Chapter 2 — Finance

Adequacy of funding

Details of the building fund were furnished by the Christian Brothers between July 2007 and February 2008.

The Congregation stated The Building Fund consisted of monies which were forwarded to the Provincial Councils by communities for use in refurbishing existing schools and building new schools. A Community submitted excess funds to the Building Fund, which funds could be called on for refurbishments and/or erections of new buildings.

The Congregation was not in a position to say how much money in total was paid in to the building fund by their Industrial Schools but the accounts furnished show that Artane was consistently one of the largest contributors. Visitation Reports show payments into this fund by all the Industrial Schools at some point. There was also some evidence of payments out of this fund by way of loans to the schools but these were relatively small sums and were generally concentrated in the period immediately prior to the closure of the institution as an Industrial School. For example in 1963, when numbers in Artane had fallen substantially, a large sum of money was spent building a swimming pool. In Carriglea, after the decision was made to close down the Industrial School and use it as a Juniorate for the Order, large-scale refurbishments of dormitories occurred.

All of these issues outlined above, although not specifically adverted to in the Mazars’ report, formed part of the documentation used by Mazars to analyse the question of capitation funding. They gave rise to a degree of unease on the part of the Committee regarding the true state of the finances of some of the Industrial Schools.

In addition, the opening statements of the Congregations raised a number of queries: Were Northern Ireland or UK costs valid comparators? Could the comments of Justice Eileen Kennedy, written in 1970 when the numbers had fallen dramatically, apply to the 1936–66 period of high occupancy? Was the capitation grant adequate to meet the basic needs of the children in care?

The submission of the Congregations that Irish schools received considerably less funding than their UK or Northern Irish counterparts was obviously correct. However, this did not necessarily mean that Irish schools received so little funding that they were unable to provide a basic standard of care. The system in neighbouring jurisdictions was fundamentally different in that they had phased out large institutional homes in favour of group homes from the 1920s and this inevitably led to a move towards a budgetary system. A capitation system depended on large numbers of children being committed, a budgetary system did not. It was because the capitation system had encouraged Managers to keep large numbers of children that it was phased out in England and abolished there in 1933 and in Northern Ireland in 1950.

The Managers of schools in Ireland had to be aware of these developments in the UK and yet, as was pointed out in the historical introduction to this chapter, in all of the submissions for increased payments made to the Department, there was no suggestion that the system itself should be changed.

The capitation system had advantages for both the State and the religious Congregations. The religious communities gained by undertaking the work of caring for poor and disadvantaged children as part of their charism. They could ensure a Catholic upbringing for children in need of care while educating them.

The State, by supporting them in the charitable work by paying maintenance for the children, gained an inexpensive pool of care workers without the expense of paying salaries and providing buildings.

However, the capitation system required schools to run at full capacity to be economical, so changes to this system were not undertaken because of the financial implications. It led to more children being kept in the institution than was necessary because their presence served the needs of the bodies in whose care they had been placed. The terms of reference for Mazars Mazars was asked to look at the adequacy of the funding provided by the State to establish whether this sum was adequate to provide basic care for the children in residential institutions. Mazars was asked to examine the accounts of four sample institutions to see how the capitation grant was used and to identify what the overall financial impact the schools had on the Congregations that ran them.

The method adopted by Mazars was to produce a draft report in the first instance, which was sent to the Congregations responsible for the four institutions. These Congregations were invited to make submissions on the general issue dealt with in Part I and Part II of the Mazars’ report as well as the issues specific to their institutions at Part III. They submitted responses that Mazars took into account in producing their revised report.

This section contains the Mazars’ revised report, incorporating some subsequent corrections and amendments, and the submissions made by the Congregations.6 It has to be remembered that the submissions were made in respect of an earlier version of Mazars’ report and so there are some references in the responding submissions that do not relate to the revised report because they have already been taken into account. The main points of difference and argument are however reflected in the revised report and the various submissions.

Adequacy of capitation

Chapter 4 of the Mazars’ report dealt with the adequacy of the capitation grant and summarised its approach as follows: Adequacy in our opinion is most appropriately considered in a context that is contemporaneous and which agrees to the norms of the society at that time. In our work we have sought to compare the capitation grant to available contemporary Irish data. Adequacy is also properly assessed against the background of purpose. In the case of the Reformatory and Industrial schools, the purpose of the capitation grant is, in our view, contained in the guiding legislation.7

Mazars began their analysis by identifying what the capitation grant was expected to cover. Because the schools were the private property of the religious owners, they submitted that the grant was not intended to cover capital acquisitions or capital improvements beyond day-to-day maintenance. This was not always understood by Managers: From the information available to us we understand that the capitation funds were in practice applied to any expenses deemed by the managers of the institutions to relate broadly to the running of the institution8.

Mazars observed that it was both inevitable and appropriate that in the ‘community’ nature of the whole enterprise, school and house (ie Congregation) expenses would be interrelated. Nevertheless they deemed it important to identify what was intended to be covered: it appears reasonable to conclude that the intention in the Act9 is for the capitation funding to apply specifically to the lodging, clothing, feeding and education of the resident children.10