COMMITTEE OF PUBLIC ACCOUNTS debate - Thursday, 16 Jun 2005

Chairman

The next item is the 2003 Annual Report of the Comptroller and Auditor General and Appropriation Accounts: Vote 26, the Department of Education and Science; Vote 27, first level education; Vote 28, second level education; Vote 29, third level and further education; chapter 9.2, centres for young offenders; chapter 9.3, qualified audit certification of appropriation account; and relevant correspondence, which is item 3.4 on the agenda.

Witnesses should be aware that they do not enjoy absolute privilege before the committee. The attention of members and witnesses is drawn to the fact that as from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act grants certain rights to persons identified in the course of committee proceedings. These rights include the right to give evidence, the right to produce or send documents to the committee, the right to appear before the committee either in person or through a representative, the right to make a written and oral submission, the right to request the committee to direct the attendance of witnesses and the production of documents, and the right to cross-examine witnesses. For the most part these rights may only be exercised with the consent of the committee. Persons invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of these rights and provided with the transcript of the relevant part of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in the legislation I should remind members of the longstanding parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official, by name or in such a way as to make him or her identifiable. Members are also reminded of the provisions within Standing Order 156, that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government, and the merits of the objectives of such policies.

Ms Brigid McManus

I am accompanied by Mr. Martin Hanevy, Assistant Secretary General dealing with finance in my Department, and by Mr. Brian Duggan, Ms Blaithín Dowling and Mr. Alan O'Neill from the finance unit, and by Mr. Liam Hughes who deals with the centre for young offenders.

Ms Ann Nolan

I deal with the education Vote. I am accompanied by Ms Emer Hogan who also deals with the education Vote and Ms Joan Daly, who deals with administrative Votes.

Chairman

Paragraphs 9.2 and 9.3 of the Report of the Comptroller and Auditor General read:

9.2 Centres for Young Offenders

Legislative Framework

Institutional reformatory and industrial schools, dating from the middle of the 19th century, were set up to provide custodial care for young offenders and neglected children. The Minister for Education and Science is statutorily obliged under the Children Act, 1908 to 1989 to provide places for young offenders. The Children Act, 2001 constitutes a fundamental revision of existing legislation. It provides a new legislative framework for the Departments of Education and Science, Health and Children, and Justice, Equality and Law Reform and their Agencies in the delivery of support services for children with special care needs or those in conflict with the law. On its enactment, it was intended that the Act would be commenced on a phased basis, with an original timeframe for implementation of 2006.

The Minister for Education and Science is responsible for the commencement of Section 88 (remand in custody) insofar as it relates to junior remand centres and Part 10 of the Act, which provides for the establishment of Children Detention Schools (under 16 year olds) to replace the existing reformatory and industrial schools. The necessary commencement orders have not been made yet.

Preparation for the introduction of the educational provisions of the Act is ongoing but these provisions cannot commence until separate detention facilities are provided for 16 and 17 year old boys and girls by the Department of Justice, Equality and Law Reform. The Accounting Officer informed me that at present there was no timescale for providing these facilities. However, having regard to the difficulties being encountered in implementing the Act, the Cabinet Committee on Children had recently approved an urgent review of the key obstacles to the implementation of the Act. The National Children's Office was co-ordinating this review.

The Special Residential Services Board was established in November 2003 under the Children Act, 2001 to provide policy advice to the Ministers for Health and Children, and Education and Science on the remand and detention of children in detention schools and special care units. It also has responsibility to advise on co-ordination of the delivery of residential accommodation and support services for children in these schools and units, the efficient use of the schools and units, and the level and nature of services available for children charged with offences, as well as those with behavioural problems and in need of special care and protection.

The Centres

The Department of Education and Science owns the five Centres for Young Offenders. They generally cater for children under 16 years of age who have been convicted or placed on remand by a Court. The centres are as follows:

Finglas Child and Adolescent Centre, Dublin (recently downsized to 12 places). This is an industrial school.

Oberstown Boys Centre, Lusk, Co. Dublin (20 places). This is a reformatory school.

Oberstown Girls Centre, Lusk, Co. Dublin (15 places). This is a reformatory school and unlike the Centres for boys, admits girls who are aged 16 years.

St. Joseph's Special School, Clonmel, Co. Tipperary (40 places). This is an industrial school.

Trinity House School Lusk, Co. Dublin (27 places). This is a reformatory school and is the only secure facility operated by the Department of Education and Science.

All of the schools, with the exception of St Joseph's School, Clonmel are certified by the Minister for Justice, Equality and Law Reform as places of detention for the purposes of Part V of the Children Act, 1908.

Scope of Audit

I examined the outturn of the Centres in terms of occupancy levels, staffing and capital and running costs.

I also reviewed how the Department discharged its overall responsibility for the Centres.

Occupancy and Staffing Levels

Refurbishment and renovation work, fire, safety and security concerns and current childcare practices determine the operational capacity of the Centres at any particular time.

Table 40 gives details of the occupancy, vacancy and staffing numbers for each of the Centres at the end of January in each of the last three years.

Table 40
		Occupied beds	Vacancies	Non-teaching Staff	Teachers employed
Finglas Child and	2002	24	7	129	15
Adolescent Centre	2003	14	17	125	17
	2004	21	5	119	12
Oberstown Boys Centre	2002	20	0	82	13
	2003	20	0	89	12
	2004	20	0	85	11
Oberstown Girls Centre	2002	8	7	49	—
	2003	10	5	60	—
	2004	9	6	67	—
St. Joseph’s School	2002	33	7	127	13
	2003	31	9	131	13
	2004	25	15	115	11
Trinity House	2002	22	2	103	10
	2003	20	7	113	10
	2004	18	9	112	9

The Department has indicated that the capacity requirements of the sector have been declining over the past number of years, with the provision of facilities for "out of control" young people within the health sector, the increasing view of detention being a last resort (a policy enshrined in the Children Act, 2001), demographic developments and the development of alternatives to custody.

The Special Residential Services Board has recommended a bed capacity of 88 plus 6 step-down beds and has recently introduced a centralised system whereby all bed requests from the Courts are channelled through it. The Department liaises with the Board in monitoring the on-going demand for beds. With the reduced capacity at Finglas, the current operational capacity for all Centres is 114 (99 male beds and 15 female beds).

Table 41 highlights the average staff numbers for each child detained based on occupancy levels at 31 January each year.

Table 41 Staff to Children Ratio in Centres
	2002	2003	2004
Finglas Child and Adolescent Centre	6.0	10.1	6.2
Oberstown Boys Centre	4.7	5.0	4.8
Oberstown Girls Centre	6.1	6.0	7.4
St. Joseph’s School, Clonmel	4.2	4.6	5.0
Trinity House Lusk	5.1	6.1	6.7

Capital Costs

The Department is embarking on a capital redevelopment programme for the Lusk campus that will have regard to the split of beds between remand and committal beds, and within committal beds, the number of secure beds required; the provision for boys and girls; the educational and recreational needs of the young people; as well as the implications of shorter sentences envisaged under the Children Act. The dual function (the only Centre that caters for both Health Board and committal cases) of St. Joseph's School Clonmel and its certification under the Children Act, 2001 is also being addressed. On finalisation of this process, the Department proposes to agree a strategic plan for the sector.

Capital expenditure on Detention Centres in the period 2001 to 2003 is summarised in table 42.

Table 42
	2001	2002	2003
	€000	€000	€000
Finglas Child and Adolescent Centre	1,518	2,774	2,704
Oberstown Boys Centre	343	126	139
Oberstown Girls Centre	274	142	102
St. Joseph’s School, Clonmel	5,042	153	234
Trinity House School	1,135	4,030	1,509
Lusk Campus	1,454	273	—
Total	9,766	7,498	4,688

In total almost €22 million has been invested over the period. The major items within this expenditure included

The purchase of St. Joseph's School in Clonmel by the Department

The provision of a specialised unit at Trinity House catering for up to 6 young people displaying extremely challenging behaviour. The Department is currently considering the staffing requirements of the Unit and is examining its potential within the system in the context of the commencement of the Children Act, 2001

The refurbishment of the Care and Education Unit at Finglas

The provision of a security fence at the Lusk Campus

The provision of step-down facilities at Trinity House and Oberstown Girls Centre.

There was also ongoing capital investment to ensure that the schools meet modern childcare standards in accordance with best practice internationally.

The Department considers that the investment has maintained rather than increased the overall capacity of the system.

Running Costs

Table 43 gives the day-to-day running costs of the Centres for 2001 to 2003.

Table 43
		Pay	Non-pay	Total
		€	€	€
Finglas Child and Adolescent Centre	2001	5,462,491	910,273	6,372,764
	2002	6,199,877	1,043,821	7,243,698
	2003	5,828,252	1,047,317	6,875,569
Oberstown Boys Centre	2001	3,508,217	698,152	4,206,369
	2002	4,164,114	572,541	4,736,655
	2003	4,219,836	765,816	4,985,652
Oberstown Girls Centre	2001	1,825,648	375,512	2,201,160
	2002	2,427,932	287,616	2,715,548
	2003	2,326,067	342,902	2,668,969
St. Joseph’s School	2001	3,982,595	749,602	4,732,197
	2002	4,835,922	786,915	5,622,837
	2003	4,875,173	829,964	5,705,137
Trinity House	2001	4,205,775	803,578	5,009,353
	2002	4,923,052	1,181,901	6,104,953
	2003	5,582,799	1,079,516	6,662,315
Total cost 2001-2003	75,843,176

Table 44 shows the annual cost of maintaining a detention place for a young person in each of the Centres. It is based on average operational capacity and the level of running costs for 2001-2003. The cost includes the salaries of Teachers, Directors and Deputy Directors of the Centres but excludes any apportionment of capital costs and expenditure funded from income from Health Boards and Local Authorities.

Table 44 Cost for each detained young person
	2001	2002	2003
	€	€	€
Finglas Child and Adolescent Centre	163,404	258,704	245,556
Oberstown Boys Centre	175,265	236,833	249,283
Oberstown Girls Centre	146,744	208,888	177,931
St. Joseph’s School, Clonmel	118,305	140,571	142,628
Trinity House, Lusk	208,723	226,109	246,752

The relatively low cost involved in St. Joseph's reflects the fact that, as an industrial school, dealing with the younger and less difficult cases, it requires less intensive staffing levels, and due to its size enjoys economies of scale that cannot be availed of by the other Centres.

Management of Centres

The Children Detention Centres are currently managed by administrative Boards of Management pending the appointment of newly composed Boards under the Children Act, 2001. One Board is responsible for the three schools on the Lusk campus while individual Boards of Management are in place for the Finglas Child and Adolescent Centre and St Joseph's School.

The main functions of the Boards are

Direct governance of the schools in accordance with policy guidelines and regulations made by the Minister for Education and Science

The selection, appointment and dismissal of staff subject to the Minister's approval

Financial management and control within approved budgetary procedures

The maintenance and upkeep of the premises, furniture and equipment

Providing the Minister with an annual report on the operation of the Centres and such other reports and information deemed necessary.

Review of Centres

In October 2001, the Department commissioned a consultant to undertake a review of existing residential provision for children convicted or held on remand by the Courts and having regard to the provisions in the Children Act, 2001, and best international practice. The consultant completed his review in December 2002 and concluded that the bed capacity should be maintained at its current level in the short-term.

Among the recommendations put forward was that "the management of the schools must be urgently addressed with the establishment of one Board of Management for all five schools and the appointment of a Chief Executive Officer with the requisite authority and staffing to manage the schools effectively".

I asked the Accounting Officer why this recommendation was not proceeded with.

He informed me that the recommendation was not proceeded with as the Department felt that there were inconsistencies between the recommendation and the requirements of the Children Act, 2001. Furthermore there was a potential overlap with the Special Residential Services Board and in any event the workload would be excessive for a part-time board. Nevertheless, he stated, the management of the sector was being kept under review pending the finalisation of the arrangements in the context of the commencement of the Children Act, 2001.

Measuring Performance

There are no performance measures identified for the Children Detention Centres. The main functions of the Centres are to provide appropriate educational and training programmes and facilities for the children referred to them by the Courts, and to promote their reintegration into society.

In response to my enquiries on the absence of performance measures for the Children Detention Centres and as to how the Department satisfies itself that the centres are currently delivering services in an efficient and cost effective manner, the Accounting Officer stated that while there were no formal performance targets identified for the Children Detention Centres they operate in accordance with the standards, procedures and guidelines prepared by the Department. Each Centre has its own individual statement of purpose and function, and individual care and education plans are drawn up for the children concerned. He pointed out that the Department maintained an ongoing review of bed utilisation in the schools and reviewed specific issues/aspects of service delivery as situations arose. He stated the Department's priority was the commencement of the relevant aspects of the Children Act, 2001 and in that context, work on codifying practices and policies across the schools is being undertaken. Once completed, this work and an agreed data framework would facilitate the introduction of consistent performance targets across the schools.

He said the Department was also examining staffing arrangements in terms of care staff ratios, pupil teacher ratios and administrative/clerical support. Once completed, this information would facilitate the adoption of standard ratios, which would allow comparisons across the sector.

Inspection of Centres

Section 46 of the 1908 Act provides for inspection of certified schools on an annual basis.

I asked the Accounting Officer for details of inspections carried out in the five-year period 1999 to 2003. He informed me that inspections were carried out by the Department on all five Centres in 1999. He went on to say that Departmental policy had shifted towards having inspections carried out by an external agency. The first such inspection was at the Finglas Child and Adolescent Centre in 2002.

The inspection of the Finglas Centre found that the organisation was in acute crisis, lacking clear direction and not meeting a number of basic requirements, and having internal undermining conflicts. The inspector was retained by the Department to monitor progress in the Finglas Centre and has made a further four visits to the Centre in late 2002 and during 2003 to monitor implementation of his recommendations.

A further review of the operations of the Finglas Centre completed in May 2004 reported that the staff and management of the Centre were of the view that they had lost their capacity for the day-to-day delivery of care to young people, and that the Centre could not continue to operate in its current state. It has since been downsized from 3 units catering for 26 persons to 2 units catering for 12 persons.

It appears that the problems continued to mount despite the Department's investment of some €5m in the Centre since 2001.

The Accounting Officer stated that the Department had no indications that difficulties in the nature of those experienced in Finglas exist in the other four Centres. He also stated that an inspection of the Clonmel School had recently been completed and found the school to operate efficiently and effectively and to make good use of the resources available.

The remaining three Centres (Oberstown Boys and Girls Centres, and Trinity House, Lusk) have not been inspected, notwithstanding a key recommendation of the December 2002 independent review that

"All schools should be subject to independent inspection by the end of March next year (March 2003) in order that the central management, organisation, policy and practice issues within each of the schools are identified and a plan formulated to address them".

The Accounting Officer informed me that having regard to the provisions of the Children Act, 2001 the following were being considered the appointment of an Inspector of Children Detention Schools

provision for each school to be inspected every six months the feasibility of retaining the Irish Social Services Inspectorate to undertake the inspection function.

Management Information

The Department is considering with the Directors of the Centres the feasibility of introducing a management information system which would store data on young people, produce reports and statistical information and assist in the tracking of young people within the sector. Data from the Centres will also be incorporated in a primary school database being developed by the Department.

Work on codifying practices and policies across the schools is being undertaken in the context of the commencement of the Children Act, 2001. Once completed, this work and an agreed data framework will facilitate the introduction of consistent performance targets across the schools, e.g. in terms of level of absconding, incidents of removal from the group, etc.

The Department has introduced a system of electronic staffing returns which will provide data for use in the filling of vacancies, identifying ratios and highlighting differences from Centre to Centre.

Post-Release Monitoring

Trinity House School introduced a tracking system in 2002 in conjunction with the establishment of a step down/pre-release unit. The primary aims of the tracking system are to retain information on the care provided at the school and to identify supports required by young people during their transition from residential care to independent living.

A step down unit has been established in Oberstown Girls Centre and a tracking system is being developed there also.

The Accounting Officer informed me that the tracking system was an initiative undertaken by the Director of Trinity House School in 2002 following the development of the step-down unit. The position of the 57 persons covered by the system was that within six months of their being discharged, 25 were residing at home, 24 were reported to be in prison, 3 were in residential care in the Health Board sector, 2 were reported to be homeless and 1 had returned to Trinity House School. The whereabouts of the remaining 2 is unknown. The re-offending rate for 2003 regarding young people leaving the school was 50%. He pointed out that eight young people who picked up new charges after leaving the school did not go to prison because of direct intervention by the step-down unit.

The Department is considering the introduction of a tracking system across all schools in the context of introducing a management information system.

9.3Qualified Audit Certification ofAppropriation Account

Accounting Officers are required by law to sign and present for audit the Appropriation Accounts for their Votes to the Comptroller and Auditor General before the 1st day of April in the year following the financial year to which they relate. It is the responsibility of the Comptroller and Auditor General to audit the Accounts and to report on them by 30 September of the same year.

The Appropriation Account for Vote 26 for the year ended 31 December 2003 was signed on 31 March 2004 and submitted to the Comptroller and Auditor General for audit on that date.

The Appropriation Account presented by the Accounting Officer on 31 March 2004 was accompanied by a note stating that due to technical difficulties associated with the introduction of the new Financial Management System (FMS) it had not been possible to execute the reconciliation process required for completion of Note 5 (Net Liability to the Exchequer) and associated tables in the attached Appropriation Account for 2003 by the 31 March deadline.

The imbalance on the Appropriation Account presented was €4.6 million.

The practical effect of the unresolved imbalance is that it is not possible to determine the proper charge to the Vote for the purpose of establishing a correct surrender figure to the Exchequer. While the Department has reduced the imbalance to €681,035 and is continuing to try to bring the account into balance, it is unable to do so within a time frame which would allow me to meet my statutory date for reporting on the Appropriation Accounts to Dáil Éireann. I have therefore qualified my audit certificate accordingly.

I enquired as to the circumstances that gave rise to the imbalance and the action being taken to resolve the matter.

Accounting Officer's Response

Background

A number of major changes and new procedures were introduced in the Department's accounting processes during 2003. On 1 July 2003, the Department moved from four Votes to a single Vote. On 7 July 2003, the Department began operating its new FMS. In addition, during 2003, the payment of pensions to retired teachers changed from a system of warrants to payable orders. Furthermore, in mid-2003, the Paymaster General (PMG) viz. the Department's banker, implemented a new computer system which caused some initial problems for the Department. The fact that the end-year reconciliation was the first using the new FMS, together with the major changes in the overall accounting process, added hugely to the complexity of the operation in the short-term.

Scope of the Problem

Arising from the introduction of the changed Vote structure from July 2003, the Department produced balanced accounts to the end of June 2003. The Department has agreed its receipts and payments with the PMG for all of 2003. The difficulties can be therefore isolated to the six months following the introduction of FMS and specifically to the bookkeeping part of the system. The balance at bank per the PMG is greater than the Department's trial balance is indicating it should be. There is nothing to suggest fraud or money loss. Rather the difficulty is in tracing transactions and their history in order to complete the Appropriation Account.

What Caused the Problem

In the course of the investigation of the sources of the specific problem with the Appropriation Account, the Department identified a number of issues requiring attention but which, of themselves, do not explain or identify precisely why the system has failed to deliver the required results. Essentially, until it is established with reasonable precision the totality of what went wrong it is not possible to be definitive about what caused the difficulties or to apportion weight to individual contributory factors.

Among the factors identified during the investigation to date were a combination of

human errors

data input errors

FMS treatment of data

omissions arising from how reports extracted data from FMS.

These factors led to the miscoding of transactions, inconsistencies in postings to ledgers, use of invalid codes, misposting of cancelled payments and incorrect treatment of foreign currency transactions. In terms of difficulty in producing the Appropriation Account, the essential point was that while all the data was in the system, some of it was not stored correctly or in a location where report software as designed would pick it up.

A key underlying constituent of the problems that emerged was the pressure on the Finance Unit to cope with the additional workload involved in the changeover to the new system — dealing with an enormous volume of financial transactions together with the requirement to reconcile and transfer additional data onto the new system and operating both the old and new systems for the first three months. The pressure was compounded by the fact that the advent of the FMS brought with it the introduction of more advanced accounting approaches to the line and bookkeeping sections. The lack of expertise of Departmental staff coupled with the lack of understanding on the part of the software consultants of government accounting requirements meant that efforts to satisfactorily address some of the problems as they arose foundered. It was in this context that the necessary functionality had not been built into the new system.

Remedial Action

The Department has adopted a multi-pronged approach to accelerate a resolution of the problem. First, it is continuing to work on the 2003 Appropriation Account with particular attention directed on how the system is handling records of the PMG bank account transactions. Second, it is moving ahead to bring all 2004 reconciliation work up to date while applying any insights gained to date from the work on the 2003 account. It is also enhancing its IT capacity by a combination of additional in-house and external IT resources. The aim is to have the enhanced IT assistance both facilitate further checks on the 2003 data and the 2004 reconciliation work, through additional reports as the need for them is identified, and at the same time to put into place any enhancements to the FMS that are considered necessary.

In order to strengthen expertise in the Finance Unit, professional accounting advice has been provided in recent months and further training for the key areas is planned during 2004.

As part of the ultimate response to this experience, it is intended to put in place an extensive review of the Department's financial systems and procedures.

The Department further augmented the internal resources deployed to resolve the issue in July 2004, in parallel with a top down in-depth assessment being conducted by the system's developer. It has also engaged additional professional accounting expertise to advise the Department and to recommend, where appropriate, improvements to its systems, processes and procedures.

Mr. John Purcell

Chapter 9.2 sets down the results of an examination into the costs of providing custodial care for young offenders who may be remanded or detained in one of the five centres under the aegis of the Department of Education and Science. Many of these young people have serious problems to be addressed. Therefore, the services they require are resource intensive. It is surprising to find the current annual cost of maintaining one young person based on average occupancy levels can be up to €500,000 depending on the centre involved. Considering this from a different angle €128 million was spent in the four year period 2001-2004. That consisted of €104 million in operational costs and €24 million in capital expenditure. The occupational capacity of the five centres is 114, although the number detained is normally somewhat less than that. The figures for costs and ratios of staff to detainee suggest there is scope for improving the efficiency and effectiveness of the management of at least some of the centres. This was borne out by an inspection of the Finglas centre, which found a lack of clear direction, and basic requirements not being met despite having high levels of staffing and recent substantial capital investment. For instance, in January 2005, on the staffing side, there were 99 non-teaching staff and nine teachers employed to look after eight occupants. On the other hand, an inspection of the centre in Clonmel found that it had been operated efficiently and effectively and was making good use of the resources available. I understand that two of the three centres in Lusk have not been inspected since 1999 although much more frequent inspection had been envisaged.

In general, there has been little or no attempt by the Department to devise performance measures for the centres, which would enable comparisons to be made across the sector and facilitate the development of standard staffing ratios, while always taking account of the different categories of offender at each centre. This sort of exercise would give an indication of the relative efficiency of the centres, with the possibility of benchmarking against similar centres in other jurisdictions.

Some work was scheduled on codifying practices and policies across the centres, ultimately moving to the introduction of consistence performance targets in terms of the level of absconding, incidents of removal from the group and so on. At the date of my report, the Department was considering extending the tracking system introduced in Trinity House in 2002 across all centres to gather information on those who had been discharged. Data from post-release monitoring could provide a useful feedback to inform efforts to improve the effectiveness of the rehabilitation process in the centres.

Chapter 9.3 of my report elaborates on the circumstances which gave rise to a qualified audit certificate on the Department's appropriation account for 2003. The initial account presented for audit had an imbalance of €4.6 million and was accompanied by a note from the then Accounting Officer stating that due to technical difficulties associated with the introduction of a new financial management system, it had not been possible to effect the necessary reconciliations in time to meet the statutory deadline for presentation. The Department continued to work on balancing the account while the audit was taking place, and by the time it was completed, had reduced the imbalance to somewhere about €680,000. The failure to balance the account meant that I was unable to verify the charge to the Vote, and by extension, the surrender figure to the Exchequer.

The Department completed its full revision and reconciliation of the 2003 account in November 2004. The end result was a lower outturn for the year than was included in the appropriation account by an amount of some €670,000. This additional surrender figure was paid over to the Exchequer and I have confirmed the accuracy of the revised figures.

As is clear from the report, the Accounting Officer put the failure to present a balanced account down to a number of factors, the main ones being the introduction of a new computer system, the amalgamation of four education Votes into one Vote and subsequent pressure on the finance unit. These factors, combined with software problems and human error, were compounded by a lack of advanced accounting expertise in the sections concerned. I am glad remedial action has been taken on all of these fronts, and on the basis of the audit work so far on the 2004 appropriation account, the signs are that this has had the desired effect.

The changeover to a new financial and accounting system will always involve some pain, and managing that risk of failure assumes paramount importance. In this case, the evidence is that the Department did not equip itself sufficiently well to achieve this task successfully, and the cost of putting it right has been substantial. I suppose the difficulties could have been avoided by proper planning. The amalgamation of the Votes in mid-year certainly did not help, and an indication of the danger of this action was signposted by this committee in early 2003 in a letter to the Department of Finance. All is well that ends well, but not until after an expensive lesson had been learned in this case.

Chairman

What are the statutory requirements? Is it correct that the accounts are finished by 31 December?

Mr. Purcell

The accounts are now for the previous calendar year, as they have been for many years. An Accounting Officer is required to submit the accounts to me for audit by 31 March. That is a reasonably tight deadline of three months. I am then required to carry out the audit and produce any report on the audits to the House by 30 September of the following year.

Chairman

By what date was this eventually finalised?

Mr. Purcell

The account was finally reconciled and balanced in November 2004, somewhat later than would have been envisaged by the statutes.

Ms McManus

I thank the committee for the opportunity to make an opening statement, and in particular to address chapters 9.2 and 9.3 of the report by the Comptroller and Auditor General.

Chapter 9.2 deals with the centres for young offenders operated under the aegis of my Department. It outlines the legislative framework within which these centres operate and examines the centres in terms of occupancy levels, staffing and capital and running costs. The report also refers to the management of the centres, formal performance measures, child care inspection, the development of a management information system and post-release monitoring.

The current operational capacity of the five schools is 114 places, of which 99 are for boys and 15 for girls. The average occupancy during 2004 was 84. The 2004 average cost per place for this sector, based on operational capacity, is approximately €250,000. This compares with a 2003 average cost of €213,000. The 2004 average cost per place based on average occupancy in the sector was €368,000 as compared with a 2003 average cost of €305,000. As indicated in the Comptroller and Auditor General's report, the cost varies by centre. The Clonmel centre, which is of a somewhat different nature, is the cheapest of the five.

The report refers to difficulties at the Finglas child and adolescent centre. The Comptroller and Auditor General referred to those difficulties in his introductory remarks. Capacity at that centre was reduced from 26 to 12 places in July 2004 on foot of recommendations contained in an operational review of the centre undertaken on behalf of the Department by Mr. Michael Donnellan, the director of the Trinity House school. He completed his report in May 2004. While a new board of management was appointed in July 2004, in line with the provisions of the Children Act, 2001, and a new director was appointed in October 2004, the centre continues to operate at a reduced capacity of 12 places until the Department is satisfied that the issues and problems identified during the operational review affecting the efficient and effective operation of the centre have been resolved satisfactorily. In line with the consultative process recommended in the Donnellan report, the Department is at present working with the board of management and the Special Residential Services Board to establish the medium-term focus for the centre and its fit within the overall service provision of the children detention schools.

A considerable amount of capital investment has been undertaken by the Department and further investment is required in the children detention schools to ensure that they meet obligations under the Children Act 2001, in addition to meeting modern child care standards in accordance with best practice internationally. Capital expenditure on the schools for the period 2001 to 2004 amounted to €24 million.

The overall development needs of the schools at Oberstown, Lusk, County Dublin, are currently under consideration, and a firm of consultant architects has been appointed to draw up proposals. The resulting campus masterplan will take account of the anticipated number of remand and committal places required, the provision for boys and girls, their educational and recreational needs, as well as the implications of shorter periods of detention envisaged under the Children Act 2001. The intention is that the masterplan, which is planned to be available in the third quarter of 2005, will provide the basis for the phased development of the Lusk campus, on a priority basis, as resources permit. In addition, ongoing capital expenditure on urgent interim building works is required.

The Children Act 2001 provides for the setting up of the boards of management of the children detention schools on a statutory basis. Pending the commencement of the relevant provisions, boards were established for the three schools at Lusk and the school at Finglas on an administrative basis in July 2004 in line with the provisions of the Act.

The 1908 Act provides for an inspector of industrial and reformatory schools. Inspections of industrial and reformatory schools were undertaken in 1999 in respect of all five schools. As noted in the report, the policy then shifted towards having inspections carried out by an external agency. An inspection of Finglas Child and Adolescent Centre in 2002 was the first of these inspections. The relevant sections of the Children Act 2001 when commenced provide for the Minister to appoint an inspector of children detention schools. The Department is currently considering the feasibility of retaining the social services inspectorate to undertake the inspection function.

Pending the commencement of relevant provisions, inspections by a departmental inspector and child care adviser were carried out in St. Joseph's School, Clonmel and Oberstown Girls School during 2004. As a further interim measure, it is proposed to appoint an appropriately qualified inspector on a consultancy basis to carry out inspections at Trinity House School and Oberstown Boys Centre.

The Department is assisting the Special Residential Services Board, SRSB, in the development of an integrated management information system covering the five children detention schools. A firm of consultants has been selected by the SRSB to draw up requirements for the proposed system.

As indicated in the Comptroller and Auditor General's report, the Children Act 2001 will replace the existing legislation in this area, dating back to 1908. The Minister for Education and Science is responsible for the commencement of section 88 in so far as it relates to junior remand centres, and Part 10 of the Act, which provides for the establishment of children detention schools to replace the existing reformatory and industrial schools.

Apart from a particular provision relating to the establishment of the Special Residential Services Board, Part 10 and section 88 of the Act have not been commenced. There is a difficulty in commencing these provisions until separate detention facilities are provided for 16 and 17 year olds. Part 9 of the Act makes provision for the designation of separate places of detention for 16 and 17 year olds by the Minister for Justice, Equality and Law Reform.

Some progress has been made in implementing some of the provisions on an administrative basis. The composition of the new boards of management of the children detention schools shadows the relevant provisions in the Act. We are working at putting arrangements in place on inspection. However, the overall implementation of Part 10 will require further work and we are currently examining how this might be progressed.

While a sound statutory framework for a modern youth justice system has been established, there is room for fresh thinking with regard to the institutional framework in which it is to be delivered. In this regard, the Minister for Justice, Equality and Law Reform established a project team towards the end of last year to examine the scope for rationalising and restructuring the State's services in the area of youth justice, focusing on the institutional framework with a view to improving outcomes in this area. The team is expected to formally report on its work in the near future and the Department will take the outcome of this work into account.

I turn now to Chapter 9.3. The report from the Comptroller and Auditor General qualifies the 2003 appropriation account for Vote 26 for the reasons stated in his report, namely, that it was not possible to execute the reconciliation process required to complete one of the notes to the account. The practical effect of this was an inability to determine the proper charge to the Vote for the purpose of establishing a correct surrender figure to the Exchequer.

Subsequent to the qualification by the Comptroller and Auditor General, the Department successfully carried out a full reconciliation of all figures related to the 2003 appropriation accounts and established the correct surrender figure and the completed vote. Notes and reports have since been provided to the satisfaction of the Comptroller and Auditor General who has agreed that a note to explain the final position may be inserted in the 2004 account. The reconciliation process has been completely successful in that it has been established that the accounts are fully in order and the correct surrender figure has been established. It was clear all along that no issue of fraud or misappropriation was involved or contributed to the difficulties encountered in relation to the reconciliation of the account.

The difficulties arose from major changes introduced to the Department's processes in 2003. While the Department, in implementing its new financial management system, delivered its core financial services in terms of receipts and payments to clients and suppliers throughout the changeover process, significant difficulties arose in meeting in a timely manner the certification required in relation to the appropriation account. This was regrettable and required considerable effort to rectify. However, I am pleased to report that the specific measures put in place by the Department arising from the difficulties with reconciliation on the 2003 account assisted in ensuring that the 2004 accounts were prepared in a timely manner and this year's deadline of 31 March was met.

In considering what brought about the specific difficulties, it is important to note that the introduction of a new financial management system was but one part of a considerable change agenda in terms of the Department's finance function in 2003. In the same year the old system whereby the Department's expenditure was spread across four Votes was replaced by a single Vote system. Changes were also made to the pension payments, with a switch from a warrant to payable order system. The introduction of a new financial system at the office of the Paymaster General, PMG, also impacted on the Department's processes.

With the benefit of hindsight this programme of change was overly ambitious and placed extra pressure on the staff directly concerned as well as adding significantly to the training and induction issues for other staff. There is always a tension between pushing ahead with desirable change on the one hand and ensuring there is adequate time for induction and adjustment to change on the other. Judging this issue in retrospect, it is clear that we tipped the scales too far in one direction.

Arising from our experience, the Department has identified a series of system enhancements. These enhancements not only address the issues that arose, but add value to the system generally by making some elements of the system more user friendly. The response of the then Accounting Officer, set out in the report from the Comptroller and Auditor General, explains that the Department undertook a number of measures to accelerate a resolution to the problem with the 2003 accounts along with measures to address the underlying difficulties.

Yes. The cost of maintaining a place for a young person at St. Joseph's School in Clonmel, based on average operational capacity, was €151,000, which is the lowest of any detention centre. The cost was €233,000 when determined on the basis of average occupancy. The school has a high proportion of health board detentions, which are not as serious as court detentions. It is likely that the school's costs will always be lower than the costs elsewhere. The cost of maintaining a detention place for a young person at Trinity House in Lusk in 2004, based on average operational capacity, was €241,000. That cost was €362,000 when determined on the basis of average occupancy.

It is a good thing, in one sense, if rates of occupancy in this sector are reducing as they have been in recent years. The policy outlined in the Children Acts and elsewhere is that detention should be used as a last resort. The number of young people in detention centres should decrease if proper measures are put in place in the community. I refer, for example, to health support units, the Department of Justice, Equality and Law Reform's diversion programmes and the Youthreach programme and other educational disadvantage schemes under the aegis of the Department of Education and Science. Crime levels were rising some years ago but they have stabilised in recent times. The number of young people being sent to detention centres has been declining.

Youth detention centres have more control over their operational capacity than they do over average occupancy. The average cost of maintaining a detention place at St. Joseph's School in Clonmel is €151,000, when measured on the basis of operational capacity. That is cheaper than the cost of maintaining places at Trinity House and the two Oberstown centres, which ranges from €240,000 to €268,000.

The most expensive centre is Finglas Child and Adolescent Centre, where the average cost is €374,000, which is a reflection of the fact that the centre's operational capacity has been reduced in recognition of its problems. While the number of staff has been reduced somewhat, the reduction has not been of a similar proportion to the reduction in the operational capacity. It was intended that the centre's capacity would be increased to the level for which it was originally designed when the problems there had been rectified. The Department needs to examine the wider issue of the detention capacity pattern of recent years to establish the likely future level of demand for operational capacity in the sector. The average cost at the Finglas centre is not in line with what one would expect, as a consequence of the problems encountered there.

It might be useful to compare the average cost at Finglas with the average cost per detention place at a similar centre in Scotland. The average cost, at operational capacity, of providing one of the 34 places in St. Mary's Detention Centre in Kenmure is just over €210,000. It is obvious that the operational cost per capita is reduced in larger facilities. The average cost at Trinity House and the centres in Oberstown is in line with the cost in Scotland. It is clear that is not true in the case of the Finglas centre, however. One has to consider that differing wage rates are paid for work of this nature in various jurisdictions. The Comptroller and Auditor General accepted in his report, on the basis of historical figures, that St. Joseph’s School in Clonmel, which is a different kind of centre, will always be a cheaper operation.

We also benefitted. The accountant who is helping us worked with the Department of the Taoiseach when it put up an Oracle financial platform. It did not encounter many of the problems we did but this had more to do with the scale of its operation. Clearly, that is a small operation. It would not have the same issues we had. For example, we found that the receivables module of the software did not work within a Government accounting set-up. The Taoiseach's Department had never used that module because it does not get significant receipts. Others within the public sector who used the Oracle financial platform would not have run into the problems we encountered. There is close liaison to ensure that others can pick up the difficulties we identify.

On the wider issue of the measures in place and the scale of the operation, the difficulty in terms of the scale for our Department was not related to the scale of the money we handle. We have a very big operation and very big financial systems apart from the financial management system. We run the biggest pay-roll in the country, including pensions for teachers. Unlike many Government Departments who had done a certain amount of computerising, we went from what was virtually a manual system on the financial management side, with some Excel spreadsheets, straight into a full bells and whistles integrated financial management system. That gave rise to issues in terms of accounting knowledge. One of the difficulties in the finance unit was that people had no real knowledge of the kind of accounting concepts required. While we are still running a Government accounting system, the package was designed for a private sector accounting system but adapted for a Government one. One would need to understand some of the wider public service accounting concepts and how they integrated. Some of the other Departments which had an intermediate platform would have already adapted.

There was also a wider cultural issue in the organisation whereby the various line sections were used to just filling in a bit of paper saying pay X to Y. If they put in the wrong subhead charge, wrong code or whatever, the accounts area corrected it. There was almost a culture of people realising that they had to take responsibility. Unlike in a small organisation which may handle a very small budget and then have to handle a very big one, we had to jump from an old-fashioned accounting system to a very advanced one.

Deputy Dennehy

It was very unusual and I hope it will not happen again. To revert to Chapter 9.2 and the centre for young offenders, we should bear in mind the Comptroller and Auditor General's comments about the difficulties of the individual young people involved. It is a chaotic and dismal situation. The reports state that people are totally incapable of doing what is required and it just cannot succeed. The cost has been outlined. A figure of €205,000 per person was mentioned. We are currently carrying out an evaluation of prison places and we are talking about €85,000 per year. While it is a different scenario, there is a staff ratio of 6:1 in this situation.

The preamble to the various reports stated that these centres are to provide care, education and training programmes for the young people involved with a view to their rehabilitation. A report from Focus Ireland in 2000 found that two-thirds of the people involved were either in prison or in detention centres within two years. More recently, the Department's tracking system found that of 57 people released from one centre, 47% are in prison, 5% in the care of health boards, one was back in the centre and two could not be found. Some 57% of the 57 people appeared to gain no benefit from their experience. I appreciate the comments made, but why is the programme such a dismal failure?

Ms McManus

As the Deputy said, we are dealing with a very difficult group. The whole thrust of our policy has been to try to deal with all the difficult cases in different ways. Detention is the last resort. This means the people one brings into the detention system for the 114 places are the ones for whom, in simple terms, probably no other measure has succeeded. I am not saying that for some of those children other measures should not have been tried earlier and might have succeeded. It may sound defeatist, but it always will be difficult to ensure that these children, who have ended up in those situations, will not reoffend. The more our policy is that the only children who end up in these centres are the ones who cannot be handled in any other way, the more difficult it will be to get results that allow for those children not reoffending.

I am not saying we should not try to monitor them. One of the reasons we try to put management information systems in place is to monitor the success rates and to see are there common issues across the centres that produce better results. Unfortunately I am not sure that an Accounting Officer for the Department will ever be able to come before the Committee of Public Accounts stating that none of these people has reoffended, given the nature of the client group. I agree it is a depressing picture.

Deputy Dennehy

I apologise for interrupting Ms McManus. We are looking at the children there. In one of the areas examined in 2002, the first inspection by an external body found that basic requirements were not being met, there was lack a direction and it was an organisation in crisis with internal conflicts undermining the centre. This is an indictment of management, not of the young people.

The idea of fresh thinking arose in the context of discussing this issue. For many years, in fact, up to the Paul O'Donoghue case in 1991, if I remember correctly, young people with special educational needs simply fell between the then Departments of Health and Education. They were shuttled back and forth. Nobody had a mandate or bothered to provide the services required.

Considering the 2001 Act and that these are called junior remand centres, should the Department of Justice, Equality and Law Reform rather than the Department of Education and Science respond to this, obviously with the educational service provided by Ms McManus's Department? Should this come under the remit of the Department of Justice, Equality and Law Reform? That Department has certain expertise, not just in locking people up but in security related matters. Is it under the remit of the wrong Department or is there a mixture of responsibilities involved? I appreciate that the Departments of Health and Children and of Justice, Equality and Law Reform are involved and that the Department of Education and Science is involved. My view is it is a little like the case of special needs children, which went on for generations before a court decision forced us to act on it. What is Ms McManus's view?

Ms McManus

If I may take the point about the Finglas report first, on foot of that report nobody doubts that there were significant problems in the Finglas centre. It was badly managed. In 2004, the Department brought in the director of Trinity House, which has good success rates. The director made a detailed operational report. That report is available on the Department's website but I have some of the details and conclusions. It was a damning report about how the place was run. His conclusions were submitted in May 2004 and, in fairness, from the Department's perspective, we have put in a new director and board. There has been much remedial work to improve it.

Both reports on the other two centres on which we did inspections in 2004 were positive, unlike the one on the Finglas centre. They were regarded as very good. There is no indication there are problems on the scale of the problems in the Finglas centre in the other two that have not been inspected but we are arranging with an expert to conduct a similar report on the remaining two in the second half of this year to ensure we do not have the problems we had in the Finglas centre. The statistics from the tracking system to which the Deputy referred are from Trinity House, which is regarded within the system as a well-run facility, and they are depressing enough. There is no doubt that if the place is badly run, one will not even achieve that level of success.

On the second point, clearly we are probably straying into a matter which is a policy choice for Government as to how issues are handled. From the Department's perspective, whatever the structure there must be a good relationship between the services that come under the Department of Justice, Equality and Law Reform, the services in which my Department is involved and the services of the Department of Health and Children. Certainly my Department found in the past — there is even still reference to cases — there was significant pressure on our facilities and children were coming into the detention system who perhaps should have been picked up in care facilities — high support health units — at a certain point. One of the reasons our numbers have been declining a little is that the system has improved on the Department of Health and Children side, in terms of some of the high support health units. Whatever our institutional structure as a system, it must have a strong education dimension and that must be tailored for the detention facilities. It must have a strong child care-health service type dimension. Clearly there will be a dimension for matters like juvenile diversion and the probation and welfare service which currently fall under the Department of Justice, Equality and Law Reform.

I do not know what the position is on the Ballygarvan site. We will come back directly to the Deputy Dennehy on the issue. I think the OPW which negotiates on our behalf has approximately 80 sites in play. Our end is the most difficult because it causes enormous problems in planning budgets and programme when we cannot sort out the purchase of sites more quickly.

Deputy Dennehy

I do not know who to blame — the Department or the OPW. To be fair to Ms McManus, I should probably blame the OPW.

Ms McManus

The negotiations are probably difficult. Site negotiations are not the easiest. Negotiations in Dublin for sites in respect of which the money was available to pay the owners had to be deferred for six to eight months because there was a difficulty with the title or vendor.

Deputy Dennehy

I appreciate that. I hope we will still not be waiting for a school when Ms McManus next comes before the committee.

I have a question about teacher training. I noticed many people left after benchmarking. The Minister announced, either last month or this month, that there were to be 660 additional special needs teaching posts for primary schools. Are we training enough people to fill these posts?

Ms McManus

Before we made the announcement, the INTO claimed there would not be enough jobs for all the trained teachers available. We are happy that there are sufficient trained teachers in the system. Schools in particular areas will always have problems in recruiting teachers.

There is a need to ensure teachers receive additional special needs training. The Minister recently announced a review of teacher training. Given the scale of special needs, one of the issues we are anxious to address is the greater incorporation of special needs training into general teacher training programmes. The number of untrained teachers has decreased in recent years. There are now sufficient teachers to meet the numbers about which we are talking. Clearly, it is an issue the Department will have to monitor.

Deputy Dennehy

My colleagues have acted well in office.

Deputy J. Higgins

I hope I do not repeat too much of Deputy Dennehy's contribution but there may be an overlap because of the vote. Are there still no performance measures for children's detention centres?

Ms McManus

In the context of the management information system which will cover such issues as performance indicators and special services, the Special Residential Services Board has employed consultants. The issues the Comptroller and Auditor General examined included staff ratios and outputs. The Department is examining the issue but it will be 2006 before measures are developed.

Deputy J. Higgins

It is incredible that that is the case. I appreciate that Ms McManus has only recently assumed responsibility but there is no excuse for the Department. These centres should serve extremely serious functions with regard to the young people in question in providing appropriate education training programmes to enable them to take their place in society. It is mind-boggling that the Department does not have any concrete measures to indicate whether the enormous amount of money involved is being well spent. It is incredible that only one centre, Trinity House, produced a follow-up report on the young people referred to it. If there is a lack of essential supervision in general, is it any wonder that the institution in Finglas ended up in such a mess?

Ms McManus

I am not happy that we do not have performance indicators. On the other hand, the lack of specific performance indicators does not necessarily mean that the Department is not assessing how the centres are performing. That we made inspections of the Finglas centres and took remedial action in the past year indicates the Department is conscious of the need to manage the performance of the institutions in its broadest sense. There is a difference between trying to ensure best value for money and these institutions' performances and having specific indicators allowing for comparison and measurement, something I fully agree we should have. We are examining performance indicators and the tracking system in the context of the management information system. I fully accept we should have them but it will take some time for them to work across the five institutions.

Deputy J. Higgins

The Department of Education and Science covered a tax liability for Jarvis, the private contractor, to the tune of €9 million.

Ms McManus

COMMITTEE OF PUBLIC ACCOUNTS debate - Thursday, 16 Jun 2005

Chapter 9.3 — Qualified Audit Certification of Appropriation Account.

Ms Brigid McManus

Ms Ann Nolan

Mr. John Purcell

Mr. Purcell

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Ms McManus

Ms McManus

Ms Nolan

Ms Nolan

Ms Nolan

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Ms McManus

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Ms Nolan

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Mr. Martin Hanevy

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Ms McManus

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Mr. Liam Hughes

Mr. Hughes

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Ms McManus

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COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 16 Jun 2005