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State fully funds non-state schools, but public scrutiny of hundreds of millions is weak

Last year, the state put church and private schools on an equal footing financially with public schools. The counterargument was that some of them, unlike public schools, also collect tuition fees.

For many years, church and private schools have demanded financial parity with state schools. Only the government of Igor Matovič complied with their demands. However, equal subsidies do not mean equal obligations. While state schools must disclose how much it cost them to wash kitchen towels or to make coffee in the headmaster’s office, non-state schools usually do not disclose contracts, invoices and orders. The public does not normally have access to their management reports either.

In addition to the network of public schools, there are also 165 church schools and 235 private schools in Slovakia that receive state contributions. After years of struggling, they have since last year earned the right to equal funding with public schools, provided for by the amendment to the Act on School Financing proposed by MPs of OĽaNO (Ordinary People and Independent Personalities).

Fight for equal rights
For years, representatives of church and private schools have criticized that the system is set up unfairly. They claimed that they provided the same service as state schools, but under the Act on School Financing they were only entitled to be reimbursed 88% of the average costs incurred by municipal schools. They supported their argumentation for example by the right to “financial security to the same extent as all other schools” enshrined in the 2004 agreement between the registered churches and the state.

However, according to the Ministry, the extra 12% intended for public schools was to be used for capital expenditure, e.g. for investments in buildings that are mostly in state or municipality ownership. Thus, repairs and reconstructions appear to have been financed from other sources, including tuition fees, which in some cases make up only a small part of their income, while in other cases they may account for more than half of their resources. They could also apply for investment grants individually. Members of the ruling coalition eventually approved the amendment. Non-state schools are thus entitled to 100% subsidies from January 2022.

However, the Union of Towns and Cities of Slovakia pointed out that it would not be a level playing field, because the possibility of charging fees would, on the contrary, favour private and church schools over state schools.
Following a recent amendment to the Accounting Act which also introduced the obligation for non-profit organisations to publish financial statements, it was revealed that, for example, C. S. Lewis Bilingual High School in Bratislava, established by the Church of the Brethren, has retained earnings of EUR 1.3 million on its account. In addition, the gymnasium will increase the tuition fee from EUR 2850 to EUR 3150 for the upcoming school year. The reason, according to the headmaster Peter Figeľ, is the need to create resources for a new building, as the school currently uses a building owned by the self-governing region. Although they have rented it for 25 years for one euro a year, excluding utilities, they must invest in it. The raise of tuition fees, says the headmaster, is not only due to inflation, but also because the money from the state is not enough to cover the necessary increase in teachers’ salaries or the student support system.

What the state finances
The total expenditure of schools in Slovakia in 2022 reached EUR 2.3 billion. Of this amount, almost EUR 114 million went to 235 private schools and 246 private kindergartens in the form of normative contributions, i.e. mainly to cover wages and operations, and EUR 6.7 million went for non-normative contributions. Public subsidies for 165 church schools and 117 kindergartens amounted to EUR 121 million in normative fees and EUR 10.45 million for miscellaneous contributions last year.

Just like with public schools, the state is financing staff salaries, operations, teaching assistants, textbook purchases, transportation, ski training, school trips, clubs, etc. And now the state funding also covers capital expenditure. At the same time, private schools are only allowed to use capital expenditure funds for the acquisition of movable assets.

Equal rights, unequal obligations
However, the equalization of state support for non-public and public schools has also highlighted another difference between the two types of institutions: transparency. The public has limited ways to check how non-state schools use public resources. The Ministry of Justice under the leadership of Viliam Karas informed us that the Information Act does not apply to church and private schools, so unlike state schools, they do not have to disclose contracts, invoices and orders. The Ministry press department has, however, failed to explain since February on what basis they have reached this interpretation.
A more detailed statement came only after the caretaker government took office. The Ministry’s current management states that the Information Act does apply to non-state schools too, but only partially. “Church or private schools, whether primary, secondary or higher education, are liable persons, but to a limited extent,” the press department wrote. “They have an obligation to disclose information or publish contracts relating to their decision-making activities, if they have been entrusted with them by law,” the statement adds. The Ministry did not specify what information the schools should publish. The law implies that it should probably be, for example, decisions on pupil admissions or decisions on fees.
The School Administration Act provides for these powers of the headmaster:
(3) The headmaster of a primary school shall exercise state administration in the first instance. He/she decides on:
(a) admission of a pupil to the school,
(b) admission of a pupil by transfer,
(c) exempting a pupil from the obligation to attend school,
(d) exempting a pupil from learning in particular subjects or parts thereof,
(e) permission to attend compulsory education outside the territory of the Slovak Republic,
(f) imposition of educational measures,
(g) permission to conduct a board examination,
(h) permitting an applicant who is not a pupil of that school to take an examination in individual subjects,
(i) setting fees for the pupil’s legal representative to partially reimburse the costs of care provided to a pupil in the school and in the school facility,
(j) individual education of a pupil,
(k) education of a pupil in schools established by another state on the territory of the Slovak Republic with the consent of the embassy of the other state,
(l) pupil’s individual education abroad,
(m) allowing a pupil to study according to an individual learning plan.
The explanatory memorandum attached to the latest amendment to the Information Act, however, states: “If the Freedom of Information Act is to be an effective means of controlling the use of public funds, it must apply to all entities that are directly or indirectly linked to the state.”

Exceptions to the rule
Some church and private schools do publish contracts, invoices and orders. Of the 165 church schools using the state budget, we found 17 that have no problem sharing their financial flows with the public. They refer to the 2011 amendment to the Information Act, according to which contracts through which public funds are spent are to be published.

Another 55 church schools have at least one contract posted on their websites. Of the 235 private schools linked to the state budget, only 11 publish their contracts on their websites. So most of them do not disclose anything. Similarly, the majority of schools we have contacted did not respond to our requests for information.
“When I use public funds, I have no problem disclosing how I use them,” explains Marián Damankoš, the headmaster of the Evangelical United School in Prešov, which publishes all documents, including declarations on how parents’ money was used. The current law, he said, allows for ambiguous interpretation and therefore the school is guided by what the headmaster believes is more beneficial to the public. According to him, the Information Act should be changed.

“The law should clearly establish a single scheme for all schools. After all, 90% of our budget as a church school is made up of public funds,” says Damankoš, who is also president of the Association of Evangelical Schools in Slovakia.

Missing funding reports
State subsidies (normative contributions) are the same for each school, so non-state schools also receive the same amount for teachers’ salaries or operations. If they collect extra tuition, they can afford better salaries or can spend more on operational functioning. Published financial statements show that where fees are not levied, or are lower, state subsidies make up the majority of non-state school budgets. If the fees are higher, they can account for more than half of the school’s budget. However, Damankoš believes that the disclosing obligation should also apply to schools with a lower share of state funding. “This country has a quite widespread culture of wasting public money and transparency is the solution. Whoever takes public funds should have no problem documenting their use.”
Image: Published contracts, invoices and orders of Gymnasium of St. Andrew in Ružomberok.
Non-state schools do not usually disclose the contracts through which they use parents’ money either. For example, contracts for the supply of meals, or for school trips or ski trainings.
However, every school – without exception – is obliged to publish a report on education and training, which should include a report on the school’s finances. However, church and private schools often forget this too. If they do publish a report, it does not always include information on financial resources. Parents therefore have no way of knowing the financial shape of their school and how the fees they pay to the school are exactly being used.
But the Act on School Financing states that parents at church and private schools have the right to request information about the use of their money. It also specifies that money from the state and parents can be used by non-state schools for salaries, operations, insurance premiums, teaching aids and their modernisation, and to deal with emergency situations. Any other income such as donations, 2% of taxes, profits from business such as renting school premises, contributions from founding entities and other profit must in turn be used to finance development.

No tendering
If schools do not publish contracts, invoices and orders, the efficient use of state funds should at least be ensured within the remit of the Public Procurement Act. The Public Procurement Office (PPO) claims that non-state schools are contracting authorities if they are largely financed from the state budget. This is true for most of them, as only a few schools charge such high tuition fees that they account for more than half of their income.
However, our research shows that most of the church and private schools linked to the state budget do not make much use of the Public Procurement Act or do not inform the authority about it.

The fact is that school contracts rarely exceed the limits for public procurement to be published in the PPO official journal. However, the law requires cost-effectiveness even for smaller contracts and requires contracting authorities to send semi-annual summary reports on low-value contracts. For example, the summary reports also show whether a school has approached one or more potential suppliers.

For the majority of the 165 church schools (88), there was no mention on their websites or on the PPO website that they awarded contracts using tendering procedures. The remaining schools have either used this option at some point or have published a summary report on low-value contracts at least once, either on their websites or within their PPO profile. As for private schools, we found no mention of public procurement in more than two thirds (163 out of 235 schools).

We have sent information requests on tendering practices to several schools that do not engage in public procurement. Most did not respond. A staff member of one of the schools even replied to us that they were not aware of the obligation to comply with the Public Procurement Act.

That school even had a procurement obligation enshrined in the contract with the municipality under which it receives money. “If funding is used to cover subcontractor services, the recipient is obliged to follow the Public Procurement Act,” the contracts read – these contracts provide for the flow of contributions to non-state institutions for the salaries and operations of kindergartens or day-care centres. This means that this obligation also applies to those entities that do not meet the definition of contracting authorities.

Thus, only a few non-state schools award larger contracts, such as reparations of school buildings and roofs, reconstructions and extensions, catering services, as well as purchases of electronic devices and school equipment, through a tendering procedure or a market research. And since most of these schools do not disclose contracts and invoices, it is currently not easy to find out whether the new roof of the school was made by a company close to the school management or whether the school buys energy through an intermediary that adds an unreasonable commission. The churches themselves are also linked to the state, and in 2023 they received EUR 57.6 million for their activities.

The state does not have a strong opinion on control
Nevertheless, the Ministry of Justice currently believes that state control of subsidies is sufficient. “Subsidy schemes fall under the oversight bodies in the areas of financial discipline, audit, efficient management or state aid. Therefore, in this context, it does not seem sensible to include private law entities among liable persons under the Information Act only by virtue of receiving public funds,” the press department wrote.

The Ministry of Finance, in turn, confirms that non-state schools are also obliged to observe the rules of financial discipline when using subsidies, i.e. economy, efficiency and effectiveness of their spending.
Regional education authorities are responsible for controlling the use of state contributions by church schools. The Act on School Financing also states that the allocation of funds for both church and private schools for the following calendar year is conditioned by the preparation of a school management report for the previous year. However, the reality is that rather than reports on the management of individual schools, the education authorities only receive aggregated reports containing accounts of founding entities.

“The schools submit their protocols (management reports) to their founding entities, not to the regional authority,” wrote an employee of one of the school authorities in response to our information request asking for the annual reports of non-state schools.

Another difference between public and non-public schools is that, if a school falls under a local authority, its budget and annual report are to be approved by members of the local council in public meetings. However, in the case of church schools, the documents are controlled by an archdiocesan education office, whose activities are not public. The situation is usually similar for private founding entities.

“If there is a need to increase the level of public scrutiny, this should be addressed by ‘opening up’ public scrutiny so as to include schemes for public sector subsidies and contributions,” the Ministry of Justice says.

Can a school make a profit?
The set-up where non-state schools operate as non-profit organisations but de facto make a profit also remains questionable. This issue has been currently highlighted by journalist of Denník N Veronika Prušová in the case of the British International School in Bratislava, which collects more than EUR 12 million in tuition fees annually. The school voluntarily gave up the state money, according to a statement from the Ministry of Education referred to in the article. The school receives only a public contribution for its kindergarten.

The aforementioned C. S. Lewis Bilingual High School in Bratislava reached positive economic results ranging from EUR 130,000 to EUR 455,000 between 2016 and 2021, according to its financial statements. Most of this money is intended for the new building as mentioned above. This should cost roughly EUR 15 to 20 million including student facilities, according to the estimates of the headmaster Peter Figeľ.

However, the Ministry of Education warns that “schools cannot use the funds as they see fit, they must comply with the legislation in force.” According to the Act on School Financing, non-state schools too must use state budget subsidies and pupil fees for salaries and wages, insurance premiums, operations, modernisation of teaching aids and dealing with emergencies. Other income such as profit from renting premises, 2% of taxes, donations or funds from founding entities must be invested in development.

To sum up, it can be concluded that the government of Igor Matovič has eliminated one problem by financially equating non-state schools with public schools but has left several other issues unresolved. The new government should therefore carry out a thorough review of this issue and amend the relevant legislation.

The analysis was prepared by Martina Hilbertová, journalist and associate of Transparency International Slovakia. 
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