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Current information on sector capability focuses on the financial health of TEOs. The financial health of an organisation, while limited in scope, does provide a reasonable indication of effectiveness of management control and the ability of the organisation to manage change and risk.

The financial situation of TEIs is improving

There has been concern about the short term financial position of TEIs. In 2000, 13 out of the 36 TEIs had operating deficits and only 11 met or exceeded the recommended threshold of a three percent operating surplus. This situation improved by 2002, with only six TEIs being in deficit and 19 meeting or exceeding the recommended operating surplus.

In 2002, the overall sector operating surplus exceeded the three percent threshold for the first time in several years and rose to 4.2 percent. This reflects the strong financial performance of wānanga, as well as the improved financial performance of other TEIs.

TEIs have exceeded the recommended thresholds on indicators of medium-term viability over the last four years and continue to strengthen their performance on all of these indicators.

Figure 67: Key financial performance indicators for TEIs, 1999–2002

Note: In order to compare indicators on differing scales, the percentage for each indicator has been transformed to an index, where 100 represents the Ministry of Education’s recommended threshold for the indicator. See Ministry of Education, New Zealand Tertiary Education Sector Profile and Trends 2002, p 138, for original data and an explanation of each indicator.

Overall financial situation of PTEs is similar to public institutions

Financial information gathered by the Ministry of Education from PTEs which received student component funding through EFTS-based tuition subsidies in 2002 shows that the average financial performance of PTEs on key indicators is reasonable in comparison with TEIs and reflects logical and obvious differences in financial and asset structures. There is, however, greater variance in key performance indicators in PTEs than is the case with TEIs.

Key findings from the analysis of PTE financial information included:

• There appear to be some economies of scale for PTEs, with larger PTEs performing better than smaller ones.
• Smaller PTEs are more reliant on shareholder funds and shareholder loans to maintain viability.
• PTEs that have made improvements in education and business processes have also had improvements in financial viability.
• A number of PTEs are part of a larger group of companies or trusts and are very strong financially when the finances of the whole group are taken into account.

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• Table of Contents

• The Baseline Picture

• Cross Strategy Indicators

• Raise foundation skills

• Skills for our knowledge society

• Strengthen research and knowledge creation

• Te rautaki mātauranga Māori

• Pacific people’s development and success

• Capability and quality

• Technical and Data Definitions