National Audit Office: The state’s attempt to change the financing model for the reconditioning of schools failed

Toomas Mattson | 10/8/2009 | 12:00 AM

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TALLINN, 8 October 2009 - According to the National Audit Office the Schools in Order project has not been effective in reconditioning the school environment. The launching of the project was delayed, the investments were not made in the planned volume and all in all less than 5% of the school network was reconditioned. The foundations of the project’s financing system were wrong: the scheme of operations was not thoroughly planned, it was expensive and did not enhance the comprehensive reconditioning of the school network.

In 2005–2008 Riigi Kinnisvara AS renovated altogether 27 school buildings. Overall, as of March 2009, about 910 million kroons have been invested in school buildings – this is about half of the amount initially envisaged. The Schools in Order project has not constituted a step towards the development of a sustainable school network, as the state did not have and still does not have a clear depiction of an optimum school network.
The problems will not disappear as the majority of the approximately 600 general education schools in Estonia need more extensive reconstruction or renovation. The schools are predominantly owned by local governments, partly by the state and to a small extent also by the private sector.
The complicated financing system – devised for the financing of the Schools in Order project – which attempted with the help of debt finance to boost the amount of money contributed by the state and at the same time try to show smaller commitments both in the state and local government accounting, failed. The state has not managed to develop a financing system, dedicated to the improvement of the school network infrastructure, which could ensure a modern learning environment for students in Estonia and keep the amortisation of schools under control.
The financing-related chaos has caused damage mostly for the state-maintained schools where the environment is far from being in conformity with modern standards. The delays caused by the Ministry of Education and Research in making investment decisions as regards state schools and the anticipation of a suitable financing system has constantly postponed school reconstruction. The unused finances of the Schools in Order project would be sufficient for the reconditioning of these schools, but this possibility may be lost due to fiscal policy choices (to fulfil Maastricht criteria) made by the state.
The chief auditor of the Performance Audit Department Tarmo Olgo said, commenting the results of the audit: “We do not know today which schools and to what extent are vigorous and how the reconstruction and continuous maintenance thereof should be arranged. Who is responsible for it on the state level is unclear.” Olgo stated that the conclusions of this audit are unfortunately similar to those made by the National Audit Office five years ago in its audit The planning of state investments for general education schools and the use of these resources. “If these decisions are not made, it is not possible to continue the proceedings with the new Basic Schools and Upper Secondary Schools Act which has at the moment passed its first reading in the parliament. The National Audit Office is of the opinion that if an optimum school network is not determined, it is very probable that wrong investment decisions will be made in the future. On the other hand it is not possible to channel the development of the school network if the state has not made its investment decisions. The decisions must be based on the school network, the decisions must be collective, clear and public and supportive of integrated solutions for the reconditioning of the schools," stated chief auditor Olgo.
The Minister of Finance, the Minister of Education and Research and the Chairman of the Board of Riigi Kinnisvara AS agreed with the majority of the conclusions made in the audit. The Minister of Education and Research announced that the Ministry is drafting a county-based analysis of the school network which with the optimisation of the school network should finally determine the network of sustainable and strong basic schools and upper secondary schools providing possibilities for good-quality studies. The minister did not specify when it would happen.
The Minister of Finance announced that by the end of November 2009 it will be clear which format of operation is most practical for the Riigi Kinnisvara AS in the administration of state property. This will determine the possible future role of Riigi Kinnisvara AS in managing state investments into the school network.
The National Audit Office audited the school reconditioning programme launched in 2004 the aim of which was to invest altogether 1.8 billion kroons in school buildings. The objective of the new programme was basically to amend the principles of the earlier financing model for the reconditioning of schools based on the programme of investments. This idea was to be implemented by Riigi Kinnisvara AS which named it the Schools in Order project. The National Audit Office evaluated whether the Schools in Order project was effective, i.e. whether it lived up to the expectations.

Toomas Mattson
Communication Manager of National Audit Office
Telephone: 6400 777
Mob: 51 34900
E-mail: [email protected]

  • Posted: 10/8/2009 12:00 AM
  • Last Update: 11/10/2015 5:58 PM
  • Last Review: 11/10/2015 5:58 PM

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