracks will be the real modern solution to those.
The other area was personnel challenges. The ETBs, like many other areas throughout the public service, were affected by the Government's moratorium on recruitment and some individual ETBs were hit harder than others in terms of how that moratorium impacted. It would have affected a loss of expertise in particular areas. That was a difficult challenge to manage in a small ETB office. With respect to what we have done for the sector, we have strengthened the senior management team with the appointment of directors. That is a big support to the chief executives. Additionally, we have put processes in place to fill critical vacancies. In the period since 2015, 2016 and to date in 2017, we have enabled ETBs to fill about 100 critical vacancies spread across the ETBs - these are critical areas within their head office - to enable them to meet their obligations. In fairness to the sector, it is not for the want of trying. A lot of good work happens in the ETB sector. We are seeing the benefits that have come from the senior management teams that were put in place in 2016 and the critical vacancies were filled in terms of the improvements in timelines in getting accounts done. We would think there would be significant improvement again in 2017 in working towards achieving those timelines.
Mr. Seán Ó Foghlú:
If we consider the average for the sector generally, for the first year, the average was about ten and a half months after the year end. For the second year, that was brought down to eight months. In terms of the 2016 accounts for those who have them in, the average was about six months.
Mr. Seán Ó Foghlú:
There is the issue of getting accounts submitted to the Comptroller and Auditor General and the separate issue of getting them certified. In terms of getting them submitted to the Comptroller and Auditor General, there might be individual issues with individual audits such as the Kildare-Wicklow investigation that can affect matters. Good progress is being made and much of that progress will enable very significant progress to be achieved in timelines in terms of the 2017 accounts.
I wish to move on to the issue of deficits and I am looking at all the reports before us. Is there a control in terms of governance on the amount a board can have in loans and if it is allowed to have loans at the end of the year, how are they paid for, or what system is used to pay off the loans? Has the Department a limit on what the 16 ETBs can borrow per area? How does it define how much of an overdraft or loan an ETB can have? There is quite a variance in the amount that ETBs owe and the amount they have in loans. What is the criteria for EBTs taking out loans or how does the Department set those criteria?
Mr. Seán Ó Foghlú:
Under the code, we set expenditure limits for each ETB and that is with respect to the particular issues affecting those ETBs in terms of demographics and other challenges they have to manage. The ETB sector, as a whole, would have deficits which would have arisen largely because of the budget cuts that had to be made in the sector, in the same way that the budget cuts had to be applied to other sectors. Those deficits, cumulatively, for the 16 ETBs would be of the order of €20 million plus.
Do the ETBs have to get permission from the Department to run a deficit or to take out a loan and with respect to the size of that loan? Did they have to get permission from the Department before they look for it?
Many buildings and properties are either owned or leased by the education and training boards, ETBs. The cost of leases would be expensive in Dublin compared to the south east or the north west. What is the Department's policy on leases?
Mr. Seán Ó Foghlú:
In general with ETB schools, training centres and post-leaving certificate provision, they are owned by the ETB. There may be some occasions when they are on land owned by the Department.
Subject to finance being available, ETBs can seek funding from the Department for head offices. Any lease entered into has to be approved by the Department. In the further education area, there would be a bigger tendency to have leases because of the lack of permanency. However, we need to have a business case for any lease or purchase. Given the limits to the amount of funding available for capital, we need to be certain that there is a long-term usage requirement by an ETB to enable it to purchase properties.
I welcome the essential work done by the Department of Education and Skills, SOLAS and the ETBs. I believe in the public sector, as well as lifelong learning, in which I have a particular interest. Our function is to make the system accountable in order that it can be improved.
There was a refund from SOLAS to the Department. Will the witnesses tell us about the circumstances of that refund?
Mr. Paul O'Toole:
In 2016, the return was approximately €9.5 million which represented 1.6% of our budget. There are many moving parts involved. There are 16 ETBs and SOLAS itself. There are in excess of 20,000 individual courses for 300,000 people. There is movement of people in between their personal status - fewer people are unemployed or they might move - because up to one third of funding goes on participants' allowances. We seek to maximise the investment but we are required formally to return unused funds.
I understand that but my point is more about the use of the money, given the many problems with functional illiteracy. It is between 17% and 20% and has never changed despite all the investment. Why are moneys being handed back when there is significant use for them? I am picking one when there are many others. Illiteracy is obvious. If between 17% and 20% of the population is functionally illiterate, why can spare moneys not be used to tackle it?
Mr. Paul O'Toole:
We work proactively during the year with every ETB to ensure they can fund the programmes they intend to do. We would be constantly fine-tuning. As we move forward and improve our planning processes, we would try to ensure that, as close as possible, the available funding from the taxpayer is deployed. It is pretty close at the moment but we do not hand it back just for the sake of it. We want to spend the money in the right way. We must, however, work it within the rules that apply across the board.
Mr. Phil O'Flaherty:
From a departmental point of view, SOLAS provides a good level of reporting to the Department at the three points in the year at which it engages with the ETBs around expenditure in the further education and training area. SOLAS engages with the ETBs which forecast their funding requirements at various points of the year. However, given the fact that €538 million is going from SOLAS to the ETBs, sometimes expenditure and liabilities that the ETBs predict do not materialise close to the end of the year. The Department fully agrees that both moneys from Votes and from the national training fund which are provided for particular purposes at a particular level should be expended to the fullest and to the greatest extent possible.
Yes, but the figure for illiteracy has remained constant since it was assessed in the 1970s. That is a reflection on our education system and all of us. If there is spare money, there should be a particular project for a specific time to finally deal with illiteracy and not accept it. It is not an inevitable difficulty and should be dealt with. Many other countries have dealt with it.
Mr. Paul O'Toole:
When FÁS was dissolved, we exited the building. It has been refurbished and is being used. We moved to smaller premises. At the time of moving, we negotiated a very attractive rent, although it will not stay like that. We are very conscious of value for money in the context of the premises we use and-----
Given that all the accounts are late, that SOLAS is doing its best to bring about a reconciliation and that there are, I believe, deficits in respect of four ETBs that have appeared before the committee - there may well be more - can Mr. O'Toole clarify how the organisation is dealing with this?
Mr. Paul O'Toole:
For the further education and training portion of their budgets, SOLAS grant-aided them €538 million. The process we engage in is that we agree an opening envelope of funding by working out an estimate from our own processes. We ask each ETB to develop a plan around that and we work iteratively and, I have to say, constructively with each board on the preparation of those plans. The funding envelope for each ETB is formally approved by our board. In May, September and at the end of the year, we receive returns from the ETBs regarding in-year progress. These outline their activities, the courses they have been running and the value for money they achieve. We make adjustments in-year to each of their allocations based on how the year unfolds. At the end of the year, each ETB provides a balancing statement for its further education and training expenditure. Each board outlines each programme and all the boards give us funding reconciliations in respect of those figures. We use these to determine the final allocation for the year, that is, any adjustments, moneys to be handed back or whatever. We then get a declaration from each ETB, signed by its chief executive and finance officer, confirming that the funds have been spent in the manner that has been suggested. We do not close the book on this until we receive the financial statements.
As an exercise, we carried out a comparison regarding our end-of-year positions for 2015. At this point, we have 12 sets of certified accounts for ETBs for 2015 and we have four sets of draft accounts. The numbers are clocking up. We do not close the book finally until the financial statements have been received. We do a lot of preliminary work so that any adjustments at the end should be minor. If we have to do further adjustments, we will.
I will leave it to the Chairman to tease the matter out further.
I have a final question on training and on working with the ETBs. Is there reference to a pilot programme for sectoral governance somewhere in the documentation? Has SOLAS been working with the Institute of Public Administration in the context of providing courses?
We are left with four examples of accounts. I am not sure if one of them is a good example. In any event, I look at all the accounts that come before us and I wonder how these problems arise continuously, other than as a result of historical difficulties in the context of merging, etc. In the documentation, reference is made to checks and balances. There is an audit committee, a finance committee and so on. Then people contact us and ask if the finance committee met, if minutes of its meetings were written up and if the minutes were passed up the line. Who checks that? The documents provided by SOLAS refer, in lovely language, to the finance committee, the audit committee, etc. Then somebody informs us that a particular finance committee did not meet very often and that the minutes of its meetings were not received. I am talking in a general about this matter before I go into specifics. Who checks that people are fulfilling their responsibilities? We have seen this with Templemore and with other groups and organisations.
Does that mean that any ETB that comes before us should be able to state that its audit committee met four times a year, that the finance committee met, that all the minutes were taken and that the board has seen them? I feel sorry for the boards. That is a huge amount of work.
I am still trying to figure out how problems arise, particularly if all this is in place. Ultimately, the board should be able to say that the audit committee met four times in the year, as did the finance committee and whatever other committees. It should be able to outline the issues to be dealt with and the risks. That should be happening. The members of boards need training in that regard. How many board members have received such training? What programme is in place in the context of training the members of the various boards?
Mr. Hubert Loftus:
The Department, the ETBI, the internal audit unit and the Comptroller and Auditor General were involved in a joint briefing session and training programme for all the audit and finance committees. The ETBI takes the lead in respect of providing training for the boards. It also provides regular training for the chairpersons of boards.
I have a few brief questions. We have heard a lot of talk about the ETBI. Just to recap, what is the amount of funding provided to the latter? A witness provided the figure earlier. Could he repeat it?
Mr. Hubert Loftus:
They have 26 or 27 employees. That includes seconded posts, which would be reflected in the figure of €1.1 million to which Mr. Ó Foghlú referred. Primarily, they are working within the ETBI to support and drive the reform programme for the sector. Then there are other staff in the ETBI who provide support in respect of more general matters.
Mr. Hubert Loftus:
Yes, there is a governance structure. This information was provided by the ETBI to the committee. There is a structure in place by means of which the various directors - the director of schools, the director of organisation support and development, OSD, and the director of further education and training, FET - within the ETBI are supported. All of that is meant to help to share knowledge between each of the ETBs and support good practice.
We have voting and then lunch so we will be suspending until 2.30 p.m. I am going to go on for a few minutes even if I miss the first vote myself, just so as to get my questions on the record and avoid wasting time in the afternoon, when we have a big pile-up. If anybody wants to skip the vote then the committee is welcome to carry on here for a while longer but I, however, am making a personal call on this and it very much depends what members want to vote on. Mr. Ó Foghlú will be remaining on for the afternoon, as will representatives from SOLAS. Questions can be put to them then.
I am giving the committee the choice. I can hand the Chair over to Deputy Kelly-----
Yes. What I am saying as Chairman of the Committee of Public Accounts is that I am going to continue with my line of questioning during the first vote, even if I then end up skipping it, in an effort to avoid wasting time in the afternoon when the other members and witnesses will be here.
Deputy Kelly can take the first lot and we will back in session at 2.30 p.m. I have a few questions I wish to put and I would like to get them in at this point rather than coming back to them in the afternoon. That is my sole purpose here. When we come back, then, Deputy Kelly will finish up.
Okay, but very quickly. I have a few quick questions to put to Mr. Ó Foghlú and Mr. O'Toole. I believe that Mr. O'Toole has to leave but that his team will stay with us for the afternoon. Mr. Ó Foghlú said in his opening statement that two of the 16 ETBs submitted their accounts within the statutory period of three months while the remaining 14 did not. Quite a few of them came in late and we have them now. This is why the witnesses are before us today. I would like to know what Mr. Ó Foghlú did, as Secretary General and as gatekeeper, since he realised in April that 14 of the bodies under the aegis of his Department had not complied with their statutory duties. Did he do anything? Just a quick response please, as after today's meeting I will tell him what it was that he should have been doing. Did he take any action other than to show concern? Did he contact the 14 ETBs that had missed-----
Mr. Hubert Loftus:
I ask the Chairman if I might quickly clarify something here. One of the ETBs in the most difficult situation, and with the most catching up to do, was the Mayo, Sligo and Leitrim ETB. I put a very concentrated effort into helping them get their accounts for 2013, 2014, 2015 and 2016 completed within the space of a few months so as to leave them in a much better position to face into their 2017 accounts. We also did a lot of work on prioritising the filling of critical job vacancies so as to support the ETBs that were particularly badly hit by retirements and so forth.
In order to help the Department of Education and Skills, to help us on this committee, and to help the cause of public accountability I ask that Mr. Ó Foghlú, as Secretary General, write directly to the chairman and CEO of each ETB and remind them of their statutory duty to submit their accounts to the Comptroller and Auditor General by 1 April 2018. If they are not in by then we on the committee will be on the case by the following week. That is straightforward.
Mr. Loftus just mentioned staffing. How many of the ETBs are claiming that they did not get their accounts done because the Department did not approve the filling of vacancies in administrative and financial roles? What requests has the Department received from ETBs with regard to filling staff vacancies in areas that might have had an impact on the late production of accounts?
Mr. Hubert Loftus:
We get regular requests of this nature from the ETBs. The process that the Department has put in place, however, looks at three broad principles. First: what is affordable? We can only approve staffing that is affordable within the funding available. Second: what are the particular priority areas set by the ETB? Third: we look at how ETBs compare with one another when it comes to matters of staffing because some ETBs might have been worse affected by the impact of the recruitment moratorium than others. I have no doubt but that if one were to talk to each of the individual ETBs, they would all want more staff, no more than any other organisation generally. We work within certain parameters, however.
Mr. Hubert Loftus:
One of the practices that I have put in place is the calling of face-to-face meetings with the ETBs, rather than having constant correspondence running back and forth between us and the individual ETBs. I have been in this role for the last two years and during that period we have met representatives of all of the ETBs face-to-face. Where we approved requests that had been submitted for filling vacancies, we gave that approval either at that meeting or immediately thereafter. Where we were unable to approve the filling of a vacancy, meanwhile, we used the meeting to explain the reasons for that, be it a matter of affordability or indeed comparability with other ETBs.
Okay. I will just finish this one point. I have three or four more points to make before I let Deputy Kelly in with his question for Mr. O'Toole. Mr. Loftus has given an answer that is not acceptable to the Committee of Public Accounts. The question I put to Mr. Loftus and indeed to the Secretary General concerned requests received by the Department for staff to deal with this issue, and in answer to this Mr. Loftus raised the parameters of affordability and comparability. The first thing he should have addressed, however, was the need to meet statutory duties. Mr. Loftus did not name the meeting of statutory duty as one of his criteria; it does not seem to have applied here. Neither Mr. Loftus nor the Secretary General has the freedom to put statutory duties to one side. We cannot just forget about our statutory duties; we cannot afford it. What I am saying to the Department of Education and Skills today is that it has statutory duties. The first job of a public body is to meet its statutory duties, and not because these might be affordable or comparable to someone next door. The Department thus needs to reconsider the criteria under which it considers requests. Where there is a statutory duty, the first duty of a public body is to meet that duty. That did not feature here. The proof of this is in the fact that this year to date only two of the ETBs met their statutory duty to submit their accounts for 2016. This is why we are helping the Department ensure the ETBs meet their statutory duties for 2017 by early 2018. Does Mr. Loftus get my point?
I will just make a broad comment. The Committee of Public Accounts, along with the entire public of the Republic of Ireland, are sick and tired of the lack of accountability in the public service. We see it in finance; banks; the HSE; the ETBs; and in education. The Committee of Public Accounts no longer has any latitude in these matters. If a body is obliged to meet a statutory obligation then it will meet it. Members of the public rightly condemn the national Parliament for letting some people off the hook and not others. If there is a statutory duty then it is to be met: it is not negotiable.
If one of the things that a Committee for Public Accounts can achieve in national Parliament is to make public bodies accountable, then we will have done a good day's work. Others can do as they choose. I think the witnesses will understand, however, that we reflect the public mood here and we cannot stand over claims that it does not matter if accounts are sent in a year late. The Department stood over this but this Committee for Public Accounts will not. I am giving a strong message here, and I say to the Department of Education and Skills, and to the ETBs under its aegis, that they should use this committee as grounds for coming the heavy on matters like this one. The Department should use us; we do not mind if the Department is telling the ETBs that that Seán Fleming fellow is on its case about this. We are happy to take a bit of flak if it achieves a good result.
Deputy Kelly wants to come in here.
In fairness to Mr. O'Toole, he took on the job at a very difficult time and there were many issues around FÁS and the like. My second set of questions concerns the whole process around transferring the training side of things over to the ETBs. From a capital point of view, there has obviously been a roll-out of buildings etc. What methodology is in place for the selection of locations and buildings for future training? I consider such new locations to be completely necessary, by the way. I am completely in favour of this and it probably should have been done years ago.
What is the process for doing that, more for the knowledge of the committee and to put it on the record than for my benefit? I know the answer to a degree. Obviously there will be overspill in respect of old FÁS centres and buildings. What is the process there? What is happening with the old buildings?
With regard to the selection of new locations and buildings, which I welcome, why rent rather than buy over a long period of time? Given the volumes of money being used in some cases, it seems the buildings could be bought rather than rented. Will Mr. O'Toole comment on the process, the old buildings and the choice of renting as opposed to buying?
Mr. Paul O'Toole:
We forecast the demands in each of the crafts over the coming years to the best of our ability. We then forecast the capacity to meet that demand within the broad education and training board and institute of technology sector. To explain to those who might be less familiar, the education and training boards generally provide what is called phase two training, which is a period of 20 weeks, to apprentices while the institutes of technology generally provide two periods of ten weeks, which are called phases four and six. The training is divided between those two types of provider. Recognising that the existing capacity in the old training centres was insufficient to meet the forecast demand, we sought expressions of interest from education and training boards willing to put forward proposals to take up some of that slack. We respond to those proposals. That is the process we follow.
In respect of the old FÁS training centres, the entire network transferred to the relevant education and training boards-----
Mr. Paul O'Toole:
The 19 old FÁS training centres were transferred to the education and training boards a number of years ago and all are functioning. Again, for those who might be less familiar, at the peak of apprenticeships in the 2000s, in approximately 2007, FÁS supplemented those training centres with a whole host of other leased buildings. When the recession and the cyclical nature of construction led to the industry going pear-shaped, we gave up those buildings. On the Deputy's point about leasing and purchasing, while we cannot be not exact, we have to consider the cyclical nature of the industry. If we lock into buildings by purchasing them, we need to be sure than we can use them in the long term. That was my latter experience in FÁS and is my experience now.
I thank Mr. O'Toole for his very good answer. I understand the cyclical nature of the industry but, presumably, if one is going to spend a huge volume of money - we are talking about millions - on a building or buildings across the country in various different locations, if they were bought, potentially for less than would be spent leasing them, at least one would have an asset at the end of it, which would negate the risk. If one is going to pay serious rent and set-up costs over what is usually a ten-year period, I would presume that if one bought the building one would at least have the asset at the end of the period. That would negate the risk. I understand what happened to FÁS when construction collapsed, but when the totality of rent being committed to is well in excess of the cost of the building and fit-out, would it not make more sense to buy properties across the country in all of these locations?
Mr. Paul O'Toole:
I do not know the answer to that. One looks at business cases on a case-by-case basis and makes judgments. I cannot give the Deputy an informed answer on that issue. One looks at what is presented and what is available. The decision on whether to purchase or lease is a decision made on the basis of a business case.
We will continue for a final few minutes before we formally suspend for lunch. During the first 20 minutes this morning, we heard a breakdown of the payments to the ETB sector. Will the witnesses, in the calm light of day, put that on paper and come back to the committee tomorrow or the next day? We were all scribbling notes but we need to receive that formally next week. It will probably make much more sense when we have it in writing. Will the witnesses separate out the breakdown on SUSI as it relates to ETBs in order to let the committee know what the ETB sector is costing? It is a simple question. The witnesses can come back to us in writing on that.
I have two quick questions. SOLAS gave us a good indication of its interaction with the ETBs in respect of the budget and the mid-year review. The organisations meet afterwards, check the figures and assert them. I know there can be a balancing. Does the Department of Education and Skills interact with the ETBs on budgetary matters to the same extent as SOLAS has indicated? SOLAS has put approximately €500 million into the sector. The Department seems to be telling us what we would like to hear. I know the Department waits for the final accounts, which might require some balancing, but does the Department interact formally in the same way as SOLAS or is it just done through the annual Estimates? How does the Department respond to what SOLAS does? It seems to be a good way of doing things.
Some €538 million goes from SOLAS to the ETBs and they follow that money as I have just described. My question is on the €816 million which the Department pays directly to the ETBs. Does the Department carry out a similar exercise during the year for its €816 million as SOLAS does for its €538 million? That is my question. Is the same procedure in place? If I ask a chief executive in the afternoon to talk about his or her engagement with SOLAS, would what he or she would say be very different from what he or she would say about his or her engagement with the Department? Be conscious that they are coming in after this session.
Mr. Hubert Loftus:
He or she may say good things too. In terms of the funding side of things, we tell the ETBs what funding we are providing to them at the start of the year. We give that money to the ETBs in monthly tranches and they are required to provide monthly returns to us on the actual expenditure up to that point and their forecast expenditure for the remainder of the year. We maintain close contact with each individual ETB and monitor those projected spends to ensure they are managing within their allocations. The bulk of the spend relates to teachers' salaries. That would account for about 85% of the budget. Our teacher allocation section provides a staffing allocation to the ETBs, which triggers the associated payroll budget necessary to fulfil that allocation. The ETBs are then require to inform the Department how they are using that staffing allocation. There is engagement there. There are also quarterly staffing returns in terms of administrative staff, which are returned to the Department. We reconcile those administrative staff returns with the monthly returns. There is engagement with the ETB sector, although it is slightly different from the approach which SOLAS takes. It should still achieve the same outcomes.
Mr. Eamonn Cusack:
We interact with the ETBs regularly on the capital side. No project is allowed to proceed without sanction from the Department. When it comes to funding draw-downs, every three months we ask the ETBs what they expect to spend on any project in the coming three months. At the end of that three months they have to tell us how such money was spent before the next tranche of money is provided. That applies to all major projects.
I have one last question for SOLAS. Rather than doing it off the top of his head, I ask Mr. O'Toole to send us a note on the status of the funding for the new ETB second level school in Portlaoise regarding site identification. The new Dunamase school has opened on a temporary site. I ask Mr. O'Toole to send an update in writing to the committee on the status of that next week.
Pages 70 and 71 of the accounts have the title, Direct Provision of Funding (Further Education Grants) - Breakdown of Grants by Programme as Reported by the Education and Training Boards. I ask Mr. O'Toole to explain the rationale; he may need to send me something on the criteria. I look at the post-leaving certificate courses. Kilkenny and Carlow ETB got €245,000 for PLC courses, but Laois and Offaly, an ETB of the same size, only got €92,000. If I move across the column and look at Youthreach, Kilkenny and Carlow ETB only drew down €911,000 for Youthreach, whereas Laois and Offaly ETB drew down €2.439 million. They are vastly different figures for areas of similar populations and similar urban-rural breakdown. It is not just those and I ask Mr. O'Toole to explain the rationale for deciding which ETBs get big money for PLCs and which get big money for Youthreach.
Mr. Paul O'Toole:
When the ETBs were established, they were, obviously, an amalgamation of VECs. This is my understanding rather than detailed knowledge. VECs developed over time and the nature of their specific provision in each VEC grew up based on local considerations. Some might have a Youthreach centre and some might have a PLC college or whatever. The distribution of PLC places is reflected in our contribution to them. There is an overall cap on places in place. They are distributed largely in proportion to the existing PLC colleges - in other words, the colleges exist. They provide the PLC places and we are one portion of their funding. My answer in the round is that there is an historical network of various facilities around ETBs which grew up over time within each VEC and now ETB.
That is the as-is situation. Going forward, we are systematically evaluating each of those major programmes, using a socio-economic model. We are looking at the current state of those programmes and how they might be approved going forward. The big-ticket one is the PLC. We have completed our review of that and we had objective independent economic advice in doing so. We have proposed a series of improvements - a programme of improvements - to the Department of Education and Skills. We would hope, on getting that approval, to move progressively towards, if one likes, ensuring the PLC provision is delivering.
A simple way of looking at it is as follows. I am from County Wicklow. There is no training centre in County Wicklow, but there is one in Loughlinstown and it might serve a bigger catchment than in a particular area. It is a similar picture on Youthreach. We are currently evaluating the Youthreach programme with exactly the same lens on it - how we can make sure these programmes are optimised for the future. We are in process with that at the moment. We will bring forward whatever recommendations we have in due course for policy decisions with the Department.
The Youthreach figure for Louth and Meath is €5 million whereas the Youthreach figure for the city of Dublin is only €9 million. Obviously, many other programmes are going on in Dublin, but there is no logic to it. It is historical.
Mr. Paul O'Toole:
We are. The Chairman should bear in mind that the Youthreach programme has two components. It is Youthreach centres, which were developed by VECs over time, but it is also community training centres which FÁS had in place. They are not always located exactly the same. Sometimes one might have a local ex-FÁS CTC and then Youthreach. Again we are taking a strategic overview that we will use socio-economic analysis to underpin that and then hope to bring to forward a programme of improvements where required.
It goes without saying that people will want youth centres, but none of the old ones to close. Mr. O'Toole will know that before we start. I thank him for that because I wanted to highlight that issue.
We will suspend for the voting block in the Dáil and lunch and we will resume again at 2.30 p.m. with the City of Dublin ETB, and Kilkenny and Carlow ETB. The Secretary General of the Department of Education and Skills and representatives of SOLAS will continue to be here. It goes without saying that representatives of the Department of Education and Skills and of SOLAS will get some questions during the afternoon session.
I say to visitors in the Gallery that if people want to get some lunch, the main building is better. There is only a cafeteria in this building. I recommend the restaurant in the main building with which I am sure they are familiar.