Accountability concerns over €1.16bn in funding
Outdated disciplinary procedures, blurred lines of responsibility, and differing interpretations of key guidelines thread through newly emerged shortcomings.
Already this year the Department of Education had to defend its record of financial oversight for the 33 VECs.
It has since told the Public Accounts Committee it will examine if there are better ways of watching how taxpayers’ money is spent.
Meanwhile, internal department briefings have revealed serious shortcomings across the country, coupled with a limited ability to centrally police proper procedures.
The VECs operate under one of the most antiquated and opaque financial reporting systems in the public service.
Individually elected committees split the accounting responsibilities with executive officers. They are not subject to the Freedom of Information Act and only scant data is routinely available publicly.
Accounts, seen by the Comptroller and Auditor General, are filed with the Oireachtas. Individual chief executives vouch for the accuracy of financial data to the department.
And the chairperson for each VEC supplies the minister for education with a separate report on significant events during the year and compliance with a code of ethics.
However, the PAC was concerned about the limited number of departmental staff dedicated to ensuring money is spent wisely. Subsequently the department spelled out the situation.
There are six staff and one accountant designated to oversee 33 VECs which are responsible for teaching more than 118,000 students, employing 12,000 people, and spending €1.16bn.
Two civil servants work full-time on financial matters. An assistant principal officer and a clerical officer work part-time in this area. A professional accountant is also available full-time for the VEC division.
The department does not have access to the 33 payroll systems for the 12,000 employees in the sector — so it is unable to link funding to the number of posts sanctioned.
This means a substantial portion of the responsibility for ensuring rules are followed falls on the Vocational Educational Support Unit, which is based in Cavan VEC.
A departmental briefing note recognised that it relied on that unit for assurances on the adequacy of internal financial controls but it does not have a direct involvement in its work.
It said only in “exceptional circumstances” that it would request to see reports prepared for individual VECs.
Furthermore, if a VEC had sufficient concerns to request a “special audit” outside the normal agenda, the department said it would have no knowledge of the request. This shortcoming is set to be rectified with the development of new rules.
All the while the department has had to provide once-off payments from central education budgets to bail out under-pressure VECs and plug the holes left by poor decisions.
A VEC lost almost €400,000 through a botched disciplinary process into a suspected €1m bookkeeping error.
The affair led to the resignation of its audit committee because it was dissatisfied with the level of information provided by the chairperson of the county VEC.
Westmeath VEC suspended the staff member involved on full pay when its monthly returns, for both receipts and payments, were understated by €1m.
However, because it took too long to assess the case and did not follow proper procedures, the VEC was forced to settle the case, pay its own costs, and reinstate the person to their job.
It settled the case in Jan 2008 when it agreed to pay its employee €84,466 in damages.
The committee clocked up €107,299 on legal and professional fees.
Official documents also said it also effectively lost €196,762 because it had to pay the employee for doing nothing for the period of the suspension.
The audit committee of Westmeath VEC had requested a breakdown of these figures but it was told, by the chairperson of its parent committee, that the sums involved were confidential.
The chairperson said the Department of Education had undertaken to increase the grant allocation for the VEC to cover its costs in the case.
However, according to an internal department brief, the audit group was dissatisfied.
“At a VEC meeting in Feb 2009 a resolution was passed declaring the matter concluded,” it said.
“In April 2009, the audit committee presented their resignations to the chairperson of the VEC as they believed the decision of the VEC had left them unable to undertake their work and that they no longer had the confidence of the VEC.”
The Comptroller and Auditor General raised concerns regarding the VEC’s handling of the case.
In relation to the costs, he said the delays by the VEC in getting to the case exacerbated the expense.
“Nineteen months elapsed between the officer’s suspension and the initial adjudication of the matter by a sub-committee of the VEC. The time taken to reach a conclusion on the matter contributed to the costs of the VEC.” &
The C&AG also said the person was suspended by the chief executive of Westmeath when this should have been done by the committee.
The person was suspended on full pay, but under the laws passed to set up regional technical colleges, the education minister’s consent was required before this could happen.
There was no record kept of the decision to end the person’s suspension or when it was decided to end an earlier period of probation. The C&AG said in this context, it was not clear if the suspension was reasonable.
Members in Longford believed money was being wasted by deciding to opt for Mullingar
The Department of Education has defended spending €2m on a VEC campus in Longford while pressing ahead with its decision to relocate the service to Westmeath.
Longford VEC is to be merged with its sister committee in Westmeath under the rationalisation of the sector. The headquarters for the new service will be in Mullingar.
The HQ will be in a building that is leased at a cost of €118,000 a year compared with the offices in Longford, which are being vacated, and were occupied for a nominal fee paid to the Office of Public Works.
The acting chief executive of Longford VEC, Rosemary Johnston, has revealed the department has spent €2m on the campus around Longford’s headquarters since 2009.
In 2009 the department agreed to fund a €300,000 refurbishment of the headquarters. This was paid in two tranches.
However, the final bill came to €472,509. The shortfall had to be taken from Longford VEC’s own resources.
The eventual cost was 65% greater than what was originally estimated in 2006.
Subsequently the department agreed to fund the purchase of the neighbouring Connolly Barracks from the Defence Forces for the extension of the adult education centre and the VEC’s VTOS service.
In a briefing note, the department’s secretary general, Sean Ó Foghlú, said most of the money spent on Longford was for other services.
It paid €950,000 for the land, €227,000 more on refurbishment and security, and another €308,400 on an electrical upgrade.
The department said the grant was released for the provision of adult education services.
Earlier, Ms Johnston informed the PAC that the members in Longford believed money was being wasted by the department by deciding to opt for Mullingar.
“The [Longford] committee is seeking transparency on this issue as it believes that on any reasonable value-for-money criterion the headquarters should be situated in Longford,” she said.
Tens of thousands of euro in legal and investigation fees have been spent on the fallout from Wexford VEC’s decision to query a €691 expenses claim in 2007.
These bills are liable to multiply later this summer when an associated defamation case is listed for trial in the High Court.
The Wexford committee was recently singled out for its disproportionately high spending on external law firms by the chairman of the Dáil Public Accounts Committee, John McGuinness.
Since 2007 the VEC has declared legal bills of €205,393 of which €122,894 was spent on human resources advice, investigations of employee conduct and appeals. Concerns have also been raised, by its internal auditors, that its specialist HR solicitors were engaged since 2007 without having to go through a tendering process.
A substantial portion of the HR costs are understood to have arisen from issues related to its accusation that a staff member wrongly authorised their own expenses. The claim was for €691 spent on a medical course.
The VEC questioned the claim and referred the matter to its audit sub-committee. It was passed to the full VEC committee, which was unusual as HR matters are considered an executive function, dealt with privately by VEC officers.
An internal audit found there were other incidents of senior staff authorising their own expenses, without the practice being a cause for concern. After the audit new procedures were put in place.
Concerns were first raised about the approach taken by the VEC in this case by one of its committee members, Cllr Padge Reck. According to a briefing note from the Department of Education, he was sent a brief containing information on expenses claims within the VEC. The department said this came from an anonymous source.
It said that in Dec 2008 Mr Reck asked the minister for education to inquire into allegations of financial shortcomings, corporate governance issues, bullying, and health and safety concerns.
The department said the solicitors Mason Hayes and Curran were hired to “review the complaint, provide advice and draft letters to Cllr Reck, the department and Cllr Reck’s solicitors”.
The councillor was later quizzed by detectives seeking to find the source of the anonymous brief.
Arising out of the posting of the anonymous brief, VEC internal auditor Allen Buckley recommended the matter be referred to the Data Protection Commissioner. He said details of employee expenses claims, copies of emails, and other sensitive data was taken from its headquarters.
Mr Buckley considered there to have been a “serious breach of data protection legislation and the code of ethics”.
The audit unit conducted one of number of examinations into Wexford VEC.
The VEC has spent four years responding to a defamation case, and the trial is scheduled for June. Wexford VEC did not make a statement on the issue but it has responded to the department.
The Department of Education has outlined its distaste for an archaic and expensive system of sworn inquiry to discipline teachers and VEC officials who have had allegations levelled at them.
In a briefing note on the issue of sworn local investigations, the secretary general was told a new bill that would replace the outdated disciplinary structures was with the drafting office.
The note detailed five cases in recent years where teachers and VEC officers have had their fitness to work questioned.
This said the existing system did not apply to primary, secondary, community, or comprehensive schools so there was an “unfairness in persisting with it”.
“Sworn inquiries tend to be costly and time-consuming and often experience significant delays,” it said.
The note advised department officials that there may be legal difficulties transferring existing VEC staff to the standard Employment Appeals Tribunal infrastructure, but this should not prevent the department from trying to reform the sector. “It is considered that there are very strong public interest factors in favour of pushing for this reform,” it said.
The document detailed inquiries that had been conducted at a cost of tens of thousands of euro but had little effect.
* In Waterford City €11,317 was paid to the person who conducted an inquiry into an officer of a VEC to determine if the employee was fit for purpose. The inquiry began in July 2009 and ended in Dec 2011, during which time the staff member involved was suspended. After the inquiry finished Education Minister Ruairi Quinn, having read the report and listened to legal advice, lifted the suspension and closed the process.
* Meath VEC amassed €49,181 worth of bills during an 11-month inquiry that began in May 2006. The report into the female teacher involved was delivered to the minister. Her suspension was lifted.
* County Westmeath VEC spent €31,045 on two individuals looking into the performance of a male teacher. The probe took two years and two months from May 2009. The case was settled and the teacher retired that summer.
* City of Dublin VEC took action against a teacher who had been suspended. The inquiry began in June 2007 and continued until May 2008, by which stage the man announced that he was retiring. By that stage €16,978 had been spend on two investigators.
* A separate departmental document on disciplinary procedures outlined the case of Kilkenny City VEC principal Catherine McSorley, who has been the subject of an inquiry under the education act for over five years. This was put in place following internal inquiries that failed to reach definitive conclusions. The ministerial inquiry has cost over €300,000 and the eventual report, which was submitted by investigator Torlach O’Connor, is the subject of a High Court challenge by Ms McSorley. She took this last July when Mr Quinn moved to sack her on the grounds that the VEC considered her unfit for office. In Feb 2012 judgement was reserved.
Expenses claimed by members of VEC committees have fallen since the boom.
Newly collated figures for 16 of the country’s 33 committees show in 2008, members claimed a record €799,456 in travel and subsistence claims.
In 2009, this fell to €555,981 — a 30% reduction on the value of meals and mileage sanctioned for councillors, parents’ representatives, and clergymen elected to sit on local educational committees.
The figures cannot be obtained through the Freedom of Information Act and it was difficult to get data on particular members, although a small number of VECs have begun to publish lists in their statutory accounts. These accounts, V15 forms, are little known but under law have to be laid before the Oireachtas each year. V15 figures for 16 VECs have provided a unique insight into half of the committees in the country.
A separate analysis released under the access to information on the environment directive suggested the overriding reason for the reduction was the cuts to public service expense rates.
In some cases the reduction from 2008 to 2009 was particularly stark.
Laois saw the value of claims by its members fall 58% in 2009; Mayo’s expenses bill for its members fell 57%.
In Donegal, the amount paid to cover the meals and miles of its members went from €93,533 in 2008 to €59,724.
Co Cork saw a 39% drop from €91,425, though it had reduced meetings that year due to a legal dispute over membership.
The relative size of claims also varied wildly between different parts of the country. Members of Donegal VEC, covering a population of 147,000 and a budget of €52m, claimed €93,533 in 2008, more than the members of County Cork VEC (€91,425). The Cork committee had responsibility for a population of 361,000 and a budget of €91m.
In Offaly, 0.3% of its total budget for the year went on the expenses of members compared with 0.03% in Cork City.
The 2009 accounts reflect the year local elections were held. In many cases this introduced new faces on to committees and some meetings were not held until new teams had been finalised.
However, separate details from Offaly VEC provide a fuller picture of the reasons behind the fall off in claims. In 2008, its 21 members received an average of €863 for mileage. This compared with €629 per member in 2009, a 27% drop.
The actual distance travelled by members only dropped 6%, or 1,315kms.
In this case the primary reason behind the cuts to members’ claims was the reduction in the public service expense rates from €0.80/km to €0.60. This was the rate for cars above 1,500cc, which applied to 17 of the 21 members.
According to the figures, Offaly predicted the spend would fall further in 2010 to €368 per member. That estimate was based on the reduced claims in the first nine months of the year and a projected fall to 12,716km — 38% below the 2008 heights.
The 2010 accounts will be available later this year.
The former CEO of County Cork VEC has defended his handling of the computer deal which exposed his organisation to unforeseen debts.
Barra Ó Bríain broke his silence to say the contract, that saw County Cork VEC accept all of the financial risks while signing away any claim to potential profits, was a good one for his organisation.
Mr Bríain, who has retired as CEO, said he approved the arrangement between a company called Mobile Voyager Solutions and Glanmire Community College.
When the company stopped repaying its debts and walked out on the project CCVEC was left with loan repayments of €161,990.
The Comptroller and Auditor General criticised CCVEC for arranging to borrow the money to fund the project, without the approval of the Department of Education, while surrendering all rights to the licences developed during the partnership.
However, Mr Ó Bríain said he still believed it was good value.
“I accepted the bona fides that were presented to me and I remain of the opinion that the project and the financial repayment contract arrangement, that was approved by me, was good value and would advance teaching and learning on behalf of the students while at the same time provide a full return of the monies to CCVEC.
“The extraneous circumstances, pertaining to the balance of the monies ... were outside my control and adopting the advice of the legal adviser to the VEC, would involve the committee in significant additional costs, without any guarantee of recovering the balance of the monies,” he said.
Upon leaving Glanmire, Mobile Voyager Solutions sold its licences to a second company set up by its chief executive, Jonathan O’Shea. He then attracted over €400,000 from private investors for the suite of products that included those developed at Glanmire.
Mr Ó Bríain said the fact that Mr O’Shea, who was from Carrignavar, was known to people influenced his decision to authorise the partnership.
“I viewed samples of the project at first hand and I had no doubt in relation to the advantages it afforded students and teachers in terms of the enhancement of teaching and learning in the college.
“I also felt reassured in the fact that the promoter was locally known and in the advice I received had a bona fide unique project that was supported by a registered company, with an authentic bank account number,” he said.
Separate documents released under the Freedom of Information Act show the department was surprised and concerned by the actions of CCVEC in relation to this.
In a letter to the C&AG, former secretary general Brigid McManus said the need to seek approval from the department before entering in to a lease was standard procedure. She was particularly concerned about this because Mr Ó Bríain had been aware about the deal since its inception.
A staff member at a Dublin youthreach project has admitted stealing €30,000 worth of goods from the centre. However, the Department of Education suspects the sums involved are considerably higher.
Gardaí have concluded an investigation into how the money and materials, predominantly linked to a catering service at the centre, were misused.
The staff member has resigned. A prosecution is expected.
According to County Dublin VEC (CDVEC) it noticed accounting discrepancies in Mar 2011 after looking at various goods ordered on a routine basis at the youthreach centre.
It said the suspicions were rooted in the fact the quantities being ordered were above what would be expected to be used in any given week.
“The practice appears to have developed gradually over a number of years on the part of the person who is allegedly involved.
“When this practice was discovered County Dublin VEC seized all files relating to the management of the centre and the following day met with an individual in this regard. County Dublin VEC then filed a complaint to gardaí concerning the matter,” a CDVEC statement said.
According to a brief for the secretary general of the Department of Education, the catering contract has been passed on to another company and rules for spending the centre’s money have been tightened.
The department also said accounts at the project, run under the umbrella of CDVEC, were being examined back to 2004. The department said the expectation is that the €30,000 theft the staff member has admitted to will be surpassed.
“The staff member concerned admitted to the theft of approximately €30,000, however, it is expected that the amount involved could be considerably higher,” the secretary general’s brief said.
In his annual report on CDVEC, the Comptroller and Auditor General noted that the fraud had taken place but said that because of the prompt actions of the VEC there was no need for his office to take further action.
The department and CDVEC said no other irregularities were found in follow-on inquiries into other youthreach centres in Dublin.
CDVEC has spoken to its insurance company about the losses it sustained. It said just one person was involved in the suspected fraud.
“In respect of the centre concerned a total outlay in the region of €30,000 has been identified as having been spent on goods over and above normal stocking requirements and it is clear this arose through the actions of a single individual over several years,” it said.
County Clare VEC broke funding rules by allowing the Burren Outdoor Education Centre to run up debts of over €430,000.
The VEC was forced to cut staff, raise prices, and reduce spending to convince the Department of Education it could remedy the situation.
Following a two-year period of probation, and the delivery of a business plan for the centre, the department agreed to pump extra money into the committee to help fill the hole.
The debt was amassed in 2008 when its running costs exceeded its income and it began development work without having the money to pay for it.
Under Department of Education rules, VECs are allowed to run the outdoor education centres on condition that they at least break even. In the case of the Burren, it had spent €247,412 more than it had taken in by the end of 2008. The same year, it spent €140,360 on capital expenditure after entering 2008 with a €45,886 shortfall.
After examining Clare VEC’s books for 2008, the Comptroller and Auditor General said the €186,246 of capital spending, where no money had been made available, and the operating deficit of €247,412 had left the centre with a loss of €433,658.
The books show the centre overspent over €20,000 in 2004. Of its €400,000 spending that year, 75% went on paying staff.
In a statement, the chief executive of the VEC, George O’Callaghan, said: “The management and staff of the Burren Outdoor Education Centre have overcome the challenges facing the centre and for the last number of years the centre has operated within the guidelines as laid down by the Department of Education and Skills.”
The VEC was asked to clarify what development work had been completed without a budget but it did not respond.
In a brief for the Department of Education, it said civil servants had monitored the centre on a regular basis to ensure it was financially viable. It said that following this probation, it agreed in Dec 2011 to release money to clear the deficit.
The department has been under pressure from private activity centres to clarify the role of the 16 VEC-funded centres. A collaboration of private operators had examined the possibility of taking a case to the European courts to challenge the support for the businesses under the rules limiting the ability of countries to provide state aid.
Jamie Young, of Killary Adventure Centre at Leenane, Galway, said while there was a place for VEC centres their role had to be clarified. He said: “Despite asking various ministers for a number of years we still cannot get an adequate response to what it is the role and remit of these centres and what are the funding parameters for VEC outdoor education centres.”
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