01 - Department of Education and Communities - NSW Government

FINANCIAL OVERVIEWaccommodation or demountableclassroom provision. Capital worksprojects are provided in schools onthe basis of identified needsconsistent with the statutoryresponsibilities of the Minister forEducation and Training. Theplanning of facilities is undertakenwithin a framework of formalschool facilities standards and costbudget procedures and has regardto economic appraisal and assetmanagement guidelines.The Department’s capital strategyis focused on the need to provideboth additional educationalfacilities in new and developingareas of the state and to ensure theprovision of essential facilities toexisting schools. Total capitalpayments were $149m in 1996-97and are projected to be $131.8m in1997-98. Over the five years to1996-97 capital expenditures havefluctuated in line with overallcapital program priorities.Audit ReportThe Auditor-General madequalifications relating toDepreciation and Carrying Valuefor School Buildings and toSchool Financial Transactions andBalances. An explanation of theseitems can be found in Notes1(a)(ii), 1(b) and 1(k) to theFinancial Statements in theAppendix of this Annual Report.The staged implementation ofthe Asset Management Systemwill ultimately provide acondition assessment of each ofthe Department’s approximately16,000 school buildings. Thisinformation will enable anaccurate measure of the extent towhich the service potential ofschool buildings is beingconsumed and enable the Auditor-General’s requirements regardingdepreciation and carrying value tobe met.In relation to School FinancialTransactions and Balances theAuditor-General has concludedthat each school’s financialstatement needs to be consolidatedwithin the Department’s financialstatements. The Departmentand Treasury’s view, basedon interpretation of AustralianAccounting Standards andStatements of AccountingConcepts, is that schools do not fitthe definition of either controlledentities or reporting entities. TheDepartment and Treasury are of theopinion that schools are branchesof the Department and should nothave to produce general purposefinancial statements subject toannual attest audit and the issue ofan audit opinion thereon. Similarlyschool global budgets do not needto be allocated in the Department’saccounts to the individual expensesto which they have been used byschools. However, in order tofulfil necessary accountabilityrequirements, the Department andTreasury agree that schools shouldcontinue to prepare special purposecash based financial statements atthe end of each school year forsubmission to the Department andthe local school community.Future ExpenditureTrendsA restructuring of administrativesupport was implemented in 1996.Savings from the restructureamounted to $6m in 1996-97 andwill reach $17m in 1997-98 andthereafter.Total recurrent payments in1997-98 are estimated at over $4billion, an increase of $236m on1996-97 levels. The estimatesincorporate a four per cent salaryincrease for teachers, as a secondstep of salary increases awardedunder the Crown Employees(Teachers and Related Employees)Salaries and Conditions Award.The award provides for anincrease of almost 17 per centpayable in four instalments withthe final instalment to be paidon 1 January 1999. The awardincorporates two per cent fundingfrom DSE productivity offsets.Financial PlanningThe Department’s programstructures reflect Core, Equity andStrategic Education services. Theselink to the Department’s strategicobjectives identified through theAgenda 97 document and to theDepartment’s strategic budgetprogram in Budget Papers. Thisallows the Department to plan andreport on a matrix basis.The DSE program budgetswere developed as part of theFundamental Review of Programsin 1992. This promotes theintegration of planning, budgetingand performance reporting. Theobjectives and program structure ofthe DSE is under review as a resultof the restructuring of educationservices in schools and TAFE. Thiswill ensure that program objectivesand the initiatives to be achievedin the current year are more clearlylinked.14 DSE Annual Report 1997