COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Reform of the administrative structure of the European Schools
Date: 2018-03-23
Institutions: Directorate-General for Human Resources and Security, European Commission
Subjects: EU financing, EU office or agency, European school, administrative reform, education policy, educational administration, educational reform, financial management, management accounting

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.3.2018  COM(2018) 152 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Reform of the administrative structure of the European Schools  
 
 
1 

Introduction 

The  mission  of  the  European  Schools  ("ES")  is  to  provide  a  multilingual  and  multicultural 
education at the nursery, primary and secondary level (including the European Baccalaureate 
diploma) to the children of the European Union ("the Union") institutions' staff members. As 
such, the ES contribute to the attractiveness of the European civil service.  

The ES are an intergovernmental organisation set up by the EU Member States and the Union, 
which  are  the  contracting  parties  to  the  Convention  defining  the  Statute  of  the  European 
Schools1. There are 13 ES in six EU Member States2 and they have a status of public bodies 
in  the  countries  where  they  are  located.  The  highest  decision-making  organ,  the  Board  of 
Governors, brings together the Member States, the European Commission - on behalf of the 
Union  –  and  representatives  of  parents,  staff  and  other  stakeholders3.  Each  member  of  the 
Board, including the Commission, has one seat and one vote. The Presidency of the ES rotates 
among  the  EU  Member  States  every  school  year  whereas  the  overall  management  of  the 
system  is  ensured  by  the  Secretary-General  (SG)  of  the  ES,  representing  the  Board  of 
Governors.  

In  line  with  Article  25  of  the  said  Convention,  the  European  Commission,  on  behalf  of  the 
Union, provides a financial contribution to the budget of the ES. This contribution covers the 
difference between the total amount of expenditure by the ES and the total of other revenue. 
This largest income (about 60% in 2017) of the ES budget is used to cater for the salaries of 
the  locally  recruited  teachers  and  administrative  staff,  the  top  up  of  the  seconded  teachers’ 
national salaries and the overheads4. Another main source of revenue comes from the Member 
States (around 18 % in 2017), through the secondment and payment of national emoluments 
to  the  ES  teachers  and  other  staff  members.  The  remainder  of  the  revenue  consists  of  the 
contributions  paid  by  other  bodies  and  companies  whose  staff's  children  are  enrolled  in  the 
schools  (around  14%,  called  category  II),  as  well  as  category  III5 parents  school  fees  and 
contribution (around 8%). 

In the recent years, the European Schools system ("ESS") has been facing major challenges 
when it comes to its financial management. The Court of Auditors ("CoA") and the Internal 

1 Official Journal L 212, 17/08/1994 P. 0003 – 0014. 
2 Alicante, Brussels I (Uccle + Berkendael), Brussels II (Woluwé), Brussels III (Ixelles), Brussels IV (Laeken), 
Frankfurt am Main, Mol, Bergen, Karlsruhe, Munich, Varese, Luxembourg I & Luxembourg II), in six countries 
(Belgium, Netherlands, Germany, Italy, Spain and Luxembourg), with a total of approximately 27,000 pupils on 
roll in 2017.  
3 Also the European Patent Office (for ES Munich), European Investment Bank/European Investment Fund (for 
ES Luxembourg since 2016), EUIPO (for ES Alicante since 2017) and ECB (for ES Frankfurt since 2017); with 
the right to vote only on matters relating to the ES covered by their agreements. 
4 Building  expenditure  for  the  Office  of  the  ES  Secretary-General,  cleaning,  maintenance,  IT  and  educational 
support in the Schools. 
5 The remaining – category I – pupils are children of staff of the EU institutions/bodies, who are exempt from 
school fees. 

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Audit Service ("IAS") have both identified some shortcomings in their Annual reports related 
to  the  period  of  2013  to  2015  reporting  years.  The  CoA  considered  in  its  2013  and  2014 
reports  that  it  could  not  guarantee  the  ES'  consolidated  accounts  were  free  of  material 
misstatement. However, in its 2015 and 2016 reports the CoA did not reveal material errors in 
the final consolidated financial statements. 

The IAS highlighted  some internal control weaknesses and underlined the risk of misuse of 
the ES' funds. 

The  shortcomings  in  the  ES'  financial  management  do  not  jeopardise  the  legality  and 
regularity  of  the  payments  made  by  the  Commission  (Directorate-General  for  Human 
Resources  and  Security,  thereafter  DG  HR)  to  the  ES,  since  the  payments  are  highly 
regulated. However, the Commission, as a major contributor to the ES' budget, has been keen 
to ensure that the required guarantees are given on the sound financial management and on the 
regularity and legality of the ES' operations.    

Accordingly, based on the audit reports and the fraud detected in the accounts of one of the 
schools in 2012, DG HR issued a reputational reservation on the ES' financial management in 
its last four Annual Activity Reports (2013 through 2016). Moreover, the Commission voted 
against the last four discharges related to the 2012, 2013, 2014 and 2015 ES' budget execution 
(whereas all other members of the Board of Governors voted in favour).  

In  its  report  on  the  2015  general  EU  budget  discharge6,  the  European  Parliament  ("EP") 
pointed out some weaknesses in the financial management of the ES, mirroring the findings of 
the CoA and of the IAS.   

Consequently,  the  EP  called  on  the  Commission  to  play  its  full  role  in  all  areas  of  the  ES 
management  and  asked  for  a  communication  to  the  Parliament  and  the  Council  on  how  the 
administrative structure of the ES could best be reformed7.  

The  present  communication  therefore  aims  to  set  out  the  Commission's  views  on  the  ES' 
administrative and financial structure and the ongoing reforms undertaken in these domains. 

2  Progress  in  reforming  administrative  structure  of  the  European  Schools 

system 

It  is  important  to  recognise  that  important  achievements  have  already  been  realised  when  it 
comes to reforming the administrative structure of the ESS. 

The  major  accomplishment  is  the  adoption  of  a  revised  Financial  Regulation  ("FR")  of  the 
ES8 by  the  Board  of  Governors  in  September  2017.  The  FR  review  was  initiated  by  the 

6 A8-0150/2017. 
7 Recommendation 2015/PAR/0371.  

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Commission, which, end of 2014, obtained a mandate from the Board of Governors to start 
discussions  thereon.  The  new  FR  introduces  a  new  model  of  financial  governance  into  the 
ESS.  It  consists  mainly  in  a  gradual  centralisation  of  the  Authorising  Officer  and  the 
Accounting Officer functions. The Commission also welcomes the fact that the revised FR is 
further  aligned  with  the  Financial  Regulation  of  the  Union 9 ,  in  particular,  in  terms  of 
budgetary  principles,  internal  control  systems  (including  a  better  reporting  and  accounting) 
and procurement rules. 

Moreover, as a way to mitigate the weaknesses identified by the auditors, the ES have taken a 
number  of  measures  to  promote  sound  financial  management  and  to  combat  fraud,  i.e. 
implementation of accrual based accounting, the reporting of control results and the redesign 
of the internal control framework (notably a risk assessment and risk register have been put in 
place and the internal control standards have been revised). An internal control coordination 
function has been operational since 2014, to advise and guide the schools and the ES Central 
Office on the effective follow-up of the audit recommendations as well as on the design and 
implementation of the internal control system. A qualified procurement cell in the ES' Central 
Office has been created. The segregation of duties principle has been reviewed and improved, 
and  the  rules  on  the  mobility  of  staff  with  sensitive  functions  (e.g.  seconded  bursars)  have 
been adopted, whereas those on the locally recruited bursars are under discussion. 

The ES have made significant progress in tackling the structural internal control weakness in 
the payment system. All ES have now a proper segregation of powers in place when it comes 
to  carrying  out  payments.  As  a  result,  the  IAS  determined  that  the  fraud  risk  related  to  the 
weakness  of  the  payment  system  has  been  sufficiently  mitigated  and  has  closed  the  related 
recommendation10. This is confirmed in the 2016 CoA report11. 

Furthermore,  the  ES  FR  enables  OLAF  to  conduct  administrative  investigations  in  the  ES, 
including  inspections  in  the  context  of  the  protection  of  the  financial  interests  of  the  Union 
against  fraud  and  other  irregularities.  In  addition,  the  ES  are  establishing  an  Anti-fraud 
Strategy and OLAF will provide fraud prevention training in the framework of Administrative 
Agreements.   

Moreover,  external  independent  audits  on  the  annual  accounts  of  the  ES  and  the  SG  Office 
have been gradually established. Five schools have already been audited and all the remaining 
ones will be within three years. 

8 The Board of Governors adopted the new Financial Regulation on 05.09.2017. Ref.: 2017-12-D-21-en-1 
https://www.eursc.eu/BasicTexts/2017-12-D-21-en-1.pdf .   
9 Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on 
the financial rules applicable to the general budget of the Union 
(OJ L 298, 26.10.2012, p. 1) 
10  IAS  Follow-up  of  Outstanding  Recommendations  from  the  IAS  audit  on  "Treasuries  and  Revenues 
Management in the European Schools.  
11 Report on the annual accounts of the European Schools for the financial year 2016 
https://www.eca.europa.eu/en/Pages/DocItem.aspx?did=42117 

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Taking  these  different  elements  into  account,  the  Commission  considers  that  it  no  longer 
needs to maintain its reputational reservation in its 2017 Annual Activity Report.  

Whereas  the  advisory  role  of  the  ES'  Central  Office  towards  the  Schools  is  crucial,  the 
Commission  has  also  contributed  to  reinforce  the  resources  devoted  to  the  support  and 
guidance  for  internal  control  and  financial  management.  In  particular,  the  Commission  has 
proactively provided the ES with advice and training in relation to the responsibilities of the 
Authorising  Officer,  the  programming  and  reporting  as  well  as  the  design  of  the  internal 
control  system.  A  Service  Level  Agreement  was  concluded  on      October  2016  to  offer  the 
possibility  to  the  ES  to  follow  the  training  organised  by  the  Commission  on  financial, 
budgetary and procurement matters. 

The CoA 2015 and 2016 reports confirm progress as  they  did not reveal material errors in 
the  financial  statements  for  2015".  The  CoA's  more  positive  conclusions  compared  to  the 
previous  reports  reflect  the  fact  that  many  of  the  required  measures  undertaken  during  the 
recent years by the ES start producing results.  

However,  a  full  overhaul  of  an  administrative  structure  and  restructuring  of  the  internal 
control  is  a  long  term  process.  This  is  reflected  in  the  CoA  2016  report,  which  equally 
provided,  alongside  the  reported  progress,  a  strong  qualification  pertaining  to  persistent 
internal  control  weaknesses  in  recruitment,  procurement  and  payment  arrangements,  which 
illustrates the need for a further reform of the ES' administrative structure. 

3  The  Commission's  views  on  the  reform  of  the  European  Schools' 

administrative structure 

First  of  all,  it  is  important  to  remind  that  in  response  to  the  EP’s  Resolution  of  201112,  the 
Commission  initiated  a discussion  concerning  a  change  in  the  governance  model  within  the 
Board of Governors in 2012. As a result, the Board concluded there was no need to change 
the  Convention,  given  that  the  Board  was  empowered  to  take  any  decision  required  for 
tackling the shortcoming of the ES system within the current model.  

The Commission therefore acknowledges that the current governance system leaves sufficient 
room  for  manoeuvre  to  bring  about  necessary  reforms  in  various  domains  of  the  ESS.  The 
Commission will continue to play its role and to provide its guidance and support to the ES 
within the current administrative and governance structure. 

On the other hand, the Member States must continue to respect their responsibilities vis-à-vis 
the  ES,  in  the  context  of  the  current  intergovernmental  cooperation  governance,  where  they 
are expected to play a key role in the overall education framework and to fulfil their financial 
commitments and obligations as hosting countries.  

12 2011/2036(INI) of 27.09.2011 

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According  to  the  Commission,  the  consolidation  of  the  administrative  structure  of  the  ESS 
should be accomplished along the following lines: 

3.1  Financial governance: centralisation of principal roles 

As per the new Financial Regulation of the ES, the functions of the Authorising Officer and 
Accounting  Officer  will  be  gradually  centralised,  in  line  with  the  model  applied  in  the 
European Commission.  

More  specifically,  the  Authorising  Officer  function  will  be  centralised  at  the  level  of  the 
Secretary-General  of  the  ES,  instead  of  the  14  authorising  officers  (currently  the  Deputy 
Secretary-General for the Central Office and 13 Directors for the schools). The centralisation 
will be finalised as from 1 January 2020. The Secretary-General as Authorising Officer will 
be able to appoint Authorising Officers by Delegation (the Directors of the ES and an actor to 
be defined at the level of the Central Office for its own expenditure).  

During  the  transitional  period  from  1/1/2018  until  31/12/2019,  the  Secretary-General  shall 
present an Annual Activity Report to the Board of Governors, in April 2019 and April 2020, 
on the overall management of the ESS, including the main conclusions on the budgetary and 
sound  financial  management  and  the  internal  control  systems.  Moreover,  the  Secretary-
General  shall  report  promptly  to  the  Board  of  Governors  whenever  any  material  findings 
resulting from controls or audits in the ESS have been drawn to his or her attention. 

The Secretary-General shall in addition report to the Board of Governors, for the first time by 
mid-July 2019, on the budgetary and financial management and on the main findings resulting 
from the ex-post controls and the internal control systems. 

Gradual  centralisation  of  the  role  of  the  Accounting  Officer  has  started  on  1  January  2018 
with  a  view  to  completing  this  process  fully  in  2020.  Local  accounting  correspondent 
functions, under the Accountant's responsibility, will be created in the 13 ES and the Central 
Office (for  its own expenditure).  The central Accounting  Officer will sign the accounts  and 
give his assurance that the accounts present a true and fair view of the financial situation for 
the first time for the 2018 accounts (in July 2019). 

The reform will streamline the ES' accounting, give oversight to the Board of Governors and 
help  mitigate  the  weaknesses  included  in  the  CoA  findings  and  related  to  consolidation, 
reliability and accuracy issues, delays, inventory and fixed asset management.  

The implementation of the revised FR will result in a new financial governance model of the 
ES.  This  is  expected  to  reinforce  the  sound  financial  management  and  the  clarity  and 
accountability of the ESS, while respecting the autonomy of the schools, as provided in article 
6  of  the  Convention,  and  ensuring  the  responsibility  inherent  to  each  financial  actor  and 
authorising officer by delegation/sub-delegation.  

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The new FR gives the legal framework to start the process of centralisation. Such a process 
entails  a  great  number  of  changes  to  the  current  structure,  which  need  to  be  carefully 
implemented by the ES. A number of issues will arise, ranging from staffing of the Central 
Office and of the ES to the degree of centralisation of the different services and the impact on 
the central and local administrations. All this will have to be carefully assessed and resolved 
before the ES can achieve the expected benefits of the centralisation exercise.  

Considering  the  gradual  centralisation  of  the  Authorising  Officer  and  Accounting  Officer 
roles,  an  implementation  plan  was  adopted  by  the  Board  of  Governors  in  September  2017 
alongside  the  revised  FR.  It  includes  a  time  frame  for  a  number  of  steps  necessary  for 
improving  the  financial  governance  (e.g.  preparation  of  more  accurate  procedures  for 
procurement, budgeting and reporting, resolving shortcomings in the accounting software and 
installing central accounting validation mechanisms). 

The achievement of this drive for centralisation will be a highly challenging task that requires 
sound execution of the implementation plan by the ES. 

3.2 

Improvements to financial and budgetary management and internal control 

Next to the centralisation of the principal roles in the ES' administration, the restructuring of 
the internal control system requires the ES to dedicate further attention to the following areas: 

3.2.1  Payment system  

As mentioned under Point 2, both the IAS and the CoA have established that the fraud risk 
related  to  the  weakness  is  sufficiently  mitigated.  However,  the  CoA  requalified  its 
recommendation in its report on the financial year 2016, as the integration of the accounting 
software  with  the  electronic  payment  system  still  leads  to  other  unresolved  internal  control 
weaknesses. Therefore, even though the fraud risk is sufficiently reduced, efforts to mitigate 
the other residual risks have to be pursued.. 

The Commission supported the centralisation of the execution of payments, as decided by the 
Board of Governors in September 2017, in the context of the 2017-2019 implementation plan 
for the new financial governance.   

3.2.2  Segregation of duties and financial circuits  

The Authorising and Accounting roles need to be separated. This will be reflected on the one 
hand in the Authorising Officer by delegation role fulfilled by the School Director, receiving 
his/her  mandate  directly  from  the  Secretary-General.  On  the  other  hand,  there  will  be  an 
accounting  correspondent  in  each school  and  in the Central Office,  who will be responsible 
for the daily management of accounts and application of the rules established by the central 
Accounting Officer. Moreover, the four-eye principle will be implemented in all transactions.  

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The Regulations for the seconded staff were revised recently13 to better reflect the importance 
and risks linked to the role of the Bursars/Administrators in the current management context 
of  the  ES.  The  new  regulation,  which  entered  into  force  as  from  1/1/2018,  includes  in 
particular  mobility  provisions  applicable  to  the  seconded  Bursars,  better  definition  of  tasks 
and salary grids.  

An  accurate  description  of  the  future  tasks  to  be  entrusted  to  Bursars  should  be  properly 
redefined  by  the  Office  of  the  Secretary-General  of  the  ES  in  order  to  ensure  clarity  and 
consistence.   

3.2.3 

Internal control environment  

The Commission considers that the internal control systems need to be further reinforced. It 
supports the action plans adopted for this purpose by the Board of Governors in the context of 
the  new  FR  as  well  in  the  context  of  the  mitigating  measures  to  implement  the  audit 
recommendations.  This  plan  aims,  among  others,  to  update  the  Internal  Control  Standards, 
develop  risk  assessment  as  well  as  a  methodology  for  ex-post  controls  covering  all  type  of 
transactions. 

Such measures improve the reliability of the information provided by the schools and give a 
clear warning on existing or possible problems.            

3.3 

  Reallocation of resources to implement the drive to centralisation  

In the context of the revision of the FR adopted in September 2017, the required posts to drive 
the centralisation process have been created in the budget 2017 and 2018.      

The  Commission  requested  that,  in  the  context  of  the  2019  Draft  budget  procedure,  a  new 
discussion take place on the staff redeployment issue. It is the Commission's view that the ES 
should  develop  multi-annual  human  resources  plans  that  would  facilitate  the  staff 
redeployment  in  line  with  the  priorities  and  needs.  A  balanced  solution  should  take  into 
account  on  the  one  hand  the  need  to  reinforce  the  sound  management  and  internal  control 
systems in the Schools and on the other hand to create the required centralised structures to 
support the central functions.  

3.4   A fair and reliable cost-sharing system 

The  number  of  seconded  teachers, who  traditionally  have  been  the  backbone  of  the  ESS,  is 
declining,  which  goes  in  parallel  with  the  reduction  of  the  Member  States  contributions 
through the payment of the remuneration of this category of staff. At the same time, the pupil 
population is growing fast.  

13 The Board of Governors adopted a set of amendments to the Regulations for Members of the Seconded Staff 
of the European Schools on 08.06.2017. Ref. 2017-04-D-8-en-1. 

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The role of the Member States is particularly pivotal as far as the secondment of teachers is 
concerned, in particular for English, French and German. The decrease in number of seconded 
teachers giving lessons in these languages has double impact on the ES. On the one hand, it 
forces the schools to recruit teachers locally, with all its negative budgetary consequences on 
the  EU  balancing  contribution  to  the  ESS,  as  the  locally  recruited  teachers'  salaries  are 
covered by the EU budget, whereas the basis of the ESS according to the Convention is the 
secondment of teachers by the Member States14. On the other hand, the decreasing number of 
seconded  teachers  may  contribute  to  increasing  the  number  of  courses  taught  by  non-native 
speakers if the recruitment of native speakers proves difficult.  

Considering  that  a  balanced  cost-sharing  system  is  crucial  for  the  financial  sustainability  of 
the  ES  system,  the  Commission  recommends  launching  discussions  on  the  revision  of  the 
current  system  in  order  to  elaborate  a  viable  solution  from  the  2020/2021  school  year 
onwards.  Secondment  or  assignment  of  teachers  by  the  Member  States  should  remain  the 
backbone  of the ESS in a revised cost-sharing mechanism. It should  also properly take  into 
account real needs of the schools and possible consequences of Brexit while catering for a fair 
share of costs by the Member States.  

Furthermore,  the  Commission  considers  that  the  cost-sharing  model  should  be  properly 
implemented by other EU institutions, agencies and bodies fully or partially financed outside 
the  EU  budget  and  whose  staff's  children  are  enrolled  in  the  ES.  In  this  context,  the 
Commission  concluded  Contribution  Agreements  with  the  "EIB  Group"  and  the  ESM15,  as 
well  as  with  EUIPO  (ex-OHIM)16 and  other  agencies  and  bodies  (Single  Resolution  Board 
and  various  Joint  Undertakings)  in  order  for  them  to  cater  for  the  education  costs  of  their 
staff's children. In addition, at the end of 2017, a participation agreement based on article 28 
of the Convention was concluded between the ES and the European Central Bank. Moreover, 
discussions  are  ongoing  with  some  other  agencies  with  a  view  to  securing  their  financial 
contribution to the ES' budgets.  

4  Conclusion 

The ES have embarked on a long-term structural reform of their administrative and financial 
structure.  So  far  this  has  resulted  in  mitigating  the  internal  control  weakness  in  the  ES' 
payment systems at the heart of the fraud case that led the Commission to issue a reputational 
reservation.  It  also  led  to  a  reinforcement  of  the  current  internal  control  structure  and  the 
revision of the FR that will allow the ES to reform their administrative structure to a greater 
extent.  

14 Articles 3(2) and 25(1) of the Convention. 
15 The European Investment Bank representing also the European Investment Fund, and the European Stability 
Mechanism, in December 2015. 
16 European Union Intellectual Property Office, in June 2017. 

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Further steps, as described above, are necessary to improve internal control and administrative 
management. The reform of the administrative structure requires full determination from the 
ES as well proper implementation of the appropriate planning. The Commission will continue 
to provide them with the necessary support, where possible. 

A  fair  and  reliable  cost-sharing  system  between  the  EU  budget,  the  Member  States  and  the 
institutions and bodies benefiting from the ESS is crucial for the future sustainability of the 
overall system. 

The Commission considers that the main shortcomings and challenges faced by the ES can be 
tackled  within  the  existing  framework  set  out  by  the  ES,  with  the  full  commitment  of  the 
Member States. To this end, the Commission will continue ensuring that its position is taken 
into  account  in  the  ES'  supervisory  system,  i.e.  the  Joint  Teaching  Committee,  Budgetary 
Committee and the Board of Governors. 

9