Annual Report 2016/17 - Education Review OfficeEducation Review Office Annual Report 2016/17 Page 4...

Annual Report 2016/17 Te Pūrongo ā-Tau 2016/17

Presented to the House of Representatives pursuant to section 44 of the Public Finance Act 1989

E.39 AR(2016/17)

Education Review Office Annual Report 2016/17

Contents

Ki tā te Toihau Arotake tirohanga ......................................................................... 3

Chief Review Officer’s overview ........................................................................... 5

ERO purpose, activities and role .......................................................................... 7

ERO’s purpose ......................................................................................................................... 7

ERO’s core activities ................................................................................................................ 7

ERO’s role in the education system ......................................................................................... 8

ERO’s progress in 2016/17 .................................................................................... 9

What ERO aimed to achieve .................................................................................................... 9

ERO’s national evaluation programme .................................................................................. 11

Support for collaborative effort across the system ................................................................. 13

Embedding the evaluation indicators ..................................................................................... 14

Build internal evaluation practice across the system ............................................................. 15

Implement ERO’s professional practice strategy ................................................................... 15

ERO’s corporate capability and supporting infrastructure ..................................................... 16

Measuring performance .......................................................................................18

Quality of education reports and services .............................................................................. 18

Accountability reviews - early childhood education services, schools and other education service providers ................................................................................................... 20

ERO’s evaluation status analysis for schools ....................................................25

Financial Statements and Service Performance .................................................28

Statement of Responsibility ................................................................................................... 28

Independent Auditor’s Report ................................................................................................ 29

Service Performance for the year ended 30 June 2017 ........................................................ 33

Statement of Comprehensive Revenue and Expense ........................................................... 40

Statement of Changes in Equity ............................................................................................ 40

Statement of Financial Position ............................................................................................. 41

Statement of Cash Flows ....................................................................................................... 42

Statement of Contingent Liabilities and Contingent Assets ................................................... 43

Statement of Commitments ................................................................................................... 43

Statement of Accounting Policies .......................................................................................... 44

Notes to the Financial Statements ......................................................................................... 51

Appropriation Statements....................................................................................................... 58

Statement of Expenses and Capital Expenditure incurred without Appropriation or Other Authority, or in excess of an Existing Appropriation or Other Authority ....................... 58

Statement of Departmental Capital Injections without, or in excess of, Authority ................. 58

Education Review Office Annual Report 2016/17 Published 2017 © Crown copyright ISSN 2463-7513 (Print) ISSN 2463-7521 (Online)


Ki tā te Toihau Arotake tirohanga Kei te pūtake o ngā mahi a Te Tari Arotake Mātauranga, ko te whai i te mana taurite me te hiranga i te rāngai mātauranga. E kore nei te whai i te hiranga e mutu, engari kē mā ia kura mā ia whare kohungahunga e koke tonu ki te whakapai ake anō, ā, me pērā hoki ngā tino kura o Aotearoa. Ko te pūtake whānui o ngā mahi a Te Tari Arotake Mātauranga, he tautoko i ngā whakarerekētanga e whai wāhi ana ki te whakatairanga ake i te eke angitu i roto i te mātauranga, kia ū te mana taurite, te hiranga tonu i roto i ia kura, puta noa hoki i ngā kura katoa me ngā whare kohungahunga. I roto i āna mahi ki te aromātai i ngā kura me ngā ratonga mātauranga kōhungahunga, ka pūrongo Te Tari Arotake Mātauranga i te kounga o te mātauranga me ngā putanga ako mō te katoa o ngā tamariki me ngā rangatahi. Puta atu ai ngā kaiarotake o Te Tari Arotake Mātauranga ki ngā tūmomo ratonga mātauranga i ia rā, ki te whakatinana i ngā mahi aromātai e hāpai ana i ngā whakarerekētanga, ā, e whakanui ana hoki i ngā whakapaitanga. He tūnga motuhake anō hoki tō Te Tari Arotake Mātauranga, inā hoki ka whakarato i ngā mōhiohio ka ahu mai i ngā whakaaturanga me ngā tirohanga ki te rāngai mātauranga, mā āna pūrongo aromātai ā-motu. Ko te tau pūtea o 2016/17, he wā whakawhitinga, he wā whakatutukitanga hoki mō Te Tari Arotake Mātauranga. Kāore e kore ko te tino whakatutukitanga, ko te kite i ngā kura e kōkiri ana, e whakamahi ana hoki i ngā tohu aromātai hou. Nō te Hōngongoi o 2016 aua tohu aromātai i whakaputaina ai mā ngā kura, ā, e tautuhi ana i ngā āhuatanga matua e pou here ana i ngā mahi a ngā kura e tino whai hua ana. He pai ngā kōrero urupare i pupū ake ai i te tīmatanga. He maha ngā kura i tuitui i ngā mōhiohio o roto i ngā tohu aromātai ki ā rātou mahere mō te tau 2017. He tino hua aua tohu aromātai ki te rāngai mātauranga o Aotearoa, ā, kua whakatakotohia anō hoki i nāianei te taumata teitei kia tūmanakohia e tātou i ngā kura. E whakamahere ana aua tohu i te ahu whakamua. He tūtohu kia mārakerake ake te aronga atu ki ngā putanga, te mana taurite, me ngā tangongitanga i ngā kura. E tīkohikohi ana ngā tohu i ngā whakaaturanga i ahu mai ai i ngā rangahau me ngā tino taunakitanga i tāwāhi, me ngā kitenga ake anō hoki o Te Tari Arotake Mātauranga i roto i ngā tau 27 kua pahure ake nei. I te Here-turi-kōkā o 2017 i kaha ake anō ai te whai pūtaketanga o ngā tohu aromātai, i te whakarewatanga o ngā kohinga rauemi ā-ipurangi e kīia nei, ko Improvement in Action / Te Ahu Whakamua. I whakatinana taua rauemi ā-ipurangi i aua tohu aromātai, mā te whakatairanga i ētahi kura e tino whai hua ana i roto i ā rātou mahi hei painga mō ā rātou ākonga, me tā rātou whakamahinga anō hoki i ngā tohu aromātai hei whakatakoto haere i te ahu whakamua o ā rātou ākonga. Ko tētahi atu tino kōkiritanga i whakatutukihia ai i tēnei tau, ko te āta whakahāngai ake anō i ngā pātai ki ngā kura e arotakengia ana e Te Tari Arotake Mātauranga. Inā koa, kua whakahāngaitia ake te aronga a ngā aromātai kura i nāianei ki te mana taurite, me ngā huarahi e whāia ana e ngā kura hei āta whakarite i te painga ake o ngā putanga ki ngā ākonga e karawheta ana ki te ako, kāhore rānei e eke angitu ana. Ko te whai pānga nui o te mana taurite ki te mātauranga, ko te poipoi anō hoki i ngā ākonga e noho āwangawanga ana i roto i ngā akoranga, koia nei kei te tino pūtake o te aronga matua a Te Tari Arotake Mātauranga ki ngā paetae ākonga, me te ahu whakamua o ngā ākonga e noho whakamōrea ana ki te ako i roto i te rāngai mātauranga. Nō te Kohi-tātea o 2017 i whakaputaina ai e Te Tari Arotake Mātauranga tētahi kohinga tuhinga e whakamārama ana i ngā mātāpono o te kaupapa e kīia nei, ko Communities of Learning | Kāhui Ako. He kura, he ratonga mātauranga kōhungahunga ēnei e whakarāmemene ana hei hāpai i ngā kōkiritanga ā-motu hou o te mahi ngātahi, te pātuitanga, me te ārahitanga i te rāngai, i runga i te whāinga ki te whakapai ake i ngā putanga ki ngā ākonga. I whakaraupapa anō hoki aua tuhinga i te ahu whakamua o te kōkiritanga nei, tae noa mai ki taua wā. I ngā Kāhui Ako | Communities of Learning e tupu haere ana, e pakari haere ana hoki, ka whakarato Te Tari Arotake Mātauranga i te aromātai whānui o tēnā e whai hua ana, me tēnā anō hoki hei hāpai ake tonu.


Nō te Hui-tanguru o 2017 tētahi pūrongo i whakaputaina ai e kīia nei, ko Extending their language – expanding their world: Children’s Oral language (birth – 8 years), ā, i whakatairanga tēnei i te hira nui ki te whāngai i te hōhonutanga, te whānuitanga anō hoki o ngā kupu kōrero ki ngā tamariki. Ko te whānui o te huinga kupu e noho matua ana ki te āhua o ngā whakawhitinga whakaaro me ngā taunekeneke ki ētahi atu, ā, ki te ako anō hoki, puta noa i te marautanga. I whakatairanga te pūrongo i te hiahia - mō rātou e mahi ana ki ngā ratonga mātauranga kōhungahunga me ngā reanga tīmatanga i ngā kura tuatahi - kia nahanaha ake, kia hakune ake hoki tā rātou poipoi me tā rātou aroturuki i te whakawhanaketanga o te reo ā-waha. I tēnei wā hoki, nā Te Uepū ā-Motu (arā, nā te rōpū e aromātai ana i ngā kura rumaki reo Māori me ngā whare kōhungahunga rumaki reo Māori), i whakawhanake, i whakatinana hoki tētahi huarahi aromātai me ngā tohu aromātai hei whakamahinga ki ngā Kura ā-Iwi, ā, ki te mātauranga rumaki reo Māori hoki. Nā rātou anō hoki i whakaoti tētahi papakupu e whakarārangi ana i ngā kupu me ngā kīanga e whai pānga ana ki te tikanga ako moroki i ngā kura rumaki reo Māori, ā, i hāpaitia tēnei kaupapa e ētahi mātanga o te mātauranga rumaki reo Māori. I roto hoki i tēnei wā, i whakaputaina e Te Tari Arotake Mātauranga tētahi pūrongo e kīia nei, ko School Leadership That Works. Ahakoa he aronga pū tā te pūrongo nei ki ngā kura, he maha tonu ngā tirohanga o roto e tino whai pānga nui ana ki te ārahitanga me ngā whakaritenga whakahaere i ngā ratonga mātauranga kōhungahunga. Koia nei hoki te wā i wehe atu ai te Manahautū, a Iona Holsted i Te Tari Arotake Mātauranga ki te kawe ake i te tūranga o te Hekeretari mō te Mātauranga. He nui ngā mahi a Iona i para ai i te huarahi mō ngā whakatutukitanga a Te Tari Arotake Mātauranga i tēnei wā, ā, e tika ana kia āta mihi anō hoki ahau ki a ia i tōna kaha ki te hāpai i taku kawe ake i tēnei tūranga mahi. Nei rā anō hoki āku mihi ki ngā kaimahi o Te Tari Arotake Mātauranga, ko koutou e whakapeto ngoi ana, e manawanui ana, e ngākau nui ana hoki ki te whakatairanga ake i ngā painga mātauranga mō ngā ākonga i Aotearoa nei. E noho titikaha ana Te Tari Arotake Mātauranga ki te mahi ngātahi ki te rāngai, kia eke angitu ai ngā ākonga katoa mā te whakapakari i te pūnaha mātauranga.

Nicholas Pole Te Manahautū me te Toihau Arotake Mahuru 2017


Chief Review Officer’s overview

The pursuit of equity and excellence in the education system is at the heart of what the Education Review Office | Te Tari Arotake Mātauranga (ERO) does. Excellence is not a destination – every school and early learning service must be on a continuous journey of improvement, even New Zealand’s best providers.

ERO’s overarching purpose is to support change that contributes to raising educational achievement for equity and excellence within, and across schools and early learning services. In its school and early learning service evaluations, ERO reports on the quality of education and learning outcomes for all children and young people.

ERO reviewers are in the field every day, providing evaluative services that influence change and promote improvement. ERO is in a unique position to provide evidence-based information and insights about the education system through its national evaluation reports.

The 2016/17 financial year was one of transition and achievement for ERO.

Arguably, the greatest achievement was seeing schools getting on board and using the school evaluation indicators. The indicators that define the core elements which underpin highly effective schools were released to schools in July 2016. Initial feedback was encouraging. Many schools incorporated the information in the indicators into their planning for 2017.

A fundamental asset to the education system in New Zealand, the indicators have now set the benchmark as to what New Zealanders are entitled to expect from schools. They chart the way forward. They signal a clearer and sharper focus on outcomes, equity and addressing in-school variation. The indicators bring together findings from international research, international best evidence and ERO’s own observations over the past 27 years.

In August 2017, the indicators were given an even higher profile with the launching of a series of online resources, called Improvement in Action / Te Ahu Whakamua. This online resource brought the indicators to life, showcasing a number of schools that are making a significant positive difference for their learners and using the indicators to chart students’ progress.

Another important initiative undertaken in the year under review was an explicit refocusing of the questions that are put to schools when they are being reviewed by ERO. In particular, school evaluations now have a sharpened focus on equity and how schools are ensuring improvements in outcomes for learners who are struggling and failing to succeed. The need for equity and addressing this pool of learners at risk of failing in our system is why ERO is placing a significant focus on student achievement, and the progress of students who are at greatest risk in our system.

In January 2017, ERO published a suite of documents describing the principles of Communities of Learning | Kāhui Ako (CoL | Kāhui Ako). These are schools and early learning services working together to support New Zealand’s new models of collaboration, partnership and system leadership aimed at improving student outcomes. The papers also charted progress of the initiative to date. As the number of new CoL | Kāhui Ako established grows, ERO will provide a wider evaluative picture of what is working well and what requires further support.

A report released in February 2017, entitled Extending their language – expanding their world: Children’s Oral language (birth – 8 years), highlighted the critical importance of fostering a rich vocabulary in children. Vocabulary is a key factor in communicating and interacting with others and to learning across the curriculum. The report highlighted the need for those working in early learning services and the early years of primary schooling to be more systematic and deliberate in fostering and monitoring oral language development.

During this period, ERO’s Māori Review Services team Te Uepū ā-Motu, which evaluates Māori-medium schools and early learning services, developed and implemented methodology and indicators for use in Ngā Kura a Iwi, Māori immersion education. It also completed for publication a Māori medium modern learning glossary document and thematic glossary, which use Te reo Māori vocabulary and terms, as influenced by Māori-medium education leaders.

Also during this period, ERO published a report entitled School Leadership That Works. While this report has a specific focus on schools, many of its insights also have important implications for leadership and management practices in early learning settings.


During the review period, Chief Executive Iona Holsted left ERO to take up the role of Education Secretary. Iona laid much of the ground work for ERO’s recent achievements and I especially thank her for the way she helped me into the role.

I also thank ERO’s hardworking staff for their dedication, passion and commitment to better educational outcomes for learners in New Zealand.

ERO is committed to working in partnership with the sector to build an education system where all learners succeed.

Nicholas Pole Chief Executive and Chief Review Officer September 2017


ERO purpose, activities and role

ERO’s purpose

ERO’s evaluation insights are a catalyst for change so that every child achieves success as a lifelong learner.

ERO’s core activities

ERO is a government department established in October 1989 under the State Sector Act 1988. The Chief Executive of ERO is the Chief Review Officer.

Under Part 28 of the Education Act 1989, ERO is required to review the performance of pre-tertiary education providers in relation to the educational services they provide. Review Officers are statutory officers designated under the Act. They exercise powers of entry, investigation and reporting.

At an education system level, ERO carries out evaluations of education sector performance and policy implementation, and reports to the Minister of Education about practice in the pre-tertiary sector.

ERO’s core activities in 2016/17 included:

National evaluations – on education system-level issues including sector performance, policy implementation and pre-tertiary educational practice

Education evaluations – scheduled external evaluation reviews carried out with schools and early learning services to complement and strengthen their own internal evaluation processes

Special reviews – carried out where a matter needed to be reviewed and reported outside regular reviews

New school assurance reviews – carried out to provide assurance to new school boards and their communities that the school has undertaken suitable administration processes and curriculum preparation

Private school reviews – carried out under section 35I and Part 28 of the Education Act 1989

Partnership school reviews – readiness reviews and subsequent assurance reviews under individual partnership school agreements

Homeschooling reviews – reviews of programmes for students exempt from enrolment at a registered school, undertaken in the context of section 21 and Part 28 of the Education Act 1989 and usually at the request of the Ministry of Education (the Ministry)

CoL | Kāhui Ako reports – as part of the Government’s Investing in Educational Success (IES) initiative. These included tailored reports for each community, bespoke reports for schools receiving the Principal Recruitment Allowance, and national reports on trends and issues

Teacher practising certificates audit – From 1 July 2015, ERO has been contracted by the Education Council of Aotearoa New Zealand (the Education Council), to undertake an audit of appraisals for the endorsement of teacher practising certificates.


ERO’s role in the education system

ERO is the New Zealand Government’s external education evaluation agency. Its evaluations are integrated with and strengthen the internal evaluation activities of schools, early learning services and CoL | Kāhui Ako. At an education system level, ERO undertakes national evaluations of education sector performance and policy.

ERO works alongside the Ministry and other agencies represented on the Education System Stewardship Forum, to achieve equitable levels of participation, engagement and achievement. There is a collective determination that the system should deliver equity and excellence – improving outcomes for all learners. ERO understands that to achieve increased levels of social, cultural and economic wellbeing across the country, the education system needs to be relevant and reach all children and young people.

ERO is developing the resources and capability to ensure that its extensive knowledge and expertise has an increasingly positive impact, particularly on the quality of early learning services, schools and CoL | Kāhui Ako to raise achievement for all.

ERO contributes to sector priorities through its influence on how schools and early childhood services perform. ERO identifies what works, establishes indicators for success, and uses this evidence to influence change in the education system.

ERO uses its knowledge about what works for children and young people (0-18 years) to influence decision making within the education system. ERO continues to model and support greater collaboration to raise the aspirations of children, parents and whānau. Features of ERO’s current evaluation approach include:

a specific focus on the outcomes for students not well served by the system

an integrated approach to external evaluation and internal evaluation

a participatory/collaborative approach to the evaluation process

a context specific approach to evaluation design, the gathering, analysis and synthesis of data, and the communication of findings

an emphasis on evaluation as a learning process, building knowledge at local, community and education system level.

ERO’s evaluations inform parents and families about the quality of educational provision in their communities. ERO’s engagement with Boards of Trustees, leaders and teachers is a vital aspect of its work. Through its evaluations, ERO strives to generate the conditions that enable ownership and improvement.

ERO’s impact on education outcomes is determined by its ability to work within and across the education system as an effective catalyst for change.


ERO’s progress in 2016/17

What ERO aimed to achieve

ERO’s Strategic Intentions 2016-2020 identified the following strategic goals and objectives for ERO:

Achieving equity and excellence Goal 1: focusing on accelerating student achievement in evaluations

Goal 2: evolving our evaluation methodologies, approaches and programme

Generating improvement and innovation

Goal 3: supporting collaborative effort across the system

Goal 4: embedding the effective practice indicators

Goal 5: building internal evaluation practice across the system

Enhancing ERO’s capability and capacity

Goal 6: implementing its professional practice strategy

Goal 7: applying its operating model principles to all its work programmes

Goal 8: developing its corporate capability and supporting infrastructure

____________________________________________________________________________________

Reflecting its Strategic Intentions 2016-2020, ERO’s strategic goals and objectives for 2016/17 were as follows:

Goal 1: Focus on accelerating student achievement in evaluations

continue to evaluate and evolve its approach to accelerating student achievement in primary schools and extend its approach to intermediate and area schools

ensure its accelerating student achievement approach and external evaluations increasingly reinforce the importance of collaboration, student voice and whānau empowerment

Goal 2: Evolve ERO’s evaluation methodologies, approaches and programme

improve the accessibility of ERO’s findings, sharing examples of effective practice with parents and whānau

inform the profession about the support needed by beginning teachers to ensure their data literacy and readiness to accelerate student achievement

shed light on in-school variations and disparity in learner achievement and enable parents to identify what they need to become more active partners in their children’s learning

assess the progress to maturity of CoL |Kāhui Ako and other aspects of the Investing in Educational Success (IES) policies' impact on school leadership, teaching and student achievement

continue to focus on how Māori and English medium schools and early learning services promote success for those at risk of under achievement

better understand the impact of various interventions, and their effectiveness in improving performance and learning outcomes


Goal 3: Support collaborative effort across the system

publish effective practice case studies to reveal the contribution of enhanced learner pathways to improved outcomes

develop and trial a methodology to evaluate CoL | Kāhui Ako

develop and trial effective practice indicators to assist CoL | Kāhui Ako to build evaluation capability and capacity

continue to support developing CoL | Kāhui Ako with workshops to identify and agree achievement challenges

Goal 4: Embed the evaluation indicators

begin to revise and embed a comprehensive set of evaluation indicators for 0-18 years

begin to develop digital and online resources that illustrate aspects of the indicators and effective pedagogical (the science of teaching) practice

begin to position the indicators so as to influence the work of other agencies

continue to develop effective teaching and learning practice resources to make them more interactive and accessible

develop Māori medium versions of key resources and revise ERO’s approach to Māori medium in mainstream settings

Goal 5: Build internal evaluation practice across the system

develop resources that enable early learning services to undertake effective internal evaluation

initiate Ngā Kōhanga Reo Effective Practice Evaluation Indicators Project

Goal 6: Implement ERO’s professional practice strategy

clearly articulate capabilities for high quality education evaluation in New Zealand

further develop professional pathways, including access to post graduate qualifications in evaluation

provide opportunities for evaluators to engage in professional inquiry and research to build knowledge about effective evaluation practice

Goal 7: Apply ERO’s operating model principles to its work programme

develop the programme co-ordination role to strengthen programme and project management

deliver on the operating model principles for data, information and design

develop an information management strategy

update ERO’s Code of Conduct and related policies to ensure clarity, fairness and transparency

continue to evolve ERO’s performance measurement framework and ensure alignment with developments through the Education System Stewardship Work Programme

Goal 8: Develop ERO’s corporate capability and supporting infrastructure

complete a review and redevelopment of ERO’s approach to induction at national and regional levels

start to develop new plans and/or processes to exploit technology for greatest impact and grow the capability of the workforce

continued to develop ERO’s risk, assurance, security and privacy processes.

Progress against each of these goals and the related objectives in 2016/17 is detailed in the following sections.


ERO’s national evaluation programme

ERO’s national evaluation programme spotlights those areas of curriculum, pedagogy and school improvement that are most likely to influence equity and excellence in the New Zealand education system. ERO works with other education agencies to align its national evaluation programme with system priorities where necessary.

ERO’s national evaluations look at models of collaboration and coherence. Through its work, ERO develops insights and delivers evidence that improves government’s knowledge of the effects of its interventions and their impact in education and across the social sector.

ERO publishes exemplars of effective practice, so that parents and whānau are better informed and empowered to seek improvement and innovation. These exemplars support accelerated student achievement, promote effective teaching practice and focus on educationally powerful relationships.

The following reports were published during 2016/17.

Partners in Learning (August 2016)

Strong connections between schools and parents and whānau are essential to accelerating the achievement of students, particularly those at risk of underachieving. This booklet helps parents, families and whānau to form effective relationships and educationally powerful connections.

Partners in Learning sets out what parents can expect from their child’s school and, more importantly, how they can help their child do well at school. It describes what parents can do if they are concerned about their child’s learning and progress and what they can expect the school to do to help.

The booklet contains links to parent information on ERO, New Zealand Qualifications Authority (NZQA), the Ministry of Education and Careers New Zealand websites.

An evaluation of Stand Children's Services: Children's Villages (September 2016)

Since 2008, the Ministries of Education and Social Development have changed provision for children who have experienced trauma. Health camp schools were closed and the task of helping children that have experienced trauma was passed to Stand Children’s Services (Stand).

Stand is a charity funded by the Ministries of Education and Social Development to provide services for children aged 5 to 12 years who have experienced trauma. Children usually stay for about five weeks in one of seven children’s villages.

This review is the first since the service was reformed. It focused on how effectively the service responds to the wellbeing and learning of children that have experienced trauma. ERO visited each of the villages in Term 1, 2016 and reviewed the approaches and processes from the time a child is referred until they transition back to school.

Early Learning Curriculum (October 2016)

This retrospective study brought together findings from 17 national reports about curriculum implementation in early learning services, published over the past 10 years.

While the national evaluations over this time have not covered every aspect of early childhood curriculum, they provide insight into how effectively early learning services are designing, implementing and evaluating their curriculum, based on the early childhood curriculum Te Whāriki. The evaluations highlight pedagogical leadership, teacher knowledge and capacity to develop powerful learning partnerships as key factors impacting on quality.

School Leadership That Works (November 2016)

This evaluation report illustrated how the leadership domain within ERO’s School Evaluation Indicators works in practice by:

drawing together ERO’s findings from recent evaluative work with school leaders across the country


combining these findings with international evidence of what works in school leadership and why

showing the practices used by effective leaders to achieve their goals of equity and excellence in their schools.

The report was designed as a resource to guide the practice of school leadership. It is aimed at all school leaders, but particularly less experienced school leaders seeking to learn from the good practices of others.

Child Youth and Family Residential Schools (November 2016)

In 2016, ERO evaluated the quality of education at the Child Youth and Family (CYF) residential schools. CYF residential schools provide education for young people in Youth Justice and Care and Protection services.

Students in CYF residential schools are among the most vulnerable in New Zealand, and present with multiple high and complex needs. The specialised knowledge, skills and practice of teachers and leaders in residential schools needs to be of a very high standard to support student engagement and achievement.

ERO found respectful relationships between staff and students in all of the schools. However, as noted in previous ERO evaluations, exit transitions remained a weakness.

Effective Internal Evaluation for Improvement (December 2016)

This revised booklet is for organisations interested in internal evaluation. This overview of the processes and reasoning involved in effective internal evaluation for improvement draws on a recently published resource Effective Internal Evaluation – How to do and use internal evaluation for improvement (2015).

Extending their language - expanding their world: Children’s oral language (birth-8 years) (February 2017)

Research shows a child’s early life is critical in terms of the rapid language development that takes place, particularly in the first two to three years.

This evaluation investigated how effectively young children’s oral language learning and development were supported in their early years of education.

ERO asked early learning services and schools what they are doing in response to children’s oral language learning and development, including concerns about and needs of particular children. The findings were based on analysis of data gathered from 167 early learning services and 104 schools.

School trustees booklet: helping you ask the right questions (February 2017)

This booklet was written for boards of trustees to help board members. It focuses on student achievement and wellbeing, and how boards contribute to this. The booklet provides information to guide trustees and help them with their discussions with school leaders.

Food, Nutrition and Physical Activity in NZ Schools and Early Learning Services (April 2017)

In late 2015, the Cabinet Social Policy Committee asked ERO to assess ‘the current status of food, nutrition and physical activity in schools and early childhood services’ and to report on schools that were included in the sample. ERO visited 202 early learning services, 46 primary schools and 29 secondary schools in the first half of 2016.

ERO asked: How well does the service/school promote positive attitudes to physical activity, and food and nutrition to benefit children?

ERO found that most schools and services were doing a good job of equipping young people with the knowledge, skills and attitudes to make healthy choices around food, nutrition and physical activity.

In addition to the main report, a separate summary report provided an overview of ERO's findings and three case studies.


He Pou Tātaki: How ERO reviews hospital-based education and care services (June 2017)

This document was the result of a collaborative effort between ERO and representatives from hospital-based education and care services. It supported improved service performance and accountability, and focussed on how well placed hospital-based services contribute to children’s learning and promote their wellbeing.

Te Whāriki

At the end of the review period, ERO began planning for an iterative series of national evaluations about early learning services awareness and implementation of the updated Early Childhood Education Curriculum Te Whāriki.

Support for collaborative effort across the system During 2016/17, ERO supported CoL | Kāhui Ako by developing integrated evaluative approaches that gather iterative information about how communities are developing.

ERO initiated the design of case study evaluation to generate insights into how communities are evolving and progressing in different contexts, and to explore the assumptions underpinning the CoL | Kāhui Ako policy design.

ERO published the following reports in January 2017:

Communities of Learning | Kāhui Ako: Collaboration to Improve Learner Outcomes

This publication supported CoL | Kāhui Ako by bringing together research findings about effective collaboration in education communities. It was supported by the publication, Communities of Learning | Kāhui Ako: Working Towards Collaborative Practice. These resources can be used in conjunction with the publications School Evaluation Indicators: Effective Practice for Improvement and Learner Success (2016) and Effective School Evaluation: How to do and use Internal Evaluation for Improvement (2016).

Communities of Learning | Kāhui Ako in Action

This was the first of a series of iterative reports which draw together what ERO knows about CoL | Kāhui Ako, as communities move from establishment to implementation. This report was based on information gathered from the following sources:

regular ERO evaluations of schools that are already members of a CoL | Kāhui Ako

workshops ERO has conducted with CoL | Kāhui Ako

in-depth work ERO is doing alongside one CoL | Kāhui Ako.

Information was collected in Terms 2 and 3 of 2016 from 82 schools representing 40 percent of the current 148 CoL | Kāhui Ako and from 20 workshops conducted nationally during 2015 and 2016.

Communities of Learning | Kāhui Ako: Working Towards Collaborative Practice

This resource supports CoL | Kāhui Ako as communities work towards effective collaborative practice. It is framed around key questions in each of the seven effective practice areas and can be used both as evidence-based progressions and as a useful internal evaluation tool.

In June 2017, ERO and the Ministry agreed to an overarching CoL | Kāhui Ako evaluation strategy. The strategy reflects a ‘theory of change’ that captures how policy settings can be expected to contribute to desired government outcomes, and identifies a high-level evaluation framework to guide the evaluation activities of each agency.

ERO’s contribution to the evaluation strategy work programme will include integrating investigations of schools’ and early learning services’ participation in CoL | Kāhui Ako into all reviews. It is beginning to cluster reviews of schools and services in a community, so that the progress of each community can be monitored more effectively by ERO. Information gathered from ERO evaluations and case studies will continue to contribute in the following ways:

by developing the knowledge base about what works collaboratively in the New Zealand education setting


by tracking progress towards the desired outcomes to inform learning and decision-making

by ensuring the government receives timely and evidence-based advice about the implementation of the IES policy.

During the year, ERO also agreed on a joint strategy with the Ministry for working with persistently poorly performing schools. ERO has set up a national team to undertake diagnostic reviews and to evaluate schools’ action plans.

ERO approach to school turnaround

ERO and the Ministry are developing new protocols, systems and processes for working together to ensure that targeted interventions and support are provided when schools are having difficulty.

In 2011, ERO developed a differentiated review methodology according to each school’s context, performance and evaluation capacity. This included a longitudinal review methodology for schools experiencing difficulties which were considered unlikely to be able to resolve their difficulties and raise student achievement without external intervention, support and ERO monitoring.

Since then, it has become apparent that, despite ERO’s best efforts, a small number of schools continue to perform poorly over long periods. Using the 2016 ERO School Evaluation Indicators, these schools demonstrate persistent poor performance in five key areas:

student achievement

other valued student outcomes - student engagement and wellbeing

the quality of teaching and curriculum design

professional leadership

stewardship - notably the cycle of planning, reporting and resourcing, and health and safety.

ERO is piloting a more intensive “School Turnaround” evaluation process to help ensure these schools improve their systems and processes to improve student achievement and school performance. ERO has worked closely with the Ministry to design this process which includes a diagnostic review focusing on school conditions most likely to support improvement in teaching and learning. With an update to the Education Act 1989 and the range of new interventions, the aim is to provide a collaborative education system response to support improvement and accelerate school turnaround.

Embedding the evaluation indicators

In July 2016, ERO published its final School Evaluation Indicators report. The content had been refined based on feedback from the education sector and ERO’s evaluators.

The new School Evaluation Indicators document is designed to focus schools and ERO evaluators on the things that matter most in improving student outcomes. The framework identifies two types of indicator: outcome and process.

The outcome indicators are drawn from The New Zealand Curriculum and Te Marautanga o Aotearoa. They can be used to assess the impact of school policies and actions. Indicators of student achievement and progress are a direct measure of what it is that schools are expected to achieve. The measures related to students’ confidence in their identity, language and culture, and to wellbeing, participation and contribution. All these factors are important in their own right, as well as being essential for achievement and progress.

The process indicators describe practices and processes that contribute to school effectiveness and improvement. They are organised in six key domains that work together to promote equity and excellence in student outcomes. They assist schools to identify areas in which changes are needed.

Where evaluation against the outcome indicators indicates poor performance, the process indicators can be used as a tool for investigating what’s contributing to this poor performance.

During 2016/17, ERO developed resources to assist schools, kura, early learning services and Kōhanga reo to explore opportunities to deliver curriculum that enables children to realise their full potential with the skills they need for study, work and lifelong learning.


In 2016, ERO initiated a film project in selected schools to produce videos that illustrate the School Evaluation Indicators. This resource, called Improvement in Action / Te Ahu Whakamua, was published on ERO’s website to support the development of understanding and capability in relation to improving student outcomes.

ERO also started to develop Māori medium versions of key resources and took initial steps to revise its approach to Māori medium education in mainstream settings.

The evaluation indicators and supporting materials will evolve and change over time in the light of new research and evaluation findings.

Appraisal as a catalyst for improved learner outcomes (December 2016)

The Education Council of Aotearoa New Zealand (the Council) was established on 1 July 2015 to replace the New Zealand Teachers Council. One of 16 functions outlined in the enabling legislation was the requirement to audit and moderate the appraisals of at least 10 percent of practising certificates issued or renewed each year. This focus was to ensure that appraisals used for teacher certification achieve a “reasonable and consistent standard”. On the first day of its operation, ERO signed an agreement with the Council to undertake this work on behalf of the new Council.

In 2016/17, ERO successfully completed the contracted number of audits and reported back to the Council.

Build internal evaluation practice across the system

In November 2015, ERO and the Ministry released a trial internal evaluation resource for schools. The resource is designed to assist schools make the most of internal evaluation. ERO has integrated the use of this internal evaluation resource into the follow up workshops that are provided as part of schools’ evaluations.

By embedding effective internal evaluation practice across the system, ERO hopes to influence the development of teaching practice and curriculum design for improved learner outcomes.

During 2016/17, ERO, in partnership with the National Te Kōhanga Reo Trust, completed a review and report about effective practice in Ngā Kōhanga Reo. ERO also established a negotiated project plan for the development of Ngā Kōhanga Reo Effective Practice evaluation indicators.

ERO’s Pacific strategy

ERO’s Pacific Strategy 2012/2017 was evaluated in 2015. As a result, some Pacific communities have shared their experiences and provided feedback about ERO’s review process and reports. This feedback has contributed to a wider collation of information from communities about new and innovative ways to engage with Pacific families.

ERO’s Pacific Strategy review work continued in 2016/17 and will help to inform ERO’s future work with and for Pacific communities. ERO is committed to increasing the involvement and understanding of Pacific parents and whānau in their children’s learning. This will improve outcomes for all Pacific learners and, in particular, those most at risk of not achieving their potential.

ERO continues to strive for educational success for all Pacific learners through high quality evaluation practice. Ongoing capacity and capability building for staff in issues of greatest relevance to Pacific people is an important part of ERO’s professional learning and development efforts.

Implement ERO’s professional practice strategy Quality evaluation is ERO’s lifeblood. ERO is developing a profession of highly skilled evaluators, fully equipped for the challenges of the role in the 21st century. This means ERO’s review officers will have the right mix of knowledge and skills, work in a highly supportive environment, and have access to modern tools and resources.

ERO’s professional practice strategy provides a framework for a multi-faceted approach to developing leadership and evaluation practice in the field.

The development of professional pathways has continued, with an increase in the number of evaluators participating in post graduate qualifications in evaluation at the University of Melbourne.


The National Professional Practice Forum provided an opportunity for reviewers and evaluators to engage with key international and national leaders in the fields of education and evaluation.

ERO reviewers also attended workshops focused on key domains of the School Evaluation Indicators at ERO’s Professional Forum. These workshops were led by the academics involved in the development process.

In 2016/17, ERO published the report Capabilities for High Quality Education Evaluation in Aotearoa New Zealand. The capabilities framework defines the capabilities that are needed to undertake and deliver high quality education evaluations.

ERO also completed the draft report, Principles of Practice for High Quality External Education Evaluation in Aotearoa New Zealand. The principles of practice complete the suite of publications designed to promote and support improved professional practice in ERO.

During the year, ERO’s professional practice leaders participated in international and national evaluation institutes focused on evaluation methodology and practice.

ERO’s evaluation expertise continues to be recognised through an increased demand for presentations in international and national contexts.

ERO’s corporate capability and supporting infrastructure

ERO continues to develop its corporate capability and infrastructure. ERO aims to apply its operating model principles in managing change projects. ERO’s infrastructure needs to support high quality professional evaluation practice but, as a relatively small government department, it looks to leverage off the assets of other education agencies where possible.

During the review period, ERO:

developed its programme co-ordination role

commenced development of a model to improve the use of available data for scheduling

reframed ERO’s ICT management approach focusing on collaboration with other agencies

continued to evolve its performance measurement framework with input from the Treasury

reviewed the ERO Code of Conduct

conducted another staff survey, using the Gallup Q12 methodology to measure employee engagement.

ERO’s Executive Leadership Team is responsible for identifying, assessing and managing key strategic and operational risks by reference to an organisational risk management framework.

In 2016/17, ERO’s risk and assurance framework continued to evolve to reflect changes in ERO’s organisational strategy. The integration of national quality assurance findings into the national professional learning and development programme is contributing to the quality and consistency of evaluation practice. ERO intends to continue this programme of regular internal reviews to identify and guide further improvements.

ERO remains committed to integrating equality and diversity into all aspects of its business. The Te Uepū ā-Motu hui (for all staff of Māori descent) and Fono Pacifika forum (for staff of Pacific descent) are examples of ERO’s commitment to equal employment opportunities.

In line with the Public Service Equal Employment Opportunities Policy, ERO strives to:

treat people fairly and with respect, ensuring equality of access to opportunities (equality)

understand, appreciate and realise the benefits of individual differences (diversity).

ERO remains committed to equality and diversity in all aspects of its business. Its gender pay gap in 2017 was 9.7 percent. Just under 78 percent of our staff are female. More than 20 percent of ERO’s workforce identify as Māori.

ERO is subject to Cabinet Circular (16) 3 issued on 25 May 2016, which sets out requirements for the implementation of the New Zealand Business Number (NZBN) by the end of December 2018. ERO is well advanced in implementing these requirements. ERO has completed a review of its business-facing systems, processes and forms to incorporate NZBN. As a result of this review, finance and other systems have been


updated to recognise NZBN. Also ERO’s website and forms such as letterheads have been amended to show ERO’s NZBN.

Relationship with the Public Service Association

In 2016/17, ERO completed negotiations for a new collective employment agreement, expiring in June 2019.

ERO and the PSA continue to meet regularly at national and local levels as part of the working relationship agreement. Both parties find these meetings useful.


Measuring performance

Quality of education reports and services

ERO posts its reports on system-wide performance and issues on its website. It also provides copies of selected reports directly to schools and services. For reports of particular interest, ERO issues media releases and conducts media interviews. It also shares and discusses report findings with education sector groups at regular liaison meetings, conferences and workshops.

ERO discusses draft national evaluation findings on system-level issues with the Ministry and other agencies. It discusses its recommendations to ensure they are well understood and contribute to improvements.

ERO uses surveys to measure the effectiveness and utility of national evaluations.

How effective were ERO’s national education evaluations?

ERO’s national evaluations are intended to promote debate and influence change in the education system. The national evaluation programme is designed to provide topical, timely, and practical recommendations. The national evaluations of good practice are used by the following groups:

the Ministry and other government agencies to establish priorities, target resources and plan interventions

schools and early learning services to inform and improve their own practice

parents and whānau as a source of information, knowledge and understanding

initial teacher education providers and in professional learning and development programmes.

Table 1: ERO’s national evaluation programme performance 2016/17

ERO’s national evaluation programme currently delivers up to 20 reports each financial year. In 2016/17, 15 reports published were as follows:

To evolve ERO’s evaluation methodologies, approaches and programme

Partners in Learning (August 2016)

An Evaluation of Stand Children's Services: Children's Villages (September 2016)

Early Learning Curriculum (October 2016)

Child Youth and Family Residential Schools (November 2016)

Extending Their Language - Expanding Their World: Children’s Oral Language (Birth-8 years) (February 2017)

School Trustees Booklet: Helping You Ask the Right Questions (February 2017)

Actual

2015/16

Education Review Office Performance Measures

Quality of Education Reports and Services

Actual

2016/17

Budget

2016/17

System-wide evaluations and related services

14 Number of national education evaluations 15 up to 20

100%Education evaluations are consistent with approved plans and

procedures100% 100%

New

measure

Key audiences report that ERO's evaluations are informative and

useful for identifying or planning improvements within the system or

its component parts

90% 80%-100%


Food, Nutrition and Physical Activity in NZ Schools and Early Learning Services (April 2017)

He Pou Tātaki: How ERO Reviews Hospital-Based Education and Care Services (June 2017)

To support collaborative effort across the system

Communities of Learning | Kāhui Ako: Collaboration to Improve Learner Outcomes (January 2017)

Communities of Learning | Kāhui Ako in Action (January 2017)

Communities of Learning | Kāhui Ako: Working Towards Collaborative Practice (January 2017)

To embed the evaluation indicators

School Evaluation Indicators (July 2016)

School Leadership That Works (November 2016)

Effective Internal Evaluation for Improvement (December 2016)

To build internal evaluation practice across the system

Appraisal as a Catalyst for Improved Learner Outcomes (December 2016)

All 15 reports were produced in accordance with approved plans and procedures.

Every year, ERO surveys one or more audiences to help assess how useful its national education evaluation reports have been for identifying or planning improvements. For 2016/17, staff and managers of early childhood education services were asked about five different ERO reports. A 90 percent positive response was received from those who had read one or more of these reports.

National education evaluations provide information on significant education issues and education sector performance. The information for these evaluations is gathered from the institutional evaluations carried out by ERO or by specialist ERO teams for particular topics.


Accountability reviews - early childhood education services, schools and other education service providers ERO provides assurance on the quality of education provided by early childhood education services, schools and other education service providers.

An ERO evaluation looks at how an early learning service or school reaches positive learning outcomes as expressed in knowledge, skills, attitude and habits. ERO is interested in what is working well and where improvements can be made.

ERO evaluations provide information for individual early learning services, schools, communities and the Government. The funding appropriation for this includes the following Departmental Output Expense categories.

Early childhood education services

This category is limited to evaluations of the performance of early childhood education services.

Schools and other education service providers

This category is limited to evaluations of the performance of schools and other education service providers.

During 2016/17, ERO’s teams evaluated the performance of 1,217 early learning services / Kōhanga reo and 700 schools /kura. For each evaluation, ERO’s aim was to engage in a meaningful review process and make sound judgements about performance. ERO used a range of evaluation techniques to collect feedback and effectiveness data about the capability of early learning services and schools.

In its reports, ERO aims to highlight performance issues and to communicate them accurately, clearly and concisely for all stakeholders. In the vast majority of cases, ERO was able to report a positive evaluation finding or review outcome.

Table 2: Evaluations of education service providers 2016/17

* The State Service Commission changed its survey reporting period from a financial year to a calendar year in

2016/17. The reported number for 2015/16 has been restated for the survey period change.

ERO’s review teams completed 1,950 accountability reviews in 2016/17. The total number of evaluations includes those for early childhood education services, state schools, private schools and home schools. Evaluations are accounted for in the year in which the ERO report is published.

ERO’s external evaluation process works with an early learning service or school’s own internal evaluation processes. It also supports a culture of ongoing improvement.

Actual

2015/16


Accountability Reviews

Actual

2016/17

Budget

2016/17

Evaluations of education service providers

New

measure

Total number of evaluations of education service providers (includes

evaluations of Early Child Education Services, Schools and other

providers)

1,950 >1,850

New

measure

Percentage of education service providers that indicate ERO's

evaluations are making a contribution to their decisions about how

to improve learner outcomes

85% 80%-100%

73 Public satisfaction with ERO's services (Kiwis Count score*) 74 70


A final report is published on the ERO website once the external evaluation process is complete and the early childhood service or school has had a chance to take in and discuss the results. This enables parents, whānau, families and the wider community to know about the teaching and learning at each individual early childhood service and school.

During the course of the year, school principals, trustee board chairs and early childhood education (ECE) managers have used our post-evaluation survey questionnaires to provide valuable feedback about where the ERO process works well and where it can be improved. ERO uses this feedback for its own learning and the professional development of its teams.

In the 2016/17 year, 85 percent of respondents to our surveys indicated that ERO’s evaluations had made, or were likely to make, a contribution to their decisions about how to improve learner outcomes. The responses received often included comments which show a strong appreciation of ERO’s work and an acknowledgement of its positive impact. For schools, the positive response was 86 percent. For early learning services, it was 83 percent. Adjusting for the respective sample sizes, the overall positive response rate was 85 percent.

The public satisfaction measure is from the Kiwis Count survey carried out by the State Services Commission (SSC). It assesses the level of satisfaction with ERO’s school and ECE evaluation reports. ERO’s results for the 2015 and 2016 calendar years were 73 and 74 (out of 100) respectively. This is a sound result but one which it will need to work hard to maintain.

Evaluations of early childhood education services

ERO used the following performance measures for the category Accountability Reviews – Early Childhood Education Services for the year ended 30 June 2017. This category is limited to evaluations of the performance of early childhood education services.

Table 3: Evaluations of early childhood education services

During 2016/17, ERO’s teams evaluated the performance of 1,217 early childhood education services and Kōhanga reo. ERO’s review teams make judgements by reference to established criteria which are detailed in its guidance, methodologies and effective practice indicators. In recent years, the finding of an evaluation has determined the length of time before ERO returns for its next evaluation.

ERO uses a national moderation panel to determine the levels of compliance against internal standard procedures. Moderation findings are followed up in quality assurance guidelines and processes. At 96 percent compliance, ERO’s moderation result was within the target range for 2016/17.

Actual

2015/16



Actual

2016/17

Budget

2016/17

Early Childhood Education Services

1,259 Number of early childhood education services evaluations 1,217 1,200-1,460

98% 96% 90%-100%

85%, 96%

and 100%

respectively

74%, 90%

and 98%

respectively

80%, 90%

and 98%

respectively

New

measure 83% 80%

ERO uses a moderation panel to assess levels of compliance with

approved standard procedures for a sample of education review reports

of early childhood education services

Percentages of draft (near final) findings sent to early childhood

education services for confirmation of accuracy and comment will meet

target for reporting to the Minister within 20, 25 and 35 working days

of the end of the last week on site

Percentage of early childhood services evaluated that indicate that ERO's

evaluations are making a contribution to their decisions about how

to improve learner outcomes


ERO also monitors the timeliness and consistency of its reporting to early learning services / Kōhanga reo and schools/kura. Unconfirmed (near-final) reports are sent to service providers for comment on any issues of fact or matters relating to findings. The timeliness criteria require 80 percent of near-final reports to be sent within 20 working days of the end of the last week on site, 90 percent of near-final reports within 25 working days, and 98 percent of near-final reports within 35 working days.

In 2016/17, ERO did not meet all its timeliness criteria for early learning services reports. In some cases staff non-availability, largely because of ill health, affected ERO’s ability to meet the criteria. In other cases, time was a lesser consideration relative to other aspects of quality. ERO’s work was also impacted by the November 2016 earthquake, which required us to permanently vacate one of our damaged premises.

As already reported, 83 percent of early learning services staff who completed our post evaluation survey indicated that ERO’s external evaluation had made, or were likely to make, a contribution to their decisions about how to improve learner outcomes.

ERO’s early childhood methodology described in the publication, He Pou Tātaki – How ERO reviews early learning services, focuses attention on the quality and effectiveness of services’ internal evaluation and on the capacity of the service to promote positive learning outcomes for all children.

Since 2013, ERO has used the following differentiated judgements and timing:

Very well placed - the next ERO review will be in four years

Well placed - the next ERO review will be in three years

Requires further development - the next ERO review will be within two years

Not well placed - the next ERO review in consultation with the Ministry.

ERO monitors changes in the status of individual services. In 2016/17, 89 percent of ECEs that had ‘required further development’ in their previous review had improved sufficiently to move to “well-placed”. This means a relatively high number of these services will now have their next review after three years.

At the end of 2016/17, there were about 4,600 early childhood education services in New Zealand’s early learning sector.

Evaluations of schools and other education service providers

ERO used the following performance measures for the category Accountability Reviews – Schools and Other Education Service Providers for the year ended 30 June 2017. This category is limited to evaluations of the performance of schools and other education service providers.

ERO adopts an approach to external evaluation of schools which is designed to build each school’s internal evaluation capability and encourage them to establish a cycle of ongoing improvement.

Evaluation reports for state schools and kura inform the Crown, the governing bodies of schools, their staff and parents about the quality of education and management practices.


Table 4: Evaluations of schools and other education service providers

During 2016/17, ERO published 700 evaluation reports for state schools and kura and completed nine homeschooling reviews and 24 private school reviews. These outputs were within target ranges.

ERO’s reviews of privately-owned schools are different from those undertaken for state and state-integrated schools, and for kura. For private schools, ERO’s primary focus is on how well the school meets the criteria for registration as a private school as required under section 35I and Part 28 of the Education Act 1989.

Homeschooling reviews are reviews of programmes for students granted exemption from attendance at school, and are carried out at the request of the Ministry. ERO met these demands and supplied the requested reviews to the Ministry.

For evaluations of state schools, unconfirmed (near-final) reports are sent to school boards for comment on any issues of fact or matters relating to findings. The timeliness criteria require 80 percent of near-final reports to be sent within 20 working days of the end of the last week on site, 90 percent of near-final reports within 25 working days, and 98 percent of near-final reports within 35 working days.

In 2016/17, ERO did not meet the timeliness criteria for schools for all three categories. This is due to the introduction of the new approach to accelerating student achievement in primary schools (2016) and intermediate schools and area schools (from January 2017). ERO has carefully embedded its new approach and this has meant additional time for moderation. Also ERO’s work was also impacted by the November 2016 earthquake.

ERO has continued to undertake its own surveys to determine, among other things, the extent to which schools have used the external evaluation process to make improvements.

ERO developed a new post-evaluation questionnaire for use from July 2016 which includes feedback from school leaders about the effectiveness of our external evaluations. As already reported, 86 percent of responses from school principals, staff and boards indicate that ERO’s external evaluation in 2016/17 had made, or was likely to make, a positive contribution to their decisions about how to improve learner outcomes.

Actual

2015/16



Actual

2016/17

Budget

2016/17

School and other education service providers

678 Total number of state schools education reviews 700 650-840

4 Number of homeschooling education reviews 9 Up to 35

20 Number of private school education reviews 24 Up to 25

93% 99% 90%-100%

75%, 88%

and 96%

respectively

56%, 77%

and 92%

respectively

80%, 90%

and 98%

respectively

New

measure 86% 80%-100%

84 Number of Communities of Learning reports 73 Up to 100

100%Communities of Learning reports are consistent with approved

presentational standards and agreed terms of reference100% 100%

Percentage of schools that indicate that ERO's evaluations are making

a contribution to their decisions about how to improve learner outcomes

ERO uses a moderation panel to assess levels of compliance with

approved standard procedures for a sample of education review

reports of schools and other education service providers

Percentages of draft (near final) findings sent to schools and

other education service providers for confirmation of accuracy and

comment will meet target for reporting to the Minister within 20, 25

and 35 working days of the end of the last week on site


In 2016/17, ERO completed 73 reports for CoL | Kāhui Ako to support the Government’s IES initiative. These include tailored reports for each community and bespoke reports for schools receiving the Principal Recruitment Allowance.

ERO evaluates how each school’s programmes, processes and teaching promote positive outcomes for learners, and how effectively the school focuses on improvement and accelerated student achievement. The differentiated review categories for schools are as follows:

the one to two year return category describes those schools where ERO’s longitudinal review processes are supporting them to develop their self-review capacity so that they can develop strategies to focus on and improve student achievement

the three year return category describes those schools that have established effective processes for student engagement, progress and achievement

the four to five year return category describes those schools who can consistently demonstrate sustained student engagement, progress and achievement.

In recent years, the finding of an evaluation has determined the length of time before ERO returns for its next evaluation. A relatively positive finding of sustainable improvement has generally resulted in a longer period (four or five years) before the next ERO evaluation. If material issues reducing school performance exist and these are having a negative impact on learning outcomes a longitudinal review is scheduled over the next one to two years.

In 2016/17, the overall picture for the evaluations of schools was that more schools improved following a one to two year return process than has previously been the case. However, fewer schools improved to a four to five year return (from a three year return process) than has been the norm over recent years.

In 2016/17, the New Zealand Council for Educational Research (NZCER) completed its survey of primary school principals. The survey, expected to be published later this year, revealed the following:

most principals were positive about their interactions with ERO and ERO reviews

many principals had used their last ERO review report in their strategic planning, and made changes in their school as a result of ERO’s national reports

principals of schools currently on a four to five year return were more likely to strongly agree that their last ERO review had focused on goals or progress towards those goals

higher proportions of principals whose schools were on the four to five year review cycle strongly agreed that ERO reports were reliable in their view of teaching/learning quality and of school improvement capacity.


ERO’s evaluation status analysis for schools From 1 July 2012 to 30 June 2017, ERO has conducted more than 3,700 evaluations of state (and state-integrated) primary, intermediate and secondary schools. Over that time, the number of schools across the country has varied between 2,400 and 2,500. This means many schools have had more than one evaluation in the five year period and a small number of poor performing schools have had three ERO evaluations during that period.

The graphs below show the total evaluation outcomes from all evaluation categories over the 5 year period.

A breakdown of all school evaluations by ERO evaluation category and outcome is provided on the following page. For the purpose of this analysis, information about primary/intermediate schools and secondary schools has been shown separately. The secondary school category includes composite schools with students in Year 9 and above, teen parent units and other special units catering for young adult learners.


Over the period, about 68 percent of the evaluations under the 1-2 year review category found that the school’s performance had improved sufficiently for it to be moved to the 3 year return category. However, almost a third of these 1-2 year reviews lead to a continuation of the 1-2 year review process for the schools concerned.

About 77 percent of the 3 year reviews resulted in no change in status for the schools with the next review scheduled in another three years’ time. For about 12 percent of these reviews the school showed sufficient progress to be moved to the 4-5 year return category. Ten percent were assessed as needing to move down to the one to two year return cycle.

All 1-2 year reviews completed 428

1-2 year review 131 31%

3 year return 293 68%

4-5 year return 1 0%

new school / special review 3 1%

All 3 year evaluations completed 2,839


3 year return 2,191 77%



All 4-5 year evaluations completed 402





Other (new school, special etc) 56





All evaluations completed 3,725


3 year return 2,689 72%



Movements between ERO Evaluation Return Time Categories

1 July 2012 - 30 June 2017 (5 year period)

31%

68%

10%

77%

12%

2%

45%

52%

12%

72%

15%


In the 4-5 year category, 54 percent (209 out of 402 school evaluations) led to another decision by ERO to return in four to five years. The rate for secondary schools was higher than in primary schools. Conversely, 45 percent (181 schools) did not sustain their performance to a level which warranted maintenance of the four to five year return and a decision was taken to return in three years. Unfortunately, 10 schools (about 2 percent of this group) had struggled with material issues and were moved from the four to five year cycle down to the one to two year cycle.

Position at July 2017

There were 190 schools were in ERO’s 1-2 year review category, and 500 schools were in the 4-5 year return category.

Based on school roll data from the Ministry of Education the 190 poor performing schools have a combined roll of around 34,000 students while the 500 schools most recently assessed as performing very well have a combined roll of about 267,000. A total of 455,000 students attend schools in the 3 year return category.

The graphs below highlight the position in July 2017.

The number of schools excludes some special schools and activity centres for which roll data is unavailable.

1-2 year 8%

3 year70%

4-5 year21%

Other1%

ERO Review Status at July 2017(proportion of schools)

2,400Schools

1-2 year 4%

3 year60%

4-5 year35%

Other1%

ERO Review Status at July 2017(proportion of students)

761,000students


Financial Statements and Service Performance

Statement of Responsibility

I am responsible, as Chief Executive of the Education Review Office (ERO), for:

the preparation of ERO’s financial statements, and statements of expenses and capital expenditure, and for the judgements expressed in them;

having in place a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting;

ensuring that end-of-year performance information on each appropriation administered by ERO is provided in accordance with section 19A to 19C of the Public Finance Act 1989 included in this annual report; and

the accuracy of any end-of-year performance information prepared by ERO included in this annual report.

In my opinion:

the financial statements fairly reflect the financial position of ERO as at 30 June 2017 and its operations for the year ended on that date; and

the forecast financial statements fairly reflect the forecast financial position of ERO as at 30 June 2018 and its operations for the year ending on that date.

Nicholas Pole Chief Executive

29 September 2017


Independent Auditor’s Report

To the readers of Education Review Office’s annual report for the year ended 30 June 2017

The Auditor-General is the auditor of Education Review Office (the Department). The Auditor-General has

appointed me, Mari-Anne Williamson, using the staff and resources of Audit New Zealand, to carry out, on his

behalf, the audit of:

the financial statements of the Department on pages 40 to 57, that comprise the statement of

financial position, statement of commitments, statement of contingent liabilities and contingent

assets as at 30 June 2017, the statement of comprehensive revenue and expense, statement of

changes in equity, and statement of cash flows for the year ended on that date and the notes to the

financial statements that include accounting policies and other explanatory information;

the performance information prepared by the Department for the year ended 30 June 2017 that

comprises the report on strategic outcomes on pages 18 to 27 and the statements of service

performance on pages 33 to 39; and

the statements of expenses and capital expenditure of the Department for the year ended 30 June

2017 on page 58.

Opinion

In our opinion:

the financial statements of the Department on pages 40 to 57:

present fairly, in all material respects:

its financial position as at 30 June 2017; and

its financial performance and cash flows for the year ended on that date; and

comply with generally accepted accounting practice in New Zealand in accordance with

the Public Benefit Entity Standards Reduced Disclosure Regime.

the performance information of the Department on pages 18 to 27 and 33 to 39:

presents fairly, in all material respects, for the year ended 30 June 2017:

what has been achieved with the appropriation; and

the actual expenses or capital expenditure incurred compared with the

appropriated or forecast expenses or capital expenditure; and


complies with generally accepted accounting practice in New Zealand.

the statements of expenses and capital expenditure of the Department on page 58 are presented

fairly, in all material respects, in accordance with the requirements of section 45A of the Public

Finance Act 1989.

Our audit was completed on 29 September 2017. This is the date at which our opinion is expressed.

The basis for our opinion is explained below. In addition, we outline the responsibilities of the Chief Executive

and our responsibilities relating to the information to be audited, we comment on other information, and we

explain our independence.

Basis for our opinion

We carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the

Professional and Ethical Standards and the International Standards on Auditing (New Zealand) issued by the

New Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further

described in the Responsibilities of the auditor section of our report.

We have fulfilled our responsibilities in accordance with the Auditor-General’s Auditing Standards.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Responsibilities of the Chief Executive for the information to be audited

The Chief Executive is responsible on behalf of the Department for preparing:

financial statements that present fairly the Department’s financial position, financial performance,

and its cash flows, and that comply with generally accepted accounting practice in New Zealand;

performance information that presents fairly what has been achieved with each appropriation, the

expenditure incurred as compared with expenditure expected to be incurred, and that complies with

generally accepted accounting practice in New Zealand; and

statements of expenses and capital expenditure of the Department, that are presented fairly, in

accordance with the requirements of the Public Finance Act 1989.

The Chief Executive is responsible for such internal control as is determined is necessary to enable the

preparation of the information to be audited that is free from material misstatement, whether due to fraud or

error.

In preparing the information to be audited, the Chief Executive is responsible on behalf of the Department for

assessing the Department’s ability to continue as a going concern. The Chief Executive is also responsible for

disclosing, as applicable, matters related to going concern and using the going concern basis of accounting,

unless there is an intention to merge or to terminate the activities of the Department, or there is no realistic

alternative but to do so.

The Chief Executive’s responsibilities arise from the Public Finance Act 1989.


Responsibilities of the auditor for the information to be audited

Our objectives are to obtain reasonable assurance about whether the information we audited, as a whole, is

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes

our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit carried out in

accordance with the Auditor-General’s Auditing Standards will always detect a material misstatement when it

exists. Misstatements are differences or omissions of amounts or disclosures, and can arise from fraud or error.

Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected

to influence the decisions of readers, taken on the basis of the information we audited.

For the budget information reported in the information we audited, our procedures were limited to checking

that the information agreed to the Department’s Strategic Intentions 2016-2020 and the Estimates and

Supplementary Estimates of Appropriations 2016/17 for Vote Education Review Office, and the 2016/17

forecast financial figures included in the Department’s 2015/16 Annual Report.

We did not evaluate the security and controls over the electronic publication of the information we audited.

As part of an audit in accordance with the Auditor-General’s Auditing Standards, we exercise professional

judgement and maintain professional scepticism throughout the audit. Also:

We identify and assess the risks of material misstatement of the information we audited, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and obtain

audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error, as

fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of

internal control;

We obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Department’s internal control;

We evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the Chief Executive;

We evaluate the appropriateness of the reported performance information within the Department’s

framework for reporting its performance;

We conclude on the appropriateness of the use of the going concern basis of accounting by the Chief

Executive and, based on the audit evidence obtained, whether a material uncertainty exists related

to events or conditions that may cast significant doubt on the Department’s ability to continue as a

going concern. If we conclude that a material uncertainty exists, we are required to draw attention

in our auditor’s report to the related disclosures in the information we audited or, if such disclosures

are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up

to the date of our auditor’s report. However, future events or conditions may cause the Department

to cease to continue as a going concern; and

We evaluate the overall presentation, structure and content of the information we audited,

including the disclosures, and whether the information we audited represents the underlying

transactions and events in a manner that achieves fair presentation.


We communicate with the Chief Executive regarding, among other matters, the planned scope and timing of

the audit and significant audit findings, including any significant deficiencies in internal control that we identify

during our audit.

Our responsibilities arise from the Public Audit Act 2001.

Other information

The Chief Executive is responsible for the other information. The other information comprises the information

included on pages 3 to 17 and 28, but does not include the information we audited, and our auditor’s report

thereon.

Our opinion on the information we audited does not cover the other information and we do not express any

form of audit opinion or assurance conclusion thereon.

In connection with the information to be audited, our responsibility is to read the other information. In doing

so, we consider whether the other information is materially inconsistent with the information we audited or

our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on our work,

we conclude that there is a material misstatement of this other information, we are required to report that

fact. We have nothing to report in this regard.

Independence

We are independent of the Department in accordance with the independence requirements of the

Auditor-General’s Auditing Standards, which incorporate the independence requirements of Professional and

Ethical Standard 1 (Revised): Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and

Assurance Standards Board.

Other than in our capacity as auditor, we have no relationship with, or interests, in the Department.

Mari-Anne Williamson

Audit New Zealand

On behalf of the Auditor-General

Wellington, New Zealand


Service Performance for the year ended 30 June 2017

The following service performance information outlines, for each output class, the actual performance measured against quality, quantity, timeliness specifications and cost. The results for the year ended 30 June 2017 are reported against the forecast information contained in the Estimates of Appropriation 2016/17 and of those as amended by the Supplementary Estimates. Explanations of major variations from the Estimates of Appropriation 2016/17 are included.

Output class: Accountability Reviews (Multi-Category Expenses) – Early Childhood Education Services

This class of outputs involves reporting on the performance of early childhood education services. These reviews include education reviews of early childhood education services. Education reviews in the early childhood education sector focus on:

how services are contributing to children’s learning and development

whether or not services are providing a safe environment that promotes children’s safety and wellbeing

national evaluation topics.

Review reports inform the Crown, the governing bodies of services, their staff and parents about the quality of education and management practices.

Quantity, quality and timeliness

ERO estimated and provided the following numbers of Accountability Reviews – Early Childhood Education Services for the year ended 30 June 2017:

Actual

Timeliness

2015/16

%

Reviews of Early Childhood Education

Services - Timeliness of Unconfirmed

Reports

Actual

Timeliness

2016/17

%

Forecast

Timeliness

Standard

2016/17

%

85 20 working days 74 80



Education Reviews - ECE Services unconfirmed report sent

within:

Actual

2015/16


Services

Actual

2016/17

Estimated

2016/17

1,259 Number of Education Reviews – ECE Services 1,217 1,200-1,460

Quality

98% ERO uses a moderation panel to assess levels of

compliance with approved standard procedures for a

sample of early childhood education service

evaluations

96% 90-100%


Unconfirmed (near final) reports are sent to early childhood service providers for comment on any issues of fact or matters relating to findings. The timeliness criteria require 80 percent of near-final reports to be sent within 20 working days of the end of the last week on site, 90 percent of near final reports within 25 working days, and 98 percent of near-final reports within 35 working days.

ERO did not meet all the timeliness criteria for early learning services in one category. In some cases staff non-availability (for example, because of ill health) affected ERO’s ability to meet the timeliness criteria. In other cases, time was a lesser consideration relative to other aspects of quality. ERO’s work was also impacted by the November 2016 earthquake, which required us to permanently vacate one of our damaged premises.

Revenue and expenses

The cost of services for Accountability Reviews – Early Childhood Education Services for the year ended 30 June 2017 was:

There are no major variances against budget for this output class.

Performance against appropriation

ERO used the following performance measures for Accountability Reviews – Early Childhood Education Services for the year ended 30 June 2017.

Note 1: This measurement is dependent on the cycle of reviews in any given year.

Actual

2015/16

%

Education Reviews of Early Childhood

Education Services (ECEs) - PerformanceNote

Actual

2016/17

%

Forecast

Standard

2016/17

%

New

measure

% of early childhood services providers that indicate

ERO's evaluations are making a contribution to their

decisions about how to improve learner outcomes.

83% 80%

96% % of early childhood services evaluated previously

within the 2 year review cycle moving to the 3 year

review cycle

1 89% 60%-65%

Actual

2015/16

$000


Services - Revenue and Expenses

Actual

2016/17

$000

Unaudited

Budget

2016/17

Main

Estimates

$000

Unaudited

Budget

2016/17

Supp.

Estimates

$000

Revenue

9,477 Revenue Crown 9,307 9,388 9,307

14 Other Revenue 19 15 17

9,491 Total Revenue 9,326 9,403 9,324

9,432 Total Expenses 9,157 9,403 9,354


Output class: Accountability Reviews (Multi-Category expenses) – Schools and Other Education Service Providers

This class of outputs involves reporting on the performance of schools and other education service providers (excluding early childhood). These reviews include:

education reviews of state schools – primary and secondary

homeschooling reviews

private school reviews.

Education reviews address the following areas:

student learning – engagement, progress and achievement as a central focus

compliance issues

national evaluation topics.

Homeschooling reviews are reviews of programmes for students granted exemption from attendance at school. They are carried out at the request of the Ministry.

Private school reviews are carried out in order to meet the statutory requirement to review registered private schools under section 35I and Part 28 of the Education Act 1989.

Review reports inform the Crown, the governing bodies of schools, their staff and parents about the quality of education and management practices.


ERO estimated and provided the following numbers of Accountability Reviews – Schools and Other Education Service Providers for the year ended 30 June 2017:

Note 2: Homeschooling reviews are carried out at the request of the Ministry. ERO met these demands and supplied the requested reviews to the Ministry.

Actual

2015/16

Education Reviews of Schools and other

providersNote

Actual

2016/17

Estimated

2016/17

678 Education Reviews of State Schools 700 650-840

4 Homeschooling Reviews 2 9 Up to 35

20 Private School Reviews 24 Up to 25

Quality

93% ERO uses a moderation panel to assess levels of

compliance with approved standard procedures for a

sample of schools and other education service

providers evaluations

99% 90% -100%

84 Number of Communities of Learning reports 73 Up to 100

Quality

100% Communities of Learning reports are consistent with

approved presentational standards and agreed terms

of reference

100% 100%


Unconfirmed (near final) reports are sent to schools for comment on any issues of fact or matters relating to findings. The timeliness criteria require 80 percent of near-final reports to be sent within 20 working days of the end of the last week on site, 90 percent of near-final reports within 25 working days, and 98 percent of near-final reports within 35 working days.

ERO did not meet the timeliness criteria for schools for all three categories. This is due to the introduction of the new approach to accelerating student achievement in primary schools in 2016 and intermediate schools and area schools from January 2017. ERO has carefully embedded this new approach with additional moderation. Also ERO’s work was also impacted by the November 2016 earthquake.


The cost of services for Accountability Reviews – Schools and Other Education Service Providers for the year ended 30 June 2017 was:

There are no major variances against budget for this output class.

Actual

Timeliness

2015/16

%

Education reviews of Schools and Other

Providers - Timeliness of Unconfirmed

Reports

Actual

Timeliness

2016/17

%

Forecast

Timeliness

Standard

2016/17

%

Education Reviews of State Schools

unconfirmed report sent within:




Homeschooling Reviews





Private School Reviews





Actual

2015/16

$000


providers - Revenue and Expenses

Actual

2016/17

$000

Unaudited

Budget

2016/17

Main

Estimates

$000

Unaudited

Budget

2016/17

Supp.

Estimates

$000

Revenue

14,845 Revenue Crown 14,847 14,818 14,848

31 Other Revenue 36 34 37

14,876 Total Revenue 14,883 14,852 14,885

14,762 Total Expenses 14,720 14,852 14,931


Performance against appropriation

ERO monitors the following measures for Accountability Reviews – Schools and other education service providers for the year ended 30 June 2017.

Output class: Quality of Education Reports and Services

This class of outputs comprises:

education evaluation reports

policy services

ministerial services

contractual services.

Every year, ERO reports on matters such as delivery of the curriculum, governance and management structures, student achievement, delivery of teaching services and barriers to learning across a number of institutions. These education evaluations may also include case studies of good practice.

Education evaluation reports tend to follow specific themes. A theme may arise out of the Government’s education initiatives or may surface as an issue of strategic importance identified by ERO in its reviews of schools and early childhood education services.

ERO is not primarily a provider of policy advice. From its regular presence in schools and early childhood services it is, however, in a position to make a useful contribution to assist the policy agencies. This service contributes to the Government’s policy priorities for schools and early childhood education service providers.

Ministerial services also include advice to the Minister on the implementation of recommendations arising from institutional evaluations and evaluation reports, or any other matter on which the Minister seeks additional information or feedback.

Contractual services include one-off reviews of institutions (or certain aspects of them), and analyses of particular matters under specific terms of reference agreed with ERO. Contractual reviews are conducted on a fee-for-service basis.

Policy services, ministerial and contractual services are subject to external demand factors making these activities difficult to forecast. No assessments of performance have been reported for these services as these activities only account for less than 10 percent of ERO's total appropriation and, therefore, are not deemed to be material.

Actual

2015/16

%


providers - PerformanceNote

Actual

2016/17

%

Forecast

Standard

2016/17

%

New

measure

% of schools that indicate that ERO's evaluations are

making a contribution to their decisions about how to

improve learner outcomes

86% 80%

62%% of schools evaluated previously on the 1-2 year

review cycle moving to the 3 year review cycle1 78% 60-65%

14%% of schools evaluated previously on the 3 year

review cycle moving to the 4-5 year review cycle1 7% 12-15%



ERO estimated and provided the following numbers of Quality of Education Reports and Services for the year ended 30 June 2017:

Note 3: This measure was based from a sample of ECEs having confirmed ERO reports between July 2016 and March 2017.

Note 4: This measure is from the Kiwis Count survey carried out by the SSC. It assesses the level of public satisfaction with ERO’s school and ECE evaluation reports. During this financial year, the SSC changed its survey reporting period from a financial year to a calendar year base. The reported number for 2015/16 actual has been restated for the survey period change.


The cost of services for Quality of Education Reports and Services for the year ended 30 June 2017 was:

Other revenue received for contractual services was $201,000 above budget due to higher levels of activity than anticipated. Total expenses were also above budget due mainly to an increase in expenditure associated with contractual services for which ERO received revenue.

Actual

2015/16National Evaluation Services Note

Actual

2016/17

Estimated

2016/17

14 Number of education evaluation reports 15 Up to 20

Quality

100%Education evaluations are consistent with approved

plans and procedures100% 100%

New

measure

Key audiences report that ERO's evaluations are

informative and useful for identifying or planning

improvements within the system or its component parts3 90% 80% -100%

73 Level of public satisfaction (score out of 100) 4 74 70

Actual

2015/16

$000

National Evaluation Reports -

Revenue and Expenses

Actual

2016/17

$000

Unaudited

Budget

2016/17

Main

Estimates

$000

Unaudited

Budget

2016/17

Supp.

Estimates

$000

Revenue

2,792 Revenue Crown 2,902 2,907 2,902

1,433 Other Revenue 752 551 1,374

4,225 Total Revenue 3,654 3,458 4,276

4,338 Total Expenses 4,000 3,458 4,285


Capital expenditure (Permanent Legislative Authority)

Description

Assets are purchased according to a planned assets replacement programme to maintain and upgrade capability essential to the operation of ERO. The major areas of capital investment for ERO are office accommodation, motor vehicles and computer equipment. ERO is not a capital intensive department.

Capital expenditure was below budget mainly due to the timing of two building fit-outs carried forward into 2017/18.

Actual

2015/16 Capital Expenditure - Performance

Actual

2016/17

Unaudited

Budget

2016/17

Main

Estimates

Unaudited

Budget

2016/17

Supp.

Estimates

71%Expenditure is in accordance with ERO's capital

expenditure plan28% 75% -100% 75% -100%


Statement of Comprehensive Revenue and Expense for the year ended 30 June 2017

Explanations of major variances against the original 2016/17 budget are provided in the Notes to the Financial Statements.

__________________________________________________________________________________________

Statement of Changes in Equity for the year ended 30 June 2017


The Statement of Accounting Polices and the Notes to the Financial Statements form part of these Financial Statements.

Actual

2015/16

$000

Comprehensive Revenue and Expense NoteActual

2016/17

$000

Unaudited

Budget

2016/17

$000

Unaudited

Forecast

2017/18

$000

Revenue

27,114 Revenue Crown 27,056 27,113 27,885

1,485 Other Revenue 1 824 600 835

28,599 Total Revenue 27,880 27,713 28,720

Expenses

20,739 Personnel 2 20,197 20,521 21,530

6,834 Other Expenses 3 6,515 5,895 5,962

717 Depreciation and Amortisation 5,6 891 997 1,002

300 Capital Charge 4 243 300 226

28,590 Total Expenses 27,846 27,713 28,720

9 Surplus 34 0 0

0 Other comprehensive revenue and expense 0 0 0

9 Total Comprehensive Revenue and Expense 34 0 0

Actual

2015/16

$000

Statement of Changes in EquityActual

2016/17

$000

Unaudited

Budget

2016/17

$000

Unaudited

Forecast

2017/18

$000

3,746 Balance at 1 July 3,746 3,746 4,021

9 Total Comprehensive Revenue and Expense 34 0 0

Owner Transactions

(9) Repayment of Surplus to the Crown (34) 0 0

3,746 Balance at 30 June 3,746 3,746 4,021


Statement of Financial Position as at 30 June 2017



Actual

30 June

2016

$000

Statement of Financial Position Note

Actual

30 June

2017

$000

Unaudited

Budget

2017

$000

Unaudited

Forecast

2018

$000

Assets

Current Assets

5,014 Cash 5,402 3,794 4,290

79 Receivables 7 90 55 55

65 Prepayments 185 93 93

5,158 Total Current Assets 5,677 3,942 4,438

Non-Current Assets

2,617 Property, Plant and Equipment 5 2,080 2,947 3,163

641 Intangibles 6 737 1,172 840

3,258 Total Non-Current Assets 2,817 4,119 4,003

8,416 Total Assets 8,494 8,061 8,441

Liabilities

Current Liabilities

1,348 Payables and Deferred Revenue 8 1,504 1,325 1,325

253 Provisions 9 146 104 126

9 Repayment of Surplus to the Crown 34 0 0

1,821 Employee Entitlements 10 1,837 1,790 1,855

3,431 Total Current Liabilities 3,521 3,219 3,306

Non-Current Liabilities

528 Provisions 9 574 376 543

711 Employee Entitlements 10 653 720 571

1,239 Total Non-Current Liabilities 1,227 1,096 1,114

4,670 Total Liabilities 4,748 4,315 4,420

Equity

3,746 Taxpayers’ Funds 3,746 3,746 4,021

3,746 Total Equity 3,746 3,746 4,021

8,416 Total Liabilities and Equity 8,494 8,061 8,441


Statement of Cash Flows for the year ended 30 June 2017



Actual

2015/16

$000

Statement of Cash FlowsActual

2016/17

$000

Unaudited

Budget

2016/17

$000

Unaudited

Forecast

2017/18

$000

Cash Flows from Operating Activities

Cash provided from:

27,114 Crown 27,056 27,113 27,885

942 Other 957 600 835

Cash applied to:

(20,732) Personnel (20,317) (20,522) (21,940)

(6,862) Suppliers (6,521) (5,891) (6,031)

(300) Capital Charge (243) (300) (226)

(29) Goods and Services Tax (net) 0 0 0

133 Net Cash Inflow from Operating Activities 932 1,000 523

Cash Flows from Investing Activities

Cash provided from:

15 Sale of Property, Plant and Equipment 0 0 67

Cash applied to:

(945) Purchase of Property, Plant and Equipment (241) (577) (480)

(125) Purchase of Intangible Assets (294) (518) (350)

(1,055) Net Cash Outflow from Investing Activities (535) (1,095) (763)

Cash Flows from Financing Activities

Cash applied to:

(58) Repayment of Surplus to the Crown (9) (25) (15)

(58) Net Cash Outflow from Financing Activities (9) (25) (15)

(980) Net Increase/(Decrease) in Cash 388 (120) (255)

5,994 Cash at Start of the Year 5,014 3,914 4,545

5,014 Cash at the End of the Year 5,402 3,794 4,290


Statement of Contingent Liabilities and Contingent Assets as at 30 June 2017

ERO has no contingent liabilities and assets (30 June 2016: nil).

__________________________________________________________________________________________

Statement of Commitments as at 30 June 2017

ERO has entered into a capital commitment to fit out its new Hamilton premises that has not been paid for nor recognised as a liability.

ERO leases all of its office premises in New Zealand, which have a non-cancellable leasing period of up to nine years. The non-cancellable leases have varying terms, an escalation clause and renewal rights. There are no restrictions placed on ERO by any of its leasing arrangements. The amounts disclosed above as future commitments are based on the current rental rates.


Actual

30 June

2016

$000

Statement of Commitments

Actual

30 June

2017

$000

Capital Commitments

0 Leasehold improvements 198

0 198

Non-Cancellable Operating Lease Commitments

1,276 Not later than one year 1,126

3,692 Later than one year and not later than five years 3,233

1,187 Later than five years 1,892

6,155 6,251

6,155 Total Commitments 6,449

Total Non-Cancellable Operating Lease Commitments

Total Capital Commitments


Statement of Accounting Policies for the year ended 30 June 2017

Reporting entity

ERO is a government department as defined by section 2 of the Public Finance Act 1989 (PFA) and is domiciled and operates in New Zealand. The primary objective of ERO is to provide goods or services for the community or social benefit rather than making a financial return. Accordingly, ERO has designated itself as a public benefit entity (PBE) for financial reporting purposes.

The financial statements of ERO are for the year ended 30 June 2017 and were approved for issue by the Chief Executive on 29 September 2017.

Basis of preparation

The financial statements have been prepared on a going concern basis, and the accounting policies have been applied consistently throughout the period.

Statement of compliance

The financial statements of ERO have been prepared in accordance with the requirements of the PFA, which include the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP) and Treasury Instructions.

The financial statements have been prepared in accordance with Tier 2 PBE accounting standards with reduced disclosure concessions. ERO meets the criteria of Tier 2 reporting as its expenditure in the last two financial years is below $30 million and is not publicly accountable.

These financial statements comply with PBE accounting standards.

Presentation currency and rounding

The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000).

Summary of significant accounting policies

The following are the accounting policies, which may have a material effect on the measurement of the financial position of ERO and the results of its operations.

Revenue

Revenue from the Crown is measured based on ERO’s funding entitlement for the reporting period. The funding entitlement is established by Parliament when it passes the appropriation acts for the financial year. The amount of revenue recognised takes into account any amendments to appropriations approved in the Appropriation (Supplementary Estimates) Act for the year.

There are no conditions attached to the funding from the Crown. However, ERO can incur expenses only within the scope and limits of its appropriations. The fair value of Revenue Crown has been determined to be equivalent to the funding entitlement.


ERO also derives revenue from the provision of services to third parties and rent recoveries. Services provided to third parties on commercial terms are exchange transactions. Revenue from these services is recognised at the time of completion of the service or in accordance with the terms of specific contracts and is reported in the financial period to which it relates. Rental revenue under an operating sublease is recognised as revenue on a straight-line basis over the lease term.

Capital charge

The capital charge is recognised as an expense in the financial year to which the charge relates.

Operating leases

An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term.

Lease incentives received are recognised in the surplus or deficit as a reduction of rental expense over the lease term.

Cash

Cash includes cash on hand and funds on deposit with banks. ERO is only permitted to expend its cash and cash equivalents within the scope and limits of its appropriations.

Receivables

Short-term receivables are recorded at their face value, less any provision for impairment.

A receivable is considered impaired when there is evidence that ERO will not be able to collect the amount due. The amount of the impairment is the difference between the carrying amount of the receivable and the present value of the amounts expected to be collected.

Financial instruments

ERO is party to financial instruments entered into in the course of its normal operations. These include cash, receivables and payables. All financial instruments are measured at fair value and are recognised in the Statement of Financial Position. All associated revenue and expenses are credited to or charged against the Statement of Comprehensive Revenue and Expense.

Property, plant and equipment

Property, plant, and equipment consists of leasehold improvements, furniture and office equipment, computer hardware and motor vehicles.

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.

The initial cost of property, plant and equipment includes the purchase consideration and those costs that are directly attributable to bringing the asset into the location and condition necessary for its intended purpose. Subsequent expenditure that extends or expands the asset’s service potential and that can be measured reliably is capitalised.


Capitalisation thresholds applied for individual assets or group of assets are set out as follows:

Additions

The cost of an item of property, plant, and equipment is recognised as an asset if it is probable that future economic benefits or service potential associated with the item will flow to ERO and the cost of the item can be measured reliably.

In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition.

Disposals

Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount of the asset. Gains and losses on disposals are included in the surplus or deficit. When a revalued asset is sold, the amount included in the property revaluation reserve in respect of the disposed asset is transferred to taxpayers’ funds.

Depreciation

Depreciation is charged on property, plant and equipment on a straight-line basis over their estimated useful lives, which will write off the cost of the assets to their estimated residual value.

The estimated useful life, residual values and associated depreciation rates applied to each class of property, plant and equipment are as follows:

The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year end.

Capitalisation Thresholds $

Computer Hardware 1,000

Motor Vehicles 15,000

Office Equipment 1,000

Furniture and Fittings 1,500

Leasehold Improvements 1,500

Depreciation of Property, Plant and

Equipment

Estimated

Useful Life

(Years)

Depreciation

Rates

(%)

Residual

Values

(%)

Computer Hardware 4 25 -

Motor Vehicles 4-5 20-25 25

Office Equipment 5 20 -

Furniture and Fittings 10 10 -

Leasehold Improvements Up to 10 Up to 10 -


Intangible assets

Intangible assets with finite lives are stated at cost less amortisation and any impairment losses.

Acquired intangible assets are initially recorded at cost. The cost of an internally generated intangible asset represents expenditure incurred in the development phase of the asset only. The development phase occurs after the following can be demonstrated: technical feasibility; ability to complete the asset; intention and ability to sell or use; and when the development expenditure can be reliably measured.

Where an intangible asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition.

Capitalisation thresholds applied for individual assets or group of intangible assets are set out as follows:

Amortisation

Amortisation is charged on intangible assets on a straight-line basis over their estimated useful lives. The estimated useful lives and associated amortisation rates applied to these assets are as follows:

Impairment of property, plant and equipment and intangible assets

ERO does not hold any cash-generating assets. Assets are considered cash-generating where their primary objective is to generate a commercial return.

Non cash-generating assets

Intangible assets subsequently measured at cost that have an indefinite useful life or are not yet available for use, are not subject to amortisation and are tested annually for impairment.

Property, plant, and equipment and intangible assets held at cost that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable service amount. The recoverable service amount is the higher of an asset’s fair value less costs to sell and value in use.

Value in use is the present value of the asset’s remaining service potential. Value in use is determined using an approach based on either a depreciated replacement cost approach, restoration cost approach, or a service units approach. The most appropriate approach used to measure value in use depends on the nature of the impairment and availability of information.

If an asset’s carrying amount exceeds its recoverable service amount, the asset is regarded as impaired and the carrying amount is written down to the recoverable service amount. The total impairment loss is recognised in the surplus or deficit.

The reversal of an impairment loss is recognised in the surplus or deficit.

The type of assets used by ERO does not give rise to adjustments for impairment. ERO’s assets will either be written off due to physical damage or obsolescence or are repaired.

Capitalisation Thresholds $

Computer Software 1,000

Review Procedures 20,000

Amortisation of Intangibles

Estimated

Useful Life

(Years)

Amortisation

Rates

(%)

Computer Software 4 25

Review Procedures 5 20


Payables

Short-term payables are recorded at their fair value.

Employee entitlements

Provision is made in respect of ERO’s liability for accrued salary, annual leave, special leave, sick leave, retirement leave and long service leave. All associated expenses are charged against the Statement of Comprehensive Revenue and Expense.

Short-term employee entitlements

Employee entitlements that are due to be settled within 12 months after the end of the period in which the employee renders the related service are measured based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned but not yet taken at balance date, long service leave and retirement gratuities expected to be settled within 12 months, and sick leave.

A liability for sick leave is recognised to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that it will be used by staff to cover those future absences.

A liability and an expense are recognised for bonuses where ERO has a contractual obligation or where there is a past practice that has created a constructive obligation and a reliable estimate of the obligation can be made.

Long-term employee entitlements

Employee entitlements that are due to be settled beyond 12 months after the end of the reporting period in which the employee renders the related service, such as long service leave and retirement gratuities, are calculated on an actuarial basis. The calculations are based on:

likely future entitlements accruing to staff, based on years of service, years to entitlement, the likelihood that staff will reach the point of entitlement, and contractual entitlements information; and

the present value of the estimated future cash flows.

Presentation of employee entitlements

Sick leave, annual leave, vested long service leave, non-vested long service leave and retirement gratuities expected to be settled within 12 months of balance date are classified as a current liability. All other employee entitlements are classified as a non-current liability.

Superannuation schemes – defined contribution schemes

Obligations for contributions to the State Sector Retirement Savings Scheme, KiwiSaver and the Government Superannuation Fund are accounted for as defined contribution schemes and are recognised as an expense in the surplus or deficit as incurred.

Provisions

ERO recognises a provision for future expenditure of uncertain amount or timing when there is a present obligation (either constructive or legal) as a result of past events. It is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount or timing of the obligation.

Provisions are measured at the present value of the expenditures expected to settle the obligations.


Reinstatement of premises

ERO has some reinstatement obligations at the expiry of the lease term to make good any damage caused to the premises and to remove any fixtures or fittings installed by ERO. In many cases, ERO has the option to renew these leases, which affects the timing of the expected cash outflows to make good the premises. The provision is measured at the expected cost to settle the obligation.

Equity

Equity is the Crown’s investment in ERO and is measured as the difference between total assets and total liabilities.

Commitments

Commitments are future expenses and liabilities to be incurred on contracts that have been entered into at balance date. Information on non-cancellable capital and lease commitments are reported in the statement of commitments.

Cancellable capital commitments that have penalty or exit costs explicit in the agreement on exercising that option to cancel are reported in the statement of commitments at the lower of the remaining contractual commitment and the value of those penalty or exit costs (i.e. the minimum future payments).

Goods and services tax (GST)

All items in the financial statements and appropriation statements are stated exclusive of GST, except for receivables and payables, which are stated on a GST-inclusive basis. Where GST is not recoverable as input tax, then it is recognised as part of the related asset or expense.

The net amount of GST recoverable from, or payable to, the Inland Revenue Department is included as part of receivables or payables in the statement of financial position.

The net GST paid to or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cash flow in the statement of cash flows.

Commitments and contingencies are disclosed exclusive of GST.

Income tax

ERO, as a government department, is exempt from the payment of income tax. Accordingly, no provision for income tax has been provided.

Cost allocation

Direct costs are costs incurred by output delivery management units.

Direct costs are attributed to the three classes of outputs based on time spent on each class from ERO’s time recording system. For the year ended 30 June 2017, 76 percent of total output costs were direct costs (30 June 2016: 76 percent).

Indirect costs are the costs of corporate management and support services that cannot be identified with a specific output in an economically feasible manner. Indirect costs are allocated to output-delivery management units (excluding Policy Services and Ministerial Services) through the most appropriate cost driver as a proxy for consumption. Indirect costs amounted to 24 percent of total output costs for the year ended 30 June 2017 (30 June 2016: 24 percent).

The cost of education evaluation reports includes a transfer of time from institutional reporting activities. This transfer represents time spent by review officers in institutions collecting overview information.

The costs of policy services and ministerial services are based on the estimated hours at the average charge-out rate.

There have been no changes in cost allocation policies from the previous reporting period.


Critical accounting estimates and assumptions

In preparing these financial statements, ERO has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are provision for reinstatement, retirement leave and long service leave.

Notes 9 and 10 provide an analysis of the exposure in relation to estimates and uncertainties surrounding reinstatement obligations of leased premises, retirement leave and long service leave liabilities.

Budget and forecast figures

The 2017 budget figures are for the year ended 30 June 2017 and were published in the 2015/16 annual report. They are consistent with ERO’s best estimate financial forecast information submitted to the Treasury for the Budget Economic and Fiscal Update (BEFU) for the year ending 2016/17.

The 2018 forecast figures are for the year ending 30 June 2018, which are consistent with the best estimate financial forecast information submitted to Treasury for the BEFU for the year ending 2017/18.

The forecast financial statements have been prepared as required by the PFA to communicate forecast financial information for accountability purposes.

The budget and forecast figures are unaudited and have been prepared using the accounting policies adopted in preparing these financial statements.

The 30 June 2018 forecast figures have been prepared in accordance with PBE FRS 42 Prospective Financial Statements.

The forecast financial statements were approved for issue by the Chief Executive on 6 April 2017. The Chief Executive is responsible for the forecast financial statements, including the appropriateness of the assumptions underlying them and all other required disclosures.

While ERO regularly updates its forecasts, updated forecast financial statements for the year ending 30 June 2018 will not be published.

Significant assumptions used in preparing the forecast financials

The forecast figures contained in these financial statements reflect the Office’s purpose and activities and are based on a number of assumptions on what may occur during the 2016/17 year. The forecast figures have been compiled on the basis of existing government policies and Ministerial expectations at the time the Main Estimates were finalised.

The main assumptions, which were adopted as at 6 April 2016, were as follows:

ERO's activities will remain substantially the same as for the previous year

personnel costs are based on 216 full time equivalents

operating costs are based on historical experience adjusted for any known expected increase or decrease in expenditure items

estimated year-end information for 2016/17 is used as the opening position for the 2017/18 forecasts.

The actual financial results achieved for 30 June 2017 are likely to vary from the forecast information presented, and the variations may be material.


Notes to the Financial Statements for the year ended 30 June 2017

1. Other revenue

2. Personnel costs

Employer contributions to defined contribution plans include contributions to the State Sector Retirement Savings Scheme, KiwiSaver, the Individual Retirement Plan and the Government Superannuation Fund.

3. Other expenses

Actual

2015/16

$000

Other Revenue note

Actual

2016/17

$000

1,428 Sale of services 748

50 Rental revenue from sub-leases 59

4 0

3 Other 17

1,485 Total Other Revenue 824

Net gain on disposal of property, plant and equipment

Actual

2015/16

$000

Personnel Costs note

Actual

2016/17

$000

20,022 Salaries and wages 19,383

781 Employer contribution to superannuation schemes 723

(81) Increase/(Decrease) in employee entitlements 77

17 Other 14

20,739 Total Personnel Costs 20,197

Actual

2015/16

$000

Other expenses note

Actual

2016/17

$000

Unaudited

Budget

2016/17

$000

1,747 Leasing and Rental Costs 1,308 1,694

381 Consultancy 525 340

2,005 Domestic Travel 2,098 1,542

64 International Travel 54 83

59 Fees paid to Auditors for Financial Statements Audit 61 56

2,578 Other 2,469 2,180

6,834 Total Operating Costs 6,515 5,895


4. Capital charge

ERO pays a capital charge to the Crown based on its equity as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2017 was 6 percent (30 June 2016: 8 percent).

5. Property, plant and equipment

Movements for each class of property, plant, and equipment are as follows:

6. Intangibles

Movements for each class of intangible asset are as follows:

There are no restrictions over the title of ERO’s intangible assets, nor any intangible assets pledged as security for liabilities.

Intangibles note

Computer

Software

$000

Review

Procedures

$000

Intangibles

Total

$000

30 June 2016

Cost 1,281 1,127 2,408

Accumulated Amortisation (1,237) (530) (1,767)

Balance at 30 June 2016 44 597 641

30 June 2016

Balance at 1 July 2016 44 597 641

Additions 37 257 294

Amortisation (26) (172) (198)

Balance at 30 June 2017 55 682 737

30 June 2017

Cost 1,318 1,384 2,702

Accumulated Amortisation (1,263) (702) (1,965)

Balance at 30 June 2017 55 682 737

Property, Plant and Equipment note

Computer

Hardware

$000

Motor

Vehicles

$000

Office

Equipment

$000

Furniture

& Fittings

$000

Leasehold

Improve-

ments

$000

P,P & E

Total

$000

30 June 2016

Cost 764 1,824 327 279 2,450 5,644

Accumulated Depreciation (581) (777) (313) (49) (1,307) (3,027)

Balance at 30 June 2016 183 1,047 14 230 1,143 2,617

30 June 2016

Balance at 1 July 2016 183 1,047 14 230 1,143 2,617

Additions 190 0 3 1 47 241

Disposals - Costs (6) 0 (17) 0 (242) (265)

Disposals - Accumulated Depreciation 4 0 18 0 158 180

Depreciation (92) (263) (8) (27) (303) (693)

Balance at 30 June 2017 279 784 10 204 803 2,080

30 June 2017

Cost 948 1,824 313 280 2,255 5,620

Accumulated Depreciation (669) (1,040) (303) (76) (1,452) (3,540)

Balance at 30 June 2017 279 784 10 204 803 2,080


7. Receivables

The carrying value of receivables approximates their fair value as they are normally issued with duration of not more than three months.

8. Payables and deferred revenue

The carrying value of creditors and other payables approximate their fair value as they are normally settled within three months.

9. Provisions

Leasing incentives

Leasing incentives received as an inducement to enter into an operating lease are recognised evenly over the term of the lease as a reduction in the rental expense.

Reinstatement provision

ERO has entered into leases on its premises in Auckland, Christchurch, Hamilton, Napier, Whanganui, Wellington and Dunedin. As part of the lease agreements, ERO has some reinstatement obligations at the termination of the leases.

Actual

30 June

2016

$000

Receivables note

Actual

30 June

2017

$000

79 Receivables from contractual services (exchange transactions) 90

79 Total Receivables 90

Actual

30 June

2016

$000

Actual

30 June

2017

$000

326 Creditors 413

421 Accrued Expenses 355

386 Income in Advance for Contractual Services 530

1,133 Payables and deferred revenue under exchange transactions 1,298

215 Tax Payables – GST, FBT and PAYE 206

215 Payables and deferred revenue under non–exchange transactions 206

1,348 Total payables and deferred revenue 1,504

Payables and deferred revenue note


Actual

30 June

2016

$000

Actual

30 June

2017

$000

Current Portion

75 Leasing Incentives 75

0 Onerous Contracts 0

178 Reinstatement 71

253 Total Current Portion at end of year 146

Non-Current Portion

171 Leasing Incentives 300

357 Reinstatement 274

528 Total Non-Current Portion at end of year 574

781 Total Provisions at end of year 720

Leasing Incentives

214 Balance at Start of Year 246

84 Additional Provision during the Year 204

(52) Provision used during the Year (75)

246 Total Leasing Incentives Provision at end of year 375

Onerous Contract



(22) Provision used during the Year 0

0 Total Onerous Contract Provision at end of year 0

Reinstatement



0 Unused Provision reversed during the Year (190)

0 Provision used during the Year 0

535 Total Reinstatement Provision at end of year 345

781 Total Provisions at end of year 720

Provisions note


10. Employee entitlements

The present value of retirement leave and long service leave obligations depend on factors that are determined on an actuarial basis using several assumptions. Two key assumptions used in calculating this liability include the discount rate and the salary inflation factor. Any changes in these assumptions will affect the carrying amount of the liability.

Expected future payments are discounted using discount rates derived from the yield curve of New Zealand government bonds. The discount rates used have maturities that match, as closely as possible, the estimated future cash outflows. The discount rates and salary inflation factor used are those advised by the Treasury.

If the risk-free discount rates were to differ by 1 percent from ERO’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $31,215 higher/lower.

If the salary inflation factor were to differ by 1 percent from ERO’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $31,331 higher/lower.

11. Related parties

ERO is a wholly owned entity of the Crown.

Related party disclosures have not been made for transactions with related parties that are within a normal supplier or client/recipient relationship on terms and condition no more or less favourable than those that it is reasonable to expect ERO would have adopted in dealing with the party at arm’s length in the same circumstances. Further, transactions with other government agencies (for example, government departments and Crown entities) are not disclosed as related party transactions when they are consistent with the normal operating arrangements between government agencies and undertaken on the normal terms and conditions for such transactions.

Related party transactions required to be disclosed

ERO has no related party transactions required to be disclosed. Any related party transactions have been entered into on an arm’s length basis by ERO.

Actual

30 June

2016

$000

Actual

30 June

2017

$000

Current Liabilities

1,202 Annual Leave, Special Leave and Sick Leave 1,251

468 Retirement Leave and Long Service Leave 300

151 Accrued Salaries 286

1,821 Total Current Portion 1,837

Non-Current Liabilities

711 Retirement Leave and Long Service Leave 653

711 Total Non-Current Portion 653

2,532 Total Employee entitlements at end of year 2,490

Employee entitlements note


Key management personnel compensation

Key management personnel include the Chief Executive and seven members of the Executive Leadership Team.

The Minister of Education does not have responsibility for planning, directing and controlling the activities of ERO. The Minister’s remuneration and other benefits have therefore been excluded from the above disclosure.

12. Financial instruments

The carrying amounts of financial assets and financial liabilities in each of the financial instrument categories are as follows:

13. Events after balance date

There have been no significant events after balance date.

Actual

2015/16

Actual

2016/17

1,682 Remuneration ($000s) 1,726

8 Full-time Equivalent Staff 8

Key management personnel compensation

Actual

30 June

2016

$000

Actual

30 June

2017

$000

Loans and Receivables

5,014 Cash 5,402

79 Receivables 90

5,093 Total Loans and Receivables 5,492

747 Payables (excluding Income in advance) 768

Financial instruments note

Financial liabilities measured at amortised cost


14. Explanation of major variances against budget

The major variances to budget were as follows:

Other Expenses was $620,000 above budget due mainly to an increase in expenditure associated with contractual services for which ERO received revenue

Cash was $1,608,000 above budget due to timing of capital expenditure

Cash applied to suppliers was $630,000 above budget due to an increase in other expenses associated with ERO’s contractual services described above

Purchase of property, plant and equipment was $560,000 below budget due to the timing of ERO’s fit out to its Wellington corporate office and its Hamilton premises.

Actual

2016/17

$000

Unaudited

Budget

2016/17

$000

Variance

to Budget

2016/17

$000

Statement of Comprehensive Income and Expense

Other Expenses 6,515 5,895 620

Statement of Financial Position

Cash 5,402 3,794 1,608

Property, Plant and Equipment 2,080 2,947 (867)

Statement of Cash Flows

Cash applied to Suppliers 6,521 5,891 630

Purchase of Assets 535 1,095 (560)

Variances against budget note


Appropriation Statements

The following statements report information about the expenses and capital incurred against each appropriation administered by ERO for the year ended 30 June 2017.

Statement of Budgeted and Actual Expenses and Capital Expenditure incurred against Appropriations for the year ended 30 June 2017

The appropriation figures are those presented in the Estimates of Appropriations for the Government of New Zealand for the year ended 30 June 2017, as amended by the Supplementary Estimates.

The Capital Expenditure-Permanent Legislative Authority appropriation is limited to the purchase or development of assets by and for the use of ERO, as authorised by section 24(1) of the Public Finance Act 1989. No amount is appropriated for Capital Expenditure-Permanent Legislative Authority.

__________________________________________________________________________________________

Statement of Expenses and Capital Expenditure incurred without Appropriation or Other Authority, or in excess of an Existing Appropriation or Other Authority for the year ended 30 June 2017

ERO has not incurred expenses in excess of or without appropriation by Parliament (30 June 2016: nil).

__________________________________________________________________________________________

Statement of Departmental Capital Injections without, or in excess of, Authority for the year ended 30 June 2017

ERO has not received any capital injections during the year, or in excess of, authority (30 June 2016: nil). __________________________________________________________________________________________

Expenditure

after

remeasure-

ments

2015/16

$000

Vote Education Review Office

Statement of Budgeted and Actual Expenses

and Capital Expenditure incurred against

Appropriations

Expenditure

before

remeasure-

ments

2016/17

$000

Remeasure-

ments

2016/17

$000

Expenditure

after

remeasure-

ments

2016/17

$000

Approved

Appro-

priation

2016/17

$000

Vote Education Review Office

Departmental Output Expenses

4,338 Quality of Education Reports and Services 4,000 (5) 3,995 4,285

4,338 Total Departmental Output Expenses 4,000 (5) 3,995 4,285

Multi-Category Appropriation


9,432 Early Childhood Education Services 9,157 (12) 9,145 9,354

14,762 Schools and Other Education Service Providers 14,720 (14) 14,706 14,931

24,194 Total Accountability Reviews 23,877 (26) 23,851 24,285

Permanent Legislative Authority (PLA)

1,070 Capital Expenditure – PLA 535 0 535 1,879

29,602 Total Annual and Permanent Appropriations 28,412 (31) 28,381 30,449

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