We take a holistic view of an institution’s performance, using both quantitative and qualitative information. We assess financial risk using a financial monitoring framework alongside other financial information and analysis. We use all other available information available to us to assess the TEI against our performance expectations, and consider any other factors that may impact its long-term viability. We then decide on a final overall risk rating.

Financial monitoring framework

We use the financial monitoring framework (FMF) to monitor TEIs' financial performance. The FMF is a technical tool that ensures a consistent and transparent approach to assessing each institution’s financial performance. It provides formulaic risk calculations for profitability, liquidity and debt affordability. A low, medium or high risk rating is calculated for each dimension.

A full description of the FMF, including the measures, assessment calculations and weightings, can be found in Appendix 1 of Risk assessment process for tertiary education institutions.

Collection of financial information

We receive financial information from TEIs at least three times per year:

• February – the first submission includes the unaudited financial results for the prior financial year, plus the budget for the current year and two out-year forecasts.
• May – the second submission includes the now audited prior year results (which we collate and publish – see Financial performance) and updated current year and out-year reforecasts.
• September – the third submission includes a reforecast for the current year and any adjustments to out-year reforecasts.

Where a TEI has an elevated risk rating, we may require additional reporting to ensure we are aware of and maintain appropriate visibility of key issues. The appropriate level of monitoring for each TEI is ultimately a judgement call by the TEC. We will engage with you on the best information source to meet our needs. This could include:

• targeted reporting on a specific issue
• more frequent reporting, or
• providing us with copies of Council or Council sub-committee meeting records. 

TEC’s performance expectation

The Education and Training Act 2020 provides universities with the autonomy and independence to make academic, operational and management decisions. TEIs and their governing Councils are accountable for their own performance, operation and long-term viability. However, for the TEC to monitor any risks to a TEI’s long-term viability, we need to consider operational, educational, management and governance risks alongside financial performance.

For a full description of the TEC’s performance expectations and the risk assessment process that sits alongside the FMF, see:

Risk assessment process for tertiary education institutions (PDF 398 KB)

For more information please email teifm.info@tec.govt.nz.