Chapter 2 — Finance

Analysis of individual accounts

The Report noted that the total capital expenditure during the period 1951-69 was €158,745. Capital expenditure using the school account was primarily on building repairs and decorations and furniture and fittings. In the 1960s this amounted to 19 percent of expenditure. In 1969 repairs to buildings made up 29 percent of expenditure. We have received some records in respect of a building account held in the 1960s which was funded by the school account and various grants. It is unclear how much of these funds were used for properties other than for the industrial school; although based on a sample review of such expenditure we did note a certificate of payment in respect of Rathdrum in the amount of IR£750. The accounts of the industrial school indicate funding given to capital expenditure of IR£2,000 for the purchase of a holiday home in 1954, with further contributions to the building fund account of IR£2,000 in 1959 and IR£4,000 in 1960, before a subsequent repayment from the building fund account to the school account of IR£1,050.36

Mazars’ conclusion was that based on the limited information available, the financial position of Goldenbridge over the period 1939-69 ‘are probably best characterised as being one of being close to break even’.37

Where accounts are available, the position is summarised as follows:

Total Expenditure	€351,743	100%
Funded by:
State and Local; Authorities	€282,239	80%
Other Income	€102,913	29%
Surplus	€33,410	9%

The analysis by the Sister of Mercy accountants acknowledged weakness in the fact that it was not possible to get supplementary explanations of various figures in the accounts.

However, based on the financial information available, it suggested that in the period for which accounts were largely available, 1951-69, the school did manage. It was however submitted that this was ‘probably best characterised as being close to break-even’. It suggested that whilst Goldenbridge had an overall surplus in the period analysed, this largely accrued from the mid 1960s when pupil numbers increased and there was a 100 percent increase in capitation grant in 1969.

Unfortunately, much of this analysis is guesswork and there is no real way of knowing the extent to which Goldenbridge contributed to the mother house or how any surplus funds were spent.

An analysis of income and expenditure for the period 1940-69 indicated that ‘the school operated at approximately a break-even position for the first two decades under review but ran into deficit during the third decade.’39 The deficit in 1969 was €20,602.

The primary sources of income were government and local authority grants. Other sources of income included farm sales, stipends, and sundry sales. Indirect sources of income involved the labour of the boys in the trade workshops.

Mazars noted that the expert report commissioned by the Oblates of Mary Immaculate and prepared by Goodbody Economic Consultants suggested that had the school paid wages to the religious staff working there the deficit would have been larger. Mazars accepted that the calculations carried out by Goodbody’s were reasonable but did not take into account: (1) the fact that the reformatory was not a State school; and (2) the system did not provide for the payment of wages at the time.

Separate accounts were not kept for the farm. The school accounts showed the farm making a loss of €25,003 over the period 1940-69. These figures do not, however, take into account the value of farm produce consumed by both the boys and the Brothers and Fathers resident at the School. In availing of farm produce to feed the boys and Brothers, there was, presumably, both a financial saving to the school, which would have resulted in lower total expenditure and lower deficits than if these costs were incurred externally, as well as a corresponding loss of potential income. Similarly, the accounts do not reflect the fact that labour on the farm was largely that of the boys and the Brothers. Again, there would have been a certain saving to the school in using this ready pool of labour as opposed to employing additional farm labourers.40

A Department of Education Report prepared in 1955 stated that the farm was making profits and that there was no evidence that these profits were being ploughed back into the school. Mazars concluded: The views of the Department Official are not consistent with the record in the financial statements, which show an overall deficit from the farm. We have not been able to identify a reason for this inconsistency.41

As to capital expenditure, the terms of the lease required the Oblates to keep the premises in suitable repair, and documentation from the Department of Finance indicated that the capitation grant was sufficient to meet this expenditure. The State was responsible for all items of capital expenditure from 1940-69. Despite the significant capital investment in Daingean in the period 1939-69, Department of Education records indicate that Daingean was not in a good state of repair. Correspondence between the OPW and Departments of Finance and Education in 1969 and the early 1970s indicates that certain buildings in Daingean were ‘structurally unsound’. A visit paid by an official of the Department of Education in 1967 echoes this view of the state of repair, referring to the premises being ‘in a bad state ........... should be demolished’42

Mazars had not had sight of a balance sheet for Daingean during the period under review and accordingly it was limited in the information which could be extracted from the accounts. The salient points in assessing the overall financial consequences included the following: There was a deficit in the bank of the Reformatory School at 30th November 1969 in the amount of €11,710. The total deficits generated by the school over the period amount to €17,706. Expenditure on the buildings (furnishing and carpentry, repairs) amounted to €72,422. In analysing the farm income and expenditure in the school accounts, it can be seen that the farm made an overall deficit of €25,003. It is not known to what extent farm expenditure includes work of either a capital or a repairs and maintenance nature.

The following is a summary of the financial position.:

Total Expenditure	€744,587	100%
Funded by:
State and Local; Authorities	€533,614	72%
Other Income	€193,273	26%
Deficit to be funded	€17,700	2%

Mazars also concluded that: An examination of the transcripts, statements and documentation of the Oblate Order made available to us describes a situation where making ends meet was a constant struggle, especially in light of the ongoing works and maintenance required ...