Monday 25 February 1991

Annual Report, Provincial Auditor, 1990

Ministry of Education



Chair: Callahan, Robert V. (Brampton South L)

Vice-Chair: Poole, Dianne (Eglinton L)

Bradley, James J. (St. Catharines L)

Charlton, Brian A. (Hamilton Mountain NDP)

Conway, Sean G. (Renfrew North L)

Cooper, Mike (Kitchener-Wilmot NDP)

Cousens, W. Donald (Markham PC)

Hayes, Pat (Essex-Kent NDP)

Johnson, Paul R. (Prince Edward-Lennox-South Hastings NDP)

MacKinnon, Ellen (Lambton NDP)

O'Connor, Larry (Durham-York NDP)

Tilson, David (Dufferin-Peel PC)


Jackson, Cameron (Burlington South PC) for Mr Tilson

Miclash, Frank (Kenora L) for Mr Conway

Ruprecht, Tony (Parkdale L) for Ms Poole

Also taking part: Cooper, Mike (Kitchener-Wilmot NDP)

Clerk pro tem: Carrozza, Franco

Staff: McLellan, Ray, Research Officer, Legislative Research Service

The committee met at 1418 in committee room 1.


The Chair: First of all, let me apologize for keeping you in the hall as long as you were there. There were certain matters that had to be discussed by the committee in camera, but we welcome you here, and I understand there is a statement which is being passed out by the clerk. Everybody has it now.


Ms Palozzi: Good afternoon. This is Ray Chénier, acting assistant deputy minister, learning services division, and Mark Larratt-Smith, assistant deputy minister, corporate planning and policy division. We are here today on behalf of the deputy minister to present the Ministry of Education's response to the report of the Provincial Auditor.

I would like to say at the beginning how pleased we are in the ministry that the Provincial Auditor chose to audit the ministry's financial relationship with the school boards of Ontario and, for the first time, to audit specific school boards.

We appreciate this opportunity to outline for you the policies and procedures of the Ministry of Education regarding the funding of Ontario's local school boards. Our focus today will be on accountability. As you are aware, the Provincial Auditor highlighted this aspect of our transfer payment program in his 1990 annual report.

I will begin by providing some background to educational funding and accountability levels along with an overview of the ministry and how it interacts with local school boards. Mark Larratt-Smith, assistant deputy of corporate planning and policy, will then outline the steps we are taking to improve our program and financial accountability. Ray Chénier, acting assistant deputy of learning services, will cover our ministry's financial verification process, including recent improvements we have implemented and the role of the regional offices in this process. I will then sum up and, together with my two colleagues, be pleased to answer any questions you may have.

As you will recall, the objectives of the audits were: first, to assess policies and procedures established by our ministry to ensure accountability of school boards for the grant money provided to them; and second, to assess those policies and procedures established by the school boards themselves to ensure accountability.

The report has provided a direction to ensure that public funds are spent in a fair and effective manner and that the citizens of Ontario receive value for the moneys raised for education.

I think it is important, however, to remember that the overall objective of the audits was to assess our ministry's planned accountability framework for the financial management of educational funds, a framework based on the ministry's transfer payment accountability report of March 1989.

This is what the auditor had to say about this accountability plan: "The ministry report is a sound plan for strengthening the accountability relationship with school boards. Most of the comments and recommendations which follow are aimed at further strengthening the framework of controls identified in the ministry's report."

We view this appearance today and your committee's deliberations over the next few days as additional assistance in our continuing program to further improve the accountability for public funds for education.

Changes in our system of approving and monitoring school board grants have been under way for some time, particularly following Management Board's directive on transfer payment accountability in May 1988 and the subsequent accountability framework developed by our ministry.

As you know, the Ministry of Education, under the Education Act, is charged with the responsibility for education at the elementary and secondary school levels throughout the province. Local school boards have the responsibility to deliver services, that is, to provide the teachers and the structures in which learning takes place and to reflect the educational needs of their communities.

For school trustees, accountability for the spending of public funds has two distinct faces: they must be accountable to the Ontario government for the transfer payments from provincial coffers, and they must, at the same time, be accountable to their local taxpayers and voters for the funds generated by the municipality's tax base.

In his book, The Administrative Structure, W.G. Fleming say that during the 1850s, the province began to use grants "as a device to pressure local communities into adopting desirable practices and to extend educational services."

He goes on to say that Egerton Ryerson saw grants "as a means of establishing provincial control so that the community's right to provide for education or not, as it saw fit, could be effectively challenged." Fortunately, the days when providing education was optional have long gone, but a healthy tension between the local community and the province remains. In fact, I believe this tension to be a necessary ingredient because it prevents the system from becoming stagnant. This interaction between province and local authority helps create the conditions for change and innovation.

In many areas of the system, we have reached a flexible solution to different funding problems, and I expect accommodations will continue to be made and remade as our education system responds to the changing face of Ontario society.

For example, the amount of the ministry's contribution varies widely from municipality to municipality, depending on the ability of the local tax base to support educational services for its children. On average, though, ministry transfer payments account for about 40% of the total operating cost of primary and secondary education in Ontario. This represents a total of $4,879,000,000 for the 1991-92 fiscal year.

From a provincial perspective, our primary and secondary educational system is a large and complex one. In total, Ontario maintains more than 5,000 elementary, secondary and specialized schools staffed by about 116,000 teachers with a total enrolment of some 1.8 million students. The model we use to fund the system is also a complex one, and studies have been under way for some time to find ways to improve and simplify it. Mark Larratt-Smith will speak to this issue later.

To help us carry out our mandate of providing education for Ontario's children, our ministry is organized into five divisions. The first two I will mention briefly. They are the French-language education division, whose primary aim is to ensure quality and equivalent French-language education, and the learning programs division. This division is responsible for curriculum development and its review, literacy programs, teacher education, and for directly managing the provincial schools for children who are blind or deaf and the demonstration schools.

The other three divisions have responsibilities that are more pertinent to your concerns today.

Corporate planning and policy division looks after coordinating the ministry's planning and policy development. It also includes the school business and finance branch, which is responsible for education funding policy and the administration of the transfer payment programs to Ontario's school boards.

The finance and administration division looks after administration of the ministry's human and financial resources and includes the internal audit branch, which last year carried out the audit of all six ministry regional offices and the school business and finance branch at head office.

Finally, learning services is the division responsible for delivering ministry programs and policies to school boards and supervising their implementation. It includes the ministry's six regional offices, whose staffs have key responsibilities in dealing directly with individual school boards on financial and program matters.

The regional offices are the main point of contact between the ministry and individual school boards. All three of these latter divisions are represented here by Mark Larratt-Smith, Ray Chénier and myself as the ADM for finance and administration.

As I mentioned at the beginning of my remarks, we will be focusing our attention on accountability.

General legislative grants to school boards can be placed in three categories according to their level of accountability.

In the first category are block equalization grants, which are unconditional in nature. They consist of two types -- the basic per-pupil grant and the board-specific grants. Both are designed to enable a board to provide the basic level of service. The amount of money a board receives under the basic per-pupil grant depends on the number of pupils on its rolls and the relative wealth of its local tax base. Board-specific grants recognize that the cost of providing a basic level of education varies with differing geographic, demographic and socioeconomic conditions across the province.

The actual grant the board receives from the province is the difference between the recognized required level of funding based on the number of pupils and the amount a school board can raise from its local taxation base. In the case of Metro Toronto, which has the province's richest tax base, the Metro school boards are able to raise virtually all their requirements from property taxes. The result is that Metro receives no provincial funds for core services. While these core grants are largely unconditional, the ministry is implementing a number of measures such as expanded enrolment audits and analysis of how school boards set their priorities. There are difficulties involved in increasing the level of accountability for this type of grant.

The second level of accountability pertains to grants provided for specific purposes. Reduction in grade 1 and 2 class size to an average of 20 pupils and heritage language instruction are examples. Here a board must demonstrate that the purpose for which the money was paid has indeed been achieved. These grants permit some flexibility on the part of the board while ensuring that the ministry's goals are met. And third are the transfer payments, which require both the income and the expenditures to achieve that outcome to be accounted for. Examples are grants for equipment, software purchases, special-education consultants, etc. For these types of expenditures, unused moneys may be returned to the ministry or the cash flow may be linked to achievement of results.

With this as background, I would now like to turn the floor over to Mark Larratt-Smith to outline the changes we are implementing to improve accountability.

Mr Larratt-Smith: Ladies and gentlemen, education in Ontario at the primary and secondary school levels is today a $13-billion enterprise. The province contributes 45% of this cost, which is about $6 billion, and that includes operating and capital grants and contributions to the teachers' pension fund. The remainder comes from municipal taxes.

Two principles underlie the granting of provincial funds to school boards: (1) all school boards in Ontario must have equitable financial resources to provide a base level of education programs and services; (2) all boards must make the same tax effort to raise the local share of the costs of providing this base level of education.

Since municipalities have varying tax bases and therefore varying abilities to fund education, the general legislative grants are designed to overcome these inequities so that every child in Ontario has an equal access to quality education.

Dina Palozzi has briefly outlined the various types of grants and the three levels of accountability they imply. However, the actual funding model we use to determine provincial payments to school boards provides us with another perspective on general legislative grants. A description of this model is set out in a document that will be distributed to you at the end of this presentation.

For 1991, the government has made a number of changes to the funding model to make it more understandable to all stakeholders. These include changes to the funding of transportation to ensure greater economy and efficiency and to make trustees more accountable for transportation decisions taken by the local board. Details of the changes will be announced at the same time as the 1991 general legislative grants are released.

In addition, we have set up an education expenditure analysis section in the school business and finance branch to provide comparative and sectoral analyses of school board expenditures. This will give us a better understanding of patterns and trends in various spending areas and the corresponding funding provided by the province. It will also allow us to identify apparent anomalies.

We are also creating a more comprehensive financial database, which will allow a better measure of accountability for transfer payments. This will enable us to better analyse the cost-effectiveness of transfer payments and help us improve our funding policies.

The results will be helpful in developing value-for-money measurements in areas such as transportation.

The new database will also contain specific data on school facilities, which will improve our ability to identify the utilization of such facilities. We recognize the valuable contribution the school board sector can make in this area, too. For example, the select committee on education and the Ontario Public School Boards' Association have recently proposed joint ministry-board efforts to determine the components and costs of a basic level of education. In fact, the association has offered to work with us to develop more accurate data on school board expenditures and we have begun discussions with boards on how this might be done.


Similarly, when local boards make decisions to increase expenditures, it should be clear that the responsibility for the expenditure rests with the local board. It should also be clear that delivery of services is the responsibility of the locally elected school trustees.

One way of holding trustees more accountable to local taxpayers would be to require that local tax bills identify which portion of the education taxes are for provincially recognized expenditures and which are related to the decisions of local trustees.

The ministry's intent to implement a new funding model has been announced by our minister. It is intended to review the education funding system over a two- to three-year period, only after consultation with the education community. This review will take place in conjunction with the work of the Fair Tax Commission. We see such changes as strengthening the accountability relationship in education financing.

I will now ask Ray Chénier to outline the role of the regional offices and to cover some of the changes that are taking place as a result of the auditor's report.

Mr Chénier: The Ministry of Education maintains six regional offices: in Metro Toronto, Sudbury, North Bay, Thunder Bay, London and Ottawa.

Aujourd'hui, si vous me permettez, je vais m'attarder sur l'un des rôles du bureau régional, soit celui qui consiste à qualifier les politiques, puis à mesurer et signaler le degré auquel les conseils scolaires se conforment aux politiques et programmes du ministère. En fait, les bureaux régionaux représentent le point de contact entre le ministère et les conseils scolaires. Ainsi, les conseils doivent soumettre leurs états financiers annuels à vérifier au bureau régional dont ils relèvent. Ils doivent également lui rendre des comptes sur divers aspects des effectifs.

The regional office carries out selected audits to verify enrolment claims and transportation costs. When discrepancies are found, an adjustment is made in the current year's grant. This settlement of a grant remains open. For example, if grant ineligibility comes to light several years later, an adjustment is made in the grant for the year the error was discovered.

It is also the responsibility of the regional office to assess the capital project proposals submitted by the boards in its area.

Turning now to the auditor's report on the ministry, the report made comments or recommendations covering 27 items. Of these, the report found six to be adequate, effective or satisfactory and therefore no further action on our part was required.

I want to assure this committee that work is under way or, in some cases, completed on each and every one of the 21 items that the auditor identified as requiring improvements. These improvements reflect our ministry's move away from simply a financial audit towards a strengthened accountability, focusing on value for the money transferred from the provincial Treasury to the school board.

I will briefly provide you with a status report on each item and, as Dina Palozzi has already indicated, we will be happy to provide any additional details you might require.

A memo is currently being sent to the directors of all school boards outlining some of the key areas of the ministry's response to the auditor's report. I would like to share the contents of that memo with you now, since it deals with five of the issues raised in the report.

First, on the need to clarify the role of the board's external auditor, particularly as it concerns enrolment audits, I said in the memo to the directors of school boards that our ministry will consider introducing procedures for auditing enrolments that are similar to those in effect at universities and colleges; that is, that the external auditor provides an opinion as to the accuracy of the reported enrolments directly to the deputy minister. The ministry would provide the boards and external auditor with specific instructions along with background information and any specific concerns the ministry may have. By more clearly defining the role of the external auditors, we would help eliminate misunderstandings and possible duplication of effort.

Second, the lack of tendering for transportation services by many boards: I said that our ministry supports the auditor's statement that tendering can be a viable alternative, provided that service and safety requirements are met. In areas where lack of competing services makes tendering impractical, boards should compare proposed costs to those of boards that were able to tender for similar types of routes. The ministry will, in the future, include an examination of the tendering process and/or the feasibility of tendering in its transportation audits.

Third, on the issue of the board's perceived need for greater clarity in the trustees' powers, I said we would work with the trustees' associations through training and orientation programs and if necessary recommend amendments to the Education Act that would clarify the roles, responsibilities and powers of the boards and the ministry.

Fourth, the auditor recommended that more sharing of board resources be explored, and I would like to take a second here, ladies and gentlemen, to explain to you a project that has just been under way -- it is called the northern education project -- whose mandate is to provide services to small and isolated boards in northern Ontario. It is to see how we can find better ways to service those boards through co-operation among boards or through contracts that small boards can have with bigger boards or through the hiring of their own officers on a part-time basis. In this, the increased sharing of board resources, I promised that we as a ministry would continue to promote such sharing and that in developing board-specific and program-specific grants in the future we would take into consideration the extent to which boards can share their resources.

And fifth, I said that we will be more closely monitoring the use of conditional grants in response to the findings of the York region Catholic and the Lakehead board audits. This monitoring will include ensuring that grants for specialized areas such as portables and for equipment such as computers are being used for the purpose intended.

Let me now briefly turn to those matters raised in the auditor's report that are the direct concern of the ministry.

Nous envisageons plusieurs mesures différentes pour améliorer la coordination et le contrôle de nos bureaux régionaux, pour uniformiser les politiques de vérification et pour partager les résultats de ces vérifications. Ces mesures comprennent la tenue de réunions regroupant les divers bureaux régionaux et l'élaboration de normes provinciales visant les vérifications sur le plan des effectifs, du transport et des installations ainsi que les méthodes de vérification de comptes.

En outre, nous sommes à préparer des listes de vérification normalisées pour améliorer le processus de vérification à l'intérieur du conseil scolaire.

A computer network system to assist in checking board submissions is being developed, although because of the costs and lead time required, we do not expect it to be in operation next year. Steps to improve the sharing of audit information within and among the six regional offices included a training session, held last November for all regional office staff responsible for auditing board data. Thus the sharing of information has become an integral part of the audit procedure for regional staff.

The matter of inadequate documentation from the boards to support their ranking of projects has been addressed in the 1991 capital expenditure forecast material that was sent to the boards. This material has been sent out earlier than usual, thus helping extend the time frame for the return of proposals and for our staff to analyse them.

Le besoin d'améliorer le processus de vérification et l'analyse des états soumis par les conseils scolaires fait l'objet de réunions entre les bureaux régionaux et la direction des affaires et finances scolaires du ministère.

Sur la recommandation que tous les conseils scolaires évaluent officiellement le rendement de leurs administrateurs et administratrices au moins une fois par année: le ministère consulte actuellement les associations de conseillers et de conseillères scolaires ainsi que l'Association des agentes et agents de supervision afin de déterminer comment procéder.


The matter of the teacher negotiation process may be addressed in a review of education finance. The issue of closer monitoring of underutilized schools is being considered for incorporation into the capital allocation process. However, the difficulties involved in closing or transferring underutilized schools have been underscored recently in several areas of the province. Local citizens and students have campaigned vigorously against transferring underutilized secondary schools from one board to the other. The effects of the class size reductions in grades 1 and 2 have already been incorporated in the 1990 revision of the capital grant plan. The ministry's internal audit branch plans follow-up audits of regional offices in the next six to 12 months.

In looking at other areas, the auditor found that the control framework governing capital projects at both the ministry and school board levels was adequate and that communications between school board trustees and their administrators was effective. He also found that trustees feel that they receive adequate financial and budget information and that their boards had adequate financial control and support mechanisms in place. In short, I believe we are well on the way to answering all the concerns raised in the 1990 Provincial Auditor's report concerning implementation of our ministry's plan for a financial accountability framework.

I will ask Dina Palozzi to sum up our presentation.

Ms Palozzi: Thank you, Ray. I would like to emphasize five points:

That our ministry supports accountability as a fundamental principle for the funding of education in Ontario.

That as a ministry we believe we must continue to improve our ability to ensure that public funds are spent in a fair and effective manner and that value is received for payments made to local boards.

That we are improving our ability to make school boards more accountable for the funds we as a provincial ministry provide them for financing the cost of education.

That the dual accountability of school boards to local residents and to the province is basically a healthy situation. It can be improved further by some of the initiatives currently under way as a result of the Provincial Auditor's report.

That we have complied with or are in the process of complying with all of the recommendations made by the Provincial Auditor, especially in regard to monitoring and co-ordinating work of our regional offices.

That completes our formal part of the presentation. Thank you for your kind attention to the remarks this afternoon and we are happy to answer any questions.

The Chair: We were not aware when the brief was presented, since it was not presented until just before our hearings, that portions of it would be en français, and although most of us make an effort to learn both of Canada's official languages, I have had requests by some members of the committee that those phrases be translated into English. It becomes very important, particularly when you are dealing with the report as a whole. Now I do not know how the committee wishes to deal with that, whether they wish to have it, perhaps, done by Mr Chénier now and it will appear in Hansard in that way. That might be the most expeditious way of doing it. Perhaps he would be kind enough to do that. Is that the wish of committee? I see heads being nodded, so perhaps we could go back, Mr Chénier, to the first item at --

Mr Chénier: Page 15, Mr Chair.

The Chair: Yes.

Mr Chénier: Today, if you permit, I shall look at the roles of the regional office; that is, the one that consists in clarifying ministry policy, and then to measure and also to signal the degree in which the boards follow the ministry, the policies and programs of the ministry. In fact, the regional offices are the contact point between the ministry and school boards. Therefore, boards must submit their financial statements, their annual financial statements, which are checked or verified by the regional office of which they are dependent. They must also respond to the ministry concerning different aspects of their -- effectifs --

Interjection: Staff.

Mr Chénier: Well, it is staff and all their belongings or -- assets; I am sorry, that is the word. Okay.

The Chair: The next, I think it is 20.

Mr Chénier: Page 20, Mr Chairman. We face many different measures to improve the co-ordination and control of our regional office in order to bring uniformity to the policies -- the verification policies or auditing policies -- and to share the results of these audits. These measures include meetings between the regions and the development of provincial norms that will bring audits at the asset level, transportation facilities level and also at the financial levels. On top of that, we are preparing audit lists, which are normalized in order to improve the process of auditing at board level.

The Chair: Okay, now we are at page 21, the third paragraph on.

Mr Chénier: In order to improve the audit process and the analysis of documents submitted by boards, there have been and there will be meetings between the regional officials and school business and finance, which is at Mowat Block.

Okay, on the recommendation that school boards evaluate their administrators or their directors of education and superintendents once a year, the ministry is presently consulting with the trustee associations and the supervisory associations in order to determine how to proceed.

The Chair: Okay, that will appear in Hansard. Thank you very much, Mr Chénier. We would ordinarily have instantaneous translation, but because we were not aware of it, it was not available.

Ms Palozzi: We apologize for any inconvenience.

The Chair: No, that is fine. I think some of us may have understood it, but it is probably better with technical language that it be translated, so whoever reads it in Hansard will be able to read it if they are unilingual. Now, I have Mr Cousens first on my list.

Mr Cousens: Mr Chairman, a couple of questions: The first has to do with page 11 when Mr Larratt-Smith begins his statement: a rather fundamental principle of the ministry that "all school boards in Ontario must have equitable financial resources to provide a base level of education." I have a feeling that is more words than practice. Certainly I see a number of separate school boards right now that are in a deficit position, the York Region Roman Catholic Separate School Board facing an $18-million deficit, and if you were to talk to them about equity between themselves and the public system, it does not exist. Practice is different from your theory. Would you not agree?

Mr Larratt-Smith: What I would say first of all is that the principles are the principles that have been there for a long time, and they have to do with the grants that relate to the under-ceiling portion, within the per-pupil ceiling expenditure portion of the grants to the ministry. As you may be aware, those go back many years and they have been incremented on the basis of inflation and wage settlements in the education sector, but they have not necessarily taken into account the full range of expenditure increases that boards have faced.

So I think it is important to clarify that these are the two principles on which the existing funding model has been based. I would not want to say that has anything to do with the equity of above-ceiling expenditures, because that of course depends very much on the tax base of the board involved, because it is 100% at the local tax cost.


Mr Cousens: Mr Chairman, I have no intention of having an argument with the honourable members from staff, who do a good job. But I just believe there is something fundamentally wrong in our system now, that in fact when you say that, it stands out to me as something that is an anomaly with what is really happening out there. We do not have an equitable system.

Certainly in my area in York region, the public and the separate are very different: one has a surplus; one has a huge deficit. And the one, especially the separate, which we will be hearing from more tomorrow, has real grievances about the failure of the province to provide an equitable funding system for them. It has to do with lot levies; it has to do with a host of areas. It has not happened and is not happening. I throw it out because, to me, it leads to the other conclusion I have: that because we do not have an equitable financial system, I think we are almost forcing these good boards to cheat. So in spite of all the things that we are going to be hearing about tomorrow, and they will have the rationalization, "And you are doing so much to do the follow up," and what the auditor has said, I am satisfied that they have to be a little bit crooked in order to make the system work, because it is so --

Mr Bradley: I would not want to see that in print.

Mr Cousens: I am saying it in public, you know. The system is so twisted that they have to walk the twisted -- Mr Chairman, I know. Can I just --

The Chair: I do not believe the word "crooked" is parliamentary.

Mr Cousens: I would not want to have that in the record, so I think --

The Chair: Shall we tell the jury to ignore that word?

Mr Cousens: Yes, please ignore that. I would not want it, because I do not --

Mr Ruprecht: Just keep the word "twisted."

Mr Cousens: Yes, there are a lot of twisted things going on. The only other thing I have -- and there are lots of others -- but, you know, when you have your five points that you have written to the boards about, first of all, I would like to have a copy of the letter if you could share it with the committee through the clerk, that you sent to the directors. Have they gone out already or are they in process?

Ms Palozzi: They are in process.

Mr Cousens: Okay. If that could become part of our data, it would be very helpful. But why did you not elaborate? When you got into tendering, one of the issues that bugs me is the failure of certain boards to have a good tendering process. When our own auditor went and did his study on the York region separate board, that was indeed one of the issues that he looked at -- I hope I am looking at the right one -- in his review of that board. It had to do with the failure of tendering procedures, not going through the purchasing department's methodology.

Why was that not mentioned in your letter as something that boards should be doing an awful lot more about? If there is anything that hurts the public perception on public institutions it is if there is a failure to fulfil a complete, honest, open tendering process for the purchase of equipment, services or whatever. So why was that not included in your letter?

Mr Chénier: We were bothered by the tendering for transportation, because, as you know, transportation is a very, very high cost and we have noticed that a number of boards were not tendering. We realized that in certain parts of Ontario it is impossible to tender, as there may be only one transportation company in the small town. But where it is possible, we would like to see tendering. In areas where tendering is possible, there will be, as I indicated, measures to check to make sure that the boards have tendered; if not, that at least they have compared with other boards -- if they cannot tender, that they will compare with other boards that can tender.

Mr Cousens: That has only to do with the transportation part of it. If you look at the auditor's conclusions and findings, he said, "Controls over purchasing were less than adequate. Specifically, many transactions did not have evidence of quotes or formal public tender," which goes beyond the transportation element and touches upon purchasing per se, and that is why I am asking you, are you satisfied? Maybe the problem has disappeared since we have looked at those two boards, but why is there not a greater emphasis in your comments or your activity to do something to make sure there is public tendering in all boards? To me, that has to be something that is demanded. The fact that it is not happening really says to me we have got a system in need of repair.

Mr Chénier: Most boards in the province have tendering policies or purchasing policies that indicate that up to a certain amount they can have oral submissions and so on. Here, what we are facing is really persons not following board policy. I think if we were to conduct audits on other board policies, which may happen in the future, we would discover that some of those are not followed. I think that would be the more general approach that I would prefer to take.

Mr Cousens: Just for the sake of the record, it is an issue I will be coming back to, Mr Chairman. I believe it is an issue that has been slighted by the ministry. I see it as something that is very urgently required across the province, and any public body that is receiving funding from this government should have and be required to follow tendering procedures, and I do not see your answer as being the kind of answer I had hoped for.

Mr Johnson: When I listened to your presentation today, I became aware that there is a necessary or forced disparity in the amount of funding that the provincial government gives to school boards, understanding that they have different tax bases, of course. I see that 40% of the total operating costs becomes 45% of the total cost when you include capital grants, and that changes the contribution from the province from $4.879 billion to $6 billion, depending on whether you include capital grants or not. Is that correct?

Ms Palozzi: And the contribution for teacher pension.

Mr Johnson: And teacher pension contributions. Okay. What I would like to know, just for my own information and I guess for the committee, is what community would receive the least and which community would receive the most. Those extremes must be well noted, I would think.

Mr Larratt-Smith: Yes. The wealthiest board is easy, it is Metro Toronto public board, which is the umbrella board for the area boards inside Metropolitan Toronto. I believe the poorest board in Ontario on our current list would be the Kirkland Lake RCSS board.

Mr Johnson: What kind of disparity is there between public and separate school board funding? Is there something evident that you can relate to us? For example, in the range of public school board funding there is an extreme range. Is that same range evident in the separate school board system?

Mr Larratt-Smith: Yes. There is a very extreme range across the whole system. By and large, coterminous public boards will have a stronger assessment base because of the nature of their access to that assessment base, and even with the coterminous pooling arrangements, than will the separate school board. But wealth is not merely a matter of public versus separate. There are some very poor public school boards, as well, in the province.

Mr Jackson: At the outset I would like to briefly comment on your presentation. I saw some elements which I felt were a bit lacking, given the context in which you are before us. We know we have had several peripheral examinations of accountability with the Ministry of Education, more notably the select education report which you briefly referenced, which was tabled January 1990, but the substantive amount of work was done in 1989 in terms of the committee's examination and several things that had come to light which were amplified and confirmed in the auditor's report.

I guess I am concerned that although you were called before us today to look specifically at the auditor's comments, there are some commonalities between the select education committee's concerns and the auditor's expressed concerns, and so if I might, let me just hit on a couple of those. The auditor has shared with us that perhaps as few as 40% of boards -- which might almost mean as few as 20% of the funding, because you know how the stats can be skewed, but whatever 40% of the boards equates in terms of the dollars spent -- have auditing committees. That is a commonality with recommendation 26 of the select education committee report and it is common to the auditor's concerns. It is through his report rather consistently. Yet Mr Chénier's letter, which was just tabled with us, makes no reference to it.

The Chair: I should add that that is only a draft, as I understand it. Is that correct?


Mr Jackson: Thank you, Mr Chairman, for that clarification. The draft is deficient in terms of any reference, either by accident or on purpose, and your collective statements this afternoon contain no reference to audit committees. So my first question really has to do with what is the resistance with audit committees at the school board level? Do you not see those as very supportive of the kinds of objectives that we are all looking for here?

Mr Chénier: I think if you were to look at the 40% of boards that have auditing committees, you would probably discover that those are fairly large boards. In Ontario, there are, I believe, 123 or 130 boards, and probably 100 of those are relatively small and are also in very small communities. It would be extremely difficult for a large number of them to implement an auditing committee because of the makeup of the population in the area. Therefore, at this point, it was not included. If we work with the external auditors of boards a little more than we have done in the past, if we give them very specific instructions on the things that they have to look for, we may be able to circumvent the problem that you are indicating.

Mr Jackson: That still does not answer my question of why there seems to be a resistance to promoting the concept of independent audit committees for school boards, and not even necessarily independent, just auditing committees that are composed of members of the public, much in the same way as dozens of committees out there that risk bringing in members of the public to be supportive to the goals of the board and the mandate of the province. It strikes me that an auditing function very much fits into that, but I am not seeing the support from the ministry.

Now, I will deal with whether or not there is support at the boards through the trustee organizations, but I am not getting a clear signal. Do you know which boards have auditing committees and which do not? Do you know if the two that we are examining have auditing committees or do not, or if they now have them as a result of the auditor's examination? I am sorry. I find your answer lacking and I apologize for persisting, but I am trying to get a sense, from a policy point of view, why we have clear recommendations and clear evidence that they are helpful, and yet I am getting a submessage that, "If we do these three things, things might get a lot better and we may not need them," without saying "We may not need them."

Ms Palozzi: I would like to comment on that. We have no intention of resisting what are, in fact, both good recommendations in terms of the normal organizational dealing with the internal audit and external audit function. I think what you are seeing is the ministry looking at those recommendations over the past number of years as you reference, the select committee report and the auditor's report, and mounting improvements in some systematic way in terms of the most critical issues. The fact that we do not have that recommendation or have not implemented it at this point does not suggest that we will not. There are a number of improvements that we will continue to look at, and within that we will be looking at various organizational functions and responsibilities that we have within the ministry. Ray spoke to the regional office roles, the school business and finance branch, the fact that we have an internal audit branch, that there are external auditors required for boards. Those are all areas that play a part in the overall accountability relationship.

Mr Jackson: Ms Palozzi, the last 17 years of my political career have been devoted to education. I have worked closely with your ministry. I understand the quantum of your efforts in accountability. I am just saying I have identified an area where I am seeing it lacking.

To quote your own reference to Egerton Ryerson, you could make his statements very, very contemporary by simply adding the word "accountability" to his statement to ensure that those children in those communities get what they are told they are supposed to get. It strikes me that internal auditing systems are a check in the system. I will not dwell on that. I am not disputing your efforts in all other areas. I just wish to bring to the committee's attention that this is an area we are not promoting, and if Ryerson were alive today, Ryerson would say the grant structure is an opportunity, like a carrot, to be dangled in front of a board for compliance, and we are not even considering that. I mean, if there was any deficiency when I recommended that, when I was on the select committee, it was that we did not say the grants should be structured as an inducement to ensure that boards get on board with internal audit committees. So it begs the question. If they will not do it based on their own energies and effort and commitment, we always have the ministry, which says: "You get extra grants and there is a grant for a further accountability, but you must have an internal auditing committee." We have seen examples of that.

I do not wish to monopolize the time, but I do have several other questions.

The Chair: Go right ahead. I do not have anybody else on the list.

Mr Jackson: Then if I can move now to a fascinating statement you make on page 14, where you talk about the hand-in-glove relationship between school boards and the ministry in terms of joint discussions, but then you move to a point, a very cleverly worded paragraph, "...when boards make decision to increase expenditures, it should be clear that the responsibility for the expenditure rests with the local board." Would you agree to the corollary, that where an expenditure is mandated by the province it should in fact be the responsibility of the province?

Mr Larratt-Smith: That has been an issue of very considerable debate over the last little while.

Mr Jackson: We have discussed this before, have we not, Mark?

Mr Larratt-Smith: Obviously, that is one of the main concerns that school boards have had over a period of time, that the amount of the provincial grant, and even the gains and the ceilings, have not been sufficient to cover all of the expenditures that they felt were being imposed upon them by provincial policy, whether in the educational field or otherwise. I suppose one can argue that different ways. There are other organizations than school boards that also have been affected by a number of these policies, very important areas of public policy, and I think it is very clear that one of the major components of the above-ceiling expenditure increase has gone for this kind of expenditure.

Mr Jackson: We do not need to revisit that, as much as I wanted to put on the record that there is a certain fairness there and recognition, because this theme will come forward if we have time to get into the functional rated capacities for our schools as it relates to utilization of school space. There is some give and take there, but if I have time, I will revisit that question.

I wanted to move from that concept on to the issue of the accountability of the Ministry of Education staff to the government of the day. In my view, it is a very strong parallel to the relationship that exists between trustees and administrators. The theme of putting the responsibility on trustees, in my view, is a partial copout, because trustees come and trustees go. I am reminded of the story of the person, the more-than-affable new minister, who says to his deputy: "Please call me Fred. I prefer to be called that." The deputy minister says, "I really must call you Minister." And he says, "Call me Fred." He says, "Well, you must understand that the only consistent way we can deal with you politicians is if I call you Minister." Of course, what is not lost in that is the fact that you have had three different administrations in six years in this province, looking at this question of accountability and implementing certain policies.

I want to raise two of them with you, because they are of concern to me. The previous administration brought in two recommendations. These were cabinet directives. This was not legislation. That was to merge the elementary and secondary funding, to roll them into one, which was done a year ago, and two years ago they rolled the special-education dollars into the general legislative grants. Now it does not take a rocket scientist to realize it is hard to impose accountability when you throw your money, in one lump sum in one cheque, down to a school board, as opposed to having it divided on a per-pupil basis by panel. You know my long-standing dislike for the discrimination between elementary funding in this province, but we will not revisit that at the moment. But I am sure the auditor, if he wanted to comment or was asked to, might suggest to you that it is helpful for school boards to track dollars if they are divided by panel, since we structure everything by panel. We have two sets of rules by panel.


Now, that was a ruling of an old government. But you are the common administrators who had to implement it based on that cabinet order. I guess I find myself in a position to ask you how comfortable you are with that. What would be an appropriate question would be to ask you how you are coping with accountabilities, which is what you are talking about to us today, when you have made those kinds of administrative moves, albeit they may not have been your recommendation but rather perhaps a decision of the political side of the equation in the last two years. Could you respond to that? Those two areas anger me and I would really like to see them reinstated for accountability purposes if for nothing else.

Mr Larratt-Smith: The merging of elementary and secondary information is really something that has not been implemented. We do not have a single ceiling. We have still a ceiling for elementary students and for secondary students. Those have been collected together in the GLG as part of an attempt to make that document a little bit more comprehensible. As you know, it is one of the most incredibly complicated documents, the regulation itself, that anybody could hope to see.

The intention in the last several years has been to try to separate the categories of grants and so to identify in category 1 grants, for example, the core per-pupil contribution on an overall basis that is made by the province. That is collected together in those category 1 grants, if you like, but the ceilings are still separate. So, for example in this past year, the ceiling has been $3,500 for an elementary student and just over $4,400 for a secondary panel. So it is possible to make that distinction as to how much money is being given against those two panels, still.

On the second question, the issue of special education, while it was included as well, there was a commitment made and maintained that the amount of money that was drawn from the special-education qualification of the board would be identified, and that continues to be identified.

Mr Jackson: Do you wish to proceed? I can yield and then you can come back to me.

The Chair: Yes, I think we will do that, Mr Jackson. I now have a few people on the list: Mr Bradley, Mr Wiseman, Mr Cousens and Mr Ruprecht, and then we will come back to you.

Mr Bradley: I would like to deal with the issue which you identify on page 22, to get some elaboration from you on that. At the top of page 22, the first paragraph says, "The matter of the teacher negotiation process may be addressed in a review of education finance.'' What did you have in mind there: province-wide negotiations, removal of the fact-finder provisions, or what?

Mr Larratt-Smith: I noted in my part of the remarks that the minister has indicated a desire to review the education finance system in a very fundamental way for some of the reasons that Mr Cousens was pointing out earlier on, and in so doing has indicated that once you do that kind of fundamental review, everything has to be available to be looked at.

Obviously, the current nature of the teacher negotiation process is very important to such a review, given that about 70% of the cost of education is in the salaries and benefits related to the teaching force. So the issue of the teacher negotiation process is obviously one of the pieces that would have to be looked at as part of such a review.

Mr Bradley: Does that include matters related to the teachers' superannuation fund?

Mr Larratt-Smith: The teachers' superannuation fund or the pension fund, as it is now called, is currently a provincial responsibility, as you know.

Mr Bradley: That is why I am asking the question. Is there some suggestion that in the negotiation process it will no longer be a provincial responsibility; it will be a shared responsibility?

Mr Larratt-Smith: There is certainly no specific suggestion of that at this point in time other than the point that the minister has made, which is that if you are going to look at a fundamental reform in the way you finance education, you have to look at all the options at once.

Mr Bradley: This is the first I can recall seeing this particular statement. I know there has been some suggestion that everything is on the table once you start talking about the financing of education, but I just noted that because, to my recollection, and I may have missed something along the way, it is the first time I saw that the teacher negotiation process may be reviewed in any significant way.

Mr Larratt-Smith: I perhaps should point out, if I might, that the reason for its inclusion here was in response to the Provincial Auditor, who had pointed out to us in the report he did that the Macdonald commission had made such a recommendation a few years ago and that had not been acted on.

Mr Bradley: A question about the closer monitoring of underutilized schools is being considered. What specific methods were you about to embark upon to more closely monitor the underutilization presumably of classrooms -- of schools, anyway, and the rooms or facilities within those schools?

Mr Chénier: At this point, Mr Chairman, I do not have any answer on how we are going to do it. It is just that we have observed that there is a very serious underutilization of schools in many parts of the province. In order to make sure that those schools are available, I would suggest that there would be a need to look at the allocation process in order to encourage boards to rationalize the use of their schools.

Mr Bradley: The next question deals with the issue of no tenders. Recognizing that the auditor has played a role in identifying some problems, what kind of monitoring does the Ministry of Education contemplate now, when we have discovered in fact that there are circumstances where tenders were not let for transportation services where indeed there may have been one or more additional people or companies who might have been interested in providing these services? That is the first part of the question.

The second part of the question is, what investigation have you undertaken to this point where we have seen no tenders? I will ask what kind of changes you are contemplating specifically, and second, what kind of investigation has gone on as to the relationship between boards of education and those who have provided transportation services to the boards without a tender.

Mr Chénier: I am not aware that there have been any investigations. It has been observed and the ministry has been working with the boards that have been audited and where this discrepancy has shown. This is something I believe I have indicated that we will be looking at much more closely in the future.

Mr Bradley: The next question I have relates to transportation as well. It is said by everyone in the world but never seems to be implemented very effectively that in fact the utilization of transportation services leaves something to be desired in areas of the province. That is, some people do not want to let children of different religious backgrounds or different boards of education on the same bus for fear that they may be contaminated in some way or other. Is there a forced or compulsory movement on the part of the Ministry of Education to compel boards, where it is practical, to share those services? I know in some areas there has been some co-operation, but there still seems to be some reluctance in some areas of the province to share the same school bus, which of course boggles the mind when we look at the cost of transportation.


Mr Larratt-Smith: Perhaps I could respond to that one. I indicated there were some changes in the transportation grants that would be announced in detail with the GLG this year, and they should provide a greater incentive towards economies where those come through sharing of school buses and school bus routes. Hopefully that will follow.

Mr Bradley: I will ask my last question, because I realize there are other people who may be interested in pursuing certain items. It relates to the closing of school for purposes of weather conditions. As a person who resided in the city of Sudbury for his first 12 years of his life, I cannot recall -- and I could be wrong; my memory may have faded in all those years -- I cannot recall King George public school ever being closed for the purposes of a storm or something like that. I moved into southern Ontario, where there is not that much snow, and it seems to be a regular occurrence. It is said, of course, that it is the bus companies, not the school boards, which close it, because they say they will not provide the services. What kind of monitoring and supervision do you have of the closing of schools? Is it whether the local disc jockey says they should be closed or whether the snowflakes begin to fall?

Mr Chénier: Usually there is a board policy on the closing of schools. I have to agree with Mr Bradley. In my former life as director of education in a town north of Sudbury, we very seldom closed the schools, because our policy was rather strict on that. In other areas of the province, it would appear that the policies are more accommodating, or maybe it is more dangerous because of ice or slush and so on. In the north it is strictly snow usually. But it is a board policy.

The Chair: No studs.

Mr Chénier: No, we do not have those either up north.

The Chair: You do not want to admit that, no, no.

Mr Jackson: That does not even need translation.

Mr Bradley: I will not pursue that.

Mr Chénier: Do not press the point, no.

Mr Bradley: Did I say that was my last question?

The Chair: I think it is.

Mr Bradley: It was my last question except for this supplementary. If you think this is a supplementary, you will believe anything.

Going back to matters of the elementary and secondary grants, which have been pursued very often, my concern is similar to Mr Jackson's in that while we would like to think of them all as one and there is equality and so on, at this point in time the danger appears to be that if they are folded into one, as they are, in fact the movement towards providing that equality of grants for elementary and secondary education will fall by the wayside somehow, that there will not be accountability there, that the money can be shuffled one place or other. I realize there is an ongoing debate as to whether that is legitimate or not. I do not pretend to state that there are not divergent points of view on that, but I guess I ask again for your comment on the advisability of perhaps going back at least to showing the figures separately and boards clearly demonstrating that they are spending the money as you see fit in elementary and secondary education. I think there still appears to be a strong bias in terms of expenditures for secondary education.

Mr Larratt-Smith: Those expenditures can be seen separately because the numbers of pupils are available and the per-pupil ceilings are also available. The money that is provided under those grants is in the form of an unconditional grant, and it is obviously up to the school board to make use of that grant as it sees fit for the purposes of education. The fact is that the way those ceilings have been incremented over the years, as I was trying to indicate earlier, has been with this very mechanistic formula, if you like, simply looking at the average wage settlements involved in the particular area of the grant and looking at the cost-of-living increases. The way we have derived that $3,500 for elementary and $4,400 for secondary goes right back to 1970, in fact, when the ceilings were $1,000 and $500 per pupil, and it is really a lockstep process that has derived from there with very little variation. Just to conclude, it is one of the very strong arguments for a major reform of the entire system, because at this stage it is very difficult to tell what is contained in that ceiling and what is not contained, given the many changes and additional responsibilities that school boards have adopted.

The Chair: Mr Wiseman.

Mr Wiseman: I would like to go down a little different road for a few minutes. I would like to discuss the relationship between grants, textbooks and curriculum, and whether or not the ministry has any monitoring device to be able to co-ordinate the publication of a new curriculum with the giving of grants and the publication of textbooks.

This was not raised by the auditor, but I know it is a problem. It is a problem because if the curriculum changes and the textbooks are not printed and the grants come out within a fiscal year, that money has to be spent, and that can amount to an awful lot of money. I would like you to comment on that.

Mr Larratt-Smith: I can comment in general terms that there has been a component in the grant put aside for textbooks as part of some changes two or three years ago. But perhaps you could be a little more specific in the question.

Mr Wiseman: Do you want an example?

Mr Larratt-Smith: I would be happy to have one, yes.

Mr Wiseman: In this grant when the OACs came out and they were to be implemented, the curriculum guidelines came out and the textbooks had not yet been written that co-ordinated the curriculum guidelines, and yet the funding was granted within a fiscal year where it had to be spent. A lot of that money was spent on books that did not match the curriculum because the textbooks had not been written, and you could not roll it over and spend it in the year when the textbooks were going to come out. Consequently, there are a lot of courses now being taught piecemeal throughout the system because the textbooks were not available.

Do you want a couple of specific subject areas?

Mr Larratt-Smith: No, I think I have a sense of your point, which is that there is a lot of trouble in co-ordinating some of the special incentive grants that are made with regard to particular programs and the ability to publish books. That is right and that does create difficulties.

In terms of the general legislative grant, we pay $17 per pupil as a contribution towards board purchases of learning materials, which is a very general statement. It does not have to do with any particular course or any particular textbook. That is then up to the school board, under the use of the GLG transfer moneys that we are discussing here, to use for appropriate textbooks as they need.

Mr Wiseman: You did not quite answer my question. Do you have anybody to co-ordinate the giving of the grants and the publication of the textbooks and the curriculum guidelines?

Mr Larratt-Smith: Okay.

The Chair: Are you looking for a job, Jim?

Mr Wiseman: No, Bob said there would be no by-elections.

The Chair: I see. All right.

Mr Chénier: The situation is that the amount of grant that was given or the additional amounts of grants that were given at the time of the OACs were certainly not sufficient to buy new sets of books in all the areas. It needed planning at board level and there were some books available. School boards in some areas bought books that were available and then the next year got others. You needed a lot of planning because the amounts did not come in amounts large enough to replace all the books in the school or in that group of students.

Mr Wiseman: I am going to try this again. The money comes down to the department head and he is given $30,000 to buy a new set of textbooks for, say, math. Then what he finds out is that the particular textbook for the change in the curriculum has not yet been printed and yet he has to spend that money within the fiscal year. He does not have the decision-making power to determine that he will hang on to that money in his account and buy it when the book has been printed; he must spend it.

The second part of my question -- the first part still has not been answered -- was: Has there been any look at being able to give more discretionary power to the people who make those decisions and know best about what decisions are to be made -- and those are department heads in the schools -- to roll over money? It is a lot of money we are talking about.

The Chair: Are you talking about rolling it over into the next fiscal year?

Mr Wiseman: Yes.


The Chair: I may be wrong, but I think that is something that cannot be done. Is that not right? You always hear about these great scurries to spend the money before the end of the fiscal year and I am sure there must be a reason for that. I do not know. Perhaps you would like to answer it, but that is my belief.

Mr Larratt-Smith: I am not sure I am still going to be able to give you a completely satisfactory answer. We can certainly look into it some more, but where a program is being implemented that may require new textbooks, part of the job of co-ordinating the development and implementation of that new program is ensuring that those new textbooks are written and come on stream. Whether they do so in exactly the same time frame as the board within its budgetary allocations allocates money through the schools and the department heads to do the purchasing is something I cannot tell you offhand, but we do attempt as we implement new programs to make sure the materials that are going to be needed, including the textbooks, are available for the implementation of that program.

Mr Wiseman: Well, I think I have made my point. You might want to take a closer look at the co-ordination of all that. Thank you.

The Chair: Are you finished? All right, Mr Cousens.

Mr Cousens: I wanted to fall back to one of the statements in your report, the value-for-money statement. You had in your report the idea that the ministry wants to incorporate more thinking on value for money. This is certainly something our own Provincial Auditor is trying to incorporate in his activity as Provincial Auditor. How would you see value for money coming into the educational system? Could you give us four or five illustrations where you will be able to have a way of checking on that kind of value? I like it. I just do not know how you are going to do it.

Mr Chénier: I think one area, if it can be promoted -- I do not know if it will always succeed -- is in boards sharing certain services. If you have two smaller boards in a community and they share purchasing of paper and other products, they may have savings in economies of scale. Those are certain areas. Services can be shared. I was talking about the northern education project. I believe that right now boards may quite often have a director of education and a superintendent, but they cannot pay for those salaries because the boards are not large enough. But if they could share the services of the superintendent or of consultants with one or more boards, that certainly would be a tremendous service to the children and, at the time, a saving to the board.

We have talked about transportation. I was going to make a comment about it and the fact that boards have saved an awful lot of money by having common routes between public and separate schools, French-English and so on. As long as the two boards are willing to have common policies whenever they have common services, it can be easily worked out, and that is a saving.

I do not know if there are other areas, but --

Ms Palozzi: I would like to just suggest that we have had some discussions within the ministry around ways in which we can look at the whole issue of value for money, and if I could come back perhaps tomorrow with some examples for you in terms of what those might be, that would be appropriate.

Mr Cousens: When I was on the school board, we had the toughest time just trying to do the simplest things, the kind of thing Mr Bradley was talking about transportation and how you improve it. People are so resistant to some of these things. Sometimes, maybe the best thing is where you have illustrations of success and the dollars that are saved, so that people will want to do it because they are able to get more value for the dollar. I can just say anything you can do in that direction certainly would be well received by local boards, looking for ideas at conferences and in newsletters. But starting here would be a good place to have it because I am impressed to see that in there and I would like to see anything you can do to make it happen.

The Chair: Okay. Mr Ruprecht.

Mr Ruprecht: Thank you, Mr Chairman. As you probably know, I am just substituting for Dianne Poole, but I did not expect this to be as interesting as it turned out to be, with all this experience.

I have one question that concerns the communiqué or the memo to the directors of education written by you, I think it was, Mr Chénier. You indicate under section (c) that you would think there should be greater clarity and responsibilities in terms of the powers that boards utilize. Could you tell us, please, whether you mean you should sit down with boards and try to indicate to them and provide them some guidance in terms of their responsibility? If that is the case, could you give us some examples where you might think some of these boards went over the line of appropriateness in terms of their spending, whether it is in the city of Toronto or in the outlying regions of Ontario?

The Chair: I am not sure that is a fair request of staff, at least with reference to the money that is raised by the trustees themselves through taxation. If you are talking about the provincial portion, I think perhaps they can comment on that.

Mr Ruprecht: Let's just stay with the first part of my question.

Mr Chénier: I think that when we talk about greater clarity it is to determine the role of the trustees within their board, the role of administration within their board, so that people can understand and not trip over one another in many instances. I think it should be understood that the role of trustees is to be policymakers. The role of administrators is to administer or implement the policies developed by the trustees. Sometimes trustees want to administer and sometimes administrators want to be policymakers, and I think everybody understands that there is a problem. Sometimes people cannot verbalize that problem, but they realize it. In 1977, I believe it was, the Ontario School Trustees' Council, the Ministry of Education and I believe the Ontario Association of Education Administrative Officials, the supervisory officers' organization, developed a booklet on the trustee: Who is a trustee, what is his role and so on? That booklet could be updated for the 1990s. I think trustees have been requesting training and orientation programs and I think that is what we are talking about when we talk about greater clarity; it is through training of trustees and refreshing administrators' memories about it, too.

Mr Ruprecht: When you meant greater clarity and responsibility, I thought perhaps you would be interested to know how trustees might be dividing up certain moneys for the school boards. For instance -- and I hope you can answer this question -- who would come into a school board when that school board has been accused of taking a greater percentage for its own expenses, for assistance, for travel budgets and for other things of that kind and when the press is indicating to all of us that certain abuses have arisen? When you talk under section (c) about greater clarity in terms of roles, I had assumed it would be also indicative of the monetary aspect.

Mr Chénier: It would be very difficult for an officer of the Ministry of Education to tell elected officials, who are democratically elected by the people of the city that they are in, how or where they should put their money. I think the democratic process will take care of that at the next election, if everybody in the community does his or her job, and if people are happy that a board puts a lot of money on buildings and no money on books.

Mr Ruprecht: I think that answers my question, Mr Chairman.


The Chair: Okay. Mr Hope.

Mr Hope: Thank you. I am not going to get cut off this time, am I?

The Chair: I do not remember ever doing that. Did I?

Mr Hope: Just so I know how much time I have got --

The Chair: You can have the rest of the day, if you like.

Mr Hope: No, I do not need that much.

Mr Jackson: Is there no one else on your list, Mr Chairman?

The Chair: Do you want to get back on?

Mr Jackson: I distinctly remember hearing you say, "We can come back to you, Mr Jackson."

The Chair: Sure.

Mr Jackson: Thank you.

The Chair: Okay.

Mr Hope: So I cannot have all day?

Mr Ferguson: He thought that was tomorrow.

Mr Jackson: You need all day to get one question out, Mr Hope.

Mr Hope: Do not worry, I will take it easy on you.

Mr Jackson: All right.

Mr Hope: I am looking at page 10, where you are talking about the reduction of grades 1 and 2 to an average of 20 pupils. In the community I come from, we have got a headhunters' group called the Tax Revolters, whose main focus now is on the school boards --

Interjection: Where?

Mr Hope: Kent county. I am reading through this whole debate about when we hit the market value reassessment, and I have got a second question which we will talk about, the wealth of the tax base. But I guess my first question is in determining the phase-in of the 20 children per class. When you talk about the accountability, I guess my question would be, when the board puts the cost on how much it would cost to lower it down to that, is that total value then taken or are you making judgement calls whether there is a necessity or whether that is just a luxury?

Mr Larratt-Smith: The way the 20:1 was implemented: First of all, there was some difficulty in the sense that boards were at different places in terms of the number of pupils in grades 1 and 2 at the point of departure. In isolate boards there would be boards that would already be below the 20:1 figure. What happened was that the ministry took an average and then worked it down over a period of time, providing grants to bring the amount down -- and I cannot tell you the exact number of years; it was over two or three years, I believe -- with a number that was to be achieved on each of the interim steps. In the case of some boards, which had already put a good deal of emphasis on the pupil-teacher ratio in grades 1 and 2, that was very easy. Perhaps it was already achieved in the first or second year and they received some incentive money as well, because of the fact that they had already allocated money for that particular priority, as opposed to other priorities that perhaps they did not have the money to spend on. So it was done on a general, province-wide basis. Its particular impact on Kent county I could certainly get for you, but I cannot speak to that situation off the top of my head.

Mr Hope: As a matter of fact, I have it on it because the federal Conservatives have been playing somewhat of a game -- as a matter of fact, I did not even know we were going to be talking about this and I got a letter to Garth Turner about it. Just in going through it, it says the increases in the grants are to help offset the initiatives; however, the costs exceed the increased grants. They received the grant, but they are saying the cost to implement it was more than what the grant was allocated for.

The Chair: Who was the letter from?

Mr Hope: It was from a board director. It was in my mail.

The Chair: Oh, I thought you gave a name.

Mr Hope: Yes, it was to Garth Turner.

The Chair: Garth Turner.

Mr Hope: The letter is to him; it is a copy to me.

The Chair: I see. I thought he was writing to you.

Mr Hope: No, no.

The Chair: I found that interesting.

Mr Wiseman: He probably wrote to everybody.

Mr Hope: You know, when I looked at that statement you had made, and it just so happened I was reading at the same time you made that statement and I guess when you talked about the accountability aspect, and that is why I put it in.

I will get off that one and on to another one dealing with the tax base. You talk on page 9 about the basic per- pupil grant and the "relative wealth of its local tax base." How do you find out the relative wealth of its tax base?

Mr Chénier: If you look at the basic amount, if you look at the up-to-ceiling expenditures, as we call them, there is equity there. If we look at Kirkland Lake separate school board -- that is, the poorest board -- the taxes and the grants offered by the Ministry of Education are equivalent to what somebody would get in another city of Ontario. That is why when we talk about basic education we are talking of expenditures up to ceiling. The difference is when you get above ceilings. If you have an equalized assessment of $200,000 per child versus $47,000 per child, you will see the difference in your ability to spend above the ceiling. But I think this is what we have to always come back to, that the commitment of the Ministry of Education up to now has been to provide equity up to the ceilings.

Mr Larratt-Smith: If I can just build on that, Mr Chairman, in terms of dealing with that up-to-ceiling amount, the ministry ensures with the GLG that there is a common mill rate, which attempts to equalize the burden across all boards up to that level. That is achieved by first of all getting the assessment data about the wealth of the local tax base from the Ministry of Revenue and then doing an equalization, which again is based on a factor we receive from the Ministry of Revenue which attempts to roughly equalize the burden so that a house of a certain size and scale in one community is being treated similarly to the same house in another community.

Even though under the assessment rules themselves there is not that full provincial level playing field, we impute it, if you like, for the purposes of setting up this standard mill rate and with the money that is allocated for the GLG each year, that money plus that standard local mill rate will provide boards -- all boards in the province -- with the basic amount per pupil, the ceiling we were talking about earlier, $3,500, as I say, in the case of the elementary pupil in 1990. That means the local taxpayer is paying an equivalent amount whether that local taxpayer is in Kent county, Toronto or the north.

Mr Hope: The comment was made, "Well, we'll find out at the next election." Going through the statistics in my area especially, I believe they are about the finest in the province of Ontario in their ability of spending and that. The unfortunate part is that I see a lot of the motivation being directed towards the board trustees and also to the teachers themselves as saying they are overpaid and underworked.

When I start to read this document that you presented today about accountability and where we have to be accountable, I guess the accountability also stems with how we are accountable to the general public in financing a lot of them. I was looking at some of the costs just for pay equity. The employers' health tax also added additional costs to those boards and yet caused some great disturbance as far as depending upon the wealth of the community to supply the tax issue is concerned. Then we get into a big time bomb. I guess where I am really coming from is that I have two small children, age seven and five, whose education is just beginning, and I do not want to see it eroded. I think I speak for a number of people in my constituency about ensuring their children's education; so I am really interested in the accountability.

Whenever we come back for the next audit we will audit this government's performance, but I am sure it will be a lot better than the previous government's. Thank you.


The Chair: Mr Jackson has asked you to provide to the clerk for the record whether the ministry keeps a record of how many boards have audit committees and a list of which boards they are. Maybe you could do that for us.

Mr Chénier: We will bring that to you for the next meeting.

The Chair: All right, fine. That is tomorrow morning, by the way. Mr Jackson, do you have further questions?

Mr Jackson: Yes, I do. On page 16 you say, "regional office carries out selected audits to verify enrolment claims and transportation costs." You go on to say that "when discrepancies are found, an adjustment is made in the current year's grant. This `settlement' of a grant remains open. For example, if grant ineligibility comes to light several years later, an adjustment is made in the grant for the year the error was discovered." How many of these discrepancies do you identify in a given year?

Mr Chénier: I cannot give you the numbers this time. If it were possible, I could bring them at the same time tomorrow. I can say we have discovered some, but the numbers I do not have.

Mr Jackson: Yes. The Treasurer -- the auditor -- I almost called you the Treasurer. You should be the Treasurer, but you are the auditor. Most taxpayers would like you to be the Treasurer. The auditor identified two specific boards. Would you concur that those were bona fide discrepancies that you are referring to in those boards?

Mr Chénier: Far be it from me to question the Provincial Auditor.

Mr Jackson: No, no. I was asking for the common knowledge of terminology here. These are what you call discrepancies?

Mr Chénier: Yes.

Mr Jackson: I did not ask you to describe a discrepancy. I just thought I would go directly to the auditor's report, where he found discrepancies. Is that what you refer to as discrepancies?

Mr Chénier: Yes.

Mr Jackson: Then my next question is: Have you made any settlement with the York Region Roman Catholic Separate School Board, and, if so, what was it? And similarly with Lakehead.

Mr Chénier: On Lakehead, maybe I should ask my people to check. But with York, discussions are still going on with the ministry to determine exactly the amounts that are due, and that should be completed satisfactorily very soon. I believe the board was supposed to submit to us today, as a matter of fact, another process about how --

Mr Jackson: Protocol for negotiations?

Mr Chénier: No, not protocol for negotiations -- how they would settle their deficit. There may be some problems that may take a little more time, because I think it is very complex, some of these discrepancies.

Mr Jackson: And could you share with us who does the negotiations for the ministry with respect to these settlement discussions?

Mr Chénier: I believe it is the regional office.

Mr Jackson: Okay, that was my suspicion. The auditor has shared with us concerns with respect to the relationship of the regional offices with boards; that it seems awkward that the very people who were responsible for finding these things, not having found them, now are in a position to negotiate a settlement with the people once they are discovered. Do you understand the nature of the question?

Mr Chénier: Yes. I think the problem has been that we in the ministry were not doing the kind of auditing that the Provincial Auditor has done. That is where we have realized our weakness. For instance, I believe the Provincial Auditor discovered that music rooms were built, musical instruments were supposed to be purchased and had not been, or if they were, they were certainly not being used. Our type of auditing facility was to look at what the boards had requested; so if they had requested a music room, was a music room built? And of course a music room was built. But the facility was not being used as a music room; it was being used as a classroom. We have added to our audits more specific questions so we can come up with the same answers as the auditor has done. In the same way, computers.

Mr Jackson: I am sorry, Mr Chénier. I understand how the accountability will work out. I want to focus on the negotiation aspect and who is doing the negotiations with respect to the government on the accountability point. You have been very clear to the committee in terms of improving how you will monitor. I want to focus solely on settlements and negotiations.

Let me throw something else into the mix that is a concern. When I was a trustee, we routinely with pride talked about certain people from our board who were seconded to the regional office. Sometimes we were upset that we lost these talented people. Sometimes we were pleased to see them go. However, there is a relationship which exists between some personnel on boards by virtue of where they developed maybe three quarters of their educational career within the given board. Now, I am now putting it on the table, the nature of my concern. The parallel in education, as you know, is how can the principal be in the same union as the teacher, and during a strike, how can they conduct themselves in the best interests of the children or their union? I see a similar type of question about a relationship as it relates to an extensive regional office staff who are all members of the same union, but that is not my biggest concern. My biggest concern is this personal relationship between some boards -- I do not want to call them friends of the board at the regional office. But we have the auditor identifying strong weaknesses at the regional offices, and we now have these very same people, having missed picking up certain things -- we will give them the benefit of the doubt -- who now are in the position of negotiating settlements. Do you understand where I want to focus?

Mr Chénier: I hope I did not mislead the honourable member in the sense that when I spoke about negotiations, it is not a question of negotiating the amounts; it is negotiating how they will be paid. There are no negotiations for the amounts that are owed. For example, if a board had reported that it had 3,462 pupils, and through an enrolment audit we discovered that it had only 3,000, it is not a matter now of negotiating whether it was 420 or 240; the 420 will stand.

I think what the ministry has done is to look at whether the board can be readjusted in one year, two years or three years. In some cases, if we were to bring a readjustment in one year, that board would be in a very serious deficit position. Those are the negotiations I am talking about. There are no negotiations when it comes to the amounts owed.

Mr Jackson: That clarification is very helpful, because settlement implies payment patterns as opposed to the amounts. In fairness, though, Mr Chénier, since I am very familiar with your political and educational and administrative career -- and it is a varied one, but you have not always been at the ministry -- I think it is fair to say there is a clear expectation that the numbers as identified by the auditor are not really subject to debate.

Mr Chénier: That is right.

Mr Jackson: Whereas something that may be an internal audit, which would never be exposed to an independent audit committee, may never be exposed to an elected body -- let me put it to you in that context -- those numbers may be adjusted by agreement before they get to the settlement stage. I am not saying that has been going on, but I find it hard to believe that in the presence of all this concern about audit and accountability, we have had this protocol that refined for so long. I expect it to follow suit once the auditor has confirmed the numbers, and it will occur in Windsor, Peel and the other board areas. That was the area.

If I am not monopolizing time, I have another question on functional rated capacity.

The Chair: All right.

Mr Jackson: Thank you. On functional rated capacity, the auditor makes a fairly strong statement about the prioritizing that goes on for capital, and I happen to believe the Treasurer -- I am doing it again; the auditor. Excuse me. I would like to correct that --

The Chair: He said he did not want to be Treasurer.

Mr Jackson: Well, if anybody knows what the Treasurer is paid, the auditor does. Anyway --

The Chair: That is a good reason not to be the Treasurer.

Mr Jackson: Precisely. Which raises questions why we are doing this for what we are paid.

The Chair: White hair is now rarer than it was before.


Mr Jackson: True. I thought the auditor's comments were rather harsh with respect to the shifting of priorities, given an understanding of how volatile school capital and transfers have been in this province since 1986 under Bill 30. I must betray a deeper understanding that I have of the four known shifts administratively on how we dealt with capital under Bill 30 in response to the changing political climate and moving from minority government to majority government.

Without dwelling on that, I think it is fair to say that a lot of capital decisions were made by directors and, from what I am told, some regional offices were not fully aware of what adjustments were made until those were negotiated by Mr Clifford and the coterminous directors behind closed doors. We know that process went on, and I do not think the auditor was privy to that kind of detailed analysis. I, for one, do not wish to focus too heavily on the capital because I think it is going to settle itself down now that we are basically 95% through the capital transfer issues under Bill 30. I know it is a sensitive area and you cannot talk about it because there are still four school boards, to my knowledge, that are questioning whether or not the deals were completed. I just wanted to put on the record that I thought those areas were rather harsh, recognizing that you as staff sometimes have to implement decisions from cabinet that may stretch the flexibility of the current guidelines for legislation. I think that is the most polite way I could put it. Mr Larratt-Smith is on record as grinning at me at the moment.

Leaving that for a moment, I want to talk about this ongoing problem with functional rated capacity because I sense that the auditor did have some concerns about when a school board should trigger its examination for closure and consolidation based on the policies we are both familiar with. When was the last time the province reviewed and updated the FRCs, and did they do that in consultation with trustees? I recall for a long time there was serious debate between what we include and what we do not include, so that we have a shifting number in terms of what we rate for pupil places.

Mr Larratt-Smith: For the record, I am still grinning, Mr Jackson. I do not recall the last time this was actually done. We are in the process of a capital grant plan review. Some changes were made last year. There are other changes pending and being looked at as part of what almost has become a continual need to update the capital grant plan, so this is something that is under review at the present time. It has been under review for some little time in the past, but there is nothing recently that has been done to change the loading.

Mr Jackson: What is your understanding of the auditor's concern with respect to underutilization of space, if you were to focus in on that? I am trying to sense if it is children in seats -- you know, actually the number of bodies -- or how we rate our schools, which gives you two different pictures. The trustees would say, "We need X square feet for those few children in order to meet program needs in a contemporary way," whereas the ministry guidelines, which I understand are some 20 years old with minor revisions, reflect a day when we were not doing English as second language, we were not doing special ed, very few kids had access to a music room, etc. What is your understanding? I want to make sure that you two know exactly what the concern was, because I read this and I am not getting a clear picture of what the concern is.

Mr Larratt-Smith: I do not think I should be trying to put words into the Provincial Auditor's mouth.

Mr Jackson: No.

Mr Larratt-Smith: When I was reading the report again over the weekend, I had a sense that he was responding to a series of comments and interviews, both with ministry people and with board people, looking at the discrepancy, looking at situations where clearly, with declining enrolments, whatever the other use has been, there have been empty classrooms and there have been situations where there has been underutilization, if not actual non-utilization, of space. Perhaps the question should more properly be put to him.

Mr Jackson: Unless the auditor's staff want to put a finer point on that.

The Chair: I do not think they can at the moment.

Mr Jackson: That is fine then. I simply just wanted to close off on this FRC and adjustments. Mr Larratt-Smith was grinning because he knows of my long-standing interest in tying the transfer of separate schools to the public schools, or public schools to the separate schools, under Bill 30 and tying it to the province's closure policies and surplus and redundancy policies. It would have worked a lot more easily. I think the auditor came close to that without saying it.

But in fairness, a lot of school boards have approached this with an added sense of timidity because they did not want to be responsible for triggering a transfer by virtue of being overly accountable in the process of identifying surplus spaces. We have to be fair to school boards. That tension has existed in this province for the last five years and it is a dynamic which, although it would be more helpful to taxpayers, does not reflect the reality of the trustees' role in both the separate and public boards to protect their turf, as it were.

Anyway, I would like to close on that. That completes my line of questioning. I want to thank the ministry personnel for their very direct responses. I appreciate it very much.

The Chair: Mr O'Connor.

Mr O'Connor: One area that the auditor did not look at, and one of the boards we are reviewing the audit of is York region. It has not only had a substantial amount of growth but is also faced with an awful deficit situation, and interest payments alone are very substantial for that board. There is a regional office that looks at the capital projects and funding for that; am I correct?

Mr Chénier: When the boards present their capital expenditure forecasts, those go to the region. Then the region looks at all the capital projects of all the boards in their area. Last week, as a matter of fact, school-business-and-finance capital-project people met with the regional directors and started to establish the provincial list. Then that will move on until it ends up with cabinet some time in April, I believe, or May. So there is no final decision taken by the regional office.

Mr O'Connor: One thing I am just wondering, though: When the audit was done it did not include any look at some of the tendering that had taken place in the construction of perhaps a new school or anything. Just what level of accountability is there in that process of the building of new schools?

Mr Chénier: It is true that I do not remember seeing in the report that the auditor had mentioned anything about tendering for capital projects, but I believe that is a pretty standard approach throughout the province. If I recall correctly from my days as director of education, I think there are ministry rules. If tendering is required you have to take the lowest tender and, if you do not, I believe you have to have some pretty good reasons to do it. I surmise that is probably one of the safer approaches in tendering; it is done properly by all boards.

Mr O'Connor: So the regional office perhaps would not audit any school going through a tendering process or --

Mr Chénier: It is done in this way: Once all the tenders are in and the board has accepted the tender, the board cannot approve that tender until it has come to the ministry. The final approval on the tender is from the ministry and not from the board.

Mr O'Connor: So the accountability lies with the ministry. Thank you.


The Chair: I have one question. I am thinking in terms of the two principles underlying the granting of provincial funds to school boards. You say all school boards in Ontario must have equitable financial resources to provide a base level of education programs and services. Why is it that the grant to a public school, or the amount allocated, is higher than that for a separate school? I thought we had equality.

Mr Chénier: It is not a matter of being public or separate; it depends on your assessment. You may get 90% grants and you pay 10% from local taxation, but in the end you get the same amount, the two put together. The taxpayer who pays only 10% and the coterminous taxpayer who may be paying 60% of the tax bill, they pay the same amount in taxes.

The Chair: I am told by my school board that the per-pupil funding for a separate school student is different than that for a public school student.

Mr Chénier: That is because of the assessment, and I will give you an example, the Timmins board and the Timmins RCSS. The Timmins board had a combined residential and commercial assessment of $88 million in their equalized assessment. The separate school board had an assessment of $43 million. Therefore, every time the public school board was raising its taxes by $1 million, it was raising $88,000. The separate school board, every time it raised its taxes by $1 million, was raising $43,000. That is because of the value of people who identified themselves, or companies which in those days had to identify themselves, as public school supporters.

The Chair: But you are talking about the overall money available. What I am saying to you is that even despite Bill 30, the calculation of grants for separate school students is based on a formula that is not equal with those for public school students.

Mr Larratt-Smith: The per-pupil grant ceiling is a province-wide amount. Whether it is a separate board or a public board, or a northern board or a southern board, the core amount per pupil, as a ceiling, is the same. There are other factors that may come into play where there is a very small school and there are inevitably greater difficulties in maintaining the overhead, the cost of the principal, for example.

The Chair: Let's not use hypotheticals; let's take Peel region. The amount allocated for the public school student as compared to that for a separate school student -- can you tell me there is a difference in that, or are they the same?

Mr Larratt-Smith: Up to ceiling, the ceiling would be the same. The cost of educating those students may be quite different as a result of the difference in program, the difference in the collective agreement that may be had by those two boards. But the base amount per pupil, which is funded on a combination of provincial grant and local assessment wealth on an equitable basis, as my colleague has just identified, would be the same for both boards.

Mr Jackson: Mr Chairman, if I might be helpful, the difference as I always understood it was in Peel there are two different costs to educate completely a separate student versus a public student, but they are funded on a base that is identical but it is later adjusted to reflect the inequities in assessment. But there are two different total costs per pupil. This public board may spend more than the separate board in Peel, but then again it has access to more money. But virtually all boards in Ontario are spending above their ceiling. I do not know if there is one left. Is that helpful?

The Chair: I will try to clarify it myself, because that is what I was led to believe. If I understand what you are saying, the amount that is paid by the province for each pupil is the same for a child or a person going to a separate school or to a public school. The only difference is that the public school is able to raise greater amounts, perhaps through local assessment, which is the other part of that cost.

Mr Larratt-Smith: No, it is not that the same amount is contributed, because the local assessment wealth will be different. But up to the ceiling, which is the arbitrary amount we were talking about before, $3,500 per elementary student, that amount is composed of provincial grant and local tax on a basis that makes the local tax the same whether it is in Peel, the Peel Board of Education, or the Dufferin-Peel RCSS Board. So, given that this local equalized contribution is the same, the ministry grant makes up the difference; in almost all cases of Catholic boards, the local wealth is less, so the ministry grant will be higher in a coterminous situation. That takes it up to the basic $3,500 per student. But if, as Mr Jackson is pointing out, in virtually all cases boards are spending at or above the ceiling -- again, these would be hypothetical figures -- one board might be spending $5,500 per student, the other board might be spending $5,000, and they would be funding the amount above the $3,500 off their local tax base.

Mr Jackson: One hundred per cent.

Mr Larratt-Smith: One hundred per cent.

The Chair: Okay. Any questions? We will have these people back tomorrow morning as well. Thank you very much --

Ms Palozzi: Mr Chairman, just a point of clarification. The memorandum that was distributed earlier was not a draft memorandum. It was distributed on Friday and will be distributed this week.

The Chair: That is fine. I was led to believe it was.

Mr Larratt-Smith: One final point I would like to add. On page 12 in my remarks I indicated that a description of the funding model would be handed out at the end of our remarks. We have it here, and perhaps it could be distributed by the clerk at this time.

The Chair: All right. Mr Clerk, if you would do that. We thank you very much, and we will see you tomorrow morning.

Before members go, I wanted to give you some good news and some bad news. The good news is that I will not be here tomorrow.

Mr Ruprecht: You were not here today, so what else is new?

The Chair: The bad news is that Mr Ruprecht will not be here tomorrow either. Apparently the Vice-Chair will not be here as well, so I have asked Mr Miclash to sit in as Chair, and I will have a substitute come in for me. I just thought I would let you know that. I do not think it makes one iota of difference. The meeting will probably run more smoothly.

Mr Wiseman: We might start on time.

The Chair: That is true. I feel like the skipper of a ship that has been floundering at sea for 365 days and a mutiny is about to take place.

Mr Jackson: I thought you felt like that on 6 September.

The Chair: Thanks very much. We are adjourned until 10 o'clock tomorrow morning.

The committee adjourned at 1620.