Destiny School 'technically insolvent' after $240,000 loss last year

New Zealand Stuff, Fairfax Media/July 26, 2015

By Libby Wilson

Destiny School has almost 200 students and is at the church's Druces Rd complex.

Destiny School has been warned it is 'technically insolvent' after it made a $240,000 loss in the past year.

The private school situated at Bishop Brian and Hannah Tamaki's City of God in south Auckland saw its costs rise by a third last year to $1.2m, leaving a major budget shortfall.

The school failed in its attempts to become a charter school or integrate to the state school system, and has been told it faces "potential uncertainty" by auditors JSA Audit. It is being propped up by donations from another Destiny charity Te Hahi o Nga Matamua Holdings, which loaned the school $142,022 by 2014.

Te Hahi lists Hannah Tamaki as a director, and is overdue in filing an annual return.

But it will keep giving financial support to the school "as it is able", according the to school's annual report.

In a statement, Destiny Church spokeswoman Anne Williamson said they were reliant on fee paying students, Government funding and donations.

"Unfortunately the funding we receive from the Government is minimal and does not reflect the true cost of educating a student in the New Zealand," she said.

"Our 2014 financials reflect that, as a school, we are doing all we can to deliver a model of quality education with limited financial resources."

Massey University history professor Peter Lineham spoke to Destiny School board and staff members for his 2013 book Destiny, and wasn't surprised at the school's situation.

He said the increasing costs could be related to the school's recent move to include secondary school students.

"They're prepared to put a lot of money into education because they do have a very, very strong sense of they're building for the future," he said.

"[Destiny] were quite committed to developing a good Maori, private school but I could see what a desperately uphill struggle it was because the level of fees that they could manage to get out of parents was a lot lower than the average school that's doing Cambridge (International Exams)."

Destiny School trustees have started work to fix the finances, including upping fundraising, reducing operating costs and tightening the policy on managing fees, the annual report said.

It has previously tried to move towards state funding through applications for both charter school and integrated status - which were unsuccessful.

"This is particularly perplexing as those applications have been viewed as meeting standards required and highly commendable," the school's statement said.

"It has been said that we are too successful and don't warrant extra funding."

Audit director at RSM Hayes Audit Craig Fisher said he felt sorry for the school as it was in a "dire financial situation".

"Quite simply, it spends more than it earns so that's not sustainable."

It also had negative equity - owing more than its worth - and negative working capital.

"Profit is like food, cashflow is like oxygen. You can go without food for a little while, you can't go without oxygen for that long. That means this organisation is totally reliant on its related party lending."

Because Destiny School was private it didn't have to report on its financial management to the Ministry of Education, head of sector enablement and support Katrina Casey said.

"Our advice in this instance, is that the school should engage with a chartered accountant to develop a plan that addresses concerns raised over financial management," Casey said.

Destiny School was reviewed by the Education Review Office in October 2013 and found to meet the criteria for registration.

Education and Destiny

Destiny Church Auckland was founded in July 1998 by Pastor Brian and his wife, Pastor Hannah, as City Church Auckland.

It opened a bilingual early childhood centre in Mt Wellington around October 2001.

The following year, it opened a school.

A bid to move the school from private to state-integrated, with more government funding, was knocked back in 2009.

The school later moved to the "City of God" Druces Rd facility.

An application to become a charter or partnership school was declined mid-2013.

Ministry of Education concerns included the expectation that students attend church and the view that individual identity as God's child was more important than cultural identity.

The school again applied to become state-integrated but was turned down in March 2015.

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