Education Bureau set no clear guidelines, DSS Council charges

The Audit Commission's declaration that some Direct Subsidy Scheme (DSS) schools have been guilty of making inappropriate expenditures and failure to adhere to government rules has encountered strong opposition from the schools. The DSS Schools Council Thursday labeled the audit report "unfair", and charged the Education Bureau had failed to provide clear guidelines on issues about which the schools had been faulted.

The response came after the Education Bureau late Wednesday identified 76 out of 77 DSS Schools tagged for inefficiencies and inappropriate spending in the audit report. The Legislative Council's Public Accounts Committee had twice requested that the names be published. "DSS schools actually have more flexibility in resource allocation - different from subsidized schools or government schools," said Chairman of the Council Lam Kin-wa at a press conference after an emergency Council meeting Thursday.

Lam stressed that it's a matter of "accounting procedures", rather than the DSS schools doing "something illegal".

He also indicated that the Education Bureau didn't inform DSS schools of the full guidelines that it submitted to the Audit Commission. He questioned whether the Bureau was trying to "shirk its responsibility". The Bureau didn't clearly require the schools to submit financial documents for checking during the application process before raising tuition fees, he noted.

He also explained that a DSS school requires a reserve of at least three months operating expenses to maintain normal operations, and must be prepared to cope with urgent maintenance, manpower adjustments, and inflation.

Several DSS Schools denied that they had intentionally underestimated their reserves. One explained that the number of students enrolled turned out to be much greater than estimates.

St Paul's Primary School issued a statement on its website stating that despite the school's HK$15-million surplus, a 25-percent increase in tuition fees still applied.

A statement from Delia Memorial School said school officials believe they have done nothing wrong by using government funding to pay taxes. It is able to exempt part of the tax, which is good for students, said the Executive Director of the school Lee Chiu-chung. He is critical of the government, however, saying the school has been applying to operate on a non-profit basis for 11 years.

Speaking on a local radio program, education lawmaker Cheung man-kwong said the auditor's findings showed supervision of DSS schools was very lax if not negligent but stopped short of condemning the scheme.

Lam said the Council will enhance communication with the Bureau. He agrees that the schools' need for better understanding of accounting procedures. He also expects the Education Bureau to clearly inform the DSS schools about the procedures they need to follow exactly.

Lam, however, refused to comment on reports that some schools had invested in the stock market. He said those were individual cases and should be explained by the schools.

The Education Bureau's requirement on the topic was actually unclear. In the English version of the Education Bureau Circular No 2/2003, it states that speculative investment (e.g. local equities) is "not recommended". Yet in its Chinese version it's phrased as "can not".

Education Minister Michael Suen will respond at a meeting with lawmakers Monday.

China Daily

(HK Edition 11/26/2010 page1)