Chapter 2 — Finance

Analysis of individual accounts

The Rosminians rejected the benchmarks used by Mazars as unsuitable comparators. For example the Rosminians object to the capitation grant compared to welfare grants as they feel that it is unjust as the State never used such comparisons when determining the level of the capitation grant.50 They also rejected the reasons advanced for not comparing the Irish capitation rates to British rates.

The Rosminians posited the view that: The level of capitation grant was never claimed to be enough by the State. It was envisaged as contributory funding. It was calculated on compromise and accepted in desperation.51

The Rosminians argue that the capitation grant was deficient even when capital expenses are excluded. ‘Comparison with weekly industrial earnings distributed per capita shows a shortfall in all but 3 of the 30 years between 1939 and 1969.’52

They do however concede that ‘Some fault could be attributed to the religious for not pursuing closer accounting with the State.’53 The Rosminians also dispute that the relationship between the State and the religious as ‘outsourcing’, as claimed by Mazars. The Rosminians counter that the religious were used as it was known that they would ‘act on the basis of charity’: The two Rosminian Schools operated under constant financial constraint and uncertainty. Amongst other influences, this aggravated disciplinary issues. Broken windows or equipment, soiled or torn clothes, perceived waste or stolen food, were punished partly because of the need for stringent economy.54

The Rosminians concluded: Allowing for debate on the complaints, three things are clear beyond interpretation or opinion: What was achieved by the Schools was only possible through significant financial contributions outside State funding. There is no evidence was waste or misdirection in the accounts. State funding was never regarded as adequate by the State or Schools...’55

The Mazars’ report attempted a comparison of the financial data available in respect of these individual institutions for two sample periods, namely, 1951-55 and 1961-65, to ascertain the number of children necessary for the Institution to break even financially.

Mazars reached the following conclusions. When we compare 1951–55 with 1961–65 we noted the following: The breakeven point for Artane and Upton decreased significantly when comparing 1951–55 with 1961–65. In the case of Artane the breakeven level decreased due to the increase in the level of variable income and variable costs by approx. 100 percent to €255 and €126 respectively per child per year increasing the monetary amount of the contribution. In the case of Upton, unlike other schools, variable cost levels per child remained constant at approx. €110 per child per year while variable income increased by approx. 50 percent. Over time the contribution per child has increased. As identified above, this is due to the variable income increasing by a higher monetary value than the variable costs per child. The level of contribution was higher in the schools with a farm due to the farm income, which was an important source of additional funding for those schools. In line with the increased contribution, fixed costs and capital expenditure have also increased. The break-even analysis for the sample period in the 1950’s shows that all of the schools, with the exception of Upton, had numbers of children in excess of the break-even point – suggesting that they should have been in a position to run at least at break-even. In the 1960’s, Artane and Daingean experienced a decline in the number of children to a point below their break-even point. The break-even calculation does not include capital expenditure. If capital expenditure were included, the break-even point would increase in each school. In the 1950’s, capital expenditure was low and would not impact the break even point significantly. In the 1960’s, where capital expenditure was higher, adjusting for capital expenditure would mean that Artane, An Daingean, Upton and Ferryhouse would have numbers of children below their break-even point. • In considering this analysis we believe that two points should be noted. The decline in the numbers of children during the late 1950’s and through the 1960’s meant that the schools in general became increasingly uneconomic to run, with some schools reaching a position where they were below break-even point. However, significant increases in the capitation grant in the late 1960’s, outside of our sample period, would have compensated for this to an extent. We also note that there is a strong argument that capital expenditure was not intended to be funded from the capitation grant – for the reasons we have examined in the early part of this report. If this is accepted as a reasonable understanding of the position, then the break-even analysis excluding the impact of capital expenditure is the more appropriate representation of the position of the individual schools, as regards the expected impact of the State contribution. Of course, the schools still had to fund this expenditure, from other sources if necessary.56

The Rosminians rejected the use of the ‘break-even’ formula: the condition described as breaking even is a false approbation. The School simply postponed improvements in order to maintain existing services. Expenditure was dictated by necessity, and sometimes crisis rather than performance, or aspiration.57

Conclusion

1.There was no opportunity for a school with particular need to have a voice in the negotiations with the Department. The negotiations were dominated by the larger boys schools which adopted a ‘one size fits all’ policy 2.Smaller schools without these advantages struggled to survive.