This part of the meeting involves the financial statements of the Higher Education Authority. I call Deputy Dowds.
Higher Education Authority: Financial Statements 2014
Mr. Tom Boland(Chief Executive Officer, Higher Education Authority) called and examined.
I welcome everybody here. I am sorry that they are still here at 2.30 p.m. I will try to be as quick as I can. I would like to ask a general question about how the HSE-----
The HEA.
Sorry, the HEA. My apologies. We were talking about the HSE earlier on. My question relates to how the HEA disburses funds to the traditional universities, the institutes of technology and other institutions.
Mr. Tom Boland
It is done on the basis of a funding model. The allocation is done on the basis of a combination of the number of students and the disciplines they are studying, with different disciplines weighted according to what the estimated cost of the course would be. A programme that does not involve a laboratory would get a weighting of one, and then there are varying gradations up to the maximum weighting, which I think is four and would apply to a course like medicine. It is done on a purely formulaic basis.
Do those funds go into a central pot in each university or institute of technology to be disbursed within the relevant institution?
Mr. Tom Boland
Yes. I suppose a fairly high core element of the funding of the higher education institutions is that the institutions get a block grant. It is therefore a matter for each institution to decide how to allocate that grant internally.
Does that include staff wages as well?
Mr. Tom Boland
It includes the entirety of the activities of the institution.
Okay. Does it include funding for research as well, or does that come from other sources? Perhaps it is a mixture of the two.
Mr. Tom Boland
It is a mixture of the two. In the case of universities, in particular the block grant goes to pay the salaries of most, if not all in some cases, of the people who carry out the research. Universities, and to a lesser extent institutes of technology, draw down research funding from the likes of the Irish Research Council, the Health Research Board, Science Foundation Ireland and internationally from the EU funding mechanisms.
Would that relate to the point that non-State grant income increased by €3.8 million between 2013 and 2014? It increased from just over €19.5 million to almost €23.5 million. Does what Mr. Boland is talking about relate to that as well?
Mr. Tom Boland
The non-State funding could come from a variety of sources, including European grants.
So it could be European.
Mr. Tom Boland
The funding-----
Could it be from private companies as well?
Mr. Tom Boland
It could.
Okay. Can I show Mr. Boland an article by Professor Ciarán Ó Catháin of Athlone Institute of Technology that has been presented to me? It suggests that the Government cares more about seagulls than students. I really think it is a rather frivolous way to describe it. The point of showing it is that I want to know whether there is a serious lack of funding, or underfunding, in third level institutions. Are third level institutions reasonably satisfied they are getting a fair crack of the whip?
Mr. Tom Boland
There is a serious lack of funding in the higher education system. In part, it is an inevitable consequence of the financial crisis. The level of funding per student has decreased from approximately €11,000 to approximately €9,000 over recent years. I think the institutions are coping well with that situation, by and large. Given the difficulties that this drop in funding causes, in terms of the quality of provision, we need to bear in mind that it has been projected that the number of people entering higher education will grow by between 25% and 30% over the next 15 years or so. That in itself will place huge demands on the system. Of course, this issue is being dealt with by the group that has been established by the Minister under the chairmanship of Peter Cassells.
I was surprised to note that the income dropped a bit from 2013 to 2014. I would have thought it would have been at the stage where it might start increasing again.
Mr. Tom Boland
I think we can have a small degree of optimism on that side. The capacity of the institutions - particularly the universities more than the institutes of technology, in fairness - to earn their own income through commercial activities or through foundations should improve as the economy improves.
Could I ask about the issue of compliance? At an earlier meeting of this committee, it was suggested that the HEA would establish a compliance unit to ensure all colleges were managing their affairs appropriately. Can Mr. Boland give me an update on that?
Mr. Tom Boland
Yes. Maybe I will put it in context and I will come to that as well. I can let the committee have a copy of an outline of the changes the HEA has made to its governance arrangements since it was last here. I guess these changes were prompted to some considerable extent by some of the criticism from this committee and some of the lessons we learned from the Comptroller and Auditor General's reports. We have issued a revised template for the governance statements to the institutions. The governance statement is the key reporting instrument from institutions to the Higher Education Authority. We have added some additional items to that template. We have asked each institution for more explicit confirmation that it is compliant with procurement guidelines. We want a specific assurance on that. We have asked those institutions that are not compliant to set out the actions they have taken in this regard. We want to know how many governing body meetings are taking place. We want to know the level of attendance at those meetings. We want to know the outcomes of the reviews of effectiveness of governing bodies. We also want upfront information on any significant unexpected expenditure that each institution is incurring. This is relevant in the context of the presence of representatives of GMIT this morning.
We have also reminded governing bodies, and the chairs of governing bodies in particular, of their central role in the whole governance and accountability system and the need for them to interrogate the information that is given to them by the management team in the institution, and the responsibility of the management team to give full information to the governing body and the chair.
We have enhanced our arrangements with the Comptroller and Auditor General. We will now meet on a quarterly basis and that is very valuable because we can share lessons that are being learned from the sector. We can also get a sense of what is happening in respect of audits and the submission of financial statements. We will also share information then to identify any early difficulties that are happening in the sector. This arose in the context of the NCAD, the National College of Art and Design, where we simply were not informed - we did not know some of the issues that were happening there.
Is Mr. Boland satisfied that the National College of Art and Design is being sorted out because it seemed to be an unholy mess at the time its representatives appeared before the committee?
Mr. Tom Boland
We would be satisfied that good progress is being made, and that there is a way to go. There is a new governing body in place. There is a new chair. We have very recently met the chair of the governing body and the chair of the audit committee. I would say that the HEA's assessment is that progress is being made but with a good deal of work still to be done.
So basically the HEA is standing behind to see that everything is-----
Mr. Tom Boland
We are. We are getting monthly reports from NCAD. We have also agreed with the college to give it an independent adviser in relation to financial and governance matters.
I thank Mr. Boland.
Mr. Tom Boland
That college is being monitored carefully in terms of the implementation of its agreed governance report with us.
How long will it be before it is fully straightened out?
Mr. Tom Boland
I think there are two issues there. One is dealing with the technical issues of doing appropriate reports. There may well also then be an issue of culture in the organisation because culture takes a bit longer to change. Also, I think we need to work with the governing body on issues to do with capacity in the institution in relation to financial expertise and governance expertise.
Okay.
Mr. Seamus McCarthy
I might just interject there to bring the committee's attention to the situation in relation to the audit, which was one of the things that, if one likes, precipitated the previous report. We are still actually waiting for draft financial statements for 2012-13.
It sounds like there is a bit to go yet.
Mr. Seamus McCarthy
Yes, there is. There are lots of technical difficulties and it will be some time before they will be up to date. I do not think we can underestimate the difficulties on that technical side.
Mr. Tom Boland
I would not like to give a rose-tinted view of this either. It is a difficult problem which will take a bit of time to work out, but we are staying close to the college on it.
Is the Comptroller and Auditor General satisfied that things are moving in the right direction? Is he sufficiently in touch with recent developments there to-----
Mr. Seamus McCarthy
I suppose in a way we do not get involved in fixing the problem-----
Yes.
Mr. Seamus McCarthy
-----but we are sort of sitting outside waiting for financial statements to audit and, if one likes, to keep the process moving and to bring it up to date as quickly as possible. However, it requires the college to be in a position to produce a set of financial statements for us to audit and to be able to substantiate what is in those financial statements. That is the process of audit.
Obviously, we then look at propriety issues and so on. The longer distance it is to the year of account, the more opaque the thing becomes, the more difficult it is to get explanations, and the more difficult it is to do the audit. Also, the findings may be irrelevant by the time they come to the committee. It is a matter of ongoing concern for us, but I appreciate that the HEA is engaged with the college and the pressure needs to be kept up.
How soon was the HEA aware of its difficulties or did the college hide them from the authority for some time as well?
Mr. Tom Boland
I think, rather than probably hiding them from us, we simply were not aware when we should have been. We were not made aware when we should have been.
Was that because the HEA did not have sufficient checks and balances in place?
Mr. Tom Boland
No. I think it had to do with the fact that we were getting misinformation from the college for a period of time in relation to its governance statements.
Does that partly explain why there is a new board and so on there?
Mr. Tom Boland
I think the board was going out of office in the normal course so it is not connected.
Could I just move on to a more general-----
Mr. Tom Boland
Could I ask the advice of the Chair? There were some other issues in relation to how we strengthen governance, but perhaps I can just write to the committee on that rather than taking up the time of the committee.
That is okay.
We would be interested to see that report.
I have a more general question about the financial standing of institutes of technology. Is any of them in financial trouble? If so, which ones and what can be done to assist them? In particular, I ask Mr. Boland to comment on one the Comptroller and Auditor General flagged earlier, namely, Dundalk Institute of Technology, which Mr. Boland mentioned earlier.
Mr. Tom Boland
A number of institutions are in what we would describe as a vulnerable position from a financial point of view. They would be Dundalk, Waterford, which has already been mentioned, and Letterkenny. NCAD is another institution and there are also Tralee and a sixth one, GMIT. They are to varying degrees having difficulties in terms of returning deficits to the HEA.
I would not want to give the impression that any of these are in danger of immediate collapse or anything like that. The HEA works very closely with any institution that is in that position. In the first instance, we require them to present to us and agree with us a three-year plan for how they are going to recover from their financial position. Also, in respect of two institutions, Dundalk and Letterkenny, we have sought independent accountancy financial advice on the strength of those plans. Given the vulnerability of the institution, we want to be satisfied that the plans are good. In the case of Dundalk, we are quite satisfied that its plan is a strong one. In the case of Letterkenny IT, there is an ongoing issue to do with the funding of a facility at Killybegs, which continues to be under discussion, particularly to see how its future might be secured through funding from other sources rather than the education Vote.
More generally, we are in a position to say that we have plans from all of the other institutions in terms of how they are dealing with their deficit situation. Those plans look good and they will be monitored carefully by the HEA to ensure they are implemented and that the institutions are brought back into a positive position.
Has the HEA identified reasons the institutions Mr. Boland listed have got into difficulty whereas others he did not mention obviously have not got into difficulty?
Mr. Tom Boland
That is a difficult enough question because I do not think there is any one or even five reasons. It is a combination of issues. In fairness to them also, it is to some extent a reflection of the overall funding situation of the sector that some institutes are less able to manage in that kind of situation than others for reasons perhaps of their organisation, their demographics around where they are located in terms of their attractiveness to students and a range of issues like that. There is no one thing that one could go in and say, "If we fix that, they'll be fine".
In any case Mr. Boland is satisfied that none of them is in danger of collapse or anything like that.
Mr. Tom Boland
I am satisfied of that, but I would say that the HEA, both at executive and indeed strongly at board level, keeps this situation under very careful review. There is a very high level of concern at board level for the viability of some of these institutions.
I am sure some of them tie in considerably with some local economic and industrial development and so on.
Mr. Tom Boland
They are extraordinarily important institutions in their regions - all of them - which is all the more reason to get them into a healthy financial position so that they can do the job they are meant to do.
My last question is on the pension situation.
In simplistic terms it seems there are two different pension schemes, one of which is primarily attached to older people and the other for younger people and one of them is in some difficulty and the other is in surplus. Can Mr. Boland explain how pensions are paid? It strikes me that it is different here from some other areas of education, for example, primary education where the pensions come directly from the State.
Mr. Tom Boland
To assist the committee I will call in the aid of Mr. Stewart Roche, who is an accountant.
The background is that the five older universities had their own pension schemes, not including the University of Limerick, UL, and Dublin City University, DCU, and, as with many pension schemes and for a variety of reasons, they were in deficit. The HEA some time ago set up a working group involving the Department of Education and Skills, HEA, the universities and the Department of Finance. That concluded that the pension schemes were not viable in the long term, should be wound up and their assets transferred to the State. The pension schemes closed. Something over €1.2 billion was transferred to the State. Is that right?
Mr. Stewart Roche
Yes, €1.4 billion.
Mr. Tom Boland
The State then takes over the liability for paying pensions. For a variety of technical and accounting reasons, that pension scheme was closed and a new one was opened and all new staff entered into the new scheme, so there are two schemes running at the same time. Since the closed scheme has older staff members who are retiring there is a draw-down on that and because staff in the new scheme are younger there is no draw down on that. The two schemes to a very great extent cancel each other out. There is no sense of a pot of money sitting in a bank account someplace and a huge deficit sitting some place else. It is more of an accounting issue.
Is the intention that the whole thing goes back to the State in the same way as primary and secondary teachers are paid when they take their pensions?
Mr. Tom Boland
Yes. We are in discussions with the Department of Education and Skills and, most importantly, the Department of Public Expenditure and Reform as to how pensions should be accounted for in this situation. It is not very satisfactory from our point of view to have what gives the impression of a huge deficit and a huge surplus. It is an accounting exercise to a great extent and we would like to see it resolved. Ultimately, as matters now stand the State has responsibility for pensions in the universities in the same way as it has across various parts of the public sector. Would Mr. Roche like to comment on how pensions are paid?
Mr. Stewart Roche
Yes. Could I correct the record? I mistakenly said that LIT made a tax settlement, instead of DKIT.
With regard to the pensions, those in payment are paid out of the closed pension scheme, which is the older one, and lump sum payments on retirement are paid out of that particular scheme whereas the model scheme is a pay-as-you-go scheme. The difficulty, as Mr. Boland has outlined, is that the excess of the payments over the income has meant that there is a cash outflow but it is all coming out of the same accounts. There is general cash. In the model scheme there is a surplus because of the newer members and that is a pay-as-you-go scheme. The funding of the pensions that are creating the major deficit would be in the closed scheme.
Would the Comptroller and Auditor General remind the committee of what he said this morning in respect of the TRBDI and the transfer of personnel to LIT? I think he referred to them as “supernumerary positions”.
Mr. Seamus McCarthy
Yes. I drew attention in the audit certificate on its financial statements to several supernumerary staff, surplus staff in the institute, following on from the amalgamation and said that since that amalgamation, the total amount of salaries paid to those supernumerary staff was €627,000. In the year 2013-14 the amount paid to those staff, which is included in the overall figure, was €216,000.
How many staff did that equate to?
Mr. Seamus McCarthy
I said I do not have the detail of it with me but my recollection is that it is three or four, certainly a small number.
What is Mr. Boland’s reaction to the fact that for a number of years supernumerary positions continued to operate in an institute of technology funded through his agency at a cost of €627,000 and it appears that very little or nothing was done to try to address the issue?
Mr. Seán Ó Foghlú
I will answer that question, if that is all right. In the closure of TRBDI, the issue of redeploying the members of staff arose and that is organised by the Public Appointments Service, in the main. A wide range of successful redeployments was successfully entered into and there were three remaining staff. It was actually a great success in terms of moving the institution along. Those members of staff remained in the payment of LIT and remained working for LIT. They were supernumerary and could not be redeployed.
What do they actually do on a day-to-day basis?
Mr. Seán Ó Foghlú
They undertake appropriate work associated with their role. They are supernumerary. I do not have a piece of paper because I got information by e-mail during lunch when I asked for an update having heard what the Deputy said this morning. Two of the three are now engaged in the general manner as lecturers in LIT so there is only one supernumerary remaining. This is what happens with redeployment. Under the public sector arrangements a person can be redeployed up to 45 km. If it is not possible to redeploy the person, he or she remains on a supernumerary basis but the people are working.
For three years?
Mr. Seán Ó Foghlú
Yes, but people are working. It is about the opportunity for a specific skill set to be redeployed. They are working. We have saved money by reducing the numbers but we have not saved as much as we wanted to. That is the position.
Is this a widespread practice in the Department? How many supernumeraries do we have today?
Mr. Seán Ó Foghlú
I can check that for the Deputy but I am not aware that it is widespread. We have not closed down many institutions. In fact, the position is the opposite, as the Deputy knows. We were operating within employment control frameworks, ECFs. We are only returning to recruitment now generally and we are now moving to having a bit more freedom on employment but within particular budgets. It is not that we have supernumeraries sitting around the place. These were engaged in work but they were above the numbers allocated to the institution.
We do not know how widespread the practice is.
Mr. Seán Ó Foghlú
I do not have the information with me here. I understand that it is not a practice that is widespread. We were closing an institution and amalgamating it into LIT. They were above the numbers needed and we had to redeploy. We successfully redeployed a wide range of people but we were not able to redeploy everyone.
On another issue I raised this morning with the Chairman, which is of huge concern, UL is funded through the HEA and recently there was a huge amount of media reporting about an allegation that staff of the university were offered over €60,000 to keep their concerns under wraps or move along. Is the HEA aware of those allegations?
Mr. Tom Boland
Yes.
Are they being investigated?
Mr. Tom Boland
I will try to be as helpful as possible on this one. This matter was referred to me by the Department of Education and Skills because two people wished to make a protected disclosure. I met with them in June or July. I do not have the precise date. They set out a range of concerns, particularly to do with what they saw as a bullying treatment of them in the university. They attributed that bullying treatment to the fact that they were not co-operating with what they saw as inappropriate practices in the finance department. The three of us agreed a minute of the meeting which I sent to the president of the university and asked for a reply which he duly did. Out of that, it is clear that there is a mix of disciplinary issues in relation to the two people concerned.
I have been trying to find out the details of the allegations because the HEA is very anxious that any allegations are fully and completely investigated. In fairness to the university, that is its wish as well and it has put the internal auditors in touch with me to establish what the allegations are. The two people concerned do not feel in a position at the moment to set out what the allegations are. However, in my most recent e-mail with them I have agreed to their request to meet again. A date was arranged but unfortunately I had to change it to next week. I am very happy to meet with them again to see how their concerns can be met because I would like to see the matter put beyond doubt, one way or another, as quickly as possible. Any allegation of improper conduct in the university should be investigated and this is a view which I strongly believe is shared by the university. A great deal of damage can be done to the university by allegations not being fully dealt with as soon as possible. That is the latest position.
When do you expect to have an update on this? Apart from anything else, there is the potential for reputational damage to an institution which is of huge regional importance and that is something I am sure they are as anxious as anybody to clear. This has been left hanging out in the media for the past six weeks or two months. When will we have a full and final result on this? It is of concern across the region, across the mid-west and across the country because, if it is true, it could not possibly be condoned.
Mr. Tom Boland
Absolutely. I could not agree more with that. My hope is that, when next I meet with the people concerned, I will be able to agree some kind of a process whereby they can feel comfortable in setting out what their allegations are. I would expect the university to respond very quickly with a thorough and objective assessment of the allegations.
Is it Mr. Boland's belief that there is a role for the Garda in the investigation?
Mr. Tom Boland
I do not think fraud or anything of a criminal nature has been alleged in relation to the university. There is a related issue to do with the concern people have that they were threatened by a colleague, which is a separate issue to the allegations of malpractice in the finance department.
During the summer another story arose affecting the HEA. You referred in your answers to Deputy Dowds to how university and third level institutions are funded. A very disturbing report came out during the summer when there was, to paraphrase, an attempt to "cook the books" to ensure points were inflated in some of our third level institutions to keep them in the attractive zone for students. Some students are being deprived of college places because universities and third level institutions, which we are funding, are inflating points to keep them attractive and give them a reputation they do not necessarily deserve.
Mr. Tom Boland
The practice has ended but I will talk about the practice a bit. There are two aspects to this. Some institutions were excessively fragmenting their courses so, rather than a common entry to science, they would have biology and French and a range of different programmes like that. There was a huge increase in the number of programmes that the institutions were putting on and apparently that can elevate the points that are needed for entry to a particular course.
Surely the HEA knew that all along.
Mr. Tom Boland
No, actually, we did not. Sorry, I beg your pardon, we did know that and indeed-----
The HEA would have known how many students take on biology and French, for argument's sake, in whatever institute. It would know the number of places because it funds the places. Surely at some stage somebody should have asked how many students were in a place.
Mr. Tom Boland
A group was set up by the then Minister for Education which sat for three years to look at the issue of transition from second level to higher education and that was one of the issues that has been dealt with. It has now been dealt with by agreement across all the institutions.
Why was there a need for agreement? You are funding these institutions to provide education to third level students but they are inflating points, which is leaving some people out.
Mr. Tom Boland
That is a strong way of putting it. Anyway, as a matter of law, the-----
Were the institutions leaving places unfilled to keep points at a certain threshold?
Mr. Tom Boland
I do not know if there is any strong evidence of that.
Did you investigate it?
Mr. Tom Boland
Can I go back to the other point? The point is that in law, under the Universities Act it is the universities which decide on access requirements, not the HEA.
But it is you that funds the universities and funds the courses.
Mr. Tom Boland
Agreed.
So if a course is left unfilled there could be a student with their heart set on a course but who will miss out by five points because university X decides it needs to be in the 450-500 points range because its competitors are. It does not want to come below the threshold so it forgoes five or ten places but the HEA is still funding it.
Mr. Tom Boland
That is a separate issue which arose precisely as you describe it, namely, that where there are places available on a course, a university would not take students on the basis that their points were not high enough. That practice is there so one could have a situation where there are places available but the places would not be filled.
Paid for by the taxpayer.
Mr. Tom Boland
No. The places are only paid for in so far as they are taken up. The money follows the student in all situations. There is no circumstance where a university would get payment for non-existent students.
Apart from the money element, did you not feel at any stage that there was something wrong with the practice of universities and colleges doing that under the noses of the HEA and that it stank a bit?
Mr. Tom Boland
It was very much a minority practice.
How do we know that? Was it investigated?
Mr. Tom Boland
No.
Is it the HEA's intention to look at it?
Mr. Tom Boland
No, I do not think so.
Why not?
Mr. Tom Boland
Because I believe it was very much a minority practice and I also believe it has now ceased.
We do not know that it has ceased and we do not know it was a minority practice if it has not been investigated. Are there any plans to look at this? I think it is an absolute scandal.
Mr. Tom Boland
As I sit here today there are no plans to further look at it.
I think there should be plans and I think there is an onus on the Department of Education and Skills to check.
Mr. Seán Ó Foghlú
I chair the transitions group which is looking at improving the transition from second level to third level and we have, with agreement, made a range of changes to the leaving certificate, the points system and the broadening of entry into courses, especially in the universities. We will be monitoring and evaluating whether there are peaks in points levels. Where one would expect a curve and there are peaks where institutions fix on certain transition points this will be monitored. If peaks emerge we will seek to address that with the universities. However, the universities, other than in the health care sciences, are not funded on the basis of the number of places per course. They have choices about the number of courses they have and the number of cases on each course. It is only in a small number of courses, such as medicine, that there is a number of funded cases but yes, we will be evaluating the information.
Do you accept that by inflating points to a certain level it makes universities more attractive? If a person is out there flogging a university to get money into a trust fund, which can be kept at arm's length from the university, is it not in the university's best interest not to have points at a depressed level, even if it actually fits the course? Is it not in the college's or the university's best interest to inflate them to make it look better and leave the student outside the gate?
Mr. Seán Ó Foghlú
I do not think it is in its best interest, no.
I am surprised that the Department of Education and Skills and the HEA take the attitude that we will just move on from here. I think the practice of colleges knowingly making sure that somebody who may be very capable of doing an assigned course is left out-----
Mr. Seán Ó Foghlú
We have exactly the same-----
-----because the college wants to inflate them.
Mr. Seán Ó Foghlú
We have the same-----
That is not their role.
Mr. Seán Ó Foghlú
No, sorry, we have the exact-----
Their role is as an educator.
Mr. Seán Ó Foghlú
Deputy, we have the exact same concern as you. That is one of the reasons we put the group in place.
Do you accept then that the HEA has no intention of investigating it?
Mr. Seán Ó Foghlú
I indicated to the Deputy the research that will be done to ensure that the implementation works-----
Because-----
Mr. Seán Ó Foghlú
-----and it will include looking at whether there are peaks on levels of points which are artificially created-----
The one thing that is-----
Mr. Seán Ó Foghlú
-----which is-----
-----missed from this is that the college's role is as an educator. It is to provide education. It is not there to be some sort of self-gratification, going around with inflated points and egos.
Mr. Seán Ó Foghlú
There is no disagreement on our side.
I am surprised that the Department of Education and Skills has taken this kind of arm's length attitude-----
Mr. Seán Ó Foghlú
We have not.
-----to-----
Mr. Seán Ó Foghlú
We have not taken an arm's length attitude.
You have heard the-----
Mr. Seán Ó Foghlú
I am chair of a group-----
You have heard the head of the HEA just say it.
Mr. Seán Ó Foghlú
-----to change the system and we will monitor the changes.
With respect, Chairman, Mr. Ó Foghlú heard the head of the HEA tell me he has no intention of investigating this or doing anything with it.
Mr. Seán Ó Foghlú
No, I clarified that-----
That is not acceptable.
Mr. Seán Ó Foghlú
The implementation will be evaluated.
I will move on to another issue which comes up perennially here, which is trusts within universities and colleges, and money winding up funding academic and administrative staff and research outside of the ambit of the Comptroller and Auditor General. Where does the HEA stand on this?
Mr. Tom Boland
Foundations or trusts are extraordinarily important, as I think the Deputy will appreciate, in order to raise private funding for the institutions. We have had an ongoing issue with the consolidation of the foundations into the accounts of the universities so there is full transparency. This matter is now at an end because we have directed the universities that all foundations must be consolidated into the accounts. One university was already doing this in any case.
Will this be done across the board?
Mr. Tom Boland
It will be done from the next accounts.
So all of the financial statements from now on-----
Mr. Tom Boland
They will be required to consolidate.
To go back to a previous point on the financial statements, the last time the witnesses were here we had a big argy-bargy on audit committees. Do all of our third level institutions now have functioning audit committees? The last time we were here and we went down this road we did not know whether they were meeting, we did not know who was on them and we had no records of them. They might or might not meet. Does every institute funded through the taxpayer by the HEA have an audit committee which is meeting?
Mr. Tom Boland
Yes, I can say with confidence.
Can we get details on all of the third level institutes with regard to who is on their audit committees, when they met last and how many times they have met?
Mr. Tom Boland
Fine.
How many people are employed in the HEA?
Mr. Tom Boland
I think our number is 62, but there are probably only 58 at the moment.
What you mean by that?
Mr. Tom Boland
There are some vacancies.
What is the number?
Mr. Tom Boland
It is 62.
It is 62 but you have how many vacancies?
Mr. Tom Boland
I think it is about four. I can provide the precise figure for the Chairman, but it is certainly of that order.
Do you employ consultants?
Mr. Tom Boland
Yes. Do you mean on a regular basis or permanently?
Well, how often? What do you call regular?
Mr. Tom Boland
We engage consultants on a needs basis.
For what purpose?
Mr. Tom Boland
For instance, at the moment we are conducting strategic dialogue with institutions to look at the performance of institutions vis-à-vis their compacts with us, so we would engage-----
When did that start?
Mr. Tom Boland
We would engage outside expertise for that. A good example would be several years ago we did a significant review of initial teacher education and we engaged consultants for it. It is that kind of work.
When did your review of the institutions and your dialogue with them start?
Mr. Tom Boland
Do you mean the-----
The one you mentioned.
Mr. Tom Boland
The process started two years ago but the actual current work started about two weeks ago.
What is the cost of that?
Mr. Tom Boland
I do not have a precise cost. I can get it for the Chairman-----
Yes.
Mr. Tom Boland
-----but I do not have the precise costs of the top of my head, but it is modest.
Did that go out to procurement?
Mr. Tom Boland
Yes. It went through the normal procurement rules.
Who is conducting that process?
Mr. Tom Boland
We are, in the HEA.
No, after the procurement process what consultant was appointed?
Mr. Tom Boland
I beg your pardon. We have engaged a former Provost of Trinity College, someone with expertise of the Hong Kong system of higher education and a former senior person in the European University Association.
I see. How much would you spend on consultants in any one year?
Mr. Tom Boland
The Chairman is looking at our accounts I assume.
That is what you are here for today.
Mr. Tom Boland
I understand that. I will ask Mr. Roche to comment on this.
Mr. Stewart Roche
The figures the Chairman is looking at in the accounts encompass quite a number of different areas. It is not just consultants.
What are those figures?
Mr. Stewart Roche
The figure for 2014 was just under €760,000 and-----
Sorry, this is the figure for consultants.
Mr. Stewart Roche
This is the overall figure for research and survey, which includes consultants.
Okay, so was this broken down into consultants?
Mr. Stewart Roche
Of the total of €759,000, we outsourced our internal audit and we also did quite extensive checking under the European Regional Development Fund, ERDF, and the European Social Fund, ESF, and this was procured through Mazars. That programme has recovered just under €100 million for the State for 2012, 2013 and 2014. This cost was just under €110,000. We also contribute €80,000 to the Marie Curie postgraduate award. We did an alumni destination report for the Irish Research Council, IRC, and that came to just under €40,000. We have our own legal costs, which came to just about €35,000. We did an employers survey through the ESRI and that came to approximately €20,000. As Mr. Boland mentioned, we had panel fees and various reviews and previous strategic dialogue which came to approximately €80,000. We have used the ESRI on occasion for statistical research on eurostudent surveys and socio-economic coding, which came to approximately €77,000. The strategic dialogue process and consultancy in this regard came to approximately €230,000, of which a major element was a procured consultant. That accounts for most of it and there are miscellaneous other bits and pieces.
What about 2013? That was significantly higher.
Mr. Stewart Roche
With regard to the ERDF and ESF, 2013 was a particularly high period of article 13 checks. We are part of a cascade to claim money back from Europe under the ERDF and ESF and, as I mentioned, the recoverable amount for the Exchequer is just under €100 million. This came to just under €200,000 in 2013 and was payable to Mazars. It is not all with regard to article 13 checks as Mazars is also our outsourced internal auditor. We also have the Marie Curie award which I mentioned, which was also €80,000 in 2013. Our legal costs were just under €40,000. We did other surveys which came to approximately €25,000. We had other panel members which amounted to approximately €50,000. We sponsored undergraduate awards, which amounted to just under €70,000. We had further statistical research, eurostudent surveys and socio-economic coding which amounted to just under €110,000. We also had a strategic dialogue process, which amounted to just under €90,000. We had the UCC medicine study which amounted to approximately €20,000 or €25,000. We had the access programme which cost €31,000. There was the ESF programme which cost €20,000. There were other various amounts, which came to quite a substantial amount of money.
Will the HEA provide us with a list of the various consultants used for 2013 and 2014, for what purpose and how much?
Mr. Tom Boland
We will do that.
It is a significant sum of money to pay on the basis of consultants' fees.
Mr. Stewart Roche
It is not all consultants.
Mr. Tom Boland
The Chairman is referring specifically to the consultants.
Mr. Stewart Roche
Is it just the consultants?
Mr. Roche might give us the details of the list he read out. It is basically the two figures in the accounts. I ask him to give us a complete breakdown of them with regard to who was used and for what purpose so that at least we can understand what is going on.
Travel and subsistence expenses were significant.
Mr. Tom Boland
Again, Chairman, many of the same issues arise in the travel and subsistence area, in particular to do with travel and subsistence around the engagement of international people to assist us with the strategic dialogue process, which was a major reform of the higher education system. Again, we can provide the committee with a full breakdown.
Yes. We will come back to it again if necessary. Some other issues arise. There are 62 staff and four vacancies in the HEA.
Mr. Tom Boland
I would have to check that precisely, but the vacancies are of that order. There may be more.
Deputy Dowds referred to the National College of Art and Design and the fact that the last set of accounts was from 2011 and 2012. Before it becomes an issue, I am anxious to determine if there is a progress report. Arising from the meeting we had with the National College of Art and Design, could Mr. Boland indicate what progress has been made to date on the issues that were raised and how they have been dealt with? A transcript of the meeting might help. We will see what progress has been made and measure what is going on in terms of the work to be undertaken.
Part of the duties of the 62 staff is to oversee the various universities and third level institutions. Because today's meeting is the first one of the session, a significant number of accounts are available that have been put before the Comptroller and Auditor General. Dublin City University was dealt with in terms of the trust and the accumulated reserves of €15.4 million. The other issue of putting money off-balance-sheet has been dealt with previously. I understand from Mr. Boland's reply that the HEA has instructed the institutes and universities that that is not to happen and the HEA will oversee it.
Mr. Tom Boland
That is correct, Chairman.
The next matter relates to Waterford Institute of Technology. Is Mr. Nevin the president?
Mr. Tom Boland
No, it is Dr. Donnelly. Willie Donnelly.
Where is Mr. Nevin?
Mr. Tom Boland
Mr. Nevin, having left Waterford Institute of Technology, was engaged by the Department of Education and Skills and assigned to the HEA to do work jointly with us on a range of issues to do with-----
So Mr. Nevin is now working with the HEA.
Mr. Tom Boland
Yes, he is.
And he is paid for by the Department of Education and Skills.
Mr. Tom Boland
That is correct.
What is the wide range of issues he is dealing with?
Mr. Tom Boland
There are a number of them. First, as a former president of an institute of technology, Dr. Nevin advises us generally on the development of the IOT sector, but he has a particularly significant role in our enterprise engagement function in the HEA. We have a new enterprise engagement strategy and Dr. Nevin is playing a very important part in rolling out that strategy.
He is heading up that strategy.
Mr. Tom Boland
He is not heading it up. There is a principal officer in charge of enterprise engagement, although the position is vacant at the moment. He acts more in an advisory role and he has taken on some specific tasks. In addition, he is very valuable to us in terms of advising on skills needs in the economy and he is working with the Department on the development of a skills strategy for the country. What we are doing is engaging him in the areas of his expertise in the past. Another significant area where his advice and support and expertise is very valuable is in the rolling out of the new apprenticeship programmes-----
Is that as a consultant or is he employed by the Department?
Mr. Seán Ó Foghlú
To be clear, he is currently working on our behalf in the HEA, but he remains on the WIT payroll, and that is one of the issues WIT is seeking to change with us. We have agreed that we will pay him but we have not made that arrangement with WIT yet.
So Mr. Nevin is being paid by Waterford IT but is working for the HEA, and the Department at some stage will pick up the tab-----
Mr. Seán Ó Foghlú
We will.
-----for his payments dating back to the time that he left the college.
Mr. Seán Ó Foghlú
We have to work that out with WIT, but we will certainly-----
But why would the Department not work it out if he left the college and went into the employment of the HEA?
Mr. Seán Ó Foghlú
We have to agree that yet with WIT. We have not done that yet.
What agreement is to be made? If he left the college and went to work for the HEA-----
Mr. Seán Ó Foghlú
He is still legally in the employ of the college.
So he has not left the college.
Mr. Seán Ó Foghlú
No, he is legally employed by the college. He is seconded to us.
I see. That is interesting. I wish to return to a matter that was raised earlier by Deputy Deasy about Dr. Byrne, the previous president. The HEA received a report back in 2011 in relation to the expenditure at the college. Is that correct?
Mr. Tom Boland
I am not sure.
I am trying to explore-----
Mr. Tom Boland
I cannot say absolutely, but let us say yes. I do not know. I cannot recall precisely.
Mr. Seamus McCarthy
I think the Chairman may be referring to the Deloitte investigation of expenses.
Mr. Tom Boland
Right. That is fine. Yes, I do recall that.
WIT did a report to the HEA on 3 June 2011, and in that report it set out to address various matters at that time, particularly to do with what was described then as the cost centre for Dr. Byrne. Reading the report that the HEA was given, it would appear that much of what we were talking about back then did not relate to Dr. Byrne at all. It was a cost centre that was used generally and was not necessarily spent by him. Mr. Costello is nodding.
Mr. Fergal Costello
I can recall the report. There would have been issues where, let us say, the institute would have had a subscription to IBEC, or to Institutes of Technology Ireland, that would have gone through that cost centre. That is just from memory.
I will not speak for him, but Deputy Deasy was trying to redress the balance in terms of that issue at the time and the fact that it was perhaps not appropriate to refer to it as Dr. Byrne's expenditure, which I think is fair, because it was said at the meeting.
Mr. Seán Ó Foghlú
Dr. Byrne-----
One moment. I will allow Mr. Ó Foghlú to comment in a moment. The HEA had that report.
Mr. Seán Ó Foghlú
Could I just clarify something? The HEA had the report and the Comptroller and Auditor General did a review of it, which was considered by the committee a number of years ago. As Mr. Costello has shown, the review showed there was a range of expenditures that were not necessarily personal. Notwithstanding that, there is a range of other expenditures which WIT is seeking to have repaid by Professor Byrne at the moment.
Yes, but I am not going into that. I am just trying to work out our understanding of what happened, because a lot was said at the public hearing. We did not go back to specifically address the issues, and it is only fair that I refer to this particular report, which is in existence and went to the HEA.
One of the other clarifications I am anxious to get relates to the sports centre. That was terminated, or the completion of the construction of the centre was stopped. Someone made a decision on that, knowing that it would cost €4 million.
Who made that decision?
Mr. Seán Ó Foghlú
This was also covered in the Quigley report. Arising from the Quigley report, the Minister agreed to a Department contribution of €2.9 million towards that. We have not paid over that €2.9 million yet but we are in discussions with WIT and WIT would like that funding to be increased somewhat. We are in discussions with WIT about that at the moment. No decision has been made that the project will not advance. WIT has not made that decision. Those issues were covered in the Quigley report.
I understand that. Mr. Ó Foghlú refers to the Quigley report as if I am asking questions that I should know the answer to. All I know from the Quigley report is it said €2.9 million. I know that when the decision was being made that people were told it would cost €4 million to terminate the contract at that time. I am asking whether that is true or false and, on the €2.9 million, what will it now cost to complete that in the way that it was planned originally? I am asking for clarification on the current status.
Mr. Seán Ó Foghlú
WIT has not decided to advance with it but it is in discussions with us about advancing it. I am not aware of what the cost will be but WIT is of the view that it will be more than €2.9 million.
Mr. Ó Foghlú does not know what the cost is.
Mr. Seán Ó Foghlú
I do not know-----
What is happening down there with it at the moment?
Mr. Seán Ó Foghlú
WIT is in discussions with us about having some extra funding for that.
Are the buildings empty? It is used or not used?
Mr. Seán Ó Foghlú
My understanding is that perhaps part of it may be used but a lot of it is empty. It is not useable.
How long has it been empty?
Mr. Seán Ó Foghlú
As far as I recall, two years or so.
Two years. Does the Department find that acceptable?
Mr. Seán Ó Foghlú
WIT-----
How much has the taxpayer spent on that up to now? Then the Department closed it; at least it did not do what the Department of Justice did and tear it down.
Mr. Seán Ó Foghlú
No.
At least there is a building there.
Mr. Seán Ó Foghlú
I have referred to the Quigley report. This is covered in the Quigley report. They over committed about this and they needed additional funding for it and that is one of the reasons why we had to have the investigation. The Minister made a call that she was willing to fund additional funding for it. That additional funding is available but now WIT is seeking an extra element to it and that is available as a loan.
What concerns me is that the buildings are there, the project is completed to a particular stage. It is two years since anyone revisited that project. Buildings, by their nature, if they are not used tend to suffer from some kind of dilapidation. It will cost much more than €2.9 million. When will the decision be made to deal with this issue once and for all? There was a Diverse Campus Services manager or CEO. Who was that?
Mr. Seán Ó Foghlú
Can I answer the first question?
Yes.
Mr. Seán Ó Foghlú
The Department has made a commitment to make the €2.9 million available. WIT can engage that to complete the project. It has informed us, which was not the case at the time, that it will cost more to do that. They will have to talk to us and agree if there will be a change in the amount of money. We committed, under the implementation of the Quigley report, to do enough to complete the project, as we understood at the time. It has tendered. There has been work done by WIT.
When did it tender?
Mr. Seán Ó Foghlú
It tendered in the last year, as far as I understand.
What does that tender show? Does it show that €2.9 million will complete it?
Mr. Seán Ó Foghlú
I understand that will not be sufficient to complete it in its view.
What is the gap?
Mr. Seán Ó Foghlú
I am not sure.
I find that extraordinary. Mr. Boland is here to oversee all these colleges and Mr Ó Foghlú is here to oversee the spending of taxpayers' money but nobody has a clear view of what exactly is happening to those buildings now and what the exact cost of completing it will be. Whether they want to do it or not is another question. Mr Ó Foghlú is talking about €2.9 million and he is waiting for WIT to come back to him.
Mr. Seán Ó Foghlú
WIT is of a view about how much it will cost but I am not sure that is what it will cost. There are different issues. We are often approached by higher education institutions and told what they need to spend. We do not necessarily always agree that this is the level we can talk to them about.
When does Mr. Ó Foghlú think he will find out? Could he not ring the CEO of Diverse Campus Services? That was a title that we came across.
Mr. Seán Ó Foghlú
No. We are dealing with the institution. We are dealing with WIT. The president has been talking to us and the HEA about this.
The president.
Mr. Seán Ó Foghlú
The president of WIT.
That president had a CEO of Diverse Campus Services involved during the process. Is that right, Mr. Boland?
Mr. Tom Boland
The intention is that Diverse Campus Services will now be fully-----
Where is he now?
Mr. Tom Boland
I think he is a staff member of the institute. He certainly was at the time. He always was.
Where is he now?
Mr. Tom Boland
He is in the institute. As I understand it, the company is to be fully consolidated into the institute.
Will Mr. Boland undertake to check with the CEO, who was the CEO but who is now in the institute, Mr. Boland has said-----
Mr. Tom Boland
I believe so. Go on.
I thank Mr. Boland for his permission. I will move on. Can Mr. Boland check with him to get the background to this and provide the Committee of Public Accounts with a report?
Mr. Tom Boland
I can certainly check with him but I will also check with the president of the institute to get a full picture of the whole situation. Of course I will.
Mr. Boland will?
Mr. Tom Boland
Yes.
Mr. Boland is very helpful. If he will ascertain that we might then be able to determine where exactly this project is at.
Mr. Tom Boland
As I understand it, it is, effectively, in mothballs at the moment. I understand that it is secured against weather but otherwise we are waiting to see how or whether it progresses.
Mr. Seán Ó Foghlú
The thing to remember about this project is that this is one entered into by WIT of its own volition which the Minister agreed to provide additional funding for following the completion of the Quigley report. It is not a project that was approved for capital funding by the Department initially. This is the institute advancing its own building programme, which is a legitimate thing for it to do but it overstretched in doing so at the time.
Out of its own resources?
Mr. Seán Ó Foghlú
Yes.
Mr. Tom Boland
From its resources from this company - DCS - to which we are referring.
All the more reason why we should find out from the previous CEO of that company or the president exactly what happened.
Mr. Tom Boland
Sure.
I will not rest until I find out because something has to be done about that, Mr. Ó Foghlú. It may not have been the Department's funding, but it had to come from somewhere.
Mr. Seán Ó Foghlú
Yes.
It did go into that building.
Mr. Seán Ó Foghlú
That is why the Minister committed to fund completion.
Fine. That is okay, but the Department is not funding for completion because it has not agreed to it.
Mr. Seán Ó Foghlú
We funded for completion and WIT came back and said it would cost more. We went through this in detail with it two years ago on the completion of the Quigley report. We made a call, which was not typical of us, to fund where an institution had landed itself in a bit of difficulty. We made that call to support it. Now, it has come back seeking a bit more. That is a more difficult call for us to make a second time around. That is what the challenge is.
I will ask the clerk to write to the president and the CEO of Diverse Campus Services, whom Mr. Boland says is still with WIT, and ask for a comprehensive explanation as to where this project is at and then to determine what money is left in their funds to complete it and what is their expectation of funding from the Department of Education. I will ask the clerk to do that with the permission of the Committee of Public Accounts, we will get that information and then we can pursue the matter in much more detail.
Mr. Tom Boland
Just for clarification, is the Chairman taking over that role now? He had asked us to do a report.
You are too busy looking after all the other matters.
Mr. Tom Boland
We are happy to do it.
I will ask the clerk to do it.
Mr. Tom Boland
I would also clarify that the then CEO of DCS is no longer CEO of that company but, as I understand it, he is a staff member of the-----
He is still employed. He is a staff member. Is that right?
Mr. Tom Boland
Yes. Just so the Chairman knows that.
Mr. Boland told me that. He is a staff member of WIT.
Mr. Tom Boland
Yes, but he is no longer CEO of DCS.
When he became a staff member and was no longer CEO, he hardly forgot everything he did.
Mr. Tom Boland
I only wanted to assist, and let the Chairman know that he is no longer CEO.
Mr. Boland is very helpful. That is what we will do.
In terms of the use of consultants and whatever might happen in colleges, this report that you gave the committee, Mr. Ó Foghlú, was into Cork Institute of Technology. In all honesty, how do you expect us decipher all of this redacted information, page after page of it? We get complete blow-by-blow information from a whistleblower. It does not read very well. How much was spent on this?
Mr. Seán Ó Foghlú
CIT went through a process whereby anonymous allegations were made.
How much was spent on this?
Mr. Seán Ó Foghlú
The cost of the KPMG report was €64,800.
The Committee of Public Accounts gave you a completely unredacted version of the accusations and you then gave us this. Is that correct?
Mr. Seán Ó Foghlú
That is what CIT provided to us. Those involved have legal advice to the effect that they cannot give any more information.
It has been suggested that we bring in CIT and the Department again in respect of the accusations to go through them, because they have not been explained in that report. I could go through the report with you, but it is too late now and we will have to set another date for it. Anyway, I can tell you that there are more questions arising from that report than there were before the report was commissioned and the information given to us.
Mr. Seán Ó Foghlú
Two sets of anonymous allegations were made to CIT. Following consultation with the Department the Higher Education Authority requested that those responsible in CIT investigate the matters. They did. They investigated them genuinely, but they were anonymous allegations so they had no one to check with about the allegations. Those responsible went through them. They were very wide-ranging. They reported that they have worked through all of them and that there is nothing of any major consequence.
We met jointly with the institute president and a senior member of staff. They reported to us on their work. We challenged them and they came back to us with further clarification. They have worked through, in what appears to us to be a genuine way, the allegations that have been made to them, which are anonymous and which they cannot seek to verify with anyone. Furthermore, they have a procedure in place whereby someone may make a disclosure on a confidential basis. They have a mechanism in place if someone within the institute wishes to make a confidential disclosure. Such a confidential disclosure, as far as we know, has not been made. Therefore, they have no way to verify or challenge the evidence underpinning the range of allegations.
They have gone about this in a genuine way. A considerable amount of their senior management time has gone into it and they have had to engage external people to undertake the investigation. That is the position as we see it.
I do not accept that report and the manner in which it has been given. It is an insult to the Committee of Public Accounts. While you may not have given - Mr. Mannion, have you something to say?
Mr. Christy Mannion
Yes. The legal advice said we could not actually give any more than that. That is all we can do. CIT has legal advice. Those involved tell us they have legal advice and we have to produce it on the basis of that.
I do not accept it. It is so heavily redacted that it insults the Committee of Public Accounts and the work we are doing.
Mr. Seán Ó Foghlú
We do not-----
I am just saying this, Mr. Ó Foghlú. I am going to ask - it has been agreed already anyway, although we could not do it today - representatives of CIT to come before us and explain this.
I have one last question for you, Mr. Boland, and I am going to conclude the meeting then. It relates to the process with Dr. Byrne at the time. Was he invited to the HEA? What was the engagement between the HEA and Dr. Byrne in terms of the issues at the time?
Mr. Tom Boland
I have two disadvantages here. One is that I have not briefed myself on this. More important, I have some concern that we are getting into areas that are sub judice.
He is taking a case. Is he?
Mr. Tom Boland
As I understand it, Dr. Byrne is suing Waterford Institute of Technology in what I believe is a constructive dismissal case. It is a High Court action and therefore I am reluctant to comment on anything that might be material to that case. Certainly, I know, because I have been asked to provide information, that the issue of when I met Dr. Byrne and the content of that meeting are issues in those proceedings.
All right. That is okay. We will not press you on that. I am going to leave it at that, gentleman. Thank you all for coming along today.
The witness withdrew.
The committee adjourned at 3.45 p.m. until 10 a.m. on Thursday, 1 October 2015.