Chapter 2 — Finance

Adequacy of capitation

In some Sister of Mercy schools such as Goldenbridge, rosary bead making and other industries provided a considerable extra income to the school.

There was evidence from complainants of baking and laundry facilities being made available to the public for profit.

Not all schools had these additional factors but some did. At the very least it might be expected that in schools that had extra resources, the capitation grant would be seen to go further and provide a better standard of care for some children. There was little evidence that this occurred and indeed some of the best physical care was given by schools such as St Joseph’s Kilkenny, which had almost no farming and no outside source of income.

Another significant factor identified by Mazars was the economies of scale that applied to the larger institutions. The Orders argued that the institutions’ fixed costs remained static irrespective of how many children were there. This fact, which was used to ground an application for increased funding when numbers began falling, was also true in reverse. Large institutions should have had the benefit of savings when in periods of full occupancy and yet the evidence pointed to greater deprivations during those periods.

Mazars’ findings were contrary to the assertions of the Congregations and the Department of Education. The Commission invited submissions from the four Congregations that were the subject of the accounts analysis in the third part of the Mazars’ report and from the Departments of Education and Science and Finance.

Response of the Christian Brothers

The submission by the Christian Brothers in response to Mazars was dismissive and critical of the Mazars’ approach in relation to adequacy of the capitation grant. This document exhibited a defensive approach by this Congregation to the investigation by the Committee. Instead of seriously analysing the funding issue and acknowledging the validity of the questions raised, the response sought to achieve by vehemence what it ought to be striving to do by way of analysis.

Mazars was asked to look at the capitation paid to ascertain whether it was enough to do the job intended. Mazars was not asked whether the system was cheaper or more expensive than that operated elsewhere. They were asked simply to analyse whether the money paid for the maintenance of the children was sufficient to do that. Mazars used comparators that were contemporaneous and directly relevant to the costs of childcare at that time.

Their analysis showed that when compared with costs in Ireland at the time, the capitation grant was adequate to care for the children to a reasonable standard. Other factors such as economies of scale, farming produce, contribution from trades and income from trades could be factored in, depending on the individual school, and these would also impact on the resources available to care for the children.

The Congregation did not respond to this analysis but simply dismissed the basis for it and insisted that the only valid comparator was the one they set out in their opening statements, that of a school in Northern Ireland or in the UK.

The Congregation criticised Mazars for failing to take note of the findings of the Kennedy Commission (1970), the Tuairim report (1966), and the Department of Education submission to this Committee. All submitted that the funding to Industrial Schools was inadequate. However, both of these reports were written at a time when numbers had fallen so dramatically that the system of funding, based on capitation, was under pressure. Even at this time, the payment per child was reasonable but the costs of keeping the institutions open for smaller numbers was becoming more burdensome and was taking an increasing amount out of the maintenance grant. The Department of Education acknowledged to the Committee that they had not conducted any investigation into the rates of capitation but had simply relied on the Kennedy and Tuairim reports and on the correspondence with the Resident Managers’ Association through the years.

The question Mazars was asked to investigate was whether the capitation was adequate throughout the relevant period including periods of high occupancy.

The Sisters of Mercy response

Some issues arose in relation to the Sisters of Mercy and Goldenbridge that also gave rise to questions on finance.

The Sisters of Mercy ran a lucrative bead-making industry in respect of which no accounts appeared to have survived. Inquiries by the Committee indicated that this activity brought in at least £50 per week.

In 1952, which was a time when the Resident Managers were demanding substantial increases in capitation allowances, the Sisters bought a large house in Rathdrum, County Wicklow, with this money, which they used as a summer house for the children for a couple of weeks every August. There was no record of any other Sisters of Mercy schools using Rathdrum and there is no evidence as to what it was used for during the other 11 months of the year. Such a purchase was not consistent with an institution struggling to survive. The Sisters’ response also dismissed the comparators used by Mazars on the basis that they failed to take into account the nature of the costs implicit in running an institution. It insisted that the only valid comparator was with a UK institution but, like the Christian Brothers’ submission, did not advert to the differences between the two systems.

The Rosminian response

The Rosminians also disputed the comparators used because of the inherent expenses in running an institution that were not reflected in ordinary household accounts. They stated: In any event, and critically, the schools were dealing with a situation which required remedial and restorative standards of care. This cannot be done on a tight budget, never mind a persistent deficit.