About this report In accordance with Ministerial Financial Reporting Direction (FRD) 30A that annual reports be ‘reports of the financial and business operations of an entity, produced to comply with relevant Victorian legislation and pronouncements,’ material not required under relevant legislation and pronouncements is not included in this report. An index which identifies the Department’s compliance with statutory disclosure requirements is provided on page 119. Purpose and functions The Department of Education and Early Childhood Development gained its current form in 2013 following a structural reorganisation. At June 2014, two groups were focused on life stages: the Early Childhood and School Education Group and the Higher Education and Skills Group. Four Groups provided cross-functional support: Regional Services, Infrastructure and Finance, People and Executive Services, and Strategy and Review Groups. The new structure is designed to: improve the level of service enable the Department to deliver its strategic plan and undertake ongoing work ensure services are cost-effective cease duplicated or inefficient functions consolidate functions where this will be more efficient and aligns with strategy. The Department plays a significant role as system designer, purchaser, regulator, and provider of system services across Victoria’s learning and development system, and owner-operator of government schools. The Department influences outcomes across all education and early childhood sectors and service systems, including schools and universities. Each of the Department’s roles is outlined below. System designer Improvements to the outcomes of Victoria’s learning and development system can be driven by improvements to its design. The Department’s role is to advise the Government on design improvements, especially those relating to funding and regulation. Liaison with the Commonwealth is also a critical element of this role. Regular monitoring and evaluation of performance informs system improvements. Owner-operator The Department is the largest owner-operator of educational providers in the state, with more than 1500 government schools. The size of Victoria’s government school system is one of its great strengths, allowing economies of scale and enabling innovation to flourish and be shared. As owner-operator, the Department gives schools a higher level of autonomy than is found in most systems around the world, while setting clear accountabilities and expectations and providing a range of support services. Purchaser The Department funds and holds to account service providers including early childhood intervention services, kindergartens, maternal and child health services, schools, and training providers.
During 2013–14, the Department has focussed on developing Productivity indicators including unit costs of service, as shown in Table 2, enabling the Department to meet its commitment to reporting these in this report. The Department’s progress towards its objectives and indicators is reported under Progress towards Objectives and Indicators on page 6. For each output, there are a range of performance measures. The Department’s performance against its output performance measures is reported under Performance against Output Performance Measures on page 12. Table —Departmental objectives, indicators and linked outputs Objectives Indicators Outputs Achievement Raise standards of learning and development achieved by Victorians using education, development and child health services Children developmentally ‘on track’ on the Australian Early Development Index language and cognitive skills domains Students meeting the expected standard in national and international literacy and numeracy assessments VET course completions Year 12 or equivalent completion rates of young people Strategy, Review and Regulation Early Childhood Development School Education—Primary School Education—Secondary Support Services Delivery Support for Students with Disabilities Higher Education and Skills Engagement Increase the number of Victorians actively participating in education, development and child health services Participation in a kindergarten service in the year before school Participation in Maternal and Child Health Services Students with acceptable levels of school attendance Students with a positive opinion of their teachers providing a stimulating learning environment VET enrolments by age and gender VET enrolments by administrative regions Strategy, Review and Regulation Early Childhood Development School Education—Primary School Education—Secondary Support Services Delivery Support for Students with Disabilities Higher Education and Skills Wellbeing Increase the contribution education, development and child health services make to good health and quality of life of Victorians, particularly children and young people Children developmentally ‘on track’ on the Australian Early Development Index social competence and emotional maturity domains Students feeling connected to their school Students with a positive opinion about their school providing a safe and orderly environment for learning Level of student satisfaction with VET Strategy, Review and Regulation Early Childhood Development School Education—Primary School Education—Secondary Support Services Delivery Support for Students with Disabilities Higher Education and Skills Productivity Increase the economic and social return on expenditure on the Department’s services Enrolments by skills shortage category courses Enrolments by specialised category courses Strategy, Review and Regulation Early Childhood Development School Education—Primary School Education—Secondary Support Services Delivery Support for Students with Disabilities Higher Education and Skills
Performance against output performance measures This section reports on the Department’s performance against the performance measures for each of its outputs. One of the Department’s outputs is Strategy, Review and Regulation, three represent life stages: Early Childhood Development, School Education and Higher Education and Skills, and two support services: Support Services Development, and Support for Students with Disabilities. These output measures refer to a financial year unless otherwise indicated. Strategy, Review and Regulation The Strategy, Review and Regulation output group develops, plans and monitors strategic policy settings across all stages of learning. It also includes intergovernmental negotiations as well as research, data and performance evaluations. This output group also supports regulation that ensures quality education and training is delivered and contributes to all the Department’s objectives of Achievement, Engagement, Wellbeing and Productivity. Performance measures Unit of measure 2013–14 Target 2013–14 Actual Quality Stakeholder satisfaction with the Victorian Registration and Qualifications Authority and its services per cent 60 73 This performance measure relates to the 2013 calendar year. The 2013–14 Actual is higher than the 2013–14 Target due to the success of Victorian Registration and Qualifications Authority business improvement initiatives. Quantity Participants benefiting from initiatives to increase the supply of trained/qualified teachers number 640 652 Cost Total output cost $ million 99.9 88.4 The 2013–14 Actual is lower than the 2013–14 Target primarily due to the delay of various projects. Early Childhood Development The Early Childhood Development output group provides funding for a range of services that support children in the early years, including kindergarten and children’s services, maternal and child health, and early intervention services for children with a disability. These outputs make a significant contribution to the Government’s key outcomes in early childhood services. This group and its outputs contribute towards providing and improving services to support all the Department’s objectives of Achievement, Engagement, Wellbeing and Productivity. Performance measures Unit of measure 2013–14 Target 2013–14 Actual Quality Families who are satisfied with the Early Childhood Intervention Services provided per cent 90 90 The 2013–14 Actual was not available at the time of publication so the figure given is the Expected Outcome published in 2014–15 State Budget Paper No.3 Service Delivery. Funded kindergarten services assessed under the National Quality Framework that have a quality assurance process per cent 100 100 This performance measure relates to the 2013 calendar year.
AASB 127 Separate Financial Statements This revised Standard prescribes the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. 1 January 2014 (not-for-profit entities) Current assessment indicates that there is limited impact on Victorian Public Sector entities. Ongoing work is being done to monitor and assess the impact of this standard. AASB 128 Investments in Associates and Joint Ventures This revised Standard sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. 1 January 2014 (not-for-profit entities) Current assessment indicates that there is limited impact on Victorian Public Sector entities. Ongoing work is being done to monitor and assess the impact of this standard. AASB 1055 Budgetary Reporting AASB 1055 extends the scope of budgetary reporting that is currently applicable for the whole of government and general government sector to not-for-profit entities within the general government sector, provided that these entities present separate budget to the parliament. 1 July 2014 This Standard is not applicable as no budget disclosure is required. AASB 1056 Superannuation Entities AASB 1056 replaces AAS 25 Financial Reporting by Superannuation Plans. The standard was developed in light of changes in recent years, developments in the superannuation industry and Australia’s adoption of IFRS. 1 July 2016 The standard was issued in June 2014. While preliminary assessment has not identified any material impact arising from AASB 1056, further work to assess the impact of this standard will be undertaken. In addition to the new standards above, the AASB has issued a list of amending standards that are not effective for the 2013–14 reporting period (as listed below). In general, these amending standards include editorial and references changes that are expected to have insignificant impacts on public sector reporting. The AASB Interpretation in the list below is also not effective for the 2013–14 reporting period and is considered to have insignificant impacts on public sector reporting. AASB 2010‒7 Amendments to Australian Accounting Standards Arising from AASB 9 (December 2010) AASB 2011‒7 Amendments to Australian Accounting Standards Arising from the Consolidation and Joint Arrangements Standards 2013‒1 Amendments to AASB 1049 Relocation of Budgetary Reporting Requirements
Summary of compliance with special appropriations Authority Purpose Appropriations applied Controlled 2014 2013 $m $m Section 5.6.8 of the Education and Training Reform Act Volunteers workers compensation 0.2 0.2 Section 10 of the Financial Management Act National Partnership Joint Group Training Program ‒ 3.2 Section 10 of the Financial Management Act Industry and Indigenous Skills Centre Program ‒ 0.7 Section 10 of the Financial Management Act Investing in Focus Schools Projects Government Schools ‒ 2.2 Section 10 of the Financial Management Act Investing in Focus Schools Projects Non-Government Schools ‒ 0.2 Total 0.2 6.5 Cash and deposits/other financial assets 2014 2013 $m $m Amounts held by schools 471.5 487.0 Bank accounts held in trust 142.7 106.6 Other bank accounts 8.1 0.0 Total cash and deposits 622.3 593.5 Cash at bank Due to the State of Victoria’s investment policy and government funding arrangements, the Department generally does not hold a large cash reserve in its bank accounts. The Departmental operating bank accounts hold funds on behalf of trusts. Cash received by the Department from the generation of income is generally paid into the State’s bank account, known as the Public Account. Similarly, any Departmental expenditure, including those payments for goods and services to its suppliers and creditors, are made via the Public Account. The process is such that, the Public Account would remit to the Department the cash required to cover its transactions. This remittance by the Public Account occurs upon the electronic transfer of funds and the presentation of the cheques by the Department’s suppliers or creditors. Other financial assets Amounts held by schools at the end of the financial year disclosed as ‘Cash and deposits’ include bank accounts and short term deposits with a maturity of less than three months. Amounts held by schools with a maturity of three months or more are disclosed as ‘Other financial assets’ and at balance date total $210.2 million (2013: $174.1 million).
Intangible assets Note 2014 2013 $m $m Software Opening balance 89.5 93.3 Additions 3.5 32.4 Disposals (0.5) ‒ Impairment ‒ (36.1) Closing balance 92.6 89.5 Accumulated amortisation Opening balance (45.9) (31.2) Amortisation expense 4(e) (18.2) (25.4) Disposals 0.4 ‒ Impairment1 ‒ 10.7 Closing balance (63.8) (45.9) Net book value at end of financial year 28.8 43.6
Reconciliations Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the financial year are set out below: Land Buildings Plant and equipment Work in progress Total $m $m $m $m $m 2014 Opening balance 7,148.8 6,629.7 147.3 260.7 14,186.4 Additions 22.7 1.3 38.5 323.1 385.6 Transfer to other Victorian government departments (8.3) ‒ ‒ ‒ (8.3) Assets previously not recognised (9.8) 14.3 ‒ ‒ 4.6 Transfers to completed assets ‒ 154.0 11.0 (168.1) (3.0) Disposals (48.2) (50.7) (1.2) (100.1) Revaluation increments/(decrements) 8.6 559.3 ‒ ‒ 567.9 Transfer (to)/from assets held for sale (30.2) (25.6) 0.1 ‒ (55.7) Depreciation ‒ (216.8) (62.8) ‒ (279.6) Closing balance 7,083.5 7,065.6 132.9 415.7 14,697.7 2013 Opening balance 6,527.4 6,382.6 159.1 578.0 13,647.2 Additions 24.5 ‒ 35.3 322.3 382.1 Impairment adjustment ‒ ‒ (2.4) ‒ (2.4) Transfers to completed assets ‒ 587.2 23.4 (639.6) (29.0) Disposals (23.1) (46.5) (1.9) ‒ (71.5) Revaluation increments/(decrements) 608.9 (152.9) ‒ ‒ 456.0 Transfer (to)/from assets held for sale 11.0 52.7 0.1 ‒ 63.8 Depreciation ‒ (193.5) (66.4) ‒ (259.8) Closing balance 7,148.8 6,629.7 147.3 260.7 14,186.4
Table 8 provides the fair value measurement hierarchy of the Department’s Property, plant and equipment. Table —Fair value measurement hierarchy for assets as at 30 June 2014 ($m) Carrying amount as at Fair value measurement at end of reporting period using: 30 June 2014 Level 1 $m Level 2 $m Level 3 $m Land at fair value Specialised land 7,083.5 ‒ ‒ 7,083.5 Total of land at fair value 7,083.5 ‒ ‒ 7,083.5 Buildings at fair value Specialised buildings 6,882.5 ‒ ‒ 6,882.5 Total of buildings at fair value 6,882.5 ‒ ‒ 6,882.5 Plant and equipment at fair value Plant and equipment 121.1 ‒ ‒ 121.1 Total of plant and equipment at fair value 121.1 ‒ ‒ 121.1 Table —Reconciliation of Level 3 fair value 2014 Specialised land Specialised buildings Plant and equipment ($m) ($m) ($m) Opening balance 7,148.8 6,431.4 135.5 Purchases (sales) (33.8) (50.7) 33.9 Assets previously not recognised (9.8) 14.3 ‒ Transfers to completed assets ‒ 154.0 11.0 Transfer (to)/from assets held for sale (30.2) (25.6) 0.1 Depreciations ‒ (213.3) (59.4) Subtotal 7,074.9 6,310.3 121.1 Revaluation 8.6 572.2 ‒ Subtotal 8.6 572.2 ‒ Closing balance 7,083.5 6,882.5 121.1
Table —Description of significant unobservable inputs to Level 3 valuations 2014 Valuation technique Significant unobservable inputs Range Sensitivity of fair value measurement to changes in significant unobservable inputs Specialised land Market approach Community service obligation 20–50 per cent A significant increase or decrease in the community service obligation adjustment would result in a significantly lower (higher) fair value. Specialised buildings Depreciated Replacement Cost Direct cost per square metre A significant increase or decrease in direct cost per square metre adjustment would result in a significantly higher or lower fair value. Useful life of specialised buildings 40–60 years A significant increase or decrease in the estimated useful life of the asset would result in a significantly higher or lower valuation. Enrolment data Not applicable A significant increase or decrease in the forecast student enrolment data would result in a significantly higher or lower valuation when determining economic obsolescence. Plant and equipment Depreciated Replacement Cost Cost per unit per unit A significant increase or decrease in cost per unit would result in a significantly higher or lower fair value. Useful life of Plant and Equipment 3–10 years A significant increase or decrease in the estimated useful life of the asset would result in a significantly higher or lower valuation.