Acting Chairman (Deputy Bell): Does the Comptroller and Auditor General agree with those sentiments?

Mr. Purcell: Earlier the Chairman, Deputy Mitchell, suggested that this is a topic the committee might take when all of the institutes have been reviewed. Perhaps I would hold my fire until then.

Deputy Ardagh: What are the specific items of the accounts with which there is still a problem? Is it to do with salaries, PAYE or something else?

Mr. Hannigan: They are just minor issues with respect to journal entries as to the year in which the money was spent.

Deputy Ardagh: Is it to do with the allocation of cash?

Mr. Hannigan: Yes.

Deputy Ardagh: Are decisions to be made in this regard? Must people think about it?

Mr. Hannigan: The issues were being addressed while the new accounting system was being put in place and the delay was caused by introducing this system. The queries were put forward by the Comptroller and Auditor General. They have been addressed by the college but the actual physical response must be prepared on the new system. That is the current position.

Deputy Ardagh: Would Mr. Hannigan let the committee have a written note to explain the particular problems in this regard, how he will resolve them and when they will be resolved?

Mr. Hannigan: Yes.

Deputy Ardagh: How many full-time students were there in the college for the 1996/7 year, the last year for which there are accounts?

Mr. Hannigan: The number of full-time students for 1996/7 was 1,290. I am not sure how many part-time students attended that year. There were probably about 400 or 500 part-time students.

Deputy Ardagh: One could account for a part-time student as 20% of a full-time student or the equivalent of 90 full-time students in this case.

Mr. Hannigan: Yes.

Deputy Ardagh: Therefore, 1,290 plus the equivalent of 90 full-time students equals 1,380 or, approximately, 1,400 full-time students. What was the cost per student?

Mr. Hannigan: The cost per student at that time was £4,200.

Deputy Ardagh: How many different disciplines are covered? How many degree courses does the Letterkenny institute offer?

Mr. Hannigan: To break it down into disciplines, we provide courses in business studies, science, engineering, nursing, graphic design and computing. We provide the following degree courses, which are a progression from our diploma courses: a Bachelor of business studies degree; a BSc in applied computing; a BSc in nursing, which is a part-time programme at present; a Bachelor of legal studies, which is in the business studies area and a Bachelor of food science.

There are a number of new degree programmes which are coming on stream in September, one of which is a BSc in an analytical science. The new degree in computing is in data communications and networking. The difference in this and other programmes which the institute has had on offer to date is that it is an ab initio degree programme - it is a four year programme from day one. It is an important one from our point of view. It is the first degree in Letterkenny Institute of Technology which has that structure. Relating to the issues which were brought forward about trying to attract students from Northern Ireland, that might be a course which will be able to stand on its own in that regard. A BSc in digital media will be coming on stream in September also.

Those courses are in place. There are other proposals on-going also. Our aim is to give any student who comes into Letterkenny Institute of Technology the opportunity to complete a degree programme with us. In the past there has been a fair migration of students either from certificate or diploma programmes to other colleges in other areas to complete their studies. We feel we have an obligation to try and offer the provision within County Donegal for the people who are attending the institute.

Deputy Ardagh: Of all the courses, where is the niche of Letterkenny Institute of Technology? Where is its selling point?

Mr. Hannigan: Before picking out the courses, the investment which has occurred over the past few years has really brought us into a new realm in terms of information technology. We have moved the college into a position where it has a very high-tech infrastructure. That would be reflected in our course provision. All courses would have a strong IT element to them. We have undertaken a great deal of expansion in the computing area, particularly with the degree which came into place in 1997 and with the new degree coming on stream. There has been strong development in the computing area and we would see that as a niche area. We would also relate that to the regional development of County Donegal because, on the subject of the recent job closures, we are trying to change the nature of the employment which can be created there. The institute must obviously see itself as a leader in terms of providing the raw material in order to do that.

The other area in which we would see specialism would be that of graphic design. It is an exciting area for students at present and the numbers applying for that programme would show that there is a regeneration of interest in that area. There are good enrolment prospects for that course at present.

The nursing course allows us a great deal of interaction with the health board, etc. The institute offers a degree in legal studies which is slightly different to those which would be available elsewhere.

Deputy Ardagh: To turn to interest income, on 31 August 1997 there was £1.5 million in the bank. The interest income for the year was £16,000. The average may be different but another college had the same amount of money in the bank and yet had six times as much interest income. What is the average amount of cash which the institute has in the bank or on hand?

Mr. Hannigan: On average, we would have about £0.5 million at the beginning of the month, reducing to about £0.2 million at the end of the month.

Deputy Ardagh: Where is the money invested? Was the institute getting more than 6% interest on the total balance during the 1996/7 year?

Mr. Hannigan: We would be working on the same system as Dundalk Institute of Technology in terms of the chary-cash arrangements. Our banker is AIB also and the same system would apply.

Deputy Ardagh: Which bank represents Carlow Institute of Technology?

Mr. Gallagher: It was the Bank of Ireland but it is now Allied Irish Banks - as a result of recent tendering we changed banks.

Deputy Ardagh: What space is there in Letterkenny?

Mr. Hannigan: We have approximately 14,000 square metres. That includes a new business development centre which is currently under construction. We had an existing business innovation centre that was constructed in the beginning of the 1990s. This has outgrown its usefulness at the moment and we are building a new centre. We have had a lot of interest from small businesses that wish to take incubation units within the centre. It will also help us to develop our training and consultancy arm for which there are facilities.

Deputy Ardagh: Do you plan any more building? You seem to be well behind the average.

Mr. Hannigan: We have a campus development plan which was broken down into various stages. Phase 1 provided administration offices. Phase 2A included the completion of nine computer laboratories, a new library, four lecture theatres and a new restaurant, while updating the existing building. Phase 2B is the next stage of development. At the moment our design students are in a separate campus. We have had to rent facilities from the North Western Health Board and some students are in part of St. Conal's Psychiatric Hospital, Letterkenny. We have been renting part of that building for ten years. This is not satisfactory from our point of view and we have been trying to relocate the design students back on to the existing Port Road campus. This will be the next stage of the development. We hope to begin that phase this summer.

Deputy Ardagh: What space will you have when that is complete?

Mr. Hannigan: We will have an extra 4,000 square metres. We are replacing what we are renting and we will also have additional accommodation. A major problem we have, which the other colleges do not have, is that we do not have any major recreational facilities on campus for students at the moment. When we were developing phase 2 of the campus, the existing gymnasium had to be taken in to provide lecturing space, etc. In the campus development plan we have a space and building provided for what is called the multi-purpose centre which would include indoor sports facilities, plus the student services already mentioned such as chaplaincy, careers offices and student union offices etc. We have facilities in the existing campus but it is important that there are dedicated student facilities. Currently we are retaining funds from the capitation fund, as the other colleges have done, with the agreement of the students, towards the development of this facility. We need to get something on campus soon in terms of providing something for the students.

Deputy Ardagh: Mr. Hannigan has very compliant students. I do not think they were like that when a member of this committee was present. What amount of land do you have?

Mr. Hannigan: We have approximately 14 acres and we are landlocked also. If all our campus development plan was in place we should have adequate facilities in terms of dealing with the number of students we have. We must develop the other aspects of our site.

Deputy Ardagh: Fourteen acres seems a small amount.

Mr. Hannigan: It is quite a tight site but the campus development plan has been planned to make best use of the facilities.

Deputy Rabbitte: Would Mr. Hannigan remind us about the circumstances surrounding the putting in of an inspector under section 20 of the Act and whether the recommendations are all in place?

Mr. Hannigan: I came to the college in January 1998. The commission came to Letterkenny in December 1994 and stayed until December 1997. He was two years there as commission and one year as director. He dealt with the recommendations in the inspector's report and these issues have been addressed to the Comptroller and Auditor General. How they were dealt with is included in the 1995 report. They were dealt with successfully.

Deputy Rabbitte: Normality took over again, so to speak, from when?

Mr. Hannigan: The commission was in place for 1995 and 1996 as the director the chairman of the governing body and the governing body. In December 1996 a new governing body was put in place and the commission became director for one additional year. The governing body and director were in place from December 1996 and in December 1997 the director left the position and I was appointed in January 1998.

Deputy Rabbitte: Is it an entirely new governing body?

Mr. Hannigan: I could not comment in terms of the membership. Some members overlapped from the previous governing body but it was a newly appointed governing body. The majority of members are new from what was there previously.

Deputy Rabbitte: Where did you come from, Mr. Hannigan?

Mr. Hannigan: I came from Dundalk. I was in Dundalk for ten years between 1987 and 1997. I left there in December 1997 and went to Letterkenny in January 1998. I am originally from Donegal.

Chairman: When will the delays in responding to queries from the Comptroller and Auditor General be addressed?

Mr. Hannigan: With respect Chairman, while you were out we already dealt with this issue.

Chairman: Let us express them again.

Mr. Hannigan: Deputy Ardagh has requested that I write to the committee outlining the issues and how they will be dealt with. The Comptroller and Auditor General mentioned that he will deal with the group at the end of the meeting.

Chairman: Have you any plans to bring these issues up to date?

Mr. Hannigan: Yes. The issues are being dealt with at the moment. As I said earlier, we have put in place a new accounting package. One of the recommendations of the previous Comptroller and Auditor General's report was that we must have a 2000 compliant computer package for the accounting area. We put that in place and some of the delays in dealing with the queries from the Comptroller and Auditor General have arisen from that. We are aware of this and will ensure that no further delays occur in future.

Chairman: Describe the financial control arrangements in the institute.

Mr. Hannigan: The financial control arrangements are similar to the Carlow situation. I am accompanied by the secretary and financial controller. We have a finance officer and other staff within the department carry out the routine work.

Chairman: Does the financial controller report to you directly?

Mr. Hannigan: Yes.

Chairman: How do you draft and keep control of the budget?

Mr. Hannigan: The programmes and budgets are developed each year for the Department of Education and Science in terms of the courses we propose to run. Therefore, the costings related to this in terms of the budget for the year must be drawn up two years in advance. We would present them to the Department of Education and Science and we would then have a meeting with the Department at which our budgets would be presented to us. Having got our budget we would be in a position to divide it out among the various areas within the college, whether the academic departments, computer services, buildings or whatever else. The division is made on the basis of need at the particular time.

Chairman: Is there a budget profile drafted at the beginning of the year in relation to the expenditure or income likely on a monthly basis?

Mr. Hannigan: Yes, and monthly financial reports are presented to the governing body.

Chairman: So that corrective action can be taken if there is any deviation?

Mr. Hannigan: Yes.

Chairman: What about internal audit?

Mr. Hannigan: Again it is a similar situation to the previous colleges. We are part of the internal audit machinery that has been set up where external consultants visit the colleges. Our first visit is scheduled for the end of May this year. It is exactly the same structure as already presented.

Chairman: We will move on to the Institute of Technology, Tallaght.

Mr. Purcell: There are four years accounts up to 31 August, 1997. There are no specific criticisms contained in the audit reports. However, there have been delays in finalising accounts. I am not yet in a position to issue my audit report on the accounts for the academic year ended 31 August 1998.

As was said earlier, we can tell from today's proceedings that there is a recurring problem in the institutes and I believe there is a need for assigning a higher priority within all the institutes to accounts preparation and clearance. There are historical reasons as to why there would be problems. When they came out from under the umbrella of the VECs there were some difficulties in the allocation of staffing, resources and so on. I am sure all the people here today could testify to some of the teething problems that were involved.

There was also a problem in resourcing the finance function. The directors and the governing body saw it as their first duty to build up an academic base and to gain credibility as early as possible. Unfortunately, in these situations things like finance and accounting become an irritant and sometimes slip down the priority list. That can have its own repercussions. We saw an example of it in Letterkenny, which has thankfully been sorted out.

However, I think the institutes are at a stage of their development now when they are mature enough to get to a position where these things can be sorted out. The introduction of a cyclical internal audit being provided by a leading firm of accountants is also a very good sign. Bringing the computer systems up to date was also very necessary. We heard earlier about a payroll system that was inherited from the VEC and was still in operation up to recently in one of the institutes.

I would compare this with a similar problem we had - albeit on a lesser scale - with the regional fisheries boards where the committee took a tough line. With a bit of hard work and good will all round on the part of the Department, the institutes and my office, it is possible to bring these kinds of problems under control. Perhaps it is time to take an approach to the accounts of the institutes similar to that of the regional fisheries boards, which we have brought up to date from an accountability point of view.

Chairman: That is something we will come back to. Mr. Collins, do you wish to make an opening statement?

Dr. Collins: Thank you, Chairman. First, a few general remarks with regard to the institute. The accounts in question cover a period when the institute was new in starting up. It was an exciting and challenging period in our existence. We have tried to establish courses at least as good as those of our colleague institutions. One thing that makes us stand out as a little different is our integrated programme of full and part-time practical higher education. We have also established extensive links with business and the community and devised special courses to support employee development in major firms. Indeed, with some of these - Intel and Hewlett Packard - we have entered a joint venture to establish a technician development centre. Applied research and development are also firmly established in the institute. This is essential for the development of appropriate programmes of education. The college has, in its early existence, come a long way and I want to pay tribute to the work of the staff involved at all levels.

In general, our accounts have suffered in the same way as other institutes in that they have not always been on time. In the current situation, Mr. Purcell referred to the closure of the 1998 accounts. This is almost complete now. There are some small issues outstanding and I will ensure that these are now dealt with. I believe they are almost completed but they will be dealt with in the next week or so. I believe we are in a position to ensure more timely accounts for the future.

Chairman: How many students do you have?

Dr. Collins: This year we have 2,200 full-time students and 1,500 part-time students. The whole time student equivalent would be 3,200.

Chairman: How many of those are from Tallaght?

Dr. Collins: Some 25% come from the Dublin 24 area, which would include Tallaght.

Chairman: A quarter.

Dr. Collins: Yes. Some 95% to 97% come from either Tallaght or the surrounding districts. This is simply due to the fact that there is a shortage of higher education places in the Dublin area, so Dublin is still exporting students to many of the other institutes.

Chairman: What land do you have?

Dr. Collins: Nearly 14 hectares, 45 acres. We started off with 25, but recently another 20 acres became available to us and we were fortunately put in a position to purchase that.

Chairman: That is valuable property.

Dr. Collins: It certainly is. We have a campus development plan almost finalised. We hope to be able to run it by the Department of Education and Science in the very near future because there are quite a few developments that have to take place on campus.

Deputy Rabbitte: Is there anything we can do to help you, Dr. Collins?

Dr. Collins: Everything - if you can persuade your colleague, the Minister for Education and Science, of the need for further developments in Tallaght. The steering committee on higher education recommended that Tallaght grow to 3,000 full-time students by 2000. We have already passed that. We are completing an extension to the original college at the moment, but we have already got more than the quota of students that should allow us to take, so we need to get into the next phase of development. As soon as our campus development plan is available we will be hoping for as much support as possible in finding the funding for its development.

Deputy Rabbitte: When will the new extension be in place?

Dr. Collins: We are already in two-thirds of what has been provided. The final piece will be completed by the end of this year.

Deputy Rabbitte: That will provide for-----

Dr. Collins: That will provide for adequate accommodation for the students we currently have. Like all the other institutes, we suffer in that our social and recreational facilities are far less than that which the students deserve. Our students would normally compare the facilities they see in Tallaght with the those of other higher educational establishments in the Dublin area and they fall far short of what is available elsewhere.

Deputy Rabbitte: You have a very high proportion of part-time students.

Dr. Collins: Yes, we do. This is deliberate policy on the part of the governing body of the institute to develop the continuing education programme. Given Tallaght's location, there is a large number of firms within easy reach of the institute. This year 1,600 students are attending the college on a part-time basis, most of them at night, but many are on day release courses as well.

Deputy Rabbitte: These are people in employment in the surrounding areas.

Dr. Collins: They are. Given the shortage of higher education places in Dublin, many people had to leave school and go directly to work. They did not have the opportunity to avail of higher education. They are now taking it up. The efforts they go to are tremendous. They are covering the courses in the shortest possible time and are getting the results. It is our regret that we are unable to support the part-time programme fully to the same extent as we do the day time, but attitudes are slowly changing in terms of funding for that.

Deputy Rabbitte: With regard to the earmarking of funding, specifically for the part-time people, is there any explicit provision for that extent of part-time participation?

Dr. Collins: There is not, and this has been a problem with the institute for some time in trying to meet the needs of these students. They are only in the college for a very short time, so we must ensure that our services are as efficient as possible for them. Unfortunately, we do not have, or have not had, a great deal of staffing to cover this area. I think most of the efforts in higher education over the last 20 years have been to deal with the ever increasing numbers of school leavers and trying to get them in as full-time students. I believe the next challenge for higher education is to deal with continuing education and to ensure that facilities for the part-time students are as good, at least, as those for the full-time students.

Deputy Rabbitte: There must be significant added value, not just to the students who are participants but to the businesses who facilitate them. Do they make any contribution?

Dr. Collins: They do. While many of the students pay the fees themselves, we know that some of the firms will recompense them. Sometimes they wait until the students pass the examinations, which is rather unfair. However, they also support the students in terms of study leave, etc. Many of the firms are paying their way. The bigger firms, the Intels and Hewlett Packards, obviously have more direct subventions. Our concerns would be for small and medium industries, particularly indigenous ones, which face sufficient challenges without having to fund ongoing staff development. We would certainly look forward to some form of State funding for such firms and their employees.

Deputy Rabbitte: What is afoot in the college in the area of research and development?

Dr. Collins: The college has been quite successful in building up a very strong programme of research and development and the staff have won various competitions for funding. We have a very strongly developed biotechnology area in which there are currently in the region of 20 research students in the institute. We have graduated PhDs and Masters - I think there are ten or 12 of those.

Deputy Rabbitte: Who awards the degrees?

Dr. Collins: They are awarded through the National Council for Educational Awards. That, of course, will be subject to change shortly. We also have a research and development consultancy area in engineering and business. In the engineering area, I am aware that at least one of the exercises has turned out to be tremendously successful in enabling a new firm to start up which initially employed 50 people. I am not sure how many people are currently employed there. This is one of the benefits of programmes such as the applied research programme we operate in conjunction with Enterprise Ireland.

Deputy Rabbitte: You asserted that you are somewhat different to your colleagues in regard to the extent of collaboration with local business. Do you wish to support that proposition?

Dr. Collins: I did not want to run any such comparisons. The opportunities for Tallaght are somewhat different in that we are very much based in an urban setting. I am aware that the other institutes which are located in large urban areas have similar opportunities and, indeed, similar programmes. We have had an opportunity to work with the community in a number of different ways.

The Deputy will be well aware of some of the difficulties in the Tallaght area. We have special programmes to encourage access for people who, traditionally, might not be expected to enter higher education. We also worked with the former employees of Packard Electric and other disadvantaged groups to prepare them for employment in high-tech industry. Some of those programmes, one of which we operated with our colleagues in Carlow in 1997, have been very successful. We see the provision of opportunities at the college to all members of the community as a vital part of our mission.

Deputy Rabbitte: Will you say a word for members of the committee who might not be familiar with your involvement in the nearby innovation centre?

Dr. Collins: Together with the South Dublin Chamber of Commerce, we made a proposal to the Department of Enterprise, Trade and Employment in regard to the establishment of an innovation centre. This was acceded to and the centre, now called Growcorp, has been set up at Citywest. The centre has been extremely successful, so successful in fact that some of the clients are now based in temporary accommodation awaiting a second phase of development of the programme. The £2 million State investment has paid off more than handsomely in terms of the potential of these start-up firms.

Deputy Rabbitte: I will not lead the witness any further, Chairman.

Chairman: That was the easiest set of questions I ever heard from Deputy Rabbitte.

Deputy Ardagh: What is the cost per student?

Dr.. Collins: We have done some rough calculations and we reckon it is in the region of £3,400 per student. This would indicate that there is a great efficiency in terms of part-time students because we are using facilities which are already paid for for the full-time students. To a certain extent, if the figures are somewhat lower than quoted elsewhere, that comes from the fact that the college is being used day and night.

Deputy Ardagh: What equivalence are you using for a part-time student to a full-time student?

Dr. Collins: That would depend on each student.

Deputy Ardagh: In this calculation?

Dr. Collins: In this calculation, I am assuming 50% to 60% of a part-time student is the-----

Deputy Ardagh: Whereas 10% to 25% in other-----

Dr. Collins: This is where our programme is different. Our students are following national certificate, diploma and degree programmes. In some instances, they are covering them in almost the same time as the full-time students so, that being the case, I believe they should be regarded almost as full-time students. We should, in fact, count our students simply by the amount of time they take to complete a course. Our part-time students have shown tremendous motivation and ability and are, I believe, in many ways the unsung heroes of the country.

Deputy Ardagh: What number of degree courses do you have?

Dr. Collins: We have nine degree programmes, although I am open to correction on that. None of these programmes are ab initio; they are all built on the national certificate or diploma route. We start with a base of perhaps 25 national certificates and 20 diplomas and in the region of nine degree programmes which are subject to further development.

Deputy Ardagh: What type of space do you have?

Dr. Collins: When the extension is completed, we will have 16,000 square metres, all of which is teaching or staff space.

Deputy Ardagh: That is significantly lower than Carlow or Dundalk.

Dr. Collins: I cannot comment on that but I know that we use our space very efficiently and desperately need to put in place some sports and recreational facilities for the students. We currently use quite an amount of space outside the institute and are fortunate in being able to hire these facilities although some are not as near to the institute as we would like them to be.

Deputy Ardagh: In regard to the drop-out rate, particularly for first year, post-leaving certificate students, I am somewhat concerned about the numbers involved. Is the drop-out rate a problem?

Dr. Collins: It is a problem and one which is very difficult to describe. Sometimes when one publishes information on this, as we did, one ends up with the information not being fully translated. One must be careful about this issue. I presume we are talking about students who do not get as far as sitting the examinations.

Deputy Ardagh: Yes, and those who fail their examinations.

Chairman: That is a different issue.

Dr. Collins: There are two different issues here. The actual drop-out rate averages out at approximately 5.5% for our institute, mostly first year students. One can understand that not all students will have chosen their course wisely and may-----

Chairman: The figure is surprisingly low. Was it lower or higher previously?

Dr. Collins: No, it is the manner of the reporting which makes it seem higher. We can talk about the examination pattern as well-----

Deputy Ardagh: We need that too.

Chairman: What year does the 5.5% figure refer to?

Dr. Collins: The figure relates the period 1995-99.

Chairman: Do you have any comparative figures for pre-1995?

Dr. Collins: I do but-----

Chairman: Well, generally, have they gone up or down?

Dr. Collins: The drop-out rate is possibly increasing slowly. One of the factors is the greater opportunity for employment. To be honest, we would not be so worried about that as others because if students prefer to work when they leave school, that is probably a good thing. They will come back to us or to one of the other institutes on a full or part-time basis. It is better if they come back knowing what they want to do rather than taking up time at a college before they are ready to embark on a career.

Chairman: We will ask the colleges the same question in a few moments.

Dr. Collins: The primary reason for withdrawal at that stage is to take up another course - this applies to 40% of the students. This means they have taken the course for the wrong reason, whether this is due to poor decision making or a poor perception of what the course is about. We work as much as we can with the Guidance Institute, guidance teachers and whatever agency we can to transmit information to the students.

Chairman: Deputy Ardagh asked about the failure rate.

Dr. Collins: The failure rate for first year students - the pass rate, which we prefer to use, is 71%, so the failure rate is 29%. Some will repeat, others will take up another course while others will go to work and perhaps return later. I do not think these people are ever lost. There is an assumption that they disappear from the system. In most cases they find very productive outlets. It is funny that we measure full-time students as failures if they fail one subject from 12 in a year while, if a part-time student passes 11 out of 12, he is regarded as a wonderful success. We are not comparing people in the same way.

Deputy Ardagh: Dr. Collins was previously with another institute of technology.

Dr. Collins: Yes, Dundalk.

Deputy Ardagh: It is the cradle of directors. Dr. Collins mentioned the technician development centre in conjunction with Hewlett Packard and Intel. Will he explain what it is doing at the moment and what the institute expects from it?

Dr. Collins: It is a facility which has been jointly developed by the institute, with the support of the Department, and these two firms. Other partners have become involved since. It is a 300 sq. m. facility in Whitestown Industrial Estate in Tallaght. It is our long-term intention to move it on to the campus. We did not have the space for the facility in the institute at the time. It is a facility which houses state of the art equipment for high-tech manufacturing industry and it is used by the institute for training staff from Intel, Hewlett Packard, IBM, Festo, SMC and there is a list of different clients as well as the original partners. Most of the students are undertaking national certificate and diploma courses but these have been specifically tuned to the needs of the industry. The students gain proper national qualifications but they also closely meet the needs of their employers. Employers can also use the facilities they have installed for their own specific training and they do this. The facility is like the rest of the institute in its 100%, if not 120%, utilisation.

Deputy Ardagh: The accounts show the college had expended £45,000 on rent of premises. All costs were to be borne equally. If the property is 300 sq. m., which is 3,000 sq, ft., the rent seems awfully high.

Dr. Collins: I have been corrected. It is 800 sq. m.

Deputy Ardagh: That is different.

Chairman: Can you tell me about your financial control procedures?

Dr. Collins: Like the other institutes we have a secretary and financial controller and a finance officer. We have a year 2000 and euro compliant accounting system which gives us good control. We have also established the proper inter-staff control within the system, the segregation of duties are properly established. Our budget process is the same as other institutes in that we prepare a budget which relates to our proposed programme. That is submitted to the Department and later discussed with the Department when it is determining the allocation to the institute. When the funds are allocated, they are worked out according to the programme we will be able to implement. Various sections of the college have their own budget allocations and control their application.

Chairman: What role do you see yourself having in preventing fraud and, as importantly, ensuring there are no inefficiencies or out of date procedures and practices in the system?

Dr. Collins: The director and the senior management team have a pivotal role in this whole area. This is discussed at senior management meetings and we are looking forward to the first visit of the internal auditors as we hope they will be able to advise us on any tightening up of procedures which may be necessary. The college is also in the process of introducing a quality management system which encourages all members of staff to come forward with any proposals they have for making the institute more efficient and effective in order to deliver a better service.

Chairman: Do you effectively see yourself as chief executive? Do you see yourself as having a particular role in ensuring financial efficiency?

Dr. Collins: Yes, the responsibility is mine.

Chairman: Precisely what do you do to check on these matters?

Dr. Collins: The major work is done with my colleague, the secretary and financial controller. He reports directly to me. We ensure the processes are adequate. Occasionally I make random checks on particular processes. Obviously if anything is worthy of discussion, it is discussed and dealt with.

Chairman: You have a management committee.

Dr. Collins: Yes.

Chairman: How many are on that?

Dr. Collins: We have various levels of management. The senior management committee consists of the three heads of school, the secretary/financial controller, the registrar and the head of development, so there is a senior management team of seven.

Chairman: How often does it meet?

Dr. Collins: It meets on a fortnightly basis.

Chairman: Are there written agendas and minutes?

Dr. Collins: Yes.

Chairman: Are they submitted to the Department?

Dr. Collins: If the Department wishes to have them. It has not requested them at any stage.

Chairman: There is a governing body.

Dr. Collins: Yes.

Chairman: How often does it meet?

Dr. Collins: The governing body meets seven to nine times a year.

Chairman: Does it take an interest in audit matters?

Dr. Collins: It has taken a general interest in all aspects of the college. It has not established any particular emphasis on the audit process. It probably will with the advent of the internal audit process.

Chairman: There is no audit committee of the governing body.

Dr. Collins: The governing body has not established an audit committee.

Chairman: The other colleges do, so that is a slight gap.

Dr. Collins: Some may have.

Chairman: I wish to discuss the general structure of internal and independent audit. We are talking about internal audit, which is in fact external as it is not internal to the colleges.

Dr. Collins: The Comptroller and Auditor General provides the external audit process as it is normally understood. Each college has undertaken to contract a firm of consultants to provide an internal audit process reporting internally to the institute.

Chairman: It is off-site, there is no one on site to see what is happening.

Dr. Collins: Yes. This is a pilot process. If it proves inadequate we will take another look at improvements in the internal audit process.

Chairman: How do you deal with staff problems?

Dr. Collins: This is a difficult area. We try to encourage staff to come forward with problems. We have been fortunate in that most of our staff are young and enthusiastic. We have encountered some difficulties. If a problem arises with a lecturer it is dealt with by the head of the department who would point out any deficiencies and inform him/her what performance is expected. He would also ensure any difficulties being encountered by the lecturer in meeting those requirements are resolved. We have been fortunate in that we have not encountered any major problems so far.

Chairman: These are issues of common concern. Obviously, in any human organisation one will have people who while they may be very good at the beginning develop personal problems resulting in students being at their mercy. Does the Department have procedures in place for dealing with such problems and how do they come to your attention?

Mr. McDonagh: The purpose for having a governing structure in the institutes is to ensure problems like these are dealt with at as local a level as possible. The committee will be well aware that employees have inherent rights and the process can be quite intractable if it poses grave problems in terms of resolution. The institutions have the power of recruitment. We allocate posts and set procedures and it is then open to the governing body and the directors to recruit people. Normal management functions are distributed throughout the colleges, including a personnel management function. We rely on the colleges to see things run smoothly. We do not take an intrusive view into how colleges order their affairs regarding personnel matters.

Chairman: I can understand that but this is a common problem in any business. A child being taught for three years by the same teacher who has personal problems is at an enormous disadvantage. The problem is not unique to Ireland. Are there any mechanisms in place to help people deal with such problems?

Mr. McDonagh: We have not issued any general guidelines on how to deal with such problems. It is something which the personnel management section of a college would deal with. We are considering the creation of posts which are more in the area of human resource management and industrial relations procedures than personnel management at local level.

Chairman: Is there an association of regional institutes of technology?

Dr. Collins: Yes. I wish to refer to the institutes and how we deal with specific issues. Our institute, and others are going the same path, have introduced a students survey whereby students are polled on how they feel the course is performing. That will permit us to identify areas where weaknesses exist. The surveys will be analysed by the course boards, the lecturers under the head of a department dealing with a particular course. This process has already been used to determine the loss of students and poor examination performance, which we have managed to pull back. We have a staff development programme within the institute as well as a collective one. Our personnel office deals with these issues.

There is also a council of directors which is an umbrella organisation for the institutes which deals with issues of a general nature for all the institutes. It, for instance, established the staff development programme which is run collectively. The council hopes to appoint an overall staff development officer/industrial relations person who will co-ordinate work within the institutes. Some of the areas touched upon are trade union issues also.

Chairman: Naturally.

Dr. Collins: Such problems have to be dealt with properly.

Chairman: Obviously these are issues common to all colleges. Are we spending money in each college to deal with the same issue? Is there scope for centralised research in this area?

Dr. Collins: The purpose of appointing a central officer is to identify areas where common action can be taken.

Chairman: How does the Department assess or monitor the performance of each institute?

Mr. McDonagh: An issue of some concern, given the growth in higher education which has taken place in the last 15 years, is that of attrition and drop-out. It is a highly complex issue about which a number of studies are currently underway. We hope to have the results of those studies later this year which will inform action for the future. I have to put a very strong caveat here. People immediately associate drop-out with failure. Drop-out is very often a student deciding quite legitimately that he/she has picked the wrong course or is not mature enough to take the course. We are finding, with the buoyant labour market, that more students are deciding to work for a number of years. This raises issues within the Department in terms of the skill needs of the economy.

We are caught in a bind because the whole thrust of policy is to encourage students and make resources available so that students can attain the highest level they desire. The issue of progression also impacts on the needs of industry. I am sure the Intels, Hewlett Packards and the large multinationals of this world would prefer to have many students taking the certificate course and coming immediately to work for them. Very often 30% to 40% of those students will progress to doing a diploma and perhaps a degree. One of the main benchmarks one will find in terms of the anecdotal evidence we have is that very often the large companies will express satisfaction with the quality of students but they say they need more. They are looking for more of our graduates.

A certain proactivity is developing among the larger companies. They recognise that employees are looking at what facilities the company provides for further and continuing education. That will very often create a win-win situation for a company.

The National Council for Educational Awards sets the standards and presents awards to colleges. We are now moving towards a scenario whereby we will have a National Qualifications Authority and two councils under it, a Higher Education Training Awards Council and a Further Education Training Awards Council. We are in the process of establishing those structures under the legislation passed last year. That will give greater quality assurance in terms of the capacity of the colleges to deliver. As well as that, as part of the process of giving colleges greater control over quality assurance in their own awards, a group chaired by Professor Dervilla Donnelly carried out reviews of a number of colleges with a view to making recommendations on whether there should be delegation of their own awarding powers. To date, three institutions have undergone the process successfully. The colleges in Waterford, Cork and Sligo have been recommended for delegation of power to award their own certificates and diplomas. Those delegation powers will be given to them when the new certification arrangements under the NQA are established.

Chairman: Presumably there will be appropriate external examiners.

Mr. McDonagh: The group chaired by Professor Donnelly has international panel members.

Chairman: Okay. Therefore, performance measuring is in hand, it is under control?

Mr. McDonagh: One is always reluctant to suggest things are not capable of improvement. One is always asking oneself how we can move to a new plane and improve. In general, the Department is satisfied with the quality control and quality assurance procedures which are in place.

Chairman: Are there any tables in the Department comparing the results of one institute against another or is that something you measure?

Mr. McDonagh: We do not have comparative tables of that nature.

Chairman: How do you know whether colleges are keeping up to speed?

Mr. McDonagh: The study which is being carried out will give us an indication. A study was carried out by three colleges on the issues of attrition and drop out which threw up an approximate figure of a 37% attrition rate. From the information we received back, that does not seem to be out of line with international figures for comparable courses. Obviously the benchmark to use is what is happening internationally and what one can learn from international comparisons in that regard. We do not seem to be out of line in the international comparisons but we are obviously awaiting the results of the studies which are under way.

In any event, a number of measures are already in train. The Minister allocated £1.5 million over the period 1999-2000 specifically to address issues of non-completion/attrition in institutes of technology and approximately £0.5 million was allocated last year with a further £1 million to be allocated in the year 2000 in that regard.

Chairman: Do you agree that the experience of students in colleges can be impacted upon by the facilities which are available? We reckon that the overall personal development of students can be greatly added to if there is a full range of facilities. In a common issue here, there is a crying lack of facilities which would be common to the universities. Is this area being addressed by the Department?

Mr. McDonagh: When I was a student the recreational aspects might not have been regarded as important as they are nowadays. The approach is somewhat more enlightened now in a sense that it is recognised. The experience of passing through a third level college is more than an academic experience. There is a broader scale; there is a social, cultural and personal development aspect. My colleagues on the capital side can give chapter and verse on this, but there has been recent recognition of the need for significant additional investment in the infrastructure of the colleges. Of its very nature, the priority in that investment has been in the academic infrastructure in terms of providing more spaces and laboratories. I had experience of visiting one college where the change in the academic infrastructure had a tremendous effect on staff and students. The Department has been in the process of putting significant capital investment into the institutes of technology over the past few years - approximately £80 million to £100 million has been allocated. The third level capital budget for the next five to six years is £800 million over the period of the national development plan.

Chairman: Over what period?

Ms Killian: Over the course of the NDP.

Chairman: Which is six years.

Deputy Ardagh: Is there a correlation between the sports and recreation facilities which are available and the place in a league table in GAA, soccer and so on? If the recreational facilities are there, will the students perform better, have a better team and get better results in a league? It appears there would be a correlation. Similarly, if there are better library facilities, experimentation equipment and fewer students per teacher, results will improve. How close are university standards within the institute of technology sector regarding the facilities available and the amount of investment which is put into it?

Mr. McDonagh: Success rates are a result of a complex interaction of a number of factors. I am sure the recreational facilities have an impact on that and also on the students it attracts. Whether students are attracted by the fact that the college is close to them or that it has the course they want, such issues, including the quality of the students, how motivated they and the staff are and a range of other issues will interact in terms of indicating colleges' success rates. My colleagues in the institute probably believe that, in terms of validating its awards, the NCEA applies what it regards as university standards. They would probably suggest national standards are being applied and that the degree one would get from an institute of technology is on a par with a degree one would get from a university.

Deputy Ardagh: Or better.

Mr. McDonagh: Yes.

Chairman: Do you doubt that?

Mr. McDonagh: The NCEA applies its standards in a national context.

Chairman: Does the Department accept in principle that the overall personal development of students outside the academic area can help in productivity and environment results in the academic area?

Mr. McDonagh: Without a doubt.

Chairman: Undoubtedly, the Department will address urgently this great cry for more facilities.

Mr. McDonagh: I am not the assistant secretary for the capital brief but the priority over the period of the national development plan will be in improving the infrastructure, in particular the lecture rooms, the library infrastructure and laboratories. I do not know to what extent we can prioritise the recreational aspects as they will be part of campus development plans. In that context, a number of the institutions apply elements of the student service charge to set aside funding for developing the recreational infrastructure.

Chairman: What is the reporting relationship between the institutes and the Department?

Mr. McDonagh: In terms of running it through the process - I speak for the current budgets - the institutes submit their programmes and budgets. These are reviewed by the Department. We then meet each institute for at least a half day session to go through its plans and budgets for the next period.

Chairman: When you said "the Department", is that you and your officials?

Mr. McDonagh: A principal officer in the area and the members of staff, including Ms Murray, meet the institutes. Usually the management team or a number of the senior management of the college, including the director, attends that meeting and they bring the programme and budget. A long review and discussion take place whereby the Department indicates its general disposition in terms of the budget for the next year and what new programmes and additional programmes will be made available. Obviously, the institutes would be disappointed more often than not because, due to our resourcing constraints, they get somewhat less than they would like.

Chairman: Are there monthly or quarterly reports?

Mr. McDonagh: We receive monitoring reports three times a year from the institutions. We are reviewing whether we need to get the reports three times a year at this stage. Having regard to some of the representations made to us from the colleges and the general constraints on staff in regard to financial responsibility, it was felt that we should consider a twice yearly report.

In regard to the tranching of expenditure for the colleges, that is now a self-starting process. The institutes apply to us for funding on a need basis and that would normally be done on a monthly basis. The institutes indicate that they require £X million. We have a stricture that, when they indicate their requirement, they must give us a commitment that when we tranche the money to them there will not be a variation of more than 5% in terms of expenditure vis-à-vis the allocation when they seek a subsequent tranche. If there is a variation of more than 5%, the amount involved will be deducted from the subsequent tranche sought.

Chairman: Does anyone in the Department read the three reports and follow up on them?

Mr. McDonagh: The monitoring reports are received in the section and professional accountants review them, having held discussions with the personnel in the sections who monitor the institutes to find out whether specific issues need to be raised.

Chairman: Are they purely financial reports?

Mr. McDonagh: Yes, purely financial.

Chairman: I am concerned about this. We discovered in regard to the VECs that reports and minutes were being sent to the Department but nobody was reading them. The VEC representatives stated that the Department was aware of their problems because they were outlined in the minutes. I want to be assured that people read reports in the Department.

Mr. McDonagh: The monitoring reports are not akin to the minutes. The problem to which the Chairman referred arose from a provision in the VEC legislation that the minutes of VEC meetings would be provided on a monthly basis. At one stage, 38 sets of reports were being received from 38 VECs. In my former role in the Department, I was responsible for that area. I recall meticulously checking whether anyone was presuming to do things on the basis that because they were in the minutes, departmental sanction had been received. I was very wary of that.

Chairman: Is there an early warning system in the Department which might indicate that problems are looming in a particular college? We had problems in Letterkenny some years ago. How do you keep on top of that sort of thing?

Mr. McDonagh: Apart from the budget meetings we have, the three monitoring reports and our ongoing interaction with the colleges - there is quite a volume of ongoing communication between the colleges and the Department - we try to ensure that as far as possible, having regard to staffing and time constraints, we visit the institutions. We would like to visit the institutions more often but time constraints sometimes preclude us from engaging in that type of activity to the extent we would like.

Chairman: I am worried about this. You are telling me that there is not any real check. There is no inspector of institutes of technology and no cigire visits the institutes to see how they are performing.

Mr. McDonagh: Under the previous VEC regime, there was a provision whereby departmental inspectors sat on the governing sub-committees. The view was taken that that was not appropriate. The actual membership of the governing bodies is laid down in the legislation and one must have regard to the fact that we have put in place autonomous and independent institutions under statute with governing bodies and a top management layer.

Chairman: We are confronted with numerous autonomous institutions but they must still be accountable. They are not subject to day-to-day control but proper checks and balances must be included in the system to ensure matters are up to scratch in terms of efficacy and efficiency. Simply because institutions are autonomous and independent does not mean they should not be accountable; they must be accountable and there must be checks and balances in the system. These issues are often confused and I would like you to consider how you could have checks and balances in the system without getting involved in detailed control which is not a good thing.

Mr. McDonagh: I fully accept the Chairman's comments. In fact, I believe that the process of engagement by the Committee of Public Accounts under the Comptroller and Auditor General legislation and the responsibility for examining the institutes has brought matters home to civil servants. There was a tendency in the past for certain parts of the Civil Service to regard the Comptroller and Auditor General as being responsible for spotting problems in colleges. I do not take that view. Colleges are responsible in the first instance to the Department and the Minister. The Comptroller and Auditor General carries out a function on behalf of the parliamentary watchdog, not on behalf of the Department. I make that point very clear to departmental staff and it is a view about which I am in strong agreement with the Comptroller and Auditor General.

Chairman: I want you to think about how we could have better checks and balances in the system.

I want to proceed to the question of internal audit which is not really internal audit. Who developed this system or how has it emerged? At what stage of implementation is the system in each of the colleges?

Mr. McDonagh: Arising from concerns which we would have collectively shared about developing robust financial management systems within the colleges and, in the light of concerns expressed over a period of time by the committee, I approached the council of directors about a year and a half ago and stated that we needed to develop robust internal audit arrangements for the colleges. Faced with the dilemma that given that there were 13 colleges and, having regard to problems in terms of economy and efficiency, I would have found it difficult at that stage to provide staff for an internal audit function in every institution because some of the colleges were not significant in size and it might not have been justifiable in the short term to put in place an internal audit function in all of them.

Arising from discussions which the Department held with the council of directors, a secretaries/financial controllers group drew up a number of options, one of which was to put in place a central internal audit unit with permanent staff for the colleges in general. The other was the idea that we would tender for consultancy. On the basis of the costings carried out, it was felt at that stage that the more economic short-term approach would be to opt for the consultancy for a trial period of up to three years. On that basis, the Department sanctioned a consultancy.

Having regard to procurement procedures, the issue was put out to tender and the successful consultancy firm was contracted to provide the internal audit function for a three year period. Part of the stricture I laid down in sanctioning the arrangement for the consultancy firm was that the arrangements would have to be reviewed before the end of the contract period with a view to determining whether the private contract arrangement should be replaced by the creation of a permanent unit, specific to the IT sector, which would be staffed on the basis of direct recruitment. My hope is that the experience of the first three years with the audit firm will give the colleges and their governing bodies good experience in this area and that we will be in a better position at the end of the period to determine how to proceed. My inclination at this stage is to move towards a formal, permanently staffed structure for the colleges in order that expertise could be built up.

Chairman: This is obviously a step in the right direction but have the auditors direct access, are they in a position to carry out spot checks and do they report to the directors of each institute? Does the Department receive copies of those reports?

Mr. McDonagh: We do not generally receive copies of internal audit reports. I understand the protocol is that the Department does not receive copies of internal audit reports. If internal audit reports are sent back to the Department that immediately can attenuate-----

Chairman: What about spot checks?

Mr. McDonagh: The institutes and the internal audit function arrange spot checks between themselves. An audit programme will be drawn up for each college and this will involve a series of audits. Those audits, which are internal reports for the college will be made available to the Comptroller and Auditor General.

Chairman: Are auditors free to go wherever they want? Do they report directly to the directors?

Dr. Collins: The internal audit will embrace much more than just finance. It will look at any aspect of the institute's activities. Consultants have been contracted for three years to run this pilot programme. The institutes hope to establish, using the collective approach of a single consultant, what is best practice and to have that best practice devolved out to each institute. There is a timetable in place for each college involved in the process. Spot checks is one task that will be undertaken. Auditors will have free access to every aspect of the institutes work and they will report to the director.

Chairman: Does that apply to each college?

Dr. Collins: Yes.

Chairman: I would like to hear more about that so that we are au fait with the arrangements. There is no audit committee in at least one college. Should each governing body have an independent audit committee? It should be considered. It is not up to committee to decide but we are concerned about audit committees.

With regard to the genesis of institutes of technology and VECs, Carlow VEC still has some unfinished business regarding property. Is that right?

Mr. Gallagher: It is very limited. The total site contained the original regional college and a vocational school. It is a matter of demarcation of the boundary. That has not been formally decided upon but there is an ongoing practice.

Mr. Purcell: That is precisely the position in Carlow. It would not be an exemplar of a case. I am aware of one institute, which is not represented here today, where there is a tug of war over premises which were formerly used by the VEC. Some residual problems exist but they are dying out.

Chairman: Who is the property of the institutes vested in? Is there a trust?

Dr. Collins: It is vested in the institute.

Chairman: The institute is a statutory body.

Dr. Collins: That is correct.

Chairman: When I was Minister for Transport I was always concerned about huge tracks of public land not being used or maximised. Is there a policy to maximise the use of assets?

Dr. Collins: I cannot speak for all institutes but I imagine that they would all have the same attitude as us. That is if we were fortunate enough to have additional land we would ensure that it was used properly, not just left to lie fallow. At our location we have very valuable road frontage which we may use for commercial purposes for the benefit of the college.

Chairman: Is there a departmental policy on maximising the use of assets, including the use of buildings? The number of part-time students was mentioned earlier.

Mr. McDonagh: The policy would be to sweat the assets to the greatest extent possible. We are doing that at present. The institute of technology sector is one particular example of it. There are a number of areas driven by the skill needs of the economy. In recent years, through the industry/education task force, we have developed accelerated technician programmes which have atypical recruitment. These programmes are run on a sandwich basis which means that they do not run to the normal academic year. Up to now people have joined these sandwich courses in January. The students stay on campus for six months, then they spend six months with a company who sponsors them and they spend their final six months back on campus. This scheme uses the assets of the institution to the maximum extent.

In recent years we have also developed a series of courses mainly on information technology which take place during the summer months. Students doing intensive courses on information technology would then have a possibility of continuing their studies by joining one of the accelerated technician programmes.

We have a huge apprenticeship programme. Under the new standards based apprenticeship system the education system must provide apprenticeships at phases 4 and 6. In the past three or four years apprentice registrations have increased from about 10,000 to over 21,000. This has created huge problems for FÁS, the Department of Education and Science and the institutes in developing capacity quickly enough. As part of our response to that we have developed capacity levels. Three or four years ago we could train 4,000 apprentices. This year we have the capacity to train 7,200 apprentices and that figure will rise to 8,500 next year.

We are trying to address the apprentice capacity problem in another way by putting on modules for apprentice training this summer. We hope to provide apprentice training for between 700 and 800 apprentices. Not only do the institutes work night and day but they work during the summer holidays as well.

Chairman: The accounts have been noted. I want the Department to look at the adequacy of the reporting relationship between institutes of technology and the Department. I want it to address the question of whether the checks and balances are adequate and will ensure against fraud and inefficiency. Perhaps the Department will meet the committee in three months time to respond to my question. I want full details of the new internal audit system submitted to us so that we can reflect on it and possibly raise questions on it. I want those details within one month.

With regard to the timeliness of the institutes' accounts, particularly the time it took them to respond to queries from the Comptroller and Auditor General, within one month each institute must tell us how they propose to bring their accounts up to date and how they will provide speedy responses to the Comptroller and Auditor General's queries left outstanding and in the future.

Deputy Ardagh: That encompasses the questions I asked Mr. Hannigan.

Chairman: It is our job to query performance and value for money. The committee appreciates the great work that has been done by the institutes. They are part of the engine of our economy. While our job is to criticise we should also say a word of thanks. As a State we are very ill equipped to do that. I thank the institutes and all of their staff and wish them continued success in the future. I extend our thanks to the Department as well.

At our next meeting we will deal with Vote 9 - Office of the Revenue Commissioners, the 1998 Appropriation Accounts, report of value for money examination, value-added tax collection and control and the report of value for money examination, use of sheriffs and solicitors in the collection of taxes.

The witnesses withdrew.

The committee adjourned at 1 p.m. until Thursday, 4 May at 10 a.m.

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