School Property Initiatives

Initiatives for School Property in the Budget 2013.

InitiativeDescription
School Network Upgrade Project (SNUP)

Operating funding
  • 2013/14 $8.879m
  • 2014/15 $13.176m
  • 2015/16 $12.328m
  • 2016/17 $7.539m
Four Year Total $41.922m

Capital funding
  • 2013/14 $43.843m
  • 2014/15 $38.467m
  • 2015/16 $11.863m
  • 2016/17 $ -
Four Year Total $94.173m

Four-year total (capital and operating) $136.095m
The School Network Upgrade Project (SNUP) subsidises and manages upgrades of schools’ internal cabling infrastructure to an approved Ministry standard.
The funding will enable all remaining eligible schools to be upgraded by 2016 (two years ahead of schedule) and will align the project with the:
  • Completion of the government fibre roll out
  • Full availability of the managed network
Operating funding covers both the programme of work and the upgrading of internal cabling and data infrastructure in State-Integrated Schools (where the property is owned by a Board of Proprietors and not the Crown). Capital funding covers the upgrading of internal cabling and data infrastructure in State schools (owned by the Crown). Further details on this initiative can be found on the Ministry of Education website. Savings rolled forward and unused contingencies are being used to cover much of the cost. $50.018m new capital funding is a call on the Future Investment Fund.
National Education Network Trial (NEN)

Operating funding
  • 2013/14 $1.852m
  • 2014/15 $ -
  • 2015/16 $ -
  • 2016/17 $ -
Four Year Total $1.852m
The National Education Network (NEN) trial offers approximately 100 schools high speed access to education content and resources across the fibre backbone of the Kiwi Advanced Education and Research  Network (KAREN) managed by Research and Education Advanced Network, New Zealand. (REANNZ) The trial has enabled the investigation of issues and opportunities for schools accessing online content and services over a dedicated fibre network.  The findings have been used to inform the design and scope of a managed network for schools. The funding will enable the schools on the trial to continue under their current arrangements until they can be transitioned onto the managed network. Unused contingencies will be used to cover cost.
Managed Network

Operating funding
  • 2013/14  $26.750m
  • 2014/15 $37.302m
  • 2015/16 $37.062m
  • 2016/17 $35.832m
Capital funding
  • 2013/14 $5.500m
  • 2014/15 $3.000m
  • 2015/16 $ -
  • 2016/17 $ -
Four Year Total $145.446m
The managed network will provide schools with affordable, safe and reliable ultra-fast internet access and a range of education content and services. Unused contingencies will be used to cover cost.
School Property Expansion

New operating funding
  • 2013/14 ($1.521m)
  • 2014/15 $7.312m
  • 2015/16 $13.397m
  • 2016/17 $16.774m
Four Year Total $35.962m

New capital funding
  • 2013/14 $26.800m
  • 2014/15 $57.866m
  • 2015/16 $38.228m
  • 2016/17 $11.096m
Four Year Total $133.990m

Four-year total (new capital and operating) $169.952m
This budget initiative will ensure that the New Zealand schools network has enough capacity to meet growing demand, with the right capacity delivered in the right place in time to meet demand for additional capacity. This initiative will provide contingency for a capital injection of $133.990 million over four years to fund new capacity in existing schools as well as providing new schools in areas where the network needs to be expanded onto new sites. The funding provided in this initiative will contribute to the Government’s investment in new capacity. Provision has been made for a combination of up to four new schools, the construction or significant expansion of up to seven kura, three site acquisitions and expansion of up to two existing schools as part of scheduled Stage 2 construction efforts. It will also allow for the provision of up to 320 new roll-growth classrooms. This funding has been set aside as a contingency. The actual combination of new schools, site acquisitions and roll growth classrooms will be the subject of decisions made during the coming year.
Depreciation Charges on Existing School Property

New operating funding
  • 2013/14 $5.000m
  • 2014/15 $5.000m
  • 2015/16 $5.000m
  • 2016/17 $5.000m
Four Year Total $20.000m
The increase in depreciation expense reflects the increasing value of the network as we grow capacity, quality and remediate impaired buildings. The need for increased provision for this expense is due to a combination of factors:
  • Expansion of the property portfolio
  • The progressive improvement in book value of the property portfolio as we restore impaired assets by such actions as remediation of weathertightness deficiencies.
School Property Improvement Programme

New operating funding
  • 2013/14 $8.600m
  • 2014/15 $8.700m
  • 2015/16 $1.300m
  • 2016/17 $1.200m
Four Year Total $19.800m
Many schools have some earthquake-prone or leaky buildings, and in some cases both are present. The scale of this problem is such that the process to address these deficiencies across the network will be a central component of capital work for the next decade and possibly longer, and this effort will require operational funding to deliver. The full extent of latent deficiencies is being progressively revealed as inspections continue across the network. This funding covers the operating cost of undertaking the two programmes:
  • The Building Improvement Programme (next four years)
  • The Earthquake Resilience Programme (next two years).
This funding will cover the programme overheads in terms of staff costs, external consultant and contractor fees and other costs associated with delivering the two programmes. The works costs of remediation and improving resilience are met out of separate baseline capital funding.
School Property Asset Management Improvement Programme

New operating funding
  • 2013/14 $7.500m
  • 2014/15 $1.500m
  • 2015/16 $1.500m
  • 2016/17 $1.500m
Four Year Total $12.000m
The Ministry is in the process of enlarging its focus from being a property funder to being a high-performing asset manager. The Ministry’s change programme is systematically focussing on:
  • Lifting the capacity and capability of staff
  • Improving Ministry and school asset management processes
  • Improving the quality of asset information
  • Improving procurement efficiency
  • Improving the level of support and advice provided to schools
This initiative will provide the Schools Infrastructure Group Transformation Programme with $5.000 million in new funding in 2013/14. This will allow the Ministry to take initial steps towards improving asset management maturity and developing a programme of change. The requirement to fund the programme beyond the next financial year will be the subject of decisions taken once the Transformation Programme is scoped in more detail. This initiative also allows $7.000 million for completion of the current national programme of Condition Assessments and maintenance of the database for the next four years.
Losses on Disposal of School Property

New operating funding
  • 2013/14 $10.000m
  • 2014/15 $ -
  • 2015/16 $ -
  • 2016/17 $ -
Four Year Total $10.000m
Disposals, demolitions, normal asset lifecycle replacement and renewal of assets drive accounting losses to the extent of the asset’s book value at time of disposal. With the onset of the various major infrastructure impairments resulting from leaky buildings and earthquake damage, as well as the impacts of data quality initiatives and improved visibility of asset condition through condition assessments, there has been a marked increase in the level of accounting losses. A review of business processes will be undertaken during 2013/14 to help forecast post 2013/14 cost pressures for consideration in future budgets.
Insurance Premium Increases Post-Canterbury Earthquakes

New operating funding
  • 2013/14 $8.500m
  • 2014/15 $ -
  • 2015/16 $ -
  • 2016/17 $ -
Four Year Total $8.500m
This cost results from increased insurance premiums due largely to the Canterbury earthquakes.  The one-off increase of $8.500 million will ensure the continuity of insurance against property loss under the same terms and conditions. A comprehensive review of insurance requirements for 2014/15 onwards is planned to be completed this year.
Cost Pressures on Established Property Management Service Contracts

New operating funding
  • 2013/14 $0.700m
  • 2014/15 $0.700m
  • 2015/16 $0.700m
  • 2016/17 $0.700m
Four Year Total $2.800m
National contracts for certain building services (such as ensuring maintenance of Building Warrants of Fitness and managing disposals of surplus property) are essential if the estate is to be properly maintained and directed service levels achieved.  This additional funding will ensure that the Ministry can meet its obligations as an asset manager both in the duties it undertakes itself and those which it manages on behalf of schools. Increased provision is being made to allow for the increasing size of the estate (and therefore in some cases a greater volume of services) and to meet the need to fund fixed escalation clauses where required in some of the longer term contracts.

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