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Rangatira Valley and Rangitata Station; and a new district, the Totara Valley, proclaimed, at which a school is now in course of erection. Attendance.—The forty-eight schools under the control of the Board, and in operation at the end of the year, are classified in respect of attendance as follows : Under 25 pupils in average attendance, 14; between 25 and 50, 20; between 50 and 100, 7 ; between 100 and 300, 5 ; between 300 and 500, 1; between 500 and 1,000, 1 : total, 48. The number of scholars shows a steady increase on the returns of former years, the roll number at the end of the year being 4,369, as against 4,203 at the end of 1885 —an increase of 166 ; whilst the average attendance was for the same period 3,543, as against 3,340 at the end of the year preceding—showing an increase here of 203. The ratio of average attendance to roll number shows a corresponding improvement, being a little over 81 per cent, for 1886, against 79 for 1885, as against 78-8 for 1884. A severe winter and contagious sickness in a few districts somewhat affected the average attendance, whilst in some other districts the compulsory clauses had to be put into force. The attendance in the larger centres, particularly in Tirnaru, is, however, greatly on the increase. The following table shows the attendance in this district since the Board was established : [Not reprinted.] Buildings.—During the past year the operations of the Board have, as heretofore, been in excess of the funds placed at its disposal. Masters' residences have been erected at Silverstream, Upper Waitohi Flat, and Belfield, while new schools have been built at Rangatira Valley and Rangitata Station. The Fairlie Creek, Pleasant Point, and Geraldine Schools have been enlarged, and the masters' houses at Pleasant Point and Winchester have been added to and generally repaired. The Timaru Main School has been tinted and varnished, and the Waituna, Otaio, Winchester, Washdyke, Woodbury, Milford, Scotsburn, Rangitata Island, Claremont, and Burkes Pass schools have been repainted. The master's house at Wai-iti has been distempered, the Pleasant Valley house covered with iron, and the roof of the school strengthened. Orari Bridge School has been refloored and reroofed; and in numerous cases the incidental funds of the School Committees have been supplemented by special grants for planting, fencing, and repairs. The purchase of the St. Andrew's site was completed and paid for during the year. New furniture has been supplied to the Rangatira Valley, Rangitata Station, Geraldine infant room, Pleasant Point infant room, Fairlie Creek class-room, to Washdyke, Kakahu Bush, and a gymnasium to Makikihi. The works already authorised by the Board out of the last grant of £1,843 10s. 7d. are—a grant of £100 towards the erection of a new school at Totara Valley ; enlargements at Makikihi, Rangitata Station, and Waimataitai, where a new class-room has been built, since turned into an infants' room, which has necessitated a slight increase in the originally-estimated cost. Masters' residences are being erected at Sutherlands, Albury, and Kakahu Bush, at which latter place the site has been doubled in extent by the liberality of the Hon. Mr. Wigley. The balance of the last grant remaining unappropriated amounts to only £171 10s. 6d. to meet all the incidental expenditure of fencing, furniture, painting, and repairs for the year; whilst the enlargement of the Fairview School is a pressing necessity, and the erection of a residence at the Timaru Side School much required. The Hilton School, too, requires to be re-covered with iron, and the ventilation of the Timaru Main School is again demanding attention. Accounts. —The balance-sheet, duly certified by the Provincial Auditor, is appended. The Building Account shows an expenditure of £2,862 65., against receipts, £2,470 165.; a balance of £319 9s. 3d. being still owing to the Maintenance Account. The Maintenance Account shows a balance at the end of the year of £1,229 Bs. Bd., from which the sum of £1,248 13s. 2d. must be deducted on account of money received from the School Commissioners, which will be balanced by that amount less in the monthly capitation grant paid by the Treasury for salaries in February. Aided Schools and Salaries.—There were fourteen schools at the end of the year whose average attendance each was less than twenty-five. Since the Ist January, 1886 (in some instances since the Ist October, 1885), these schools have been taken over entirely by the Board, and a contribution demanded from the residents of each of these fourteen districts to go towards the salary of the teacher, which, under the old aided schools regulations, was generally thought insufficient to secure certificated or even efficient teachers. This contribution is a fixed sum, based on the average attendance of the previous quarter, and ranges from £19 per annum for an average of ten children to £5 for an average of twenty-four. When the average reaches twenty-five this contribution ceases, and the teacher receives the full amount of his salary from the Board's funds at the ordinary scale. Calculating on the sums paid in 1885 for the maintenance to aided schools and those paid last year, there is a difference in expenditure of nearly £640, which is reduced by the sum of £143 received in contributions to something near £500 as an extra expenditure by thenncr scale. This sum, however, includes house-allowance, which item alone cost the Board £125, under section 6of Table A. The difference in the salaries of some of the schools was very marked under the new scale, varying as much as £50 per annum, against which the contribution did not in one of them amount to more than £6 ss. In the opening of the Rangitata Station School the Board lost nearly £44, and in the case of Rangatira Valley £1110s., so that in the present state of the finances it must be carefully calculated that, in future, the opening of a new school should be made practicable towards the end of the quarter. Scholarships.—The second examination under the new regulations took place in January, the examiners being a committee of gentlemen acting in conjunction with the Board's Inspector. The candidature has again been disappointing, only thirteen presenting themselves for examination. The result of the examination, with the report of the several examiners, is appended, as well as a table showing the actual holders of the Board's scholarships from the commencement to the present, time. On the report of the examiners the following new scholarships were granted: [Not reprinted.] District High Schools.—The District High Schools of Waimate and Temuka continue to give instruction in secondary subjects, and it appears from the Inspector's report that satisfactory 10— E. 1.