A high school under investigation by the Ministry of Education for illegal fee-charging has been criticised for being allowed to operate under its own set of rules.
Early last year former private school Wanganui Collegiate was integrated, after a falling roll and increasing debt meant it would fold without a government bail-out.
In 2012 the prestigious decile 10 school was running an expected loss of $800,000 and subject to government providing funding, a Crown Monitor was appointed to oversee its finances until integration went ahead in January last year.
When Wanganui Collegiate applied for integration it said it would likely close without financial support from the Crown, Ministry of Education acting head of sector enablement Marilyn Scott said. "The proprietor acknowledged capital assets were held but not liquid assets that could be used to pay the operational expenses of the school."
According to Wanganui Collegiate's annual report for the year ending March 31, 2013, the college had more than $3 million in freehold land and, in addition, the college grounds were valued at $1.7m.
The school's foundation owns three commercial properties in Wanganui, two of which have rateable values of just under $1m, while the third property, a car park on the corner of Victoria Ave and Glasgow St had a rateable value of $4.75m.
The Post-Primary Teachers Association has long claimed the integration system gives an advantage to integrated schools at a cost to the taxpayer.
PPTA president Angela Roberts said no state school would be able to clock up an $800,000 debt and not have a limited statutory manager enforced on them.
She said there were schools with only a couple of thousand dollars of debt that had been hit with government intervention.
"From the state school's perspective, when they get into difficulty they don't get a government bailout, they get a bill for a limited statutory manager to sort it out.
"Wanganui Collegiate is on a different playing field," she said.
The ministry says state-integrated schools could be subject to interventions.
"The ministry takes decisions to intervene in schools based on a range of factors. The level of debt a school carries is rarely the sole trigger for an intervention in a state school," Ms Scott said.
Traditionally private schools operated under a business model of supply and demand but when Wanganui Collegiate was integrated the demand for it didn't exist, Ms Roberts said.
As of March 2012, there were 1407 unfilled places in state schools in the Whanganui region, with one - Wanganui Girls' College - operating at less than 50 per cent capacity.
Documents show officials warned that co-ed Wanganui Collegiate would draw students from already under-used schools, as well as from others around the North Island.
In October 2012 Education Minister Hekia Parata recommended to the Cabinet that ministers reject the integration move and take no further action. However, a second paper two days later shows her recommendation was overruled.
Labour education spokesman Chris Hipkins said when a private school asks for a government bail-out but is sitting on property not needed for educational purposes then it should be expected that it would be sold.
Wanganui Collegiate principal Chris Moller could not be contacted for comment.
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