Chapter 2 — Finance

Adequacy of funding

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

Mazars used the Cussen Report as a point of departure and concluded: in the view of the Cussen Commission, the funding to the schools was adequate if supplemented with a grant towards teaching costs – provision for which was made early in the period under review11

Cussen also suggested bringing the local authority contribution in line with the Department of Education payment and this was also done.

Chapter 4 of the report looked at the rate of capitation increase against inflation and concluded that ‘annual inflation exceeded changes in the capitation grant by 15 percent on average’ between 1939 and 1957. Between 1957 and 1969 ‘the annual capitation changes exceeded inflation by 58 percent on average’.12

As pointed out above, other factors such as the payment of capitation to the under-sixes; the accommodation limit being used as the basis for payment; and the introduction of the National School grant, all increased the actual income to the schools without an increase in the capitation allowance during the 1940s and therefore a simple comparison of capitation and inflation does not give the full picture.

Having compared the capitation rates and economic conditions and the cost of living, Mazars concluded: Taking the review period in its entirety, the funding per head to schools did not decline in real/purchasing power terms as changes in the capitation grant more than match movements in the general price level.13

The chapter then addressed the issue of adequacy of funding, which it approached from two points of view adequacy in accordance with the 1908 Act; adequacy in comparison with other frameworks of reference suggested.

For the first, they used benchmarks that identified the cost of maintaining a child as opposed to maintaining an institution and used: average household income per head; unemployment benefit.

Specifically, Mazars did not accept the comparisons used by the Christian Brothers in some of their submissions, which sought to compare the costs of a residential institution in Ireland with one in the North or UK because of the different economic and social circumstances and because the capitation system had been abolished in the UK in the 1920s and had been replaced with a block grant system that was not dependent on large numbers of children being committed. It did, however, note that the rate of increase in the two jurisdictions was largely in tandem.

Mazars also believed it was invalid to apply modern childcare standards retrospectively as suggested by the Oblates in their opening statement.