Background
Section 195A of the Education Act 1989 ("the Act") requires the Secretary for Education to determine and publish in the New Zealand Gazette criteria for assessing the level of risk to the operation and long-term viability of tertiary education institutions, and the level of risk to the education performance of students enrolled at polytechnics. This notice sets out these criteria.
These risk assessment criteria will be considered by the Chief Executive of the Tertiary Education Commission (TEC) and the Minister for Tertiary Education ("Minister") when they consider whether an institution is at risk in
a way that might warrant intervention in accordance with Parts 15 and 15A of the Act.
Whether the Chief Executive of the TEC or the Minister decides to initiate an intervention will depend on their assessment of the nature and level of the risk or risks, and the thresholds for the various types of intervention set out
in the Act. Other relevant considerations may also be taken into account. For example, the Chief Executive of the TEC or the Minister will assess the appropriateness of the steps already being taken by the council of the institution before deciding whether or how to intervene.
Different interventions available under the Act have different risk level thresholds. These risk level thresholds are described by statements in the Act relating to whether:
- an institution "may be at risk" [sections 195B (provision of information), 222A (specialist help), and 222B (performance improvement plan)]
- the "operation or long term viability of an institution is at risk" [section 195C (Crown Observer)]
- "there is a serious risk to the operation or long-term viability of an institution" [sections 195D (Crown commissioner), and 222C (Crown manager)]
- "the education performance of the students at a polytechnic may be or is at risk" (this relates only to polytechnics) [sections 222A (specialist help), 222B (performance improvement plan), and 222C (Crown manager)].
The risk assessment criteria apply to three areas.
These are:
- organisational;
- financial; and
- educational.
Two of the risk assessment criteria cross-reference the Financial Monitoring Framework operated by the TEC from 1 January 20101.
To the extent that the Financial Monitoring Framework is incorporated by reference in this notice, it shall be taken to be the Financial Monitoring Framework in the form published by the TEC on its website as at the date of this notice. Any revision to the Financial Monitoring Framework will not be automatically included in this notice, and
a replacement notice will need to be published in the
New Zealand Gazette to give effect to any changes to the TEC's Financial Monitoring Framework.
Nothing in this notice limits or affects the duties of a tertiary education institution council under section 181 of the Act, or any other duties or obligations of an institution or council under any other enactment.
Words and phrases used in this notice bear the same meaning as under the Act.
Criteria for Assessing the Level of Risk
Organisational
1. The council has not fulfilled, and continues not to fulfil, its statutory functions and duties under the Education Act 1989.
2. The council has failed, and continues to fail, to ensure the institution maintains adequate systems and processes for effective planning, and for the effective management of the financial and educational performance and infrastructure of the institution.
3. The council or the institution has failed, and continues to fail, to meet a material obligation under the
Education Act 1989, Crown Entities Act 2004 or Public Finance Act 1989.
Financial
4. The institution is, or is at risk of being, unable to pay
its debts as they become due in the normal course of business.
5. The institution has breached any of the conditions set by the Secretary for Education in a borrowing consent under section 192(7) of the Education Act 1989, and the breach has not been remedied.
6. The institution is in default under any loan or other facility agreement with a bank or other commercial lender, or the Crown, and the default has not been remedied.
7. The institution has an overall rating of Moderate Risk or High Risk in the most recent financial performance assessment carried out under the Financial Monitoring Framework operated by the TEC from 1 January 20101. The overall financial performance assessment under the Financial Monitoring Framework covers the dimensions of the shorter term financial viability and longer term sustainability of the institution.
8. The institution has a rating of Moderate Risk or High Risk under the financial viability criteria in its most recent financial performance assessment carried out under the Financial Monitoring Framework operated by the TEC from 1 January 20101. The financial viability criteria under the Financial Monitoring Framework focus on the shorter term financial performance of the institution.
Educational
9. The polytechnic has failed to meet the educational performance commitments in the Investment Plan agreed by the TEC.
10. The external evaluation and review of the polytechnic carried out under the auspices of the New Zealand Qualifications Authority, or by any Quality Assurance Board delegated under section 260 of the Act, has concluded that the relevant external quality assurance body is "not yet confident" or "not confident" in any aspect of the performance of the institution.
Dated at Wellington this 25th day of November 2010.
KAREN SEWELL, Secretary for Education.
Note: This notice replaces the one published in New Zealand Gazette, 28 February 2008, No. 41, page 1203.
Key to Annotation
1The Financial Monitoring Framework is available on the TEC's website:
www.tec.govt.nz/Tertiary-Sector/Crown-interest/Financial-monitoring/Financial-performance-measures