Seven Otago and Southland schools are among 19 nationwide which have been deemed "in financial difficulty", following audits by the Office of the Auditor-general.
Bathgate Park School, Big Rock Primary School, Garston School, Goldfields School, Halfway Bush School, Kaikorai Valley College and Kavanagh College (now Trinity Catholic College) are among the 19 schools that received letters from the Ministry of Education saying they were being treated as "going concerns", based on their 2021 financial statements.
It means the schools have enough resources to operate for at least the next 12 months from the date of the audit report.
Auditor-general John Ryan said overall, there had been a slight increase in the number of schools in financial difficulty in 2021, compared with the previous year.
In 2020, 17 schools received "going concern" letters from the ministry.
However, it was still a reduction from previous years when the number of letters of support issued were about 40.
One indicator of financial difficulty is when a school has a "working capital deficit".
This means, at that point in time, the school needed to pay out more funds in the next 12 months than it had immediately available.
Although a school was expected to receive further funding in that period, it might find it difficult to pay bills as they fall due, depending on the timing of that funding.
Another indicator is if a school goes into overdraft or has low levels of available cash.
When Mr Ryan’s office considers the seriousness of the financial difficulty a school is in, it usually looks at the size of its working capital deficit against its operations grant.
Although many schools received additional revenue, it was often through donations, fundraising or other locally sourced revenue.
Therefore, it was variable from year-to-year. For most schools, the operations grant was their only consistent source of income.
Big Rock Primary School principal David Grant said its financial difficulty stemmed from 2019, when about 50% of the Brighton school’s staff had to take time off work for a range of long-term illnesses.
"It hammered our staffing bill."
However, in subsequent years, the school had been working on the issue and he believed the 2022 audit would show the school was back to normal financial operation.
Mr Grant said it was interesting to see five of the 19 schools given "going concern" letters were from Dunedin.
"Maybe we spent too much money on children’s learning and not leaving enough in the bank," he said.
Kaikorai Valley College principal Rick Geerlofs said his school was on the list because it did not receive the income it was expecting in 2021.
"We are in a very good financial position, but clearly the report was written at a time when the international market was not so strong," he said.
Like most secondary schools, his relied on fee-paying international pupils to boost its funding.
When Covid-19 restrictions hit, the flow of international pupils stopped.
"Our international market is returning very nicely at the moment, so everything is good again.
"Our 2022 accounts show quite a reasonable surplus."
Mr Ryan said the 2021 auditing of schools was supposed to be complete by May 31 last year.
However, a global shortage of auditors and the Covid Omicron outbreak early last year affected the office’s ability to complete audits on time.