Chapter 3.7: Assets

3.7.1 Asset acquisition

See section 3.3.18 - Procurement guidance for schools

Competitive quotes

Prior to seeking competitive quotes for lease finance, schools should obtain the most competitive quote or tender to purchase the asset. Obtaining a competitive equipment purchase price is fundamental to obtaining, and assuring, value for money. As with most acquisitions, good financial management would be to seek the lowest purchase price and then, if borrowing money, the cheapest source of finance. The same principle applies to equipment leasing.

If a school decides that leasing or borrowing is preferred then it is important schools directly negotiate lease finance with more than one lessor.

Standard lease agreements

Lease agreements have the potential to contain a variety of terms and conditions that are not appropriate for schools (such as onerous rights of entry, unknown future costs or very long term arrangements) or could significantly increase the costs of leasing and, therefore, affect the outcome of a lease vs. buy analysis.

3.7.2 Fixed asset register

Fixed assets are physical goods with useful lives in excess of 12 months, which provide a benefit during each year of their lives and are generally replaced – computers, office equipment, library and curriculum resources, grounds-keeping equipment etc.

What is on the fixed asset register

Schools are required to maintain fixed asset registers. For each asset the register lists:

• purchase date
• purchase price
• estimated useful life
• residual value
• annual depreciation expense
• depreciation rate
• accumulated depreciation
• book value (purchase price less accumulated depreciation)
• description
• quality
• location
• asset classification (eg, sports equipment)
• donor (where applicable)
• vendor.

The Ministry suggests that schools only record assets in their Fixed Asset Register if they cost more than $1,000, but smaller schools may choose a lower value and larger schools a higher value. Every board should minute their minimum asset register value.

The Fixed Asset Register should be kept up-to-date and an asset stocktake done at least annually.

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3.7.3 Furniture and equipment

Funding for furniture and equipment in state schools is provided as a capital contribution. There is no GST included and it is not income for the school. On receipt, the money should be credited to the school’s equity account in the Balance Sheet and not recorded as revenue in the Income Statement.

Funding for furniture and equipment in state-integrated schools is provided as part of their grant income and does include GST. Funding is on the basis of new square metres based on an approved maximum roll increase, at the same rate as state schools. As with state schools, repair and replacement of furniture and equipment is the responsibility of the school to pay for from their operations grants.

Furniture and equipment is the property of schools rather than the Ministry of Education and, therefore, schools are responsible for its repair and replacement. Grants received from the Ministry of Education provide for this repair and replacement, but if the school’s furniture and equipment needs are met the money can be used for other purposes.

More information about furniture and equipment funding is available in the State Schools Property Management Handbook – see Section 3 - Qualifying for Funding - Ministry of Education.

3.7.4 Library and curriculum resources

A school’s library resources form a valuable asset that serves to support teachers and enhance students’ learning opportunities.

Record of library acquisitions

For schools using automated library management systems, the following information should be recorded electronically, with copies in the form of back-up tapes or disks stored off-site at all times.  For schools using manual systems, a Library Accession Register should be maintained and for each book it should record the:

• date of purchase or donation
• barcode number assigned to the item (automated systems) or accession number (manual systems)
• title and author
• publisher
• supplier
• purchase cost, GST exclusive (or estimated cost if donated).

The register is very important in the event of a fire or civil disaster. It will be this record on which an insurance claim will be based. For this reason it is vital that back-up disks or tapes are done regularly and stored off-site and for schools on manual systems, the accession register must also be kept off-site.

Classroom library resources

If schools have resources purchased specifically for classroom use (such as classroom books), then they should be treated in the same way as library resources.  If entered on the automated library system, the same information should be recorded as for library resources.  If the school uses manual systems, the details should be recorded in a section of the Accession Register.  These resources will be depreciated in the same way as library resources and should be included in the annual stocktake.

Curriculum and teacher resources

Departmental and curriculum resources are a mix of working tools (such as Ministry of Education curriculum materials, Learning Media curriculum support resources, instructional teaching resources, School Journals, graded reading materials and resource kits from other educational agencies and publishers) as well as subject-specific textbooks, journals and resources purchased to support specific curriculum areas. These should be recorded as library resources.

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3.7.5 Capital works – state-integrated schools

Capital works include land, buildings and building additions and alterations. .

For state-integrated schools, capital works are the responsibility of the proprietor and should not show as assets on the school Balance Sheet. It may be possible for the board of trustees to get approval from the Ministry of Education and their proprietor to undertake capital works – refer to Capital Works Expenditure by Boards of Trustees of Integrated Schools.

If approval is granted then the capital works must be included in an equitable lease between the proprietor and the school board of trustees. Template documents are available in the Resources Section.

3.7.6 Buildings – state schools

Any buildings erected on Crown land become part of that land. Legal ownership of educational Crown land and the buildings on it that are used by schools is vested in the Ministry of Education. It is for these reasons that before any school buildings are erected on school land, Ministry of Education approval must be obtained. This will avoid any later disputes as to the ownership, use and disposal of such buildings. The cost of a board-funded building must be accounted for as a fixed asset in the school’s Balance Sheet. All buildings on the school’s Balance Sheet are the responsibility of the board of trustees to manage and maintain.

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3.7.7 Housing

A number of school houses have been transferred to board of trustee ownership since 2005 and should also be in the school’s Balance Sheet. The Ministry of Education Teacher Housing Policy and management guidelines are available on the Ministry website – keywords Teacher Housing.

3.7.8 Surplus Property Disposal Incentives Scheme (SPDIS)

Boards can release surplus property to the Ministry for disposal through the Surplus Property Disposal Incentive Scheme (SPDIS). Information about this is available in the State Schools Property Management Handbook:  Section 3 - Qualifying for Funding.

3.7.9 Minor or valuable assets

Schools should keep a register of minor or valuable assets that cost less than the asset register value but need to be managed and replaced if they wear out or get lost, stolen or damaged. A minor/valuable asset register is likely to include items such as telephones and mobile phones, small printers and other low-value computer equipment, and sports equipment.

A minor/valuable asset register should record:

• description
• location
• purchase date
• purchase price
• estimated useful life
• donor (where applicable)
• vendor.

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3.7.10 Depreciation and asset replacement

Schools must budget for depreciation and should be setting aside the cash equivalent to the depreciation expense for asset replacement.

If a school budgets for a small surplus including depreciation, and meets that budget result at the end of the year, then they will have a cash surplus that includes the operating surplus and the depreciation expense.

The resulting cash surplus can be used for asset replacement.

3.7.11 Asset replacement plan

As well as recording all fixed assets in the Fixed Asset Register, schools should maintain those assets in good working order and plan for their replacement.

Asset planning should be consistent with an Asset Management Policy – refer to Chapter 2.

One suggested method for preparing an asset replacement plan is to:

1. Ensure that the Fixed Asset Register is up to date and accurate.

2. Identify fixed assets that you:

• don’t plan to replace eg, school houses, assets becoming obsolete with technology changes
• don’t plan to replace by using board funds, eg, assets bought with fundraising
• don’t plan to replace by purchasing, eg, computers that will be leased. Make sure that all finance leases are within the school’s borrowing limit; and use the lease/buy tool available in the Resources Section to ensure the right decision is made

3. Decide what new assets will be needed to achieve the school’s strategic plan.

Note: asset costs such as consumables and maintenance need to be budgeted for.

4. Determine when existing assets will be replaced

Note: replacement costs may be higher than original cost; and that roll projections will affect the number of assets to replace.

5. Prepare a forecast of future cash flows needed for asset replacement, including timing of purchases during a year, as teaching staff may expect assets to be available for the beginning of a new school year.

6. Compare the depreciation budget with the asset replacement budget.
Prepare a savings plan to cover any shortfall plus new asset purchases.

Build in flexibility to the asset and savings plans if possible so that funds are available if an asset needs to be replaced unexpectedly.

It can be a challenge to stick to an asset plan, especially if there is a perceived need or community expectation to keep up with technology beyond the school’s ability to pay for it, or if senior staff members are tempted by marketing and salespeople. 

It may help to discuss variations to the Asset Replacement Plan at a board of trustee meeting and/or with the school’s financial service provider and to have a ‘wish list’ of items that could be considered for purchasing later in the year, as finances allow and there are clear links to educational outcomes.