E—l

24

Improvements and alterations in the system of assisting uncertificated teachers have been considered, but it has not yet been possible to put them into practice. It is hoped that the recent regulations providing that a fair proportion of uncertificated teachers shall be employed in city schools will lessen the need of preparing them for their teachers' examinations by means of correspondence. Finances of Education Boards. (See also E-2, Appendix A, and Tables Fl-F4.) For several years attention has been drawn to the unsatisfactory condition into which the finances of Education Boards have been drifting, more particularly with reference to the building funds. Most of the grants paid by the Government to the Boards are for special purposes, and should be regarded as moneys held in trust strictly for those purposes. Boards also receive grants for general purposes — i.e., for expenditure on any object consistent with the provisions of the Education Act. The latter form what is known as the General Fund, from which is paid the cost of administration and sums required to supplement the grants received for special purposes. Boards have failed to discriminate between the Special Funds and the General Fund with the result that large sums have been misappropriated and that the conditions attached to the grants have been ignored. This misuse of the Boards' funds is clearly contrary to the provisions of the Education Act and the Public Revenues Act, and steps have been taken to stop the practice and to put the funds of the Boards on a sounder basis. An examination of the Board's accounts for the year 1918 showed that before adjustments were made the Special Accounts were overdrawn, and had so-called debit balances amounting in the aggregate for all the Boards to approximately £95,000, representing moneys expended on special purposes in excess of the revenue for those purposes. A Special Account is an account of moneys received in trust for a special purpose and of the payments properly made out of the fund thus created. When a fund is exhausted it ceases to exist, and no further payments can possibly be made out of it, so that it is impossible to have a debit balance in a Special Account. The fictitious debit balances had, therefore, to be eliminated from the Boards' accounts by transferring to the Special Accounts from other accounts sums sufficient to meet the deficiencies. Such transfers could properly be made only from the General Account, but, unfortunately, there were not, in the case of many of the Boards, credit balances sufficient for the purpose, and consequently recourse has been had to other accounts which are not properly available. The Special Accounts that showed the greatest deficits were—New Buildings, £33,110 ; Sites, £19,595 ; School Committees' Allowances, £11,090 ; Technical Instruction, £9,285 ; and lielieving-teachers, £6,697. These deficits are due to various causes, the Boards alleging that the grants from the Government were inadequate. The Boards therefore used other special funds to supplement the grants. Whether such a defence of the proceeding could or could not be accepted as a temporary expedient is open to question, but it must be regarded as indefensible if adopted as a permanent and generally applicable course, and must be strenuously resisted as being without the authority of law. The work of investigating the accounts has been difficult, and it has not yet been 'found possible to make all the adjustments necessary to put the accounts of some of the Boards in order. In the meantime in these cases transfers have been made from other accounts to meet the deficits. These transfers, which are in some cases tentative only and subject to future revision, are from the following accounts : General Account, £44,082 ; Rebuilding Account, £44,954; Manual Instruction Account, £6,219 ; other accounts, £1,265 : total, £96,520. In the case Of the Auckland and Taranaki Boards the whole of the deficits in the Special Accounts have been met by transfers from the General Account, and the accounts have been put in order without the improper transfer of sums from Special Accounts ; but in the cases of the other Boards in addition to transfers from the General Account transfers amounting to the following sums have been