CHAPTER 1 Education Bureau Administration of the Direct Subsidy

CHAPTER 1

Education Bureau

Administration of the Direct Subsidy Scheme

Audit Commission

Hong Kong

25 October 2010

This audit review was carried out under a set of guidelines tabled in the

Provisional Legislative Council by the Chairman of the Public Accounts

Committee on 11 February 1998. The guidelines were agreed between the

Public Accounts Committee and the Director of Audit and accepted by the

Government of the Hong Kong Special Administrative Region.

Report No. 55 of the Director of Audit contains 11 Chapters which are

available on our website at http://www.aud.gov.hk.

Audit Commission

26th floor, Immigration Tower

7 Gloucester Road

Wan Chai

Hong Kong

Tel : (852) 2829 4210

Fax : (852) 2824 2087

E-mail : [email protected]

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ADMINISTRATION OF THE DIRECT SUBSIDY SCHEME

Contents

Paragraph

PART 1:

INTRODUCTION

Background

Conditions for admission to the Direct Subsidy Scheme

Direct Subsidy Scheme subsidy

Monitoring of Direct Subsidy Scheme schools

Audit review

General response from the Administration

Acknowledgement

PART 2:

ADMISSION PROCESS

Application for admission to Direct Subsidy Scheme

Assessment of track record

Audit observations and recommendation

Response from the Administration

Compliance with admission conditions

Audit observations and recommendations

Response from the Administration

1.1

1.2 – 1.4

1.5 – 1.6

1.7

1.8 – 1.14

1.15 – 1.16

1.17 – 1.18

1.19

2.1

2.2 – 2.3

2.4

2.5 – 2.6

2.7

2.8

2.9 – 2.15

2.16

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Paragraph

PART 3: SERVICE AGREEMENT WITH

SCHOOL SPONSORING BODY

Requirement to enter into service agreement

Audit observations and recommendations

Response from the Administration

Compliance with service agreement

Audit observations and recommendations

Response from the Administration

Director of Audit's access right to records and accounts

Audit observations and recommendation

Response from the Administration

PART 4:

SERVICE AGREEMENT WITH

INCORPORATED SCHOOL GOVERNING BODY

Service agreement

Delays in entering into service agreement

Audit observations and recommendations

Response from the Administration

Composition of incorporated school governing body

Audit observations and recommendation

Response from the Administration

3.1

3.2 – 3.4

3.5 – 3.13

3.14

3.15

3.16 – 3.29

3.30

3.31

3.32 – 3.33

3.34

4.1

4.2

4.3

4.4 – 4.7

4.8

4.9 – 4.11

4.12 – 4.15

4.16

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Paragraph

Tenancy agreement

Audit observations and recommendations

Response from the Administration

PART 5:

MONITORING SCHOOL PERFORMANCE

Monitoring mechanism

Compliance vetting

Audit observations and recommendations

Response from the Administration

School Development and Accountability framework

Audit observations and recommendations

Response from the Administration

Comprehensive Review

Audit observations and recommendations

Response from the Administration

PART 6:

DIRECT SUBSIDY SCHEME SUBSIDY

Payment of subsidy

Information provided to the Legislative Council

Audit observations and recommendation

Response from the Administration

4.17 – 4.18

4.19 – 4.22

4.23

5.1

5.2 – 5.5

5.6

5.7 – 5.13

5.14

5.15

5.16 – 5.23

5.24

5.25 – 5.26

5.27 – 5.29

5.30

6.1

6.2

6.3

6.4 – 6.8

6.9 – 6.10

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Paragraph

Subsidy for schools with a longer history

Audit observations and recommendations

Response from the Administration

PART 7:

INTERNATIONAL SCHOOLS

IN DIRECT SUBSIDY SCHEME

Inclusion of international schools in Direct Subsidy Scheme

Audit observations and recommendations

Response from the Administration

6.11

6.12 – 6.15

6.16 – 6.17

7.1

7.2

7.3 – 7.16

7.17 – 7.18

Page

Appendices

A : Assessment areas for DSS applications

B : Chronology of key events:

Phasing out of international schools from the DSS

C : Acronyms and abbreviations

50 – 51

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PART 1: INTRODUCTION

1.1 This PART describes the background to the audit and outlines the audit scope

and objectives.

Background

1.2 In June 1988, the Education Commission (Note 1) published its Report No. 3.

The Commission recommended the introduction of a Direct Subsidy Scheme (DSS), under

which schools would receive a recurrent subsidy based on the number of students enrolled.

The objective of introducing such a Scheme was to inject diversity to the school system

through the growth of a strong private school sector so that parents would have greater

choice in finding suitable schools for their children. The Government accepted the

recommendation, and in May 1990, announced the introduction of the DSS with effect from

the 1991/92 school year (Note 2).

1.3 To meet the policy objective of giving more choices to parents, DSS schools are

allowed to have greater flexibility in various areas including school management, resources

deployment, staff appointment, curriculum design, student admission and fees collection so

that they can cater for the diverse needs of their students in a more responsive manner.

1.4 In 1998, the Government reviewed its private school policy with the aim of

fostering a more vibrant and diverse private school sector and providing parents with

greater choice. To provide expansion in the private school sector, especially DSS schools,

the Chief Executive announced in his 1998 Policy Address the following improvement

measures:

(a) to enhance the capital and recurrent assistance for DSS schools; and

(b) to allocate to sponsoring bodies government-built school premises for the

operation of non-profit-making DSS schools.

Note 1: The Education Commission advises the Secretary for Education on the overall

educational objectives and policies, and the priorities for implementation of its

recommendations having regard to the resources available.

Note 2: Unless otherwise specified, all years mentioned hereinafter refer to school years which

start on 1 September of a year and end on 31 August of the following year.

Introduction

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Conditions for admission to the Direct Subsidy Scheme

1.5 At present, schools admitted to the DSS:

(a) must have self-owned school premises;

(b) must be non-profit-making;

sufficient to meet at least two months’ operating expenses;

(d) are not allowed to operate private classes without prior approval from the

Education Bureau (EDB);

(e) should issue an annual prospectus and ensure that its contents are updated and

factually correct;

(f) are required to offer principally a curriculum targeted at local students and

prepare them to sit for the relevant local public examinations;

(g) are required to enter into a 10-year service agreement with the Government.

The objective is to enhance the schools’ accountability and to facilitate the

development of performance-based school management; and

(h) should be prepared to abide by new rules concerning the DSS.

1.6 For 2009/10, there were 72 DSS schools, comprising 11 primary, 52 secondary

and 9 primary-cum-secondary schools. The enrolments of DSS secondary and primary

schools were 51,123 (11% of secondary students) and 12,589 (4% of primary students)

respectively. The budget for recurrent DSS subsidy was $2,422 million.

Direct Subsidy Scheme subsidy

1.7 DSS subsidy is payable on a per student basis. The amount is derived with

reference to the average unit cost of an aided school place, the operating history of the

school (Note 3) and the school fees charged by the school. For 2009/10, the DSS subsidy

Note 3: DSS schools which have been established for 16 years or more will receive additional

recurrent subsidy per student per year. For 2009/10, the annual additional recurrent

subsidy per student ranged from $3,135 (for primary schools) to $6,869 (for sixth form

classes of secondary schools).

Introduction

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ranged from $28,134 (for Primary One school places) to $56,371 (for Secondary Seven

school places). A DSS school will receive full subsidy until its fee level reaches two and

one-third of the average unit cost of an aided school place. Beyond this level, no recurrent

subsidy will be provided. To make DSS schools more accessible to students from less

well-off families, DSS schools are required to set aside at least 10% of their fee income for

a fee remission/scholarship scheme with a set of eligibility benchmarks no less favourable

than the student financial assistance schemes offered by the Government.

Monitoring of Direct Subsidy Scheme schools

1.8 DSS schools are accountable to the public for the quality of their education

services and the proper use of the government and school funds. They are required to

adhere to the following guiding principles issued by the EDB for the proper and effective

operation of schools:

(a) complying with laws and regulations;

(b) putting the interests of students as the first priority;

(d) maintaining transparency in school management;

(e) taking key stakeholders’ concerns into consideration in the decision making

process;

(f) deploying resources properly and effectively; and

(g) making reflections and improvement through continuous evaluation.

1.9 To ensure that DSS schools meet the service and operation standards required,

the EDB has instituted a control and monitoring mechanism, which comprises both

compliance vetting and quality assurance assessment.

Compliance vetting

1.10 The purpose of compliance vetting is to check, by way of information collected

regularly through different channels (e.g. annual school plans, school inspections, and

audited accounts), whether there is any breach of the school operating requirements,

particularly in the following areas:

Introduction

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(a) admission conditions and requirements;

(b) statutory requirements; and

1.11 Appropriate actions (including termination of subsidies) could be taken if a DSS

school does not pass the compliance vetting. Follow-up reviews by the EDB will be carried

out to ensure timely rectification of the situation.

Quality assurance assessment

1.12 The purpose of the quality assurance assessment of a DSS school is to provide an

external review on the performance of the school as a whole. The EDB may assess the

performance of the school by conducting:

(a) full inspections along areas such as management and organisation, teaching and

learning, support for students and school ethos, and attainment and achievement;

(b) focus inspections on one of the areas (e.g. discipline, home-school cooperation,

medium of instruction, and teaching and learning of a subject);

(d) other new performance measures to be introduced in the future.

1.13 Assessment in the form of a Comprehensive Review (CR — see para. 5.25) will

be made after the first five-year period of the school’s admission into the DSS. After the

assessment, the EDB may:

(a) require the school to draw up and implement an action plan to overcome the

identified problems within a reasonable period;

(b) monitor the progress of implementation of the action plan; and

1.14 If the EDB considers that the school fails to improve, the EDB may:

(a) appoint additional school managers to the school for such a period as it

thinks fit;

Introduction

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(b) not renew the School Management Committee (SMC)/Incorporated Management

Committee (IMC) Service Agreement by giving the SMC/IMC nine months’

notice before that Agreement expires;

giving the SMC/IMC nine months’ notice to that effect; or

(d) take any other measures as it thinks fit.

Audit review

1.15 The Audit Commission (Audit) has recently conducted a value for money audit

on the DSS covering the administration of the Scheme and the governance and

administrative matters of the DSS schools. Audit reviewed the files and records of the EDB

and visited four DSS schools to obtain a better understanding of their operation. The audit

findings are contained in two separate reports, as follows:

(a) administration of the Direct Subsidy Scheme (the subject matter of this report);

and

(b) governance and administration of Direct Subsidy Scheme schools (Chapter 2 of

the Director of Audit’s Report No. 55).

1.16 Audit’s review of the administration of the DSS focused on the following areas:

(a) admission process (PART 2);

(b) service agreement with school sponsoring body (PART 3);

(d) monitoring school performance (PART 5);

(e) Direct Subsidy Scheme subsidy (PART 6); and

(f) international schools in Direct Subsidy Scheme (PART 7).

Audit has identified a number of areas where there is room for improvement and has made

a number of recommendations to address the issues.

Introduction

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General response from the Administration

1.17 The Secretary for Education fully appreciates Audit’s efforts in conducting this

study and making recommendations to improve the administration of the DSS. He has said

that the EDB:

(a) appreciates the observations and recommendations made by Audit in the study,

which evidently point out the areas for improvement for both the EDB and DSS

schools;

(b) is committed to continuing its efforts to improve the administration of the DSS

with the aim of promoting quality education delivered by DSS schools;

governance structure as well as their internal control mechanism with a view to

enhancing accountability and transparency for proper management and

organisation;

(d) will consider the preventive measures to minimise the possibility of

non-compliance, and systematise the intervention measures to ensure timely

rectification;

(e) will strengthen the communication within the EDB by enhancing internal

procedures/guidelines to improve the administration of the DSS. By doing so,

the EDB will ensure, in a more timely and effective manner, that DSS schools

are in compliance with the requirements as set out in different agreements signed

between the EDB and DSS schools, the conditions for admission to the DSS and

the guidelines/management letters issued by the EDB from time to time;

(f) will continue to provide comprehensive information to the Legislative Council as

and when required; and

(g) will review the existing mechanisms and measures under the DSS whenever

necessary and continue to strive to bring further improvement to the DSS to

facilitate DSS schools’ delivering quality school education service in an

accountable and transparent manner.

1.18 The Secretary for Education has also said that:

(a) DSS schools are allowed to have greater flexibility in managing their schools.

Nevertheless, flexibility enjoyed by DSS schools is not boundless. DSS schools

have to comply with the Education Ordinance (Cap. 279), Education

Regulations, other related legislations and such other requirements as specified

from time to time by the Government;

Introduction

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(b) the EDB considers that autonomy should go hand in hand with accountability.

While the EDB has to play an appropriate monitoring role to enhance the

governance, accountability and transparency of the operation of DSS schools, the

EDB is not involved in the day-to-day operation of DSS schools;

the EDB would issue advisory or warning letters to the responsible persons

demanding rectification within a specified time. Follow-up investigation visits

or reviews will be conducted to ensure timely rectification of the situation. If

the non-compliance persists or systemic problems have been identified in

schools, the EDB will render appropriate intervention to the schools concerned.

Depending on the gravity of the problems, the EDB may appoint school

managers to the SMC/IMC, take punitive measures such as withholding or

withdrawing part of the DSS subsidy where appropriate, and report to the

relevant law enforcement agencies should there be suspected illegal and

corruption cases; and

(d) if non-compliance of requirements or malpractices continue even after warning

has been given and intervention been administered, the EDB may withdraw the

subsidy payable to the school with a resultant loss of DSS status. In exceptional

cases, the EDB may terminate the SMC/IMC Service Agreement at any time

before the expiry of the Agreement.

Acknowledgement

1.19 Audit would like to acknowledge with gratitude the full cooperation of the staff

of the EDB and the four DSS schools during the course of the audit review.

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PART 2: ADMISSION PROCESS

2.1 This PART examines the EDB practices in processing applications from schools

to join the DSS.

Application for admission to Direct Subsidy Scheme

2.2 In order to be admitted to the DSS, applicant schools must be able to

demonstrate their readiness, capability and viability to provide quality education

services under the DSS (Note

4). The Task Force on DSS (Note 5), which is chaired by

a Deputy Secretary for Education, oversees the assessment of applications from aided

schools for admission to the DSS.

Upon completion of the assessment of applications,

the Task Force will recommend the Permanent Secretary for Education to approve or

reject the applications.

2.3 Upon receiving an application, different EDB subject divisions will provide

inputs and comments for preparing an assessment report based on the applicant school’s

proposed plan for joining the DSS. The assessment report covers the track record of the

school’s performance and the provision of quality education by the school (see Appendix A

for the details of the assessment areas). The Task Force on DSS will take into

consideration the supply and demand of school places, the assessment report findings and

the financial viability of the school in assessing the application.

Assessment of track record

2.4 Assessing an applicant school’s track record of performance is one of the areas

considered by the Task Force on DSS in processing the application. It is carried out by the

Quality Assurance Division (QAD — Note 6 ) and the School Development Division

Note 4: New schools may also apply to join the DSS. Their applications will be vetted by the

School Allocation Committee, which comprises an equal number of official and

non-official members who are familiar with the education system of Hong Kong.

Note 5:

The Task Force on DSS was set up in 2000. It meets quarterly to review the policies and

practices of the DSS, propose criteria for DSS applications, and recommend DSS

applications for approval.

Note 6: The QAD is responsible for carrying out school inspections to ensure that schools are

delivering quality education.

Admission process

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(SDD — Note 7) of the EDB. The assessment covers four sub-areas (i.e. management and

organisation, learning and teaching, student support and school ethos, and student

performance). The involvement of both the QAD and the SDD in the assessment is to

ensure that relevant information pertinent to the applicant school will be taken into

consideration. The QAD’s assessment is based on the results of previous External School

Review (ESR — see para. 5.15) or quality assurance inspection. The SDD’s assessment, on

the other hand, is based on its day-to-day working experience with the applicant school.

Audit observations and recommendation

2.5 Audit examination of the records of 10 applications for admission to the DSS in

2008/09 and 2009/10 revealed the following:

(a) in one case, the score awarded by the QAD was based on a quality assurance

inspection carried out in 1998. The QAD had not taken action to verify that the

information contained in the quality assurance inspection report of a decade ago

was still valid and relevant for the assessment; and

(b) in four other cases, the applicant schools had not been subject to any ESR or

quality assurance inspection, and therefore no score was awarded by the QAD.

In this connection, Audit noted that in general, a team of four to five QAD

officers would take about five days to complete a school inspection. If the QAD

had mobilised its resources to carry out school inspections in these cases, the

four applicant schools would have been assessed from the perspectives of both

the QAD and the SDD.

Audit recommendation

2.6 Audit has recommended that the Secretary for Education should consider

taking action to ensure that the assessment on DSS applicant schools’ track records of

performance is based on up-to-date and relevant information. Where necessary, the

QAD should carry out a new school inspection for assessment purpose.

Response from the Administration

2.7 The Secretary for Education agrees with the audit recommendation.

Note 7: The SDD operates regional education offices and is responsible for providing support

services to schools.

Admission process

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Compliance with admission conditions

2.8 The EDB has laid down a set of conditions for admission of schools to the DSS

(see para. 1.5). Only schools that have met the laid down conditions will be eligible to join

the DSS.

Audit observations and recommendations

Non-profit-making status

2.9 When the DSS was introduced in 1991/92, both profit-making and

non-profit-making schools were eligible to join the DSS. Starting from 1999/2000,

profit-making schools were no longer eligible to join the Scheme. When the new restriction

was introduced, a transitional measure was adopted, whereby a profit-making school which

applied for admission to the DSS in 1999/2000 and 2000/01 and had initiated procedures for

changing to non-profit-making status would be deemed to have provisionally satisfied the

non-profit-making condition. If the school met all the other admission conditions, it would

be admitted to the DSS on the condition that it would complete the procedures for acquiring

a non-profit-making status within one year after admission.

2.10 Five profit-making schools were admitted to the DSS during this transitional

period (four in 1999/2000 and one in 2000/01). They were required to complete the

procedures in acquiring a non-profit-making status within one year after admission.

However, due to a number of legal issues concerning the titles of school premises

of the five schools, they were unable to complete the procedures to acquire

the non-profit-making status within one year after admission.

2.11 In December 2005, the EDB, based on the advice of the Lands Department and

the Department of Justice, put forward a proposal to the five schools to settle the legal

issues. In January 2006, the proposal was accepted by the five schools. However, up to

June 2010, the proposal had not yet been implemented. The profit-making status of the five

schools remained unchanged.

2.12 In September 2010, the EDB informed Audit that efforts were made during the

period January 2006 to June 2010 to sort out the proper procedures to take forward the

proposal. Much time was spent on clarifying the implications of the legal documents, and

preparing the essential documents in line with the prevailing requirements. Due to the

uniqueness, complexity and legal implications of the issues involved, a prudent approach

was adopted.

Admission process

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Self-owned school premises

2.13 One of the conditions laid down by the EDB for admission of schools to the DSS

is that the schools must have their self-owned school premises. This is to ensure that DSS

schools will have a security of tenure as a safeguard against disruption of education

services. Schools operating in leased premises will be granted conditional admission if they

meet all the other conditions for admission. They will be required to secure their own

premises within 10 years after admission, or any other period as specified by the EDB.

2.14 Two schools that were conditionally admitted to the DSS in 1999/2000 were

required to secure their own school premises by the end of 2004/05. However, up to

June 2010, they had still been operating in leased premises.

Audit recommendations

2.15 Audit has recommended that the Secretary for Education should:

(a) take further action to facilitate the five schools to complete their procedures

to acquire the non-profit-making status as soon as practicable; and

(b) take proactive action to facilitate DSS schools to secure self-owned school

premises within the specified period.

Response from the Administration

2.16 The Secretary for Education agrees with the audit recommendations. He has

said that:

(a) regarding the change of the profit-making status of the schools reported in

paragraphs 2.9 to 2.12, the EDB has sorted out the major issues relating to the

proper procedures and preparation of legal documents, such as change of

operation right;

(b) the EDB will continue to sort out the remaining issues, such as amendments to

the Memorandum and Articles of Association of the school sponsoring body, to

meet the latest requirement for the change of the profit-making status and

facilitate the schools to complete the procedures to acquire the non-profit-making

status as soon as practicable; and

objective is to ensure that DSS schools would have a security of tenure as a

safeguard against disruption of education services. It will discuss with the

schools concerned various possible ways they may take forward, such as bidding

of school premises under the established mechanism, or drawing up a long term

tenancy agreement as soon as practicable. They will be required to submit

proposals to deal with the issue, which will be proactively considered by the

EDB.

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PART 3: SERVICE AGREEMENT WITH

SCHOOL SPONSORING BODY

3.1 This PART examines issues relating to the service agreements between the EDB

and the school sponsoring bodies (SSBs) of DSS schools (SSB Service Agreements).

Requirement to enter into service agreement

3.2 After a review in 1999 on the policy and arrangements for the DSS, the EDB

introduced the concept of a time-limited service agreement to enhance the DSS schools’

accountability in delivering quality education and to facilitate the development of

performance-based school management. From 2000/01 onwards, the SSB of a school

joining the DSS is required to enter into an SSB Service Agreement with the EDB upon

admission to the DSS.

3.3 In addition, the SSBs of schools (including DSS schools) are required to enter

into an SSB Service Agreement upon:

(a) being allocated with school premises; or

(b) receiving capital subvention exceeding $21 million for improving the existing

school premises.

3.4 Of the 72 DSS schools, 57 were required to enter into an SSB Service

Agreement with the EDB. The remaining 15 schools were not required to do so because

they joined the DSS before 2000/01, and were not provided with school premises or capital

subvention exceeding $21 million. However, they were still bound by the terms and

conditions for admission to the DSS promulgated by the EDB at the time of their admission.

Audit observations and recommendations

DSS schools not yet entered into service agreements

3.5 Up to 30 June 2010, 5 (9%) of the 57 schools still had not entered into an SSB

Service Agreement with the EDB. Counting from the year of their commencement of

operation under the DSS or from the operation of the new school premises which were

funded by capital subvention from the Government, the signing of the SSB Service

Agreement had been overdue for about 18 months to 8 years. A brief description of these

five cases is given in paragraphs 3.6 to 3.10.

Service agreement with school sponsoring body

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3.6 School A. In June 2001, the SSB of an aided school was allocated with new

school premises for relocation. Approval was given for the SSB, after the relocation, to

operate a new DSS school (School A) from the old school premises which were built on

private land owned by the SSB.

3.7 In September 2003, School A commenced operation under the DSS.

In April 2006, the EDB requested the SSB to execute an SSB Service Agreement.

In January 2007, a reminder was sent to the SSB. In response to Audit enquiry, in

June 2010, the EDB informed Audit that the signing of the SSB Service Agreement by the

SSB was voluntary, because no funding support for infrastructure had been provided to it to

operate School A. Up to June 2010, the signing of the SSB Service Agreement had still

been outstanding.

3.8 As the SSB commenced operating School A in September 2003, it should be

required to enter into an SSB Service Agreement in accordance with the EDB’s policy

(see para. 3.2). Despite the fact that allowing the SSB to sign the SSB Service Agreement

voluntarily was not consistent with this policy, no record was available showing that the

matter was discussed and approved by the Task Force on DSS or the EDB senior

management.

3.9 School B. School B was admitted to the DSS in 1998/99. In 2003, approval for

a capital subvention of $30.4 million was given for the school to upgrade its premises

(including the construction of a new block). The project was completed in 2008, and the

school commenced its operation in the upgraded school premises in January 2009. As the

amount of the capital subvention was more than $21 million, the school was required to

enter into an SSB Service Agreement with the EDB. However, no action was taken by the

EDB to request the school to do so until December 2008. In July 2009, the EDB sent a

draft SSB Service Agreement to the school. The school did not accept the draft Agreement.

In June 2010, a revised draft Agreement was sent to the school.

3.10 Schools C, D and E. Schools C, D and E were aided schools with their own

incorporation ordinances. They were admitted to the DSS in 2002/03 to 2004/05. Up to

June 2010, no SSB Service Agreement had been signed by the three schools. Audit

examination of EDB records showed that in all these three cases:

(a) the draft SSB Service Agreements were not sent to the schools upon receiving

their applications for admission to the DSS. Instead, the draft Agreements were

sent several years after the schools’ admission. For example, School C was

admitted to the DSS in 2002/03, but the draft SSB Service Agreement was not

sent to the school until June 2005;

Service agreement with school sponsoring body

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(b) the schools did not accept the terms and conditions of the draft SSB Service

Agreements. In particular, the schools considered that the school governance

structure required under the draft Agreement was not consistent with that in their

incorporation ordinances. They did not agree that they should modify their

governance structure following their admission to the DSS. Eventually, the

EDB revised the draft Agreements. Under the revised draft Agreements sent to

the schools in February and April 2006, the schools would continue to be

managed and operated by their existing school governing bodies; and

agree to sign them. In July 2010, School D informed the EDB that it was

deliberating on the terms and conditions of the revised draft and was unable to

commit to a definite date on which it could come to a decision. Schools C and E

informed the EDB that they were not satisfied with some of the terms and

conditions of the SMC Service Agreement (see para. 4.2). They indicated that

upon agreeing on the terms and conditions of the SMC Service Agreement, they

would sign the SSB Service Agreement.

Delays in entering into service agreements

3.11 Audit examination of the EDB records revealed that, of the 52 schools which

had entered into the SSB Service Agreements, only 26 (50%) schools had entered into the

Agreements upon their admission to the DSS. For the remaining 26 (50%) schools, there

were delays in entering into the Agreements (see Table 1).

Table 1

Delays in entering into SSB Service Agreements

(30.6.2010)

Delay Number of schools

Within 1 year 7

Exceeding 1 year to 3 years 10

Exceeding 3 years to 5 years 5

Exceeding 5 years to 7 years 3

Exceeding 7 years (Note) 1

Total 26

Source: Audit analysis of EDB records

Note: The school entered into the SSB Service Agreement 8.5 years after it

was admitted to the DSS.

Service agreement with school sponsoring body

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3.12 Audit considers that the delays in these 26 cases and the 5 outstanding cases

reported in paragraphs 3.6 to 3.10 might have been avoided, if the EDB had:

(a) reminded the schools of the requirement for them to enter into an SSB Service

Agreement upon receiving their applications for joining the DSS, or for the

provision of school premises or capital subvention of more than $21 million;

(b) taken early action to agree with the schools on the terms and conditions of the

SSB Service Agreement as soon as they had submitted applications to join the

DSS, or for the provision of school premises or capital subvention of more than

$21 million; and

premises or capital subvention of more than $21 million until the SSB Service

Agreement was entered into.

Audit recommendations

3.13 Audit has recommended that the Secretary for Education should:

(a) take effective measures to expedite the entering into an SSB Service

Agreement with each of the SSBs of the five DSS schools that are required

to enter into such an agreement;

(b) ensure that proper documentation of the justifications and approvals is kept

for those exceptional cases where the SSBs of DSS schools are allowed to

sign the SSB Service Agreements voluntarily; and

SSBs of all DSS schools immediately upon:

(i) their admission to the DSS;

(ii) allocation of school premises; or

(iii) approval of capital subvention of more than $21 million.

Response from the Administration

3.14 The Secretary for Education agrees with the audit recommendations. He has

said that:

Service agreement with school sponsoring body

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(a) while the execution of the SSB Service Agreement for School A is not

compulsory, the EDB will continue to engage the SSB with a view to completing

the process;

(b) the SSB of School B signed the SSB Service Agreement on 3 September 2010;

some minor revisions. Legal advice on the proposed revisions is being sought;

(d) Schools C and E have indicated that upon agreeing on the terms and conditions

of the SMC Service Agreements, they would sign the SSB Service Agreements;

(e) the EDB will enhance its in-house documentation mechanism, especially on the

justifications and approvals for those exceptional cases in the context of signing

the SSB Service Agreements;

(f) the EDB will work closely with the SSBs to make sure that the SSB Service

Agreements are formulated and executed in a timely manner; and

(g) the requirement of entering into an SSB Service Agreement will be set out

clearly in the relevant documents and correspondences issued to the SSBs as in

the existing practice.

Compliance with service agreement

3.15 Audit examined the EDB records of the 52 DSS schools that had entered into

SSB Service Agreements. The examination revealed the following non-compliances with

the terms of the Agreements.

Audit observations and recommendations

Incorporation of school governing body

3.16 According to the SSB Service Agreement, the SSB of a DSS school is required

to ensure that the school governing body shall be incorporated under:

(a) the Companies Ordinance (Cap. 32) as an SMC before the school commences

operation;

(b) the Education Ordinance as an IMC; or

by the EDB) before the school commences operation.

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3.17 Up to 30 June 2010, Audit noted that of the 52 DSS schools that had entered into

SSB Service Agreements with the EDB:

(a) the SMCs of 18 schools were incorporated after the schools had commenced

operation. The delays ranged from two days to about nine years, with an

average of three years; and

(b) three DSS schools, which commenced operation in 2004/05 to 2008/09, had not

incorporated their school governing bodies.

Tax exemption status of SMC/IMC

3.18 According to the SSB Service Agreement, the SSB should ensure that the

SMC/IMC will acquire a tax exemption status under the Inland Revenue Ordinance

(Cap. 112).

3.19 Up to 30 June 2010, the SMCs/IMCs of three DSS schools that commenced

operation in 2004/05 to 2008/09 had not yet acquired the tax exemption status under the

Inland Revenue Ordinance.

Donation by SSB to SMC/IMC

3.20 Under the SSB Service Agreement, the SSB is required to:

(a) donate to the SMC/IMC a sum equivalent to the costs of furnishing and

equipping the school to the standard not lower than that of an aided school as

recommended by the EDB; and

(b) make available at least half of the donation to the SMC/IMC at least two months

before the commencement of school operation. The balance should be made

within 18 months after the commencement of school operation.

3.21 Audit examined the 2008/09 audited accounts of 15 DSS schools and noted that

for 4 (27%) schools (2 commenced operations in 2004/05 and 2 commenced operations in

2006/07), the donations made by the SSBs were less than those required. The shortfalls

ranged from about $0.7 million (9%) to $2.4 million (35%), with an average of

$1.3 million.

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Establishment of parent-teacher association

3.22 Under the SSB Service Agreement, the SSB is required to ensure that the

SMC/IMC will establish a parent-teacher association (PTA) within three years after school

operation has commenced. Audit examination of the EDB records revealed that up to

30 June 2010, of the 52 DSS schools that had signed an SSB Service Agreement,

2 schools, which commenced operation in 2004/05 and 2006/07 respectively, had not yet

established the PTA.

Service agreement between SSB and SMC/IMC

3.23 Under the SSB Service Agreement, the SSB shall, within a reasonable time after

school operation has commenced, enter into a service agreement with the SMC/IMC to

ensure that the latter is accountable for the management and performance of the school.

The agreement between the SSB and the SMC/IMC should specify the procedures to be

followed by the SMC/IMC if the performance of the school is found unsatisfactory. Audit

noted that:

(a) no record was kept by the EDB on the signing of service agreements between the

SSBs and the SMCs/IMCs. Therefore, it was not able to ascertain if this

requirement had been satisfactorily complied with; and

(b) in three of the four DSS schools visited by Audit, no service agreement was

signed between the SSBs and the SMCs although they commenced operation in

2002/03 to 2006/07.

Submission of school development plan

3.24 Under the SSB Service Agreement, the SMC/IMC is required to submit a school

development plan to the EDB within six months after the school commenced operation.

After endorsement by the EDB, the plan will be attached to and become part of the first

SMC/IMC Service Agreement.

3.25 Audit examined the EDB records of 15 DSS schools and noted that, up to

June 2010:

(a) one of the schools, which commenced operation under the DSS in 2003/04, had

not yet submitted its school development plan to the EDB;

(b) the submission of the school development plans by 11 other schools had been

delayed. The longest delay was about eight years. All these plans had been

endorsed by the EDB;

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been delayed. The two schools commenced operation under the DSS in 2002/03

and 2008/09 respectively. They submitted their school development plans to the

EDB in November 2009. The plans had not been endorsed by the EDB and

were being revised by the two schools; and

(d) the school development plan submitted by the remaining school was being

reviewed by the EDB.

Information provided in the school development plan

3.26 According to the EDB guidelines, school development plans submitted by

schools should contain the following information:

(a) academic and non-academic goals for students;

(b) annual targets and long term goals;

(d) evaluation mechanism, including tools, areas covered, targets and timeframe;

(e) school budget; and

(f) criteria for admission of students.

3.27 Audit examination of the school development plans submitted by 10 DSS schools

revealed that, in their development plans:

(a) 3 schools did not set the academic goals for students;

(b) 2 schools did not set the annual targets;

(d) 6 schools did not include the school budget; and

(e) 2 schools did not disclose the criteria adopted for admission of students.

School improvement works

3.28 Under the SSB Service Agreement, the SSBs are required to obtain the EDB’s

prior approval for any additions, alterations or improvements to the school premises. Audit

Service agreement with school sponsoring body

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noted that two schools had not obtained the EDB’s prior approval for the improvement

works carried out at their school premises.

Audit recommendations

3.29 Audit has recommended that the Secretary for Education should ensure that

all the requirements stipulated in the SSB Service Agreement are complied with by the

DSS schools. Such requirements include:

(a) the governing body of a school should be incorporated as an SMC before the

school commences operation under the DSS;

(b) the SMC/IMC of a DSS school should acquire a tax exemption status under

the Inland Revenue Ordinance in a timely manner;

specified in the agreement a sum equivalent to the costs of furnishing and

equipping the school to the standard not lower than that of an aided school

as recommended by the EDB;

(d) the SMC/IMC should establish a PTA within three years after

commencement of school operation;

(e) the SSB should enter into a service agreement with the SMC/IMC within a

reasonable time after school operation has commenced;

(f) the SMC/IMC should submit the school development plan in a timely

manner;

(g) the SMC/IMC should provide all the required information in the school

development plan; and

(h) the SSB should obtain prior approval from the EDB for any additions,

alterations or improvement works to be carried out at the school premises.

Response from the Administration

3.30 The Secretary for Education agrees with the audit recommendations. He has

said that:

(a) experience shows that it may not be feasible for a new school to follow the

required timeframe as the new school premises are sometimes handed over to the

SSB a few months before the school starts operation;

(b) the EDB has therefore revised the timeframe in the relevant clause of the SSB

Service Agreement for the governing body of a new school to get incorporated

and to acquire a tax exemption status;

Service agreement with school sponsoring body

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effective measures to ensure that the requirements are complied with:

(i) once the application for joining the DSS has been approved, the EDB

will immediately remind the school to incorporate the governing body as

soon as possible; and

(ii) the EDB will provide advice to the school on the incorporation of its

governing body; and

(d) the EDB will request DSS schools to establish a mechanism to enhance their

self-compliance in these aspects.

Director of Audit’s access right to records and accounts

3.31 DSS schools receive substantial funding from the public purse. They should be

accountable to both the Government and the community. It is important that the Director of

Audit is provided with the right of access to their records and accounts, similar to the

arrangements for government and aided schools.

Audit observations and recommendation

3.32 Audit noted that the current standard SSB Service Agreement included a clause

to provide the Director of Audit with the right of access to the records and accounts of the

DSS schools. Of the 52 SSB Service Agreements signed between the SSBs and the EDB,

only 34 included such a clause. Audit considers that the EDB should take action to request

the other DSS schools (including the 15 schools which were not required to sign an SSB

Service Agreement) to provide the Director of Audit with the right of access to their records

and accounts.

Audit recommendation

3.33 Audit has recommended that the Secretary for Education should ensure that

the Director of Audit is provided with the right of access to the records and accounts of

all the DSS schools.

Response from the Administration

3.34 The Secretary for Education agrees with the audit recommendation. He has

said that the EDB will explore the most appropriate way to provide the Director of Audit

with the right of access to the records and accounts of those DSS schools that the Director

does not have such right for the time being.

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PART 4: SERVICE AGREEMENT WITH

INCORPORATED SCHOOL GOVERNING BODY

4.1 This PART examines issues relating to the Service Agreements between the

EDB and the incorporated school governing body (i.e. the SMC/IMC) of DSS schools.

Service agreement

4.2 Under the DSS, the SSB of a DSS school should ensure that the SMC/IMC of

the school will enter into a 10-year renewable service agreement (SMC/IMC Service

Agreement) with the EDB within one year after the school commenced operation. Through

the SMC/IMC Service Agreement, the EDB and the SMC/IMC agreed to perform the

duties and obligations on the terms and conditions contained therein. An SMC/IMC Service

Agreement contains clauses that stipulate the following:

(a) the SMC/IMC’s duties to implement the school development plan as approved

by the EDB;

(b) the SMC/IMC’s responsibility to implement the prevailing education policy

applicable to DSS schools;

(d) the procedures to be followed by the SMC/IMC in the event of unsatisfactory

performance of the school; and

(e) the EDB’s right to terminate DSS subsidy, if the SMC/IMC fails to comply with

the agreement.

Delays in entering into service agreement

4.3 Under the DSS, the SMC/IMC of a DSS school should enter into an SMC/IMC

Service Agreement with the EDB within one year after the school has commenced

operation. Audit noted that some schools had not yet entered into the agreement with the

EDB after the due date and there were also delays in entering into the agreement in some

cases.

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Audit observations and recommendations

4.4 Of the 72 DSS schools, 53 schools were required to enter into an

SMC/IMC Service Agreement with the EDB by June 2010 (Note 8). Audit noted that, as at

30 June 2010:

(a) 40 schools had signed the SMC/IMC Service Agreements;

(b) 5 schools had not yet signed the SSB Service Agreements with the EDB

(see paras. 3.6 to 3.10);

(d) 2 schools were negotiating with the EDB on the terms and conditions of the

SMC/IMC Service Agreements; and

(e) 3 schools had agreed to enter into the SMC/IMC Service Agreements with the

EDB, pending the arrangement to sign the Agreements.

4.5 Up to 30 June 2010, the SMC/IMC Service Agreements of eight schools

(see para. 4.4(c) to (e)) had been overdue for about ten months to seven years.

In September 2010, the EDB informed Audit that the three schools mentioned in

paragraph 4.4(e) had signed their SMC/IMC Service Agreements in July and August 2010.

4.6 Audit noted that of the 40 schools which had entered into SMC/IMC Service

Agreements with the EDB, only 4 (10%) entered into the agreements within one year after

the schools had commenced operation. For the remaining 36 (90%) schools, there were

delays, ranging from about two months to nine years (see Table 2).

Note 8: Nineteen DSS schools were not required to enter into an SMC/IMC Service Agreement

with the EDB by June 2010, including 15 schools that were admitted prior to 2000/01

and were not required to sign the SMC/IMC Service Agreement with the EDB, and

4 schools for which the signing of the SMC/IMC Service Agreement was not yet due as of

June 2010.

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Table 2

Delays in entering into SMC/IMC Service Agreements

(30.6.2010)

Delays Number of schools

Within 1 year 8

Exceeding 1 year to 3 years 14

Exceeding 3 years to 5 years 6

Exceeding 5 years to 7 years 5

Exceeding 7 years (Note) 3

Total 36

Source: Audit analysis of EDB records

Note: The longest delay was about nine years.

Audit recommendations

4.7 Audit has recommended that the Secretary for Education should take

effective action to:

(a) expedite the entering into an SMC/IMC Service Agreement with each of the

school governing bodies of the 10 DSS schools (see para. 4.4(b) to (d)) that

are required to enter into such an agreement; and

(b) in future, ensure that SMC/IMC Service Agreements are entered into with

the school governing bodies within one year after the schools have

commenced operation under the DSS.

Response from the Administration

4.8 The Secretary for Education agrees with the audit recommendations. He has

said that:

(a) the EDB has all along been putting effort to expedite the entering into SMC/IMC

Service Agreements with school governing bodies;

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(b) for schools which have not shown good progress in entering into SMC/IMC

Service Agreements, the EDB will urge them through various means to ensure

that the SMC/IMC Service Agreements will be concluded without further delay;

(i) once an application for joining the DSS has been received, the applicant

school will be informed that it has to sign an SMC/IMC Service

Agreement and advised to download the standard Service Agreement

from the EDB website for reference/legal advice where required; and

(ii) in the approval-in-principle letter for the applicant school to join the

DSS, it has been stated explicitly that the terms and conditions of the

standard SMC/IMC Service Agreement will not be subject to change

unless under very special circumstances; and

(d) the EDB will continue to require operating aided schools to incorporate their

SMCs before they are admitted to the DSS. In the case of allocated new school

premises for the operation of a DSS school, the EDB will require the SSB to

submit a draft Memorandum and Articles of Association of the proposed SMC

for approval no later than six months before the scheduled opening date of the

school.

Composition of incorporated school governing body

4.9 According to the SMC Service Agreement, the composition of the SMC shall

comprise the principal, representatives from the SSB, parents, teachers, other community

members/professionals and, where appropriate, alumni.

4.10 The Education Ordinance prescribes that an IMC should compose of:

(a) SSB managers (the number of SSB managers should not exceed 60% of the

maximum number of managers in the IMC);

(b) the principal (as ex-officio manager);

(d) not less than one parent manager;

(e) one or more alumni managers;

(f) not less than one independent manager;

Service agreement with incorporated school governing body

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(g) not more than one alternate SSB manager;

(h) one alternate teacher manager (where the constitution allows the nomination of

not more than one teacher manager); and

(i) one alternate parent manager (where the constitution allows the nomination

of not more than one parent manager).

4.11 It is also prescribed in the Education Ordinance that if an IMC fails to maintain

its full composition, the IMC shall, within three months from the date on which the failure

arises, ensure that a person qualified to fill the vacancy is nominated for registration as a

manager.

Audit observations and recommendation

Composition of SMC

4.12 Audit reviewed the composition of the SMCs of 10 DSS schools, which had

signed the SMC Service Agreements, as at 30 June 2010 and noted that:

(a) 1 SMC did not have the principal;

(b) 7 SMCs did not have teacher representative;

(d) 4 SMCs did not have community/professional representative; and

(e) 3 SMCs did not have alumni representative.

Composition of IMC

4.13 Audit examined the composition of the IMCs of 16 DSS schools as at

30 June 2010 and noted that:

(a) vacancies existed in the following IMCs for more than three months:

(i) 2 IMCs did not have the principal;

(ii) 3 IMCs did not have teacher manager and alternate teacher manager;

(iii) 2 IMCs did not have parent manager;

Service agreement with incorporated school governing body

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(iv) 1 IMC did not have alternate parent manager; and

(v) 14 IMCs did not have alumni manager; and

(b) the number of SSB managers in 12 IMCs exceeded 60% of the maximum

number of managers in the IMCs.

4.14 In September 2010, the EDB informed Audit that:

(a) for the 2 IMCs mentioned in paragraph 4.13(a)(i), the principals of the schools

were appointed on an acting basis pending completion of their Certification for

Principalship;

(b) for the 6 IMCs that did not have teacher/parent/alternate parent managers, some

were due to the change of tenure and for some, the registration procedure was

underway; and

was relatively short and hence either their alumni associations had not been

formed or their graduates were too young to serve as managers.

Audit recommendation

4.15 Audit has recommended that the Secretary for Education should follow up

with the schools to ensure that the compositions of the IMCs and SMCs comply with

the requirements stipulated in the Education Ordinance and the SMC Service

Agreements respectively.

Response from the Administration

4.16 The Secretary for Education agrees with the audit recommendation. He has

said that the EDB will follow up with the schools concerned.

Tenancy agreement

4.17 Schools occupying premises which are built on government land are required to

sign a tenancy agreement with the EDB. The agreement should be signed by the governing

body of the school before the handover of the school premises. If the incorporation of the

school governing body is not yet completed, the SSB would be responsible to sign the

agreement and take action to ensure that the school governing body would also sign it

within the period specified in the SSB Service Agreements.

Service agreement with incorporated school governing body

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4.18 The tenancy agreement sets out the terms and conditions of using the school

premises. It sets out the Government’s right to repossess the premises if the premises

ceased to be used for the purposes specified in the tenancy agreement.

Audit observations and recommendations

Delays in signing tenancy agreement

4.19 As at 30 June 2010, 37 DSS schools were required to sign a tenancy agreement

with the EDB. Audit noted that:

(a) 8 schools had not signed the tenancy agreements. These 8 cases had been

outstanding for about 4 to 10 years;

(b) 7 tenancy agreements were signed by the SSBs instead of the school governing

bodies. In 4 of these 7 cases, the governing bodies had been incorporated.

However, they did not sign the tenancy agreement within the period specified in

the SSB Service Agreement. Up to 30 June 2010, the delays ranged from less

than a month to about 3 years; and

were signed within the period specified in the SSB Service Agreement. The

delays ranged from about 2 months to 9 years.

4.20 In September 2010, the EDB informed Audit that tenancy agreements were

signed in July 2010 by the school governing body of:

(a) 1 of the 8 schools mentioned in paragraph 4.19(a); and

(b) 1 of the 4 schools mentioned in paragraph 4.19(b).

School premises used for activity other than school operation

4.21 Under the tenancy agreement signed between the EDB and the SMC, the SMC

undertook not to carry out, or permit anyone to carry out, any activity other than school

operation in the school premises without the EDB’s prior approval. Audit noted that

without obtaining prior approval from the EDB, the SSB of a school had arranged with a

church to allow part of the school premises to be used for religious services for the period

2003/04 to 2010/11. Under the arrangement, the SSB and the school would receive a

monthly donation of $50,000 and $10,000 respectively from the church.

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Audit recommendations

4.22 Audit has recommended that the Secretary for Education should:

(a) ensure that tenancy agreements are signed in a timely manner;

(b) take effective measures to expedite the signing of the outstanding tenancy

agreements; and

obtain prior approval from the EDB before carrying out, or permitting

anyone to carry out, activity other than school operation in the school

premises.

Response from the Administration

4.23 The Secretary for Education agrees with the audit recommendations. He has

said that the EDB will:

(a) require the schools to enter into the tenancy agreements with the EDB in a

timely manner. This will be set out clearly in the relevant documents and

correspondences issued to the schools as in the existing practice;

(b) follow up with the schools concerned with a view to expediting the signing of the

outstanding tenancy agreements; and

requirements set out in the tenancy agreements and that prior approvals are

obtained from the EDB where necessary.

— 30 —

PART 5: MONITORING SCHOOL PERFORMANCE

5.1 This PART examines issues relating to the EDB’s monitoring of the performance

of DSS schools.

Monitoring mechanism

5.2 The EDB monitors the performance of DSS schools through two mechanisms,

namely compliance vetting and quality assurance.

Compliance vetting

5.3 The EDB carries out compliance vetting on the DSS schools through school

audits. The purpose of compliance vetting is to ensure that they are using government and

school funds properly.

Quality assurance

5.4 The quality assurance aims to provide an external review on the performance of

a school as a whole. It informs the EDB on whether the quality of education provided by

the DSS schools meets the required standards. It also enables the schools to evaluate their

performance in the focus development area and to identify strengths and areas for

sustainable development.

5.5 If a DSS school has breached a requirement or failed to meet the required

standards, and repeatedly refused the EDB’s advice to make improvement, the EDB may

withdraw the DSS subsidy, with the schools’ resultant loss of DSS status. Quality

assurance is mainly conducted through the School Development and Accountability (SDA)

framework and the CR.

Compliance vetting

5.6 Although DSS schools are allowed to have greater flexibility in their operation,

they are required to comply with the Education Ordinance, Education Regulations and other

related legislations, and the requirements specified from time to time by the EDB. In

January 2004, the Task Force on DSS decided that DSS schools should be subject to school

audit. The EDB’s School Audit Section is responsible for carrying out school audits of DSS

schools. The objective of the school audits is to ascertain whether the financial and

accounting operations of the schools comply with the relevant legislations and requirements,

and the schools’ internal policy and guidelines governing their operation. Up to

30 June 2010, the EDB had completed school audits on 28 (39%) of the 72 DSS schools.

Monitoring school performance

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Audit observations and recommendations

Selection of schools for school audits

5.7 The EDB’s selection of schools for audit was based on the operational or

management risks identified in:

(a) the examination of the DSS schools’ audited accounts;

(b) the information obtained from other EDB subject divisions; or

As the EDB can only audit a limited number of DSS schools each year, Audit considers that

it is important for the EDB to establish a systematic risk analysis mechanism for the

selection of schools for audits. Under such a mechanism, different aspects of the risk

profile of each DSS school should be regularly analysed with a view to selecting schools

with higher risk for audit.

Issue of school audit reports

5.8 It is important that the school audit report is issued to the management of the

school audited as soon as possible after completing the audit. This will enable the school to

take early action to deal with the audit findings.

5.9 The EDB set a time target of three months for the issue of school audit reports.

Audit examination of the EDB records of 20 DSS school audits revealed that there were

delays in issuing audit reports to 11 (55%) schools, ranging from 6 to 240 days

(see Table 3).

Monitoring school performance

— 32 —

Table 3

Delays in issue of school audit reports

Delay

(Day)

Number of reports

1 to 50 1

51 to 100 5

101 to 150 3

151 to 200 —

Over 200 2

Total 11

Source: Audit analysis of EDB records

5.10 In September 2010, the EDB informed Audit that, with effect from August 2010,

an improvement measure was introduced to issue interim management letters (excluding

outstanding issues) to the DSS schools in three months’ time after completing the audit.

The objective was to enable the schools to take early action to deal with the audit findings.

Follow-up audits

5.11 For aided schools, follow-up school audits would be carried out if glaring

practices (Note 9) were identified during the school audits. However, no such audit was

carried out on DSS schools.

5.12 Audit visited four DSS schools in May and June 2010. All of them had been

audited by the EDB in the period 2007 to 2009. During Audit’s visits to the schools, Audit

noted that some issues identified as glaring practices by the EDB in three schools had not

yet been rectified (see Table 4).

Note 9: The EDB considers it a glaring practice if the practice has a significant effect on the

internal control and operation systems of the school, or a significant amount of

government funds is incorrectly used.

Monitoring school performance

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Table 4

Glaring practices identified by the EDB not rectified

School

Glaring practices

Identified during school audits

(2007 to 2009)

Observed during Audit’s visit

(2010)

F Improper use of government funds

(e.g. meal expenses incurred by staff

met by government funds)

Improper use of government funds

(e.g. staff welfare expenses met by

government funds)

No procurement policy and

procedures were laid down

Formal procurement policy and

procedures were not found. The

school informed Audit that it had

followed the procedures promulgated

in EDB Circular No. 15/2007

G The trust arrangement used to hold

one of the two properties purchased

using school funds was not approved

by the SMC

The same trust arrangement used to

hold a third property was also not

approved by the SMC

H Improper use of school funds

(loan to a third-party company)

Part of the loan had been repaid by the

company. However, up to

June 2010, no agreement was

reached between the school and

the company on the settlement

of the outstanding loan balance

No tender or quotation exercises for

procurement of goods and services

involving significant amounts

No tender exercise for a procurement

involving a substantial amount

Source: Audit analysis of EDB records and Audit’s visits to schools

Audit recommendations

5.13 Audit has recommended that the Secretary for Education should:

(a) establish a systematic risk analysis mechanism for selecting DSS schools for

school audits;

Monitoring school performance

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(b) ensure that the time target for the issue of school audit reports to DSS

schools is met. For cases where there is a long delay, the reasons of the

delay and the remedial action taken should be documented; and

practice is found during school audits. If necessary, a follow-up school

audit should be carried out.

Response from the Administration

5.14 The Secretary for Education agrees with the audit recommendations. He has

said that the EDB will:

(a) strengthen the existing risk-based approach in the selection of DSS schools for

audit by establishing a more systematic risk analysis mechanism whereby

different risk aspects of schools would be analysed;

(b) endeavour to issue school audit reports to DSS schools within three months and

where this time target cannot be met, document the reasons for the delay and the

remedial action taken; and

glaring practice is found during school audits, including conveying the findings

to the SMC/IMC, withholding payment of subsidy, as well as carrying out

follow-up audit, if necessary.

School Development and Accountability framework

5.15 In 2003, the EDB introduced the SDA framework as a mechanism for quality

assurance. All public sector schools, including DSS schools, are accountable for their

performance and are monitored under the SDA framework. The SDA framework

comprises two key elements, namely School Self-evaluation (SSE) and ESR. The SSE is

based on strategic planning and includes an annual school plan and an annual school report

based on evidence and data. The EDB conducts the ESRs to validate the SSEs. It aims to

validate the SSEs of all schools within a period of five to six years (Note 10). Under the

SDA framework, schools are required to:

Note 10: The first SDA cycle covered a five-year period 2003/04 to 2007/08. The current SDA

cycle covers a six-year period 2008/09 to 2013/14.

Monitoring school performance

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(a) compile a strategic plan in their school development plans to cover a period of,

say, three years;

(b) devise the corresponding action in the annual school plans to map out the

implementation details;

report; and

(d) release information on ESR findings to school governing bodies and key

stakeholders (e.g. parents and teachers).

Audit observations and recommendations

Uploading information to school website

5.16 According to EDB Circular No. 23/2003, the school development plan, annual

school plan and school report should be endorsed by the school governing body and made

available to the stakeholders for information and feedback. These documents should be

uploaded to the website of the school by the following timetable:

(a) the school development plan: by end of October of the first year of the period

covered by the plan;

(b) the annual school plan: by end of October of the year covered by the plan; and

5.17 In May 2010, Audit browsed the websites of 20 DSS schools and noted that only

5 (25%) schools had uploaded their school development plans, annual school plans and

school reports to their websites. In June 2010, after the EDB was informed of the audit

observations, Audit browsed the 20 websites again and found that some schools still had not

rectified the omissions (see Table 5).

Monitoring school performance

— 36 —

Table 5

Schools not yet uploaded required documents to their websites

(May and June 2010)

Document

Number of schools

May 2010 June 2010

School development plan 9 5

Annual school plan 12 5

School report 11 4

Source: Audit analysis of schools’ records

Accessibility of documents uploaded to school website

5.18 Audit noted that in some cases, although the schools had uploaded the required

documents to the school websites, the documents were not easily accessible by the users, as

illustrated by the following examples:

(a) the documents uploaded by a school could only be accessed in the school’s

Chinese version of the website. Users browsing the English version of the

website could not access the documents; and

(b) in the website of another school, no direct link was provided for the annual

school plan and the school report. Users had to scroll to the bottom of the

webpage on “news”, and click on “past news” to access the list of school

documents.

Contents of school report

5.19 Under the SDA framework, a DSS school is required to upload its school report

to its website. The school report should include a financial summary and information on:

(a) achievements and reflection on the school’s major concerns;

(b) learning and teaching;

Monitoring school performance

— 37 —

(d) student performance; and

(e) feedback on future planning.

5.20 Audit reviewed 20 school reports uploaded by DSS schools to their websites and

found that some school reports did not provide the required information (see Table 6).

Table 6

Required information not provided in school reports

(2008/09)

Required information Number of school reports

Financial summary 17

Achievements and reflection on the

school’s major concerns

Learning and teaching —

Support for student development —

Student performance 4

Feedback on future planning 4

Source: Audit analysis of school reports

Schools excluded from the ESR

5.21 Under the SDA framework, the ESR should be carried out by the EDB to

validate the SSEs. Audit noted that 2 of the 72 DSS schools were excluded from the ESR.

In July 2010, the EDB informed Audit that the existing ESR was primarily designed for

schools offering full local primary or secondary curriculum. The two schools were either

offering a non-local curriculum or only sixth form classes. Therefore, up to July 2010, the

schools had not been subject to the ESR.

5.22 All DSS schools are monitored under the SDA framework. As such, they are

subject to the ESR (see para. 5.15). It is a matter of concern that the two DSS schools

were excluded from the ESR simply because they were either offering a non-local

curriculum or only sixth form classes. Audit considers that the EDB should take action to

ensure that all DSS schools are subject to the ESR.

Monitoring school performance

— 38 —

Audit recommendations

5.23 Audit has recommended that the Secretary for Education should:

(a) request DSS schools to establish a mechanism to:

(i) monitor their compliance on uploading school documents to the

schools’ websites in a timely manner; and

(ii) ensure that school documents uploaded to their websites are easily

accessible and contain all the information that is required under the

SDA framework; and

(b) ensure that all DSS schools are subject to the ESRs, including schools which

offer non-local curriculum or only sixth form classes.

Response from the Administration

5.24 The Secretary for Education agrees with the audit recommendations. He has

said that the EDB will:

(a) request DSS schools to establish a mechanism to enhance their self-compliance

in the aspects mentioned in paragraph 5.23(a); and

(b) arrange for ESRs to be conducted for all DSS schools.

Comprehensive Review

5.25 For a DSS school that has entered into an SSB Service Agreement with the EDB,

a CR will be conducted after the school has joined the DSS for five years. In the CR, the

school will be assessed in four major areas:

(a) management and organisation;

(b) learning and teaching;

(d) student performance.

Monitoring school performance

— 39 —

5.26 A CR can be carried out either by the EDB or by an external consultant

appointed by the school at its own cost. Upon completion, a report should be prepared and

uploaded to the EDB website. Up to 30 June 2010, the EDB had completed 35 CRs.

Audit observations and recommendations

Submission and uploading of CR documents

5.27 According to the EDB’s guidelines, schools should:

(a) submit CR proposals to the EDB for approval by the end of September of the

school year in which the CR is to be carried out; and

(b) if the CR is carried out by a consultant, submit the CR final report to the EDB

within three months after the completion of the CR.

When the CR reports are available, the EDB should upload the reports to its website by end

of October of the following school year.

5.28 Audit examined the records of the 19 CRs (9 of them carried out by the EDB

and the other 10 by consultants) carried out in 2007/08 and 2008/09 and noted that the

above-mentioned timetable was not always followed (see Table 7).

Table 7

Delays in submission and uploading of CR documents

(2007/08 and 2008/09)

Number of CRs carried out by

Delay

EDB Consultants

School’s submission of CR

proposals to the EDB

1 8 4 days

to 2 months

School’s submission of CR final

reports to the EDB

(for CR conducted by

consultants)

NA 9 2 weeks

to 7 months

EDB’s uploading of CR report to

its website (Note)

2 3 1 to 6 months

Source: Audit analysis of EDB records

Note: These cases did not include those cases where the delays were due to late submission of

CR reports by schools.

Monitoring school performance

— 40 —

Audit recommendations

5.29 Audit has recommended that the Secretary for Education should take action

to ensure that:

(a) CR proposals and final reports (for CRs carried out by consultants) are

submitted to the EDB in a timely manner; and

(b) CR final reports are uploaded to the EDB website in a timely manner.

Response from the Administration

5.30 The Secretary for Education agrees with the audit recommendations. He has

said that the EDB:

(a) will revisit the existing arrangements to facilitate timely submission of CR

proposals and CR final reports by schools; and

(b) has started to upload CR final reports to the EDB website on a monthly basis.

— 41 —

PART 6: DIRECT SUBSIDY SCHEME SUBSIDY

6.1 This PART examines matters relating to the DSS subsidy.

Payment of subsidy

6.2 DSS subsidy is payable on a per student basis. Under the EDB’s current

practice, the number of students enrolled on 30 September and 30 March each year would

be used for calculating the DSS subsidy payable to a DSS school.

Information provided to the Legislative Council

6.3 Since the introduction of the DSS in 1991/92, a number of changes on payment

of DSS subsidy have been made to the Scheme. Audit noted that the Legislative Council

was not always provided with full and accurate information of the changes.

Audit observations and recommendation

Information provided to the Legislative Council Panel on Education in 1999

6.4 In November 1999, the Legislative Council Panel on Education was briefed on

the measures introduced to the DSS. The Panel was informed that:

(a) with effect from 2000/01, DSS schools which charged a fee exceeding one-third

of the DSS subsidy rate would start to have the subsidy reduced. For every

additional dollar charged, the DSS subsidy would be reduced by 50 cents; and

(b) the annual school fees then charged by local non-profit-making DSS schools

ranged from $170 to $11,000 (i.e. all below one-third of the DSS subsidy rate).

6.5 However, the Panel was not informed that:

(a) in October 1999, the then Education Department (ED — Note 11) decided to

treat an international DSS school as a local non-profit-making DSS school with

regard to DSS subsidy; and

Note 11: In February 2003, the ED was merged with the then Education and Manpower Bureau.

In July 2007, the Bureau was renamed the EDB upon the reorganisation of the

Government Secretariat.

Direct Subsidy Scheme subsidy

— 42 —

(b) the school fee charged by the school for 2000/01 was about $93,000, which

exceeded one-third of the DSS subsidy rate.

Information provided to the Finance Committee in 2001

6.6 In June 2001, the Finance Committee (FC) of the Legislative Council was

informed of the implementation of a new DSS subsidy formula with effect from 2001/02.

The FC was also informed that:

(a) the school fees charged by all DSS schools were at a level which entitled them to

full DSS subsidy; and

(b) therefore, the Government would not have to grant additional recurrent subsidies

for introducing the new formula.

6.7 However, the FC was not informed that:

(a) at that time, one of the DSS schools was not receiving full DSS subsidy

(Note 12) because of its high school fees (about $98,000 for 2001/02); and

(b) introducing the new formula would entitle the school to full DSS subsidy.

Additional recurrent DSS subsidy would have to be granted by the Government.

Audit recommendation

6.8 Audit has recommended that the Secretary for Education should ensure that

accurate and complete information is always provided to the Legislative Council.

Response from the Administration

6.9 The Secretary for Education agrees with the audit recommendation.

6.10 The Secretary for Financial Services and the Treasury agrees with the audit

recommendation.

Note 12: Before the introduction of the new formula, the school received only 25% of the full DSS

subsidy.

Direct Subsidy Scheme subsidy

— 43 —

Subsidy for schools with a longer history

6.11 In January 1999, the EDB announced that it would implement a two-tier system

for calculating DSS subsidy for 1999/2000 and onwards. Under the system, the full

recurrent subsidy for a DSS school with a history of 16 years or more was pitched at the

average unit cost of a place in aided schools with a comparable history. Those established

for less than 16 years were benchmarked against the average unit cost of a place in aided

schools with less than 16 years’ history. According to the estimates made by the EDB in

June 2001, comparing to DSS primary and secondary schools with operating history of less

than 16 years, those with a history of 16 years or longer would receive, on average,

additional recurrent subsidy of $1,100 and $1,600 per student per year respectively.

Audit observations and recommendations

Approval from the FC

6.12 Audit noted that when the two-tier system was introduced in 1999/2000, all

except one DSS school had been established for 16 years or more. They would be given

additional recurrent subsidy per student per year. Therefore, the introduction of the

two-tier system had financial implication to the Government. However, the EDB did not

seek approval from the FC. The FC was informed of the two-tier system only in June 2001

(i.e. about two years after introducing the system).

School exempted from the two-tier system

6.13 Before 1999/2000, the DSS subsidy rates were based on the average unit cost of

a place in aided schools of all ages. Under the two-tier system, whilst the subsidy rates for

DSS schools with a history of 16 years or more would be increased, those for DSS schools

with a history of less than 16 years would be reduced. At the time when the two-tier

system was introduced, a school which was registered in May 1993 had a history of less

than 16 years. Therefore, the DSS subsidy to be provided to the school should have been

reduced. However, the EDB considered that, following the conventional practice, the

school should not suffer upon the introduction of the new system. A special approval was

therefore granted for the school to continue to receive the DSS subsidy based on the old rate

until such a time that it could benefit from the two-tier system.

6.14 Audit noted that when the FC was informed of the two-tier system in June 2001

(see para. 6.12), the EDB had not informed the FC that exception had been given to the

school to ensure that it would continue to receive the old DSS subsidy rate.

Direct Subsidy Scheme subsidy

— 44 —

Audit recommendations

6.15 Audit has recommended that the Secretary for Education should ensure that:

(a) approval from the FC is obtained for new measures under the DSS where

there is financial implication to the Government; and

(b) full information is provided to the FC when seeking approval for new

measures introduced under the DSS.

Response from the Administration

6.16 The Secretary for Education has said that:

(a) both the then Education and Manpower Bureau (EMB) and the then Finance

Bureau (FB) were of the view that the FC’s approval was not required for the

change in the calculation of subsidy rate under the two-tier system because the

two-tier system did not deviate from the funding principle approved by the FC

(Note 13). The FC’s approval was therefore not sought for the introduction of

the two-tier system;

(b) the FC was informed of the two-tier system in June 2001 as the justification to

support the adoption of the new DSS subsidy formula (see para. 6.6). The

information was used to show that even with the two-tier system, some aided

schools would still receive less subsidy if they joined the DSS, and thus the new

formula was required; and

the old rate when the two-tier system was introduced, was in fact not relevant

to the justification for the new measure. It was an internal administrative

arrangement within the policy purview and authority of the then ED.

6.17 The Secretary for Financial Services and the Treasury has said that the

Financial Services and the Treasury Bureau:

(a) agrees with the general principles in the audit recommendations; and

(b) affirms the agreement between the EMB and the FB that the two-tier system did

not require a separate FC submission as it did not go beyond the FC’s approved

parameters of the DSS.

Note 13: Under the funding principle approved by the FC, DSS subsidies for schools of all ages

were calculated at the same rate. The introduction of the two-tier system changed the

funding principle whereby a higher rate was used to calculate the DSS subsidies for

schools with a longer history. Audit considers that approval from the FC should have

been sought for such a change in the funding principle which had financial implication to

the Government (see Note 3 to para. 1.7).

— 45 —

PART 7: INTERNATIONAL SCHOOLS IN DIRECT SUBSIDY SCHEME

7.1 This PART examines issues relating to international schools in the DSS.

Inclusion of international schools in Direct Subsidy Scheme

7.2 When the DSS was introduced in 1991/92, international schools were eligible to

join the Scheme. By September 1994, five international schools were admitted to the DSS.

In October 1995, the Government decided to gradually phase out international schools from

the Scheme. Up to 2009/10, one international school (School I — Note 14) remained in the

DSS.

Audit observations and recommendations

Admission of School I to DSS

7.3 In June 1991, the FC approved a one-off grant for building and equipping the

new school premises for School I. In seeking the approval, the Administration informed the

FC that School I had agreed to meet its full operating cost and no recurrent subsidy would

be provided to it.

7.4 In October 1992, School I applied to join the DSS. At the meeting held in

November 1992, the then Private Schools Review Committee (PSRC — Note 15) agreed

that the school should be recommended for joining the DSS since it had met all the

requirements physically. However, in view of the strings attached when the school was

granted funds for building and equipping its existing premises, the PSRC advised that if

School I was allowed to receive recurrent DSS subsidy, approval from the FC should be

sought again. In the event, School I’s application for admission to the DSS was not

accepted.

7.5 In October 1993, School I applied again to join the DSS. At the meeting held in

May 1994, the ED informed the PSRC that approval from the FC to allow School I to join

the DSS was being sought.

Note 14: School I offers a non-local curriculum and about half of its students are not normally

residents of Hong Kong.

Note 15:

The PSRC was set up in 1989 to advise the then Director of Education on all matters

relating to the Bought Place Scheme and the DSS. It was dissolved in 1998.

International schools in Direct Subsidy Scheme

— 46 —

7.6 Subsequent to the PSRC meeting in May 1994, the then Education and

Manpower Branch (EMB — Note 16) and the then Finance Branch exchanged views on

whether approval from the FC was needed for School I to receive recurrent DSS subsidy.

In June 1994, the Finance Branch advised the EMB that:

(a) there was no need to seek the FC’s approval for admitting School I to the DSS,

because the assertions in the June 1991 FC paper that School I was self-funded

and that it agreed to meet its full operating costs were not conditions imposed by

the FC for the one-off grant (see para. 7.3); and

(b) however, as School I would receive recurrent subsidy after its admission to the

DSS, the original assertions in the FC paper were no longer valid. It was

necessary for the EMB to submit an information note to the FC to inform

Members of the changes.

7.7 In September 1994, School I was admitted to the DSS. No information note was

submitted to the FC to inform Members that recurrent subsidy would be given to School I

upon its admission to the DSS.

Phasing out of international schools from DSS

7.8 In July 1995, the ED completed a review on the provision of international school

places. The review recommended that:

(a) as the DSS was intended to encourage the growth of a strong private school

sector to provide alternative types of schooling to local children, international

schools should no longer be eligible for admission into the DSS; and

(b) international schools admitted to the Scheme should be gradually phased out.

In October 1995, the Executive Council endorsed the recommendations of the review and

the Legislative Council was informed of the Executive Council’s decision.

7.9 When the Executive Council’s decision was sought in October 1995 to phase out

international schools from the DSS, the ED’s records showed that there were five

international DSS schools. In the Memorandum submitted by the Administration, the

Council was informed that:

Note 16: In July 1997, the Education and Manpower Branch was renamed the Education and

Manpower Bureau.

International schools in Direct Subsidy Scheme

— 47 —

(a) international schools were defined as schools that followed non-local curriculum

and whose students did not sit for local examination; and

(b) four international schools, which were admitted to the DSS, were to be phased

out.

By 2003/04, the four international DSS schools had been phased out.

7.10 Audit noted that in the Memorandum submitted to the Executive Council,

School I was not included in the list of the four international schools to be phased out. No

record was available showing the justifications for excluding School I from the list.

Up to 2009/10, School I remained in the DSS (see the chronology of key events at

Appendix B).

School I was allowed to remain in the DSS

7.11 At a meeting held in January 1996, the PSRC was informed that the four

international schools approved to be phased out by the Executive Council had been

informed of the phasing out arrangements, and that School I would be approached at a later

stage after the matter was cleared with the policy branch. After the PSRC meeting, the

EMB informed the ED that if School I was recommended to be phased out at a future date,

clearance from the EMB was needed.

7.12 In September 1998, the ED sought the EMB’s advice on phasing out of School I

from the DSS. The ED informed the EMB that pursuant to the existing policy, School I

should be phased out. At the EMB/ED Liaison Meeting held in September 1999, the

phasing out of School I was discussed again. The relevant meeting minutes recorded that

after the discussion, the then Secretary for Education and Manpower agreed to allow

School I to remain in the DSS but any future application for capital assistance should be

carefully considered.

7.13 In October 1999, the ED decided to treat School I as a special local school with

regard to DSS subsidy. The ED wrote to School I to advise it that it would remain in the

DSS.

7.14 In June 2002, the matter of allowing School I to remain in the DSS was raised

again in an internal discussion at the ED. The then Director of Education instructed that

reasons should be placed on record why School I was not considered as an international

school and was allowed to remain in the DSS. The justifications subsequently recorded by

the ED were as follows:

International schools in Direct Subsidy Scheme

— 48 —

(a) when approval was sought from the Executive Council to phase out international

schools from the DSS, School I was not on the list of such schools set out in the

Executive Council Memorandum;

(b) School I was offering the International Baccalaureate Diploma Programme which

was recognised by universities both in Hong Kong and overseas for admission

purpose; and

7.15 Audit considers that the above justifications did not explain why the policy to

phase out international schools from the DSS had not been applied to School I. This is

because:

(a) the justifications simply pointed out the fact that School I was not included in the

list of international schools set out in the Memorandum submitted to the

Executive Council (see para. 7.9);

(b) School I should have been classified as an international school as it followed a

non-local curriculum (see para. 7.9(a)). It is noted that when the Executive

Council decision was sought in October 1995, two of the four international

schools included in the list set out in the Executive Council Memorandum were

also offering the International Baccalaureate Diploma Programme; and

consideration for retaining School I in the DSS. It is noted that most of the

students of the four international schools were local students.

Audit recommendations

7.16 Audit has recommended that the Secretary for Education should:

(a) ensure that the Legislative Council is informed when there are major

changes in the information previously provided to it;

(b) ensure that the Executive Council is provided with full information when

seeking its advice; and

in the DSS and take action to address the matter, if necessary.

Note 17: Under the existing government policy, only local students are eligible for recurrent

subsidy. Non-local students, i.e. persons entering Hong Kong for the purpose of

education with a student visa/entry permit, are not eligible for government subsidy.

International schools in Direct Subsidy Scheme

— 49 —

Response from the Administration

7.17 The Secretary for Education agrees with the audit recommendations. He has

said that:

(a) the EMB had made a conscious decision of not submitting an information note to

the FC on admitting School I to the DSS based on the following considerations:

(i) the Director of Education had the authority to approve an application for

joining the DSS. He should not be required to report to the FC about

his exercise of the authority for approving the application of School I;

(ii) no information note had ever been submitted to the FC regarding

admission of schools to the DSS. On par with other schools, there was

no need for submitting an information note to the FC in respect of the

approval for School I that had met all the criteria for joining the DSS;

and

(iii) the EMB was of the view that the submission of an information note to

the FC was only considered desirable by the Finance Branch and it was

up to the policy bureau to decide whether there was such a need;

(b) the purpose of the Memorandum submitted to the Executive Council

(see para. 7.9) was to seek its approval to, among others, phase out international

schools from the DSS. It was prepared based on the review report on the

provision of international school places (see para. 7.8). School I was excluded

from the discussion of the review because it was defined as a DSS school

offering non-local curriculum, and most of its students were not normally

residents of Hong Kong, making it unfit for the scope of the study on the

provision of international school places. The presentation of the Memorandum

to the Executive Council was based on a conscious decision. The Administration

had prudent considerations of the contextual circumstances with due regard to

the intent of the policies being submitted to the Executive Council for approval;

deliberation in 1999. The ED and the EMB held the view that the School was

unique in its nature and was different from other international schools. The case

was revisited by the ED in 2002 and a status quo was ruled; and

(d) the EDB has no objection to the recommendation that it should critically review

the justifications for continuing to allow School I to remain in the DSS.

7.18 The Secretary for Financial Services and the Treasury agrees with the audit

recommendations.

Appendix A

(para. 2.3 refers)

— 50 —

Assessment areas for DSS applications

Assessment area Assessment Division Maximum score

Part I: Track record of school performance

Management and organisation

School Development

Division (SDD)

Quality Assurance

Division (QAD)

Learning and teaching

SDD 5

QAD 5

Student support and school ethos

SDD 5

QAD 5

Student performance

SDD 5

QAD 5

Total 40

Part II: Provision of quality education

A. Proposed class structure

Class structure School Administration

and Support Division

(SASD)

Demand of DSS school places SASD 4

Popularity SASD 4

B. Proposed prospectus

Prospectus SASD 4

C. Proposed governance structure

Governance structure SDD 4

D. Proposed facilities

Teaching and learning facilities SDD 4

Appendix A

(Cont’d)

(para. 2.3 refers)

— 51 —

Assessment area Assessment Division Maximum score

E. Staffing

Principalship SDD 8

Existing staff profile SDD 4

Proposed staff situation SDD 8

F. Proposed learning and teaching

Curriculum



organisation and

framework

Curriculum

Development Institute

(CDI)

Teaching and learning strategies CDI 4

Educational programmes for the

diverse learning needs of students

including special education needs

CDI 2

SASD 2

Proposed medium of instruction

policy

CDI 2

Education Commission

and Planning Division

Total 60

Source: EDB records

Appendix B

(para. 7.10 refers)

— 52 —

Chronology of key events

Phasing out of international schools from the DSS

July 1995 Review on the provision of international school places completed.

October 1995 The Executive Council endorsed the review’s recommendation to

phase out four international schools from the DSS.

The Legislative Council was informed of the Executive Council’s

decision.

September 1996 Phasing out of four international schools from the DSS commenced.

September 1998 The ED informed the EMB that pursuant to the existing policy, all

international schools, including School I, should be phased out from

the DSS.

September 1999 The EMB/ED Liaison Meeting agreed to allow School I to remain in

the DSS.

October 1999 The ED decided to treat School I as a special local school with regard

to DSS subsidy.

The ED informed School I that it would remain in the DSS.

June 2002 The ED placed on record the justifications for not considering

School I as an international school when it came to DSS subsidy.

August 2002 Three international schools were phased out from the DSS.

August 2004 The fourth international school was phased out from the DSS.

Appendix C

— 53 —

Acronyms and abbreviations

Audit Audit Commission

CDI Curriculum Development Institute

CR Comprehensive Review

DSS Direct Subsidy Scheme

ED Education Department

EDB Education Bureau

EMB Education and Manpower Branch/Bureau

ESR External School Review

FB Finance Bureau

FC Finance Committee

IMC Incorporated Management Committee

PSRC Private Schools Review Committee

PTA Parent-teacher association

QAD Quality Assurance Division

SASD School Administration and Support Division

SDA School Development and Accountability

SDD School Development Division

SMC School Management Committee

SSB School sponsoring body

SSE School Self-evaluation