Legislative Assembly of Ontario

ANNUAL REPORT, OFFICE OF THE PROVINCIAL AUDITOR, 1990

MINISTRY OF EDUCATION

AFTERNOON SITTING

YORK REGION ROMAN CATHOLIC SEPARATE SCHOOL BOARD

CONTENTS

Tuesday 26 February 1991

Annual Report, Office of the Provincial Auditor, 1990

Ministry of Education

Afternoon sitting

York Region Roman Catholic Separate School Board

Adjournment

STANDING COMMITTEE ON PUBLIC ACCOUNTS

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)

Substitutions:

Curling, Alvin (Scarborough North L) for Mr Callahan

Ferguson, Will (Kitchener NDP) for Mrs MacKinnon

Haeck, Christel (St. Catharines-Brock NDP) for Mr Cooper

Hope, Randy R. (Chatham-Kent NDP) for Mr Hayes

Jackson, Cameron (Burlington South PC) for Mr Tilson

Martin, Tony (Sault Ste Marie NDP) for Mrs MacKinnon

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 1013 in committee room 1.

ANNUAL REPORT, OFFICE OF THE PROVINCIAL AUDITOR, 1990

Resuming consideration of the 1990 annual report of the Provincial Auditor.

MINISTRY OF EDUCATION

The Acting Chair (Mr Miclash): Ladies and gentlemen, seeing a quorum, I would like to get started. Actually, if I were in my former position as a schoolteacher, there would be a lot of detentions handed out right now, but we will not get into that.

I would like to welcome you to the standing committee on public accounts, and particularly welcome the witnesses today from the Ministry of Education, if they could identify themselves.

Mrs Palozzi: Dina Palozzi, acting deputy minister.

Mr Chénier: Ray Chénier, assistant deputy minister, learning services.

Mr Larratt-Smith: Mark Larratt-Smith, assistant deputy minister, corporate planning and policy.

The Acting Chair: Thank you. I believe we had two questions from Mr Jackson that were on the record yesterday. Are you prepared to go ahead with the answers to those?

Mrs Palozzi: What we have done, Mr Chairman, is prepared a number of handouts that we would like to table. Yesterday we did not have the English translation of the pages where Mr Chénier's speech was in French, and we have that available for the committee. Also, there were a number of questions yesterday that we noted. One was information on audit committees. There was a commitment to Mr Cousens on examples on value-for-money initiatives that we have outlined, and a question on discrepancies and adjustments, I believe, by Mr Jackson. We have written information on that, which we would like to table with the committee, and we have copies available for that.

The Acting Chair: Ladies and gentlemen, at this time I guess we are ready to move on to further questioning, and I am looking for questions. Mr Curling.

Mr Curling: Thank you, Mr Chairman. What an opportunity it is to serve on this public accounts committee. I am so glad that sometimes my colleagues are unable to make it so I can get the opportunity to sit in on this. Since I see the opportunity here, may I then, Mr Chairman, just point out something that is in the auditor's comments on the Lakehead Board of Education, that there are suggestions that the enrolment at the Lakehead Board of Education has somehow declined to just about 11% over the past eight years, which as you know, will bring about a surplus of schools. I know the ministry requires that all boards are to have a closure policy. Under Bill 30 the public schools are also required to identify the surplus schools and transfer them where necessary to the other separate school boards. Am I correct in that?

I notice the auditor also suggests in his review of the Ministry of Education that the potential does exist for boards to reduce costs also by sharing those resources, like transportation, information systems, supplies and their PD, their professional development. Most of the boards indicated that there were few opportunities for sharing resources, partially because there were insufficient ministry incentives also to do so. My concern, then, given the ministry's requirement for board developments, to develop school closure policies, is, does the ministry require boards to develop plans for resource sharing, and what incentives does the ministry provide for, or is it thinking about contemplating providing for, to move boards towards more fulsome resource sharing?

Mr Larratt-Smith: Perhaps I can address some pieces of that, Mr Chairman. I do not believe there is any strict requirement on boards to develop resource-sharing plans. There is obviously an encouragement for them to do so in terms of other than the capital facilities.

I was mentioning yesterday to the committee that the new general legislative grants, which will be announced shortly we hope, do include some changes to the transportation grants, which will provide a greater incentive to school boards to achieve efficiencies and work together in doing that than has been the case with the old formula, where the marginal dollar was very heavily a provincial dollar, and so there was not really that incentive to achieve efficiencies in school bus routing.

I might also mention this would touch on an issue that Mr Jackson raised yesterday as well, that there are some changes that are being made to the school closure policy, which we are hoping will be out shortly, which will make it very clear that a transfer of a school under Bill 30 arrangements is not a closure issue.

Mr Curling: Thank you.

Mr Jackson: I have had an opportunity to read all of the material that has been presented by staff today from the ministry. Perhaps I could read into the record the ministry response to my question about discrepancies and adjustments. I believe I asked if I could have some examples of adjustments. It could either be number or board specific, but what the ministry has provided -- I might suggest that if these are dated, they are helpful to the committee for our records in future. I am quoting from the material presented by the ministry:

"Discrepancies and Adjustments.

"There is almost always some adjustment as a result of audits. Most are minor. The number of major discrepancies varies from year to year, but is still a small percentage of audits. The more comprehensive approach to auditing is expected to be productive." That is quite helpful.

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Can you share with us anything more concrete in terms of how many adjustments have been made? Let me put the point directly: As a result of the auditor's activities, we have two school boards. Both school boards are going to have adjustments. We can only theorize at this point that, at the end of the six audits that are currently under way, there will be six more adjustments. Maybe not, but maybe. When this committee looks at that a year from now, if that is the case, we are going to really raise the question, "Just how many adjustments occurred prior to the auditor's interventions?" That is really what I am trying to get a sense of

If you said to me, "Cam, we have only had one adjustment in the last 30 years," then I would be horrified, but I would like to know that information. If you said it was routine, and I got a sense of that -- but I am afraid that these three sentences do not enlighten me on the basis of the question I asked.

Mr Chénier: Mr Chairman, we can talk about adjustments at two levels. When the boards submit their financial statement at the end of the year, about 98% of them are readjusted. They may be very minor, but there are readjustments there.

Mr Jackson: Who readjusts what? I am sorry, Mr Chénier, if you could just explain to me who adjusts what? I mean, do they send it in less something and then they phone up and say, "I would like to change it"?

Mr Chénier: No, the regional office will call back and indicate not enough information, or the wrong information, and there were errors in the figures that were made and so on. So there are readjustments. That is one part.

Mr Jackson: Okay, so that really is completing the form appropriately, as opposed to an audit function.

Mr Chénier: Yes, that is one --

Mr Jackson: Okay, I just want to be very clear on that.

Mr Chénier: The second part is the audits themselves. If we talk about major discrepancies, there would be six to eight per year.

Mr Jackson: Out of a hundred and how many boards?

Mr Chénier: A hundred and twenty-three.

Mr Jackson: Okay.

Mr Chénier: Of course, you have to realize that there are not audits of every board every year. There are --

Mr Jackson: By the regional offices?

Mr Chénier: By the regional offices.

Mr Jackson: How many would the regional offices audit then, or examine in those kinds of detail?

Mr Chénier: In some areas, if you talk about enrolment, we talk schools; we do not talk auditing a whole board. We will audit a number of schools in a board, a sample, if you want. Usually it runs at the secondary level at about 15% of our secondary schools in Ontario. At the elementary panel, it is approximately 3% a year. In the transportation area, I do not have the percentage in front of me, but again there are transportation audits conducted and discrepancies are found.

Mr Jackson: Can you give us a sense of a higher or lower priority that you have for various financial activities in your relationship with boards? Would you say that because transportation is a flow-through and subject to the very sensitive areas of tendering in and -- I do not want to get into busing, but we know that you cannot always tender when there is only one supplier of service in the region. But it is a very sensitive area versus perhaps trusting a principal to ensure that he is staffing his school according to the collective agreement. I see two different needs to check. I could weight those if I were asked. Do you do a similar type of weighting, and therefore have more of your -- what is becoming more loosely defined as auditing of these -- do you do more or less in certain activity areas? Could you be more specific?

Mr Chénier: In transportation audits, there are 20% of school boards per year that are audited.

Mr Jackson: And how extensive is the 20%? Do you do all the contracts in a given board? Do you do one supplier?

Mr Chénier: Usually when transportation audits are conducted, they are conducted with the coterminous boards. The two boards in one area are done at the same time.

Mr Jackson: This was not always done? This is a recent function?

Mr Chénier: I would have to check that, I think.

Mr Jackson: I do want to deal with transportation at length some time this morning, because of my prior life on the standing committee. There was a lot of information shared by your ministry, and it does not seem to square with what we are seeing in this document. I will come back to that if I may.

If I can continue, Mr Chairman, I wanted to pursue my line of questioning on audit committees. Again, for purposes of the record of this Hansard, the information that I have received from the ministry today states -- and I am quoting and I want it read into the record because I do not want to paraphrase. This is exactly the information that was given to this committee: "The ministry collects information on all legislative committees. Audit committees are not currently mandated in the Education Act and therefore there is no information available at this time. The ministry will undertake a survey to determine the extent to which school boards have audit committees and the scope of these committees. We are aware that some school boards have already broadened the expectations of their audit committees to include comprehensive auditing. We will encourage the establishment of audit committees and/or other mechanisms to ensure accountability of the local level."

Now that that is on the record, I guess my concern primarily is that, as I understand the process -- and I have been around here for six years -- the auditor has identified a problem and he has communicated to your ministry. You are communicated that well in advance of the public's seeing the auditor's report, and the auditor has made some references to audit committees being helpful either informally or in the report. Yet I am not seeing a commitment from the ministry to either determine how many are out there, which you have confirmed, that you even -- I mean, it has been a year since the auditor first advised you that we had problems here, and I do not sense a commitment from the ministry.

I draw your attention to the report of the select committee on education, which also references some interest there. Now, that does not mean you are not committed this morning or as of last night when you prepared the memo, but how soon do you think we will be able to get a handle on how many are auditing and the nature of their audits? I will leave it at that for the moment.

Mrs Palozzi: I would like to comment on that. One, I think that you indicated that it has been a year since we had this information and that is not quite correct. I would suggest that action on many fronts in terms of improvements that we want to make and the overall accountability relationship of the ministry with school boards takes a fair amount of time in terms of determining the most effective changes that we can make and that we can implement, and that your comment on our inactivity on audit committees at this stage does not suggest that we would not take action on this front, but it does suggest that we are looking at and considering the various options available. It is no different from what is available within organizations. The Provincial Auditor will know the use of audit committees within ministry organizations and the comment around including an external participant on -- and I think it was the same comment from the select committee report, including a member of the public on your audit committee. That does not mean that boards do not have audit committees. So it is the variety.

In response, I would refer you to our efforts in terms of our plan on transfer-payments-accountability framework, our intended directions in terms of making improvements, and I would suggest that there are things that take time to implement. Audit committees are seen as a positive thing. The question in our minds at the moment is one of requiring, whether we require boards to do certain things, and that whole discussion is a difficult one for the ministry in many areas. Ray, maybe you could add to Mr Jackson's question.

Mr Chénier: I think we will require that boards have measurements of their own accountability. As to what form that will take, I think that the auditor indicated that audit committees are fine, and I agree with that. I think that what we have to do is we have to find out what mechanisms boards have or whether they do not have a mechanism to measure their own accountability. Then the ministry will have to work with the trustee associations to see, should we have only one and say all boards will have auditing committees, or should we indicate boards will have to devise an auditing mechanism and see if that can be worked out? As I said yesterday, I am not sure that all boards, depending on the size of the board or the community that it is in, could have the type of auditing committee that we may request them to have, such as one that would have external members and so on. I think we have to look at what is possible within the province, because it is such a large province and so diverse.

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Mr Jackson: Well, Mr Chénier, you have held public office and you are a civil servant; you have worn many hats. I understand what you are saying to me, but you were able to tell me yesterday in rather specific terms that the large boards had audit committees, and then today I get a report saying, "We do not know where audit committees are in this province, specifically." So I will leave that alone if I may, but my point simply is: I am not suggesting that you are negligent for not doing it. There is evidence everywhere we should be doing it in a proactive way, and the extent that you are not doing it is also a matter that this committee will address in its report and we hope to be helpful in that regard.

In light of the horizon and the problems in education, it is unusual that we are not trying to get a handle on how many audit committees are operating, when everyone seems to be talking about them. Perhaps the auditor can explain the earliest time -- I may be off by several months -- but my understanding of the process is that the government is advised of the contents of the audit and I was told that it was done pre-summer and that it was made public in the fall. Maybe the auditor can be more specific and maybe I was unfair to suggest that you have had it a year, but I do believe you have had it some seven, eight or nine months, as long as that amount of time.

Mrs Palozzi: Yes, in an interesting period.

Mr Jackson: Yes, there was a change of government. I do not want to dwell on that. I want to build on this principle that we are not getting the information on audit committees and now we are going to and that is appreciated. However, I want to go back to Mr Chénier's letter, which does not mention this concept of auditing committees. That is fine, but it is a memo to directors of education. Nowhere are we advised that this has gone out to the chairmen of school boards or the finance committees or maybe even the auditors of records for each of the school boards. I made some calls last night myself. Can you indicate to this committee if you have any assurances that this has been shared with school board elected people, your memo that you tabled with this committee?

Mr Chénier: No, I cannot assure the committee that it has been shared. I would hope that directors of education would share with their boards and the other administrators the memos that they receive from the ministry. That is all I can say at this point.

Mr Jackson: I do not wish to put you in a difficult situation. We have a problem in this province with directors of education. It is a specific recommendation in the report of the select committee on education. It is probably the most controversial one, recommendation 27, which talks about the dual role of directors as financially accountable agents and yet they are the chief educational officer. Mr Chénier has been in that awkward, difficult and challenging position himself as a director of the separate board in Timmins, and he knows what this is all about. But MPPs have expressed concern to the Ministry of Education that somehow boards are not implementing the spirit of the legislation, which is to be more consultative and to be more accountable.

I wonder how well we serve elected trustees, who are held accountable for these moneys in a public way, whereas the directors are not. They are held accountable through performance review, but trustees come and trustees go, as I said yesterday. Do you not agree that it would be more helpful if we were to ensure that matters that we are dealing with as a committee, of the sensitive nature of audits, should be shared at least with the elective people who were elected to ensure that taxpayers' money is spent wisely and safely? Because it is not us -- we are here in Queen's Park; it is those trustees who are elected at the local level. But I have talked to chairmen of boards last night and this morning who have never seen this memo and one did not even know the auditor had anything to say at all about school boards. This is a pretty with-it chairman of a board.

Mrs Palozzi: I think that, first off, yesterday I indicated it was a draft memo to begin with and then corrected myself and said that it had been signed as of Friday. I am unsure whether our mail system is quite that efficient that as of yesterday or last evening this memorandum would be available out in the boards. On the matter of our communication with directors of education, in our normal procedures we would communicate this type of administrative/financial information through to directors of education, who are responsible to their boards.

I think one of the other points I wanted to make was that earlier you asked why would we not encourage, or more than encourage, boards to have audit committees? Perhaps you implied that we should require that sort of thing. I think one of the things we have to deal with is that we have traditionally in the ministry not told boards how to run their operations. If you think about an audit committee as a mechanism for control, it really does fit in the category of how to accomplish something.

I think that we have to move in -- perhaps it is a cultural shift, perhaps it is requirements that change with time, but it is an issue that causes us some difficulty from time to time in terms of the kind of things we want to accomplish.

Lastly, if l could just comment, I referred to a report that I do not believe we have made available, but it is a report to Management Board on the ministry's framework for transfer payment accountability and the kinds of improvements we expect to make. I would like to table that with the clerk if I could. It is a report plus an appendix.

Mr Jackson: That is appreciated. If I may, just briefly, I think you have got other speakers, but I do not see a cultural shift on accountability. Frankly, I just think we have trusted the Ministry of Education to run its shop with elected trustees, but the economy and the times are requiring that we have fuller accountability across the board in all. However that has happened, I do not see it as a cultural shift, but I do not want you to debate that.

Perhaps we could move very quickly into this issue of retirement gratuity. Again, it is a recommendation that the legislative committee has made to the Minister of Education. You know that the retirement gratuity sits on the books in almost all cases as an unfunded liability. It is not required to be reported to the trustees or to the public, but as a benefit it is required to be reported in just about every other circumstance for public accounting. In other words, retirement gratuities stand alone and unique in the fact that they do not have to be reported. But in my board, it is a $190-million liability that is sitting on the books, which has to be funded in current-year funding.

You know the issues. I am concerned that we are not telling the public about this and that we could be helpful if in fact we got some feedback from the ministry, because it is, in my view and the select education committee's view, an important enough issue that it should begin to be reported so that the trustees are aware of it and the public is aware that this is a liability that has to be met out of the current contract agreements.

Mr Larratt-Smith: Perhaps I can respond. I am not entirely sure what response I can give to Mr Jackson. I appreciate the discussion of that in the select committee report, and that is still very much something that is under consideration in the ministry, that report. But I cannot be helpful to you in terms of a specific answer right now as to any changes of policy or any changes in the way in which the ministry would want to see school boards deal with this issue.

Mr Jackson: Okay. Well, Mr Chairman, I will yield, but I just wanted to make two very brief comments. One was the issue of auditing committees. It is well within the purview of the public accounts committee to make recommendations that your ministry be directed to maintain information on audit committees. We might even go to the next level, which is that you recommend guidelines. Or thirdly, we might even recommend mandating them.

On the other point about the letter, there is nothing preventing you from sending a copy of your memo to the directors of education and a copy of the auditor's report, because the two go hand in glove, to every chair of a board in this province. You would have no difficulty doing that to ensure that, just as we are the elected people and the auditor respects our function, within the ministry you would want to ensure that your directors of education are sharing this with the elected people. You would have no difficulty doing that or would you prefer it if we made that a motion?

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Mrs Palozzi: I believe we would have no difficulty doing that.

Mr Jackson: That is good. That is fine.

Mrs Palozzi: We did provide a copy of the full Provincial Auditor's report to all boards.

Mr Jackson: Yes. Well, I am sorry, I should not follow up, but I sent a copy to every trustee in my region but they had not received it. I sent it a month later but they had not received it from their board, and although the trustee association was referencing it, they did not present complete copies to each trustee. So I think it would be helpful if we ensured that that was shared, directed to the chair and members of the board because, as you know, there is this little thing that if it is addressed to the chair it is for the chair, but if it is addressed to the chair and the members of the board they are obligated to share it with their trustees. I do not want to get into that little problem, but if it could be clear on the record that this is to be shared with the chair and members of the board, I would appreciate that. Thank you, Mr Chairman. The committee has been most understanding of my line of questioning.

Mr Cousens: One question that bothers me has to do with the fact that the York Region Roman Catholic Separate School Board received grant money under the grant eligible microcomputer systems program, which is known as GEMS, and the allocation was based on the number of students in elementary and secondary schools in 1989, and when the board reported to the ministry under the GEMS program, it indicated that the grant was spent as approved when in fact it was not. Instead, $245,000 was spent for elementary schools while $812,000 was spent for secondary schools.

If the correct information had been supplied to the ministry, the board would have received approximately $400,000 less. I see that as a serious matter in a number of different ways and I would like to just take a moment or two to find out, first of all, does the ministry ever try to recover moneys that were directed to a local board under one program and were not spent for that?

Mr Chénier: Yes.

Mr Cousens: And if that is the case, the problem we are going to have is that if you try to collect it out of the York Region Roman Catholic Separate School Board, they are already at a deficit of $18 million and so do not be too keen to take it away from them or they will be closing schools and the kids will be in the backyards.

Mr Jackson: They will be calling you.

Mr Cousens: They would be calling me.

Mr Jackson: Exactly.

Mr Cousens: And I will be saying, on one hand you are taking money away and on the other hand you are not giving them enough, but there is a fundamental problem to our system when they have taken $400,000 that they should not have taken. So, how do you deal with that? It is too bad, it is my favourite school board, but we are dealing with a very serious problem.

Mr Curling: I thought Scarborough was.

Mr Cousens: Scarborough is not my favourite board.

Mr Chénier: Mr Chairman, I think that when Mr Cousens asked a question, "Do we take money away?" yes, but in the case of York region I will give you an example. Six portables were placed at schools where they were not supposed to be. One was definitely not approved, therefore we will take back whatever money was approved for that portable. The other five, which were put in schools or near schools where they were not supposed to be, we have checked, and yes, there was a need for portables there, so we have readjusted so they do not have to pay for those five.

In the case of the GEMS, there will be a revised approval for the elementary panel, and in the next year this readjustment will be reflected in the amounts they get for the other panel that was getting too much money. In some other cases, yes, we make a readjustment, and many have been done in the past.

Mr Cousens: Well, many or all or to what degree will you be going after -- I mean, you may as well take this example. It is $400,000 that has been used differently than it was supposed to be. Will you get back that $400,000 for the Ontario government into our general funds?

Mr Chénier: It was a revised approval, so I would surmise that that $400,000 will not be taken back but will be -- because what happened is that they shifted the money from elementary to secondary, if I understand the auditor's report correctly. So, what will happen in the coming years, the secondary will not get the amount that they should be getting and elementary will get the -- so it will be a balance over two years rather than one year.

Mr Cousens: I would have to say that that is not what you would call a good answer, in the sense that the Ontario government has -- what I want to do is, if the money is going to be allocated in a certain way, then it should be done in that way, and if they have been given $400,000 more than they should have been, there should be -- we are in a deficit position in the province of Ontario. If we are going to have any integrity to the books, there should be a full and accurate integrity on the way allocations are given and how they are followed through. I think it is rather a nice-guy approach in which we are able to go back and say, "Well, here are six portables and we are now able to justify five." If a board does not accurately reflect the requirement and if it is not approved in the first place, why are you into this business of going back and forth? To me, it is not the way that promotes good business practices.

Mr Chénier: I think, Mr Chairman, I may not have made myself clear. The board overspent it, one panel, underspent on the other panel and reported the right amounts as having been spent. For instance, I think the total amount was $1,057,000. They spent $1,057,000 but they only spent $245,000 at elementary and $812,000 at secondary and I do not have the figures of how it should have been spent.

So what happened is that they spent too much at secondary, not enough at elementary. But we had approved the two amounts separately. Therefore, what we are doing is that in this year, when normally they would get another grant for computers, we will just reduce that amount by $400,000 for secondary.

Mr Cousens: Could I ask the Provincial Auditor some questions on this matter? I am concerned with how you have a procedure for the whole Ministry of Education when you have allocated it one way and then when you find, as you did in this example, $400,000 that were spent another way. In defence of the Roman Catholic separate school board, I would have to be generally satisfied that they have an excellent system so I am not -- but I am dealing with an accounting question here. Is there a methodology that you would recommend or suggest that we as a committee look at for the ministry to recover funds that are not spent the way that they are supposed to be?

The Acting Chair: Excuse me for one second. Before you come on, Mr Archer, could you identify yourself for the purpose of Hansard please? Thank you, Mr Cousens.

Mr Archer: I was going to ask Mr Mishchenko to address that question.

Mr Mishchenko: Basically the answer to the question about the allocation of that $400,000 is the board was not entitled to that $400,000, period, based on the way the ministry's formula was set up. The approval was based on $791,000 for elementary schools using a formula that the ministry has established for all GEMS programs across the province, and using that formula for secondary schools it was $266,000.

So regardless of whether they switched back and forth, they were not entitled to $400,000 because, using the ministry's formula, the maximum they were allowed for secondary schools was $266,000, regardless of what they spent. So the $400,000 they were not entitled to, period.

Mr Cousens: Okay. Is there a way that you can suggest that our committee can -- I mean, I would rather do it in the presence of the ministry right now, in case there is some way in which we can resolve this kind of disparity to what they are allocated by the ministry and then the board gets a different amount.

Do you have any recommendations on how we approach this for other situations? What I see coming through from the ministry is the nice-guy approach, "Well, we will go back and revisit it and look at it." I think if someone is going to put in an incorrect invoice for an amount of money from the province, there should be a penalty that goes into that. How can you have a system with any integrity if you do not have that?

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Mr Mishchenko: The ministry does have a process in place. I guess if it is followed through in all examples or all cases where wards have received more than they are entitled to, the ministry does have a recovery process in place. When there are incorrect enrolment figures or things of that nature, the ministry does recover those funds. So there is nothing different about this method. If you find that the board has asked for more money than it is entitled to or it has received more money than it is entitled to, I mean, it is an automatic adjustment of their grant, and the money is refunded to the ministry or deducted from a future grant, but it definitely is taken away to compensate for any incorrect information that the board has supplied to the ministry.

Mr Larratt-Smith: I just wanted to underline that point. I hoped to make it a moment or two ago, but that is correct, and if the money was not properly paid, it is recovered in the ongoing financial relationship that we would have with that board in terms of its grants.

Mr Jackson: I think I sensed from Mr Chénier's response that since all this money was spent on computers, it is deemed to be half a sin. It is not a full sin because the money did not go to buy field trips, it went for computers.

We may as well put it on the record that we know that secondary separate schools in this province have this concern about marketing their programs until the full impact of full funding is felt, and a lot of secondary Catholic schools in this province do not have the capital resources that the public system has. I think I can interpret -- and I am not putting words in the separate board's or York board's mouth, but they are competing -- they are in portables and the public schools have fewer numbers of portables even though York public has a ton of portables. But I know some of these decisions were made because they want to accelerate access to better programming for the senior panels in our secondary Catholic schools in this province. So it is really only half a sin.

But the dilemma we have is that the auditor has an auditing function and as soon as one board hears that we can bend the rule, the others say, "Hey, we can bend the rule, too." We have to be really careful with this one, because we have to respect the board's need to make sure kids get access to the program but we really have to watch the fact that education and health are the fastest-growing elements of cost and the public is getting pretty angry at us about it.

I think I heard Mr Chénier suggest that for next year's allocation of the GEMS, or the GEMS that are in being now, your method of adjustment might be to say: "Look, boys and girls, you have had enough money for secondary. We will give you money for elementary but we will not give you money for secondary, and that is how we will even it out." Is that the kind of option you are looking at? Am I getting a sense of that, because I think if I was reading between the lines, that is what Mr Chénier was maybe hinting at as an option that you are looking at.

Mr Chénier: That is right, that is possible, because in some cases, where you cannot take blood from a rock, as Mr Cousens indicated, alternatives have to be arrived at.

Mr Cousens: Is the auditor satisfied that there are procedures in place that -- I guess the first element is that, once it is found, the money is recovered by the ministry, and I am hearing the answer yes to that.

Mr Archer: I think as far as the recovery is concerned, once it is found, the key issue is how much of this is going on. Remember, we only looked at two boards and there are 123 of them out there.

Mr Cousens: That really leads to our next question, as to the surveillance of the way in which money is being allocated, and it is obvious that the Provincial Auditor has identified a serious problem. When it comes to your attention, you are able to act upon it and we can recover the money. But unless you know that -- I am just wondering, are there any other ways in which you can assess the amount of money that is being misused within our provincial system? To me we have got two boards and we have seen it in both cases. Therefore, we have got other boards. What can be done to make sure that you are monitoring this more closely? Is it something wherein the auditor of the local board is in there, that you have a special procedure to look for in that instance? Are there any methods that we as a public accounts committee can be satisfied that in the future we are not going to have the assistant deputy minister and colleagues in here to report on this kind of issue?

Mrs Palozzi: Mr Chairman, if I might, I think I indicated perhaps yesterday that within the ministry structure and organization there are a number of players who have some responsibility for parts of the process in terms of looking at that accountability relationship. Mr Chénier spoke to the regional office performing a verification process. We have an internal audit branch within the ministry that, through its cycle of audits, incorporates in a program sense looking at the programs, and we intend to expand our capability in that area.

There is a requirement for external auditors. We have discussions going on around ways in which we can look at the use of external auditors to improve our overall capability. There are a number of players in this perhaps evaluation and control mode that we have with boards so that between regional offices, school, business and finance branch, internal audit branches, external auditors and, lo and behold, the Provincial Auditor, I think we have an interesting scheme of different levels of review and an auditing that can go on that can supplement and complement each other. I guess by that statement I am saying that we are looking to expand our role in that whole area. The extent or the speed at which we do that, of course, depends on the availability of resources and identifying all the various responsibilities and clarifying that with school boards.

Mr Cousens: The auditor asked -- I will cut off as soon as someone wants to get into it, Mr Chairman.

Mr Hope: Okay, cut off.

The Acting Chair: We do have other people wanting to put questions.

Mr Cousens: Just quickly. This was not identified by the board's auditor, and it had passed by them so it was you who picked it up. So, what can we do to cause board auditors to be more conscientious about determining whether or not boards took the moneys and spent them properly?

Mr Archer: It is true, as far as we know, at any rate, that the board auditor did not pick this up, but then I do not know that the board auditor's terms of reference would require him to check it. One solution might be to have that built into the mandate of the external auditor, that he check at least a sample of their special grants to make sure that they are spent in the way that they were intended.

Mr Cousens: Could that be something, that our committee looks at in the recommendations that we are coming forward with, so that there is a series of guidelines that auditors to boards would be required to follow? Would you comment on that?

Mrs Palozzi: We would support that, because in fact we are already looking at that and talking with the auditing community about ways in which we can accomplish that to express those requirements for the external auditors of boards.

Mr Cousens: Thank you very much.

Mr O'Connor: Just moving further along with some of what Mr Cousens has actually touched on, York region shares some of that with Mr Cousens representing that area, so I do have concern in there. The $18-million deficit in that area I am sure has a lot to do with the substantial growth that has taken place. It is the fastest-growing region in North America right now.

Mr Cousens: It was before we got this recession.

Mr O'Connor: It was, yes. Anyway, right now, it seems to be the way the grants are allocated and the tendering from that board seems to be -- there was some sort of problems and a watchdog or a committee, as has been suggested, to take a look at some of the programs -- the GEMS programs, the portables, transportation. There seems to have been a problem with transportation there, leading to upwards of around $1 million there alone, and that some savings could have been had for that board in particular -- and enrolment grants and any other grants that they may be receiving. Is there any way that the ministry has of following up on the grants that they do receive? Perhaps you could share some of how that works.

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Mr Chénier: There will be further audits. When boards have been audited and there are discrepancies, there are follow-up audits the next year and in following years. I think in the case of many boards in the province, and especially Roman Catholic separate school boards, because they are coterminous with a public school board and in order to be competitive they have to maintain a mill rate that is about the same as the coterminous board, that helps to create deficits also, because they do not have the base to spend above ceilings if they do not raise their taxes to a higher level than their coterminous board. That helps to create rather serious deficits in many cases.

Mr O'Connor: Right. What about some of the shared revenue that they might get from businesses and commercial -- that tax base?

Mr Chénier: They receive an amount, but the amount is not totally equivalent and I think that my colleague --

Mr Larratt-Smith: I can speak to that. Currently there is a phasing in, going into the second year of the phasing in over six years, of access to commercial and industrial assessment, generally speaking on the same splits as residential and farm assessments, although there are some variations in the way some of that is calculated. But that is being phased in rather slowly at a one-sixth, one-sixth, one-sixth rate per year, both to protect the shift and to meet a commitment that was made to public boards and to provide this as a gradual increase. So that perhaps is not as useful in an area that has experienced the very explosive growth that York region has.

Mr O'Connor: Another area that was pointed to was the hours worked and absenteeism. l do not know whether it is because there are so many people there that the teachers have to take a bit of time off, but in the funding that goes for salaries and stuff like that, is there any way that they respond back to the ministry, where there could be an absenteeism problem or --

Mr Larratt-Smith: That is the responsibility of the school board, which is the employer of the teachers, and the collective agreement is negotiated between the board and the local affiliate of the appropriate teachers' federations. That is not something that we would be directly involved in, no.

Mr O'Connor: Right. Just one final thing. The trustees are ultimately, then, responsible for the budget of the board. They also realize too that under the Education Act they are not allowed to operate in a deficit situation. They are in a very awkward position, now being held accountable, as they always should have been. Is there any guidance going to them, some special guidance to try to help them through their problem here?

Mr Larratt-Smith: Yes. I think it is fair to say there has been a great deal of discussion between ministry staff and the boards, particularly those that have had difficulties. You are correct, they are not allowed to budget for a deficit. There are provisions where a deficit occurs to arrange for its retirement over a maximum of a three-year period, and in the case of the boards that are having real difficulties, the ministry has been working with them to help them find ways to meet their obligations under the law.

Mr O'Connor: Within the next three years from their first deficit occurrence it does not appear that they are going to be able to retire that debt. Will there be further assistance then?

Mr Larratt-Smith: Well, the requirement is that they produce a plan that will retire the debt over that period of time.

Mr O'Connor: Okay. I guess then I will have to ask the board this afternoon maybe where their plans are at. Thank you, Mr Chair.

Mr Curling: I just want to go back to my question that I asked earlier on. l want to tell you, though, that I was satisfied with the response in general, that you responded adequately in general to how we -- how the ministry develops a plan in order to share resources. I read the opening remarks by Mr Chénier and in it there is a part talking about the improvements reflected in the ministry's move towards strengthening accountability and you focusing more on value for money.

Mr Cousens and Mr Jackson raised the point about accountability and especially in a time like now, where every dollar counts. So I want to be a little bit more specific. In my opening, first question, I did ask about Lakehead, and I want to be more specific, because there in the separate school board they are planning a secondary school and I think the cost runs about $6 million. The population it will serve is about 130 students. The local public high school, it is said, has room to accommodate those students in pursuing their secondary schooling. Have we developed in specific a plan where we may not spend that $6 million, building a school for 160 students, where it could be accommodated elsewhere?

I think that some serious consideration should be taken to sharing the benefits to the students in setting up their programs. So that is $6 million that maybe could be saved. It is quite possible that the school has got to be built, but it seems to me there is room there to accommodate that without building -- without that capital expense of $6 million for that school. Could you reflect on that for me?

Mr Chénier: If you are talking about the transfer of buildings under Bill 30, there is PIC, the Planning and Implementation Commission, which will meet with the board either to facilitate or mediate, or it can go as far as arbitration. What PIC will do will be to try to bring boards at some point to maybe share facilities or, in the case of underutilized buildings, to transfer to the other board in order to not have to create capital projects and at the same time create additional pupil places when those are not required.

In referring to the Lakehead board, I regret that was before I came in as ADM for the learning services division and I do not know what kind of final agreement was reached there. But we are presently involved, or PIC is presently involved, in negotiations in many areas of the province to bring about transfers of schools from one board to another under the Bill 30 arrangements, so that we do not have to spend additional capital money that is not required.

Mr Larratt-Smith: I think we should get you the details on the exact status of the $6 million in the Lakehead board rather than just talk off the top. I would want to emphasize, though, that the minister has made it very clear that she is keen to see boards share to the greatest degree possible, and particularly in the recessionary times, as you have indicated, to not be making expenditures that are not needed where a more positive co-operation between coterminous boards will achieve the appropriate result.

Where an issue has been fully resolved and where an agreement is in place, and where money has been allocated in the capital grant plan, obviously it would be difficult to make changes to some of those agreements at this point in time. We would want to get you the exact details on where the Lakehead stands at this stage.

Mr Curling: Am I understanding, then, that you will get back to the committee and say, "Here is the status of the $6 million being spent"? But am I understanding too that if you say if it is started but maybe not built yet, it is hard to stop? I was getting that it is very difficult, once it is in motion, to stop this.

Mr Larratt-Smith: With respect, I think there is also an issue here of the ministry having received an agreement that has been made among boards. We have wanted in the past to encourage boards to make appropriate arrangements at the local level and encouraged them to do so with some facilitation from the ministry, and that too speaks to the issue of people trying to resolve their own concerns as fully as they can within the sometimes very, very big difficulties that occur within communities as they try to sort out the use of schools that many people have attended over a long period of time.

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Mr Curling: Mr Chairman, just bear with me a little bit here because I just want to get an easy answer and I know it is difficult. If the $6-million project has been approved but not started, because of the good intention that went through all this it is extremely difficult to stop it -- is that what you are saying? I was getting that kind of a drift.

Mr Larratt-Smith: I think we are working on assumptions here. I could perhaps just check on a couple of the figures and give you the information much more clearly. If the committee goes on to something else I could come back in about 10 minutes and I can --

Mr Curling: I do not want an answer right away, if you could look into it and come back and give us a status report.

Mr Larratt-Smith: Yes.

Mr Curling: That is not where it stops, itself. If there is some recommendation to say yes, some of the programs and some of the resources can be accommodated but because we have approved it before we cannot stop it, I would like to see that -- where the possibility is yes, that could be stopped and we could save ourselves millions of dollars. I know, of course, that there may be local outcry, but I tell you that the Treasurer will be happy to know that resources can be saved, can be accommodated, that a couple of million dollars, maybe $4 million could be saved, maybe $2 million already down -- I do not want to call it down the drain, but the fact is that if the report comes back, could it state actually whether or not one should really proceed with this, that all the resources can be shared around the community?

Mr Larratt-Smith: I will undertake to get what information I can.

Mr Hope: Just sitting here listening to some of the conversation, and looking at the auditor's report, it should have been something that should have been done years ago. As I sit here and listen to where most of the questions are coming from, I guess I ask a lot of questions in my head about why were these questions not asked years ago to make sure that some of the problems that the auditor has indicated were not addressed in previous years. As I look at the auditor's report and I hear a lot of the conversation --

Mr Bradley: It must have been a weak opposition in those days.

Mr Hope: -- a lot of the conversation taking place --

Mr Ruprecht: Didn't you understand what he said?

Mr Hope: Some of the things that are put in here as far as recommendations are concerned, because we are dealing with people who are elected, not appointed to boards, and we talked about the trustees back in our communities and if we start holding a club over their heads, I guess, we are going to hear a cry from those. But I guess until recently under the whole issue of taxes, as school boards have become a public identity in themselves in smaller communities -- I do not know about larger communities but I know in smaller communities -- they have become in the public's eye and there is an interest by the people in the area about the school boards and their jurisdiction. It is called in my community -- I am speaking on behalf of some of the people in my constituency -- the old boys' club, but it is not all made up of men. But it is just that the responsibility to the community was not there. How many people actually voted for school board trustees? I know this question comes out and as it becomes more of an interest we are probably going to see a change of structure in a lot of municipalities in their school boards.

I understand the interests of accountability of provincial dollars going to these institutions, but as we start putting more restrictions on those boards, are we letting those elected officials be responsible for their actions. As I hear about an auditor, an auditor, an auditor, we are creating a line of bureaucracy as we keep going. I guess my question to you is, are we not creating more confrontation than we are trying to solve a problem?

Mrs Palozzi: If I could try to comment on that, I spoke in my remarks yesterday about the dual accountability of trustees to their elected officials and to the government of Ontario for the transfer payments that are flowed to boards. I think that every level of government is open to scrutiny both by the public, its electorate, and obviously, control mechanisms: a Provincial Auditor, many types of mechanisms are there. So perhaps on the one hand, strengthening some of those mechanisms at the local level is not necessarily an extra -- I think you referred to holding a club over their head. Perhaps there are ways in which, however, we can develop those mechanisms and implement them collaboratively and co-operatively with the local school boards. That will make it more palatable to some extent and make it more understandable.

A clarification: One of the recommendations, I believe, in the Provincial Auditor's report was around roles and responsibilities, and trustees' understanding of their roles and responsibilities. I think that it is all in there together. I think my answer to your question, "Will that create more tension, to some extent?" is that I think it can, in the sense of a change in the operating environment, but perhaps if we approach it in a co-operative and collaborative way and with an understanding that accountability, as Mr Jackson suggested earlier, is a very common theme and a very important and strong one across the government, given our economic environment, and so that we all, presumably, want to be doing the right thing, and so, yes and no. I do not mean that to sound like a vague answer, but I think it is a complex sort of question that you pose.

Mr Hope: Yes it is. Thank God for the auditor's report, that we have some direction now that we can take to make sure we clear up a lot of the problems.

I am not and I do not plan to be an expert on Bill 30, but there are some questions and I heard some of the comments, not necessarily what I am reading today, but what I am hearing out of the comments that are coming from both sides -- that side and that side; not this side -- about some of the things that are dealing with the sharing of facilities or the sharing of equipment between the two school boards. I am not an expert because I have not been out of the school system all that long. As most of them have stated, they have sat as school board trustees for years. I am not that fortunate.

I guess my question would be, is it going to be as easy as the words are being put out, because of the -- how would you say? -- turf of the school boards and being more co-operative and sharing? Yes, we talk about the economic hard times, but I guess when you start stepping on my turf then you have got problems, and is it going to be harder than the words being said?

Mr Chénier: I think it is obvious that, if you have been reading the papers lately, and probably in every part of Ontario, most of the members here probably have a school accommodation dispute in one part of their riding or another. It is difficult. I think the whole idea of ownership and turf is very apparent in the negotiations or facilitation that is taking place. But in some areas agreements have come quite easily. Also, I think it depends on the relationship between coterminous boards, and sometimes among personalities on the coterminous boards that are going to share or transfer buildings, and so on. I do not think there is a pat answer, but --

Mr Hope: How would we then deal with the right of the teacher, who is part of an organization, who has also rights? Are we going to be making sure that we make appropriate changes or appropriate requests that are going to deal with the teachers themselves, as far as their jurisdictional rights are concerned?

Mr Chénier: When it comes to Bill 30, when there is a transfer of a school, an en bloc transfer, if you want, the teachers transfer with it, and for a number of years after, if it is the public school transferring to the separate school, the teachers who are redundant in the public schools automatically have a job in the separate schools. So there is job protection for the teachers who are caught in a situation where a school is transferred.

Mr Ruprecht: I wanted to ask a question in terms of the process and perhaps progress this committee has made. On the handout that I think the ministry gave us this morning, under section 3, you talk about transportation. That is your handout, correct? You indicate that the ministry has adopted -- that is what it says; I am reading from your handout -- "has adopted the Provincial Auditor's questionnaire, challenging boards to consider practices which will result in better utilization of transportation dollars."

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My question here would be, when you challenge boards to consider practices, are you going to do that from now on, or when have you adopted this practice? Is this something that has just come out since yesterday, that you have now accepted Mr Archer's recommendations?

Mrs Palozzi: Vis-à-vis the transportation issue, in terms of the Provincial Auditor's questionnaire, I think it is an approach there, encouraging and challenging boards to look at their own practices.

Mr Ruprecht: So you are going to do that from now on, is that right?

Mrs Palozzi: In terms of the transportation area? Yes.

Mr Ruprecht: From now on?

Mrs Palozzi: Yes.

Mr Ruprecht: Sorry I interrupted you, because I have another follow-up on this.

Mrs Palozzi: No, that is fine. That was fine.

Mr Ruprecht: Okay. So when you say you are going to challenge it, right, there is no -- you have not mandated it, so I suppose there is a big difference between challenging a board and mandating the board. So when you would challenge the board, what will you do? Will you simply require them to fill out a questionnaire that the auditor has structured?

Mr Larratt-Smith: I just came in, in the middle of the question, so I hope I have captured it all, and Mr Ruprecht may want to come back to me on this. What I was indicating was in response to the concern that the Provincial Auditor had expressed in his report, that the policy behind the transportation grants was such as to not encourage a degree of efficiency and sharing, because the marginal dollars in the transportation grants, existing transportation grants structure, was such as not to give the board any advantage in acting in an efficient way of organizing its transportation system. I had indicated that that is one of the issues that will be addressed in the 1991 GLG, which will be announced shortly -- a change in that, which will not require sharing under certain conditions but will make it much more advantageous from a cost point of view for boards to be working together wherever possible.

Mr Ruprecht: Well, thank you very much. I think that you are answering that question okay.

Then let's go to the audit committees again -- one of, I guess, our favourite subjects, Mr Jackson. You are saying in the audit committees that the ministry collects information, but the audit committees are not currently mandated in the Education Act. But your final paragraph says, "We will encourage the establishment of audit committees and other mechanisms to ensure accountability." Again, you are going to encourage auditing committees. Now, unless I missed it when you answered the question that Mr Jackson raised, what will your procedure be when you say you will encourage auditing committees? In other words, I can see a number of options that you could exercise. Which of these are they going to be, when you say you will encourage them? Finally, or (b) under that question, I suppose -- that was question (a) under that section -- (b) would be, when you encourage the school boards to do the audits, are you empowered to enforce your own recommendations?

Mr Chénier: At this point, audit committees or audit mechanisms outside of the regular are not legislated. As you know, in the act -- I cannot recall the section, I think it is 19 -- they indicate that there are committees that are statutory committees of the board. This is not one of them. This is why at this point we are talking encouragement. In other words, if we wanted to make audit committees or other audit mechanisms mandatory, we would have to legislate it.

Mr Ruprecht: But how would we encourage them? That is my first question. How will you go about encouraging them? What is the process? Are you going to call them up by telephone, or are you going to send them -- what are you going to do to encourage each board? That is what I understand, you are going to encourage each board?

Mrs Palozzi: There are --

Mr Ruprecht: All the boards.

Mrs Palozzi: Shall I try to respond to that?

Mr Ruprecht: Yes, sorry.

Mrs Palozzi: Okay. There are a number of things that we deal with with school boards from a point of view of trying to encourage and motivate and move boards along to certain behaviour. That applies to a whole range and host of behaviour, and there are mechanisms such as sharing information on best practices, such as holding information sessions or training sessions, sharing, providing, developing a set of guidelines that they can use without going to that final step of legislating or mandating or requiring them to do something.

Many of the things that we believe we accomplish and we accomplish well relate to our process of encouraging and working with boards to get them to achieve the kinds of things we set out. So there are mechanisms in place and our regional staff would establish forums where they meet regularly with school boards and discuss issues and on those agendas, information -- in fact audits -- these audits have been discussed and the fallout of them and the kinds of issues, the learning that occurs from these kinds of experiences. So we believe we have a number of mechanisms in place to deal with that and we use them differentially depending on the item that we are dealing with.

I think your (b) question was around the power to enforce when there are findings when you do an audit. When there is an audit and there are findings and we are empowered under the Education Act in terms of requirements that are the expectations of boards, and it is within the act and we are empowered to the extent that that act specifies.

Mr Ruprecht: I appreciate your answer and I realize that you have to strike a balance here since you are not legislated to do that, in a way. But I want to switch, if you will permit me Mr Chairman, to Mr Archer just very briefly, and ask Mr Archer perhaps, are you somewhat encouraged, not satisfied I guess, encouraged that this practice will provide you with enough information or with enough force, I guess, to do your job? Or will your recommendation, let me rephrase that then, will your recommendation be satisfied with this kind of action that the ministry will pursue?

Mr Archer: Well, we are certainly very encouraged by the reaction of everybody to the audits of school boards and in particular to the ministry's actions, and we recognize, as you mentioned, that it is a very delicate situation. There is a middle road that has to be found because we are dealing with two bodies, both of which are separately elected by the public. We feel the tone of the ministry's comments is one of encouragement as opposed to mandating, and I think that is the route that has to be followed.

Our reading of the situation out in the school boards is that they are willing to get assistance and to be encouraged and to try to improve the situation, so at this point we are quite pleased with the results that have come out of the audits we have done.

Mr Larratt-Smith: If I might, Mr Chairman, earlier on Mr Curling was asking about the Lakehead situation and I was being very cautious at that point in time because with these individual circumstances it is hard to keep a handle on all of them and it is also very important to get the information correctly. Mr Curling and I had a brief word about it. I think I can give you information both on the Lakehead and on the Kenora situation, which was the other one that he mentioned to me.

In the Lakehead there is an agreement that is fully in place, and two schools have been transferred from the public board to the coterminous Catholic board. The province, as part of that agreement, provided some money for the upgrading of schools on both sides of the equation so that there is, I think, a strong sense in that community and certainly a sense in the ministry that that is a solution which has been achieved and has had benefits on both sides.

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The Kenora situation is a little bit more complicated in that there is not an agreement in place. The Catholic board has extended but has not had its own high school and is currently operating in portables attached to a senior elementary school. What is in fact happening right now is that there has been an allocation for a site and for some dollars, which would serve to build a small high school to accommodate the Catholic students. But that is being worked on at the moment by the ministry and by the ministry's regional office with both boards, with a view to trying to maximize and improve all of the facilities for both boards in that community, really taking into account the elementary as well as the secondary schools.

So that is still a set of discussions that are in progress with really the objective of maximizing the plant on both sides and the availability of schooling. The Kenora public board, for example, is receiving some money for some new tech facilities and there is already an agreement, I understand, that the Catholic board students will be able to share in the use of those facilities.

That is the kind of solution that we are looking for in the Kenora situation and hopefully the money, which would be spent by the ministry, would be part of producing that total solution that would cover both boards and would help renovate and upgrade and make appropriate the facilities that both boards would have to offer students.

Mr Curling: For my own explanation, a supplementary to that, Mr Chairman: Am I understanding, in what seems to be a difficult situation that we have here, that the separate school board, you said, has no high school there and so therefore it is making its mark as its first high school in Kenora? Is that it?

Mr Larratt-Smith: Well, I understand they are currently operating a high school, but in portables and with some of the facilities in a senior elementary school. That is right.

Mr Curling: The ministry must have done all this looking at whether or not there are some public schools that could be taken over and established as a separate school, but I presume the separate schools do not want that. They want their brand-new, nice school and it would be an easier thing to build a nice school, establishing the first separate school high school there.

Mr Larratt-Smith: I believe there are some very old schools in that community, and part of the issue has to do with which schools can best be renovated, which schools should be taken out of service and how should that best be done to accommodate a population that is roughly two thirds in the public system and a third in the Catholic system in a way that will work for both of them. It would appear that the discussions are going on the basis of a very small, largely academic secondary school for the Catholic students and then providing some degree of access for them to the tech facilities that the Kenora Board of Education is going to be putting in place. That again would meet the kind of criterion that our minister has indicated an interest in, of encouraging sharing and encouraging working together so that the community sees these accommodation situations as win-win rather than win-lose situations.

Mr Cousens: I understand the staff were going to give some insight on board sharing this morning. Were you going to table some report on examples of board sharing today?

Mrs Palozzi: Board sharing?

Mr Cousens: Where you have board resources that can be shared one board with another. Was there going to be any further elaboration on that today?

Mrs Palozzi: I do not recall that we were to give examples.

Mr Cousens: Okay.

Mrs Palozzi: I recall your question around, "Could you give examples around value-for-money initiatives?" Mr Chénier, I think, started to give some examples and sharing of resources was in that response. I suggested that we would come back to you with some examples of the types of value-for-money initiatives that we attempted to lay out for you here. I apologize if I did not understand that you wanted examples of boards sharing resources. We certainly could provide that information to Mr Cousens.

Mr Cousens: I think that would be helpful along the way because, in the auditor's report -- do not worry about that; to me, it is something that we are going to want to look at -- there is a section under page 121 of his report: "more sharing of board resources should be explored." One of the points the auditor made there was that "there were insufficient ministry incentives for sharing." That could be a financial incentive; it could be reward incentives. Could you comment on what your ministry could do to respond to that expression of concern that was tabled by the Provincial Auditor?

Mrs Palozzi: You are quite right in that it could be financial incentives. Very often, the most effective thing that an organization can do is to provide the co-ordination and bringing together of the interested parties. I can give you, for instance, one example in the area of information systems development where within the ministry we work with some boards in terms of looking at and developing information systems that they require for administrative purposes. There are other examples where, given a level of resourcing, it does take effort to co-ordinate and to put staff time to identifying those issues, bringing the boards together.

I think I referred earlier to processes of information sharing, sharing of best practices, developing guidelines, providing training sessions. Those are all mechanisms that can be used and I think the statement is a valid one made by the Provincial Auditor. There are probably, in all sorts of ways, in all kinds of organizations, endless opportunities to some extent where you could maximize the collective resources of that organization. It does become a question of what level of resourcing does the organization have to put to that and in what order of priority. What sorts of issues are at the top of the list to tackle first? But there are a number of ways, including financial incentives.

Mr Cousens: I think the auditor has put his finger on something that could be a political issue, maybe after there are a few more funerals, because it is going to take a few more people to fade away before we are going to see one system of education where both public and separate will retain their own unique systems within the school, yet there could be one common administration. That is when you would have a far larger amount of sharing going on and it would take legislative authority to institute that. It is quite a step in a direction that is beyond what we have done earlier.

But I have to suggest that the ministry and boards would be well advised to try to find voluntary methods of having sharing of resources in as many ways as possible, because I think it would do an awful lot to take the wind out of the sails of those who might otherwise try to legislate a common administration between both public and separate. I think it will happen unless you start seeing something going on at the local level. The auditor is a very careful person with his staff not to make political statements, but I would say that this one comes very close to someone's political agenda. I just would be interested in your little comments if you have any. I realize that you might well be in trouble if you say too much.

Mr Larratt-Smith: I do not think that is the case on this issue because the minister has been quite clear in a number of public meetings that she has had that she wants to encourage sharing at a community level of people deciding that they can make these things work at a community level within the framework of all the constitutional rights that we are aware of. She has asked us to look at trying to reduce some of the artificial impediments which, as Dina said, are not necessarily -- one of the aspects is financial but sometimes it is not financial; sometimes it is simply because of rules in place more complex to work with another coterminous board or with a local department of recreation or on a common facility, for example, things of that nature. That is something that we are actively looking at right now so as to enable communities, particularly in a time when money is scarce, to be able to continue to deliver their program and to meet all of those rights and obligations, but to do so in as efficient a way as possible.

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Mr Johnson: It is interesting being on this committee and wanting to pose a question to the presenters. Of course, you listen to other questioners in the interim and maybe it modifies somewhat what you want to ask or maybe it confuses you sometimes, I would even suggest.

I think that, as I have listened to the conversations today, something that has come to my attention is the fact that there is a funding need and a funding non-need. It seems to depend on the fiscal situation that the provincial government finds itself in. There are times when it is easier to get funding and times when it is less easy to get funding and certainly I guess we would find ourselves in a time when it is less easy right now. However, I had always perceived there to be a need for accountability in any expenditures the provincial government made, and certainly I realized that school boards like their autonomy and their elected representatives may or may not be competent. But I would like to suggest that, by and large, they would run a competent organization. When I look at some of the statistics that I have got as a result of the audit, I see there are some shortcomings and certainly the audit that the auditor has made points these out. Until that point in time, I guess it would not be exactly clear that there were these shortcomings.

I am a little concerned when I see there is a school board that has a deficit situation and that it has been stated to be illegal. That certainly concerns me. I know, having worked for the government in another capacity for a number of years, that there are budgets that ministries look after and certain different little bailiwicks around the province have their own budgets. There came a time in the year when it was, in good times, when there was a lot of money flowing out of the government coffers, when it was easy to access these funds. Some of the non-need funding, I would call it -- or let's call it unnecessary funding; we could even call it frivolous funding -- would be made to certain ministries, or by certain ministries to their agencies out and around the province. That has always concerned me because it seemed to me that that was not good representation by those agencies or by the ministries of the funds that were made available to them. It concerned me because I always thought that there was a better use for some of the funds that were available. I could go on and on about this, I have no doubt, but let me get right to the point. Mr Curling, for example, said earlier that at this point in time every penny counts. Well, I would like to suggest that at any point in time every penny counts, except that sometimes there are more pennies to count than others.

Mr Curling: Profound, profound.

Mr Johnson: Having said that, the question I wish to ask is: We have an example of a school board here that has a deficit or debt of $18 million that costs them a substantial amount per month to service. Is this a usual occurrence? I am not familiar with this, of course, so I have to ask this question. Is this a usual occurrence? What kind of frequency does it happen with? What kind of assistance do the school boards get with regard to this and do they get out of these deficit situations?

Mr Larratt-Smith: There are provisions in the legislation for what is called an undue burden grant where boards have a highly unusual burden placed upon them. However, in the specific kind of situation, the deficit situation that York RCSS and a number of other boards have run into in the last several years, it has really come as a result of some of the changes over the last few years. There is no regular ministry program available to meet those particular problems. The assumption in the act and in the regulations is that school boards are responsible, within the reasonable limits, for managing their resources so as not to have a deficit. They have the taxing authority locally, somewhat constrained, as my colleague says, by the coterminous situation, but none the less they have that authority. As long as it is not something that is completely outside of their ability to control, it is their responsibility to manage their budgets within the ability of their revenues. So the Education Act and the ministry's granting policies do not provide a special way of handling those situations where boards do not choose or find themselves constrained to the point where they do not meet those concerns.

There were a fair number of boards -- 26, I believe, in the last year or so -- that were expressing difficulties in their preliminary material to the ministry about being able to meet a balanced budget situation. As I indicated in answer to an earlier question, we have been working very hard with those boards under the conditions of the legislation as it exists, which requires that they not have a planned, budgeted deficit, not be in a situation where they are not working toward overcoming a deficit in the three-year period. So far, we have been very pleased with the responsiveness and the commitment of boards to try to do that, working towards that kind of a plan. That is the situation, as I say. The only exception to that would be the undue burden situation, which would not be something that would have been considered in the context of, say, the York region board.

Mr Johnson: There is an expectation, I am sure, among boards of education that certainly they have criteria to meet and a formula they use to receive the funding from the government. But an impression I have -- and I may be wrong -- is that there is a lot of money at Queen's Park and it is available and we apply for that and we get it, given the parameters of the criteria and the formula.

Mr Larratt-Smith: I think it is important to note that, with the general legislative grants, it is one of those areas of government funding where we manage to spend it all every year. It is not a case where you sit there with a problem, one way or another. There is a commitment that that amount of money will be spent, and it is spent. It is spent initially on projected, and then on revised projected, enrolments. But the expenditure is against the needs of the system as a whole and against this principle of equity, however limited it may be, since it only applies to the underceiling. The basic expenditure, as was being commented yesterday, is something that has not been reviewed in recent years to determine how realistic that amount is. But none the less, it is spent against that principle of establishing equity across the system -- equity of resourcing and equity of requirement on the local taxpayer, both for rich and for poor boards.

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Mr Johnson: I believe, too, that school boards plan a budget and certainly they would, within that budget, identify their needs. I would interpret some of their needs to be frivolous although that may not be the case. Where our school board had real and genuine needs for funding, it is evident too in these audits that there are some shortcomings. Transportation was one that I can recall immediately where there was an opportunity to make some great savings and that did not occur. It might now as a result of this audit. Again, I just have some concern that there are some things that are not nearly as important, and I would consider non-essential or non-necessary, that are funded, and in the good times they certainly are funded but in times of restraint they would tend to be overlooked or maybe shelved.

What I want to know, just for the final part of this is: If a school board gets into a situation -- where I understand they have a tax base that they draw from, and there are many ways in which they can raise money to pay off their debts or, in fact, pay their interest on their debts -- is it within the legislation, or is it something that any government would have to worry about with regard to bailing out a board of education because they got themselves in such a mess that they could not see in the future an opportunity to become again in the black?

Mr Larratt-Smith: That is not a circumstance that we have had to contemplate and, as you say, the main reason for that is that school boards do have access to a tax base of their own, which makes them quite different entities from something like a community college, which is entirely dependent upon funding from external sources. It also means that locally elected trustees have the responsibility to make those decisions, particularly the decisions outside the area of direct ministry funding, about what they are going to spend money on. That is their responsibility as long as they are not breaking the law, as long as they are not spending money on things that they are not allowed to do. I think we have to respect that.

I think the entire context of this conversation is one of moving rather gingerly in this area of dual accountability, of not wanting to be remiss in the spending and accountability for provincial money that is going to school boards -- a very large amount of money -- but, at the same time, to be wanting to protect and even enhance the accountability of the local school trustee. In fact, I think it is in that context -- coming back to the opening statements that we made -- that we are particularly pleased to have this kind of report, because the Provincial Auditor has, over a period of years, moved into the area of transfer payments in a much more proactive way. That is useful to us because it provides a very high-profile signal to school boards about the accountability they owe the province. It also enhances the kinds of directions that were outlined in one of the many documents that we passed around this morning on our plans -- which were submitted to the Management Board -- about how we want to improve the level of auditing and accountability around the specific things that are the key elements in our grants: things like enrolment, the transportation activities and some of the more specific areas where the ministry requires either an output or both a level of expenditure and an output as part of the money that it gives to school boards.

Mr Johnson: I agree. I think that the audit process is very important, and in fact I am surprised to know that it is only recently, or appears to be only recently, that it has been as extensive as it has and as conclusive as it has, and I would like to see that increase, personally; I would like to see more audits done. I think ultimately we do have a great responsibility to the people of the province and the accountability of expenditures made.

With regard to the municipal tax base, that does not directly affect us at Queen's Park, but indirectly it certainly does. I think you are aware that at present there is much concern across the province with regard to the increases in municipal taxes and the education part of municipal taxes. So again, although directly we may not see the pressure to bail out, if I can use that word, the board of education, certainly within that community there is going to be a lot of pressure to raise funds, and that will reflect on municipal taxation everywhere in the province as people become apprised of difficult situations school boards have. Thank you very much.

The Acting Chair: Thank you, Mr Johnson. Noting that we have about five minutes left, I have two more questioners on my list. What I will do is, I will give each five minutes. We will go to 12:05. Mr Jackson and then Mr Hope. Mr Jackson?

Mr Hope: Before you go to Mr Jackson, this it may be considered to be a political shot but I was just looking for the information in here, just a question Mr Cousens has raised and I am looking for the answer in here.

The Acting Chair: Mr Jackson.

Mr Jackson: A political shot. What does that make you, a political pistol or something?

Mr Hope: No, no.

Mr Jackson: Okay, that is fine.

I wanted to build on Mr Johnson's question. He was moving into this area of deficits, and as someone who spent six years of his life working on Bill 30, and respecting that we had 13 drafts of this legislation to work with and we ran all over the province with Frank Clifford and we did a ton of things, there were some unforeseen circumstances the legislation did not deal with. Having said that, it is my understanding that under very rare circumstances there is a difference between the treatment of deficits between separate and public boards. It is not a general statement, but there is under very rare circumstances. There is also a loophole, it is my understanding, unless it has been recently plugged, with respect to the amount of capital and debenturing that a separate board can undertake for expansion and a public board. Can you respond very briefly to those two points, because it is my understanding -- well, I have had it confirmed to me -- that a substantive portion of the deficits deal with capital, that that is where they are getting into their trouble, with separate boards and not public boards.

Mr Larratt-Smith: You are correct. There are some differences in terms of the ability to operate in terms of debenturing between separate and public boards, and that has been brought to our attention. That is something that obviously has to be looked at, as we look at other things in the legislation. What was the other part of your question?

Mr Jackson: The ability to conduct a deficit. It is a lead-pipe, closed issue in the legislation. Public boards cannot have deficits. There are very rare circumstances, but the legislation does provide a small opening for separate boards under very rare circumstances. I do not know if that loophole has been blocked. Mr Chénier, as a former director, might be more familiar with this clause. I cannot recall the number. I used to have it memorized.

Mr Chénier: What it is, is that the separate boards are not tied as closely to the Municipal Act, I believe. A separate school board can actually debenture without going to the municipality. I think they go directly to the Ontario Municipal Board. Therefore, it is possible for a separate school board to debenture its deficit, which is not possible for a public board.

Mr Jackson: But you do get a compounding effect here, which --

Mr Chénier: Yes.

Mr Jackson: So I just want to put that on the record for those members who do not have the background in education but who are expressing interest in this point.

Mr Johnson: I thank you for that.

Mr Jackson: I am going to say something now which I have reported to twice in committees before, and it is not pleasing to either public or separate boards, but again I am revisiting this issue of the problems inherent with Bill 30 which have manifested themselves with problems in education delivery and accountability. We did not start on a level playing field in this province in 1986 and we did not have as strong an accounting base as we believe we have today. I do not want to be too critical of separate boards, because their deficits are a clearly understood function of some things that happened in this province. Public boards, by and large, had large reserve capital accounts. The rules were changed. School boards could sell a surplus school and put it in a bank account and use that for renovations.

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When, under Bill 30, we had this process of the government saying -- and the Liberals did expand capital very much in this province -- "Look, you've got a lot of money in the bank now," some school boards were sitting on $90 million; $80 million or $90 million were sitting in some of these reserve accounts in the largest of boards. They said, "Well, you build some schools with this money." The separate board did not have any of that. So as soon as they got the message, a lot of the public boards went out and spent their money like crazy so that they could cry poor like the separate boards. And that happened. There were some pretty offensive expenditures; there were a lot of legitimate ones -- do not get me wrong -- but there were a lot of offensive ones. So then the separate boards got the message that the game was being played differently, so the separate boards said, "Well, we are going to overbuild or we are going to advance some of our construction."

I guess the point I am trying to get at is now they are in a position so that we failed as a Legislature to create this level playing field, but I now get a sense clearly that we did not have the sound accountability base in place in order to ensure that we could enforce those rules. I am sorry that I have to come back to the recommendations contained in the standing committee because we discussed this point in detail. It is why we said: "Go to the two trustee organizations and get some proper rules for renovation moneys so that they are not obscenely spent redesigning the principal's personal office, yet you go down the hall and the chemistry lab is pathetic." I can show you schools where that occurred in this province. We really need to do a lot in this area, and it will still be three or four more years before we shake it down completely.

But we cannot be too hard on the separate boards for their deficits because we allowed it to happen and we did not catch it fast enough. The auditor, to his credit, has had some insight into this but he would not have picked up all the subtleties of how this has evolved in this province. We are talking billions of dollars here. We are not talking hundreds of millions; we are talking billions of dollars since 1985. I just wanted to leave that on the record. You may wish to comment, because my time is almost out.

One other question, and this has to do with transportation: Simply put, a year ago before the select committee on education, the ministry made a rather extensive presentation to the all-party committee about substantive changes in rules governing transportation. A tightening of the rules was going to enforce accountability. I did not get from your initial presentation any strong restatement of that direction from the ancien régime. l would like to know if in fact that is still on stream, or if it is still a mandate that the new government is suggesting you continue with.

You have, Mr Smith, referenced it once already. But I would like to know if you are proceeding with it in the same terms that you told another committee of this Legislature a year ago, in the kinds of detail about sharing, route, distance factors, urban, rural -- you made a substantive presentation to a committee and I think it is very relevant to the issues raised by the auditor and the interest area for this committee.

Transportation is highlighted as a serious matter. Can we get a fuller report on the exact nature of your direction from the minister in terms of proceeding with these regulation changes and where are we at with those? Thank you.

Mr Larratt-Smith: There are two parts to that response. On the capital, obviously no one can guarantee at the level of the principal's office or the chemistry lab that every expenditure was exactly appropriate or was what you or I might have considered exactly appropriate. l think that it is really important. You are right, Mr Jackson; $3 billion have been spent on capital since the middle 1980s by the Ministry of Education, and the most amazing part of that, l suppose to everyone involved, has been the pent-up demand: that as the amount that has been put in has gone up, so the requirement for additional resources has gone up as well. School boards themselves I think have been quite amazed by this, so I would find it difficult to accept completely your comment that a lot of the funding was frivolous.

Of course the ministry has had a share in some of those reserve funds, because they have gone back to money that was initially put in by the ministry as their share of that money. But those expenditures by and large have been in a context of a very large demand. While there may have been individual instances -- I am sure in a system this large one could find them -- where the priority on a particular item would not have been as high or as needed as for others, none the less it has been a requirement against a very high, overall demand for improvement in school accommodation.

On transportation, I did reference that and indicated that the details would be part of the GLG announcements in the next few weeks, we hope. l did not make the presentation to which you refer, so you were using the "you" in the plural sense of the ministry. l was not in attendance, so I do not recall the exact words.

Mr Jackson: Bill Trbovitch made the presentation before the select committee.

Mr Larratt-Smith: Yes, Ron Trbovitch.

Mr Jackson: Ron Trbovitch, sorry.

Mr Larratt-Smith: The overall direction which was discussed at that time was essentially to move from a transportation granting system where the highest rate of grant currently, or for 1990, is right at the margin, so that there is the least amount of accountability for the school board for the marginal routes that it may add over and above its basic transportation system. The basic intention was and is to move that, to provide the transportation money more heavily in the core grant and then to allow the marginal grants to be the one where the local dollars are shared in, so there is a greater incentive for school boards to operate efficiently, to share routes with coterminous boards and to get some of the benefit themselves of a streamlined transportation system, rather than be asked to do that simply in order to reduce the amount of money they get from the province.

Mr Jackson: I just want to correct a bit of the record. I do not want to leave the impression that all these expenditures were frivolous. I said some were. The point I was trying to underscore was that in the case of these dollars in the public board reserve accounts, the public board could spend that money -- 100% dollars -- on their renovations without really having your permission; nor could you really stop them from doing it. My point was that the separate boards did not really have this option to utilize, so you will see there is a huge hole punched in the pail of these public dollars and the separate people were saying, "We paid into that over the years but now that we have full funding we don't have access to it." That was the fine point and the concern. But the auditing record will show that those funds were depleted at an alarming rate and they did not build new schools with them. This was for renovations. That was my point.

The Acting Chair: Before we adjourn I would just like to thank the witnesses from the Ministry of Education for being with us today, and at this point I would like to adjourn the committee until 2 pm this afternoon.

The committee recessed at 1207.

AFTERNOON SITTING

The committee resumed at 1406.

YORK REGION ROMAN CATHOLIC SEPARATE SCHOOL BOARD

The Acting Chair: Ladies and gentlemen, if we might, l would like to get the standing committee on public accounts going on the afternoon session. I would like to welcome the York Region Roman Catholic Separate School Board. Could I just have the witnesses identify themselves for the purpose of Hansard, please?

Mr Virgilio: I am Joseph Virgilio, chairman of the board.

Mr Bobesich: I am Frank Bobesich, director of education.

Mr Sabo: John Sabo, superintendent of business affairs.

The Acting Chair: Thank you, and please proceed.

Mr Virgilio: We welcome the opportunity to be here today.

Perhaps to give you some background, I think we were initially shocked that we should have a provincial audit. We did not know what the reasons were or what was expected of us. After the process, I think we were very happy that it happened. I think, from the trustees' point of view at least, it was a good thing and it happened at a stage in our board's history when it was probably most needed. We have experienced tremendous, tremendous growth, and as a result, our administration is really trying to cope with that immense growth. One of the difficulties that we have indicated or that was said, I think, during the audit process is this growth and how we have tried to handle it.

Really, we do not have any experience to go on. No one tells us these things and everyone is just trying to grapple. When the auditors came through, I think they performed a function that we perhaps were not able to do, in the sense that they got into everything. As trustees, sometimes we would like to do that sort of thing but that is overstepping our bounds, and even if we could go and look, we would not know what to look for. So it was quite meaningful and I think the auditors were quite helpful and insightive of what was happening on our board. I mean, they did want to try and learn what our board was all about. I think for them it was a learning experience too, because we were the first board that they looked at, as well as the Lakehead. So it was a learning experience for all. It was a time-consuming experience for our board. Our people had to give up a lot of time to give them the information, but I feel that it was a worthwhile experience for us. I think that is something the public probably thinks happens more often. People think it is government and everyone looks after us, looks into the accounts, and they do not. We know they do not. As I say, I found it quite useful and perhaps our director will have some further comments regarding the process.

Mr Bobesich: Mr Chairman, I have made available through Mr Carrozza copies of our executive summary, which also serves as our intended response to the Provincial Auditor's report, which unfortunately could not be included in the provincial publication because of publication dates. By the time we received our final report, processed it with the board and replied, it was beyond the printing point. However, there is some information that may be of interest or value to your committee this afternoon. I will not read that entire text but rather highlight a few contents, if I may.

As Mr Virgilio indicated, we were one of the first two boards in the province to be audited. I do not know to what extent we were chosen because of comments we made before a select committee on education funding some year and a half ago in this very room. So today I think I am going to be very careful as to what I say, so as not to invite any other visitors.

Nevertheless, the audit commenced on 14 November 1989 and the final report was not received until 4 September 1990. That was a terribly long period of time. By way of sharing all the information that had been generated, we did hold a series of meetings with the board of trustees and other stakeholders, but primarily I will focus on our involvement with our board. The special board meeting to review the report was held on 18 September 1990, after it was received. Press release of copies of the audit were submitted on 19 September. The board decided to take various aspects of the auditor's finding and send them to the board's three standing committees for further study. Administration appeared before the three standing committees prior to Christmas. We have given a status report since then and will be giving a status report again this June as to what activities and actions are being taken with regards to recommendations generated by both the Provincial Auditor and by the respective committee members.

As we sit here, there is an ongoing review in process of our whole purchasing operation, as well as our transportation operation, and we continue to review all areas and aspects of financial controls. By way of a personal comment, as one of the first two boards, we were into a very new and a very stressful type of situation. Audits at the best of times, I think, create anxiety. Certainly they created anxiety for us. l think it would be appropriate to suggest that the anxiety began to subside as we worked with the members of the audit field team, who were a very professional group of people. We developed, I think, a very fine professional working relationship, and so those anxieties began to subside. However, the time drain on staff was significant, as chronicled in my opening paragraph on that covering page. There were a lot of person-hours involved, and we were then again anxious to see what the final report would read. However, after all is said and done, I think it was a beneficial process, and I think it was net gain for our board, for a number of reasons.

We are one of the provincial boards with a large deficit, and I think it was very important for all of us to satisfy ourselves that that deficit was not in any way attributable either to mismanagement or to misappropriation of funds in any kind of way. I think those two unspoken questions were well satisfied in the context of the auditor's report. It identified for us a number of weaknesses in areas that needed improvement.

Now, I would like to suggest that we were quite well aware of a number of areas of weakness prior to the audit starting and I would like to suggest that we shared with the auditors, very candidly, where we thought our weaknesses lie and what in fact we were doing, or intending to do, about these various areas. So in the final analysis, although a lot of information was given to us by the auditor, with the exception of one or two things, there were no real surprises for us in the report. I am rather glad of that because it suggested to me that, as an administration, we were aware, fundamentally aware, of our weaknesses in areas that needed some kind of attention.

The report -- or the audit and subsequent report filed by the auditor -- as you well know, was a very exhaustive and extensive report, and clearly I understand that the scope of investigation of school board audits has been significantly reduced, the focus has been reduced and the time span allotted to field officers of the provincial office to do audits has been shortened considerably. I can well understand that. I would like to also share with you, personally, that the other directors and business officials and school boards in the province are really grateful for that. They are also grateful for the educative role that we may have played in terms of orientating the Provincial Auditor to the school board enterprise. And, notwithstanding some of the areas that we have to address and are still in the process of addressing with ministry officials, there is an unspoken recognition on the part of other school boards in this province that there but for the grace of God go they. It could be any number of school boards sitting here. It need not be this board or the Lakehead board responding to any number of questions and concerns that have been raised by the auditor.

So, as I have said, the report did not provide any major surprises, since the board had been actively involved in restructuring and redefining many aspects of operations, not the least of which were the plant department, the purchasing department and the transportation department. One of the problems we had in addressing the areas in those respective operational departments, however, was lack of resources, primarily lack of money to hire expertise and/or persons to occupy various positions, although we will get to that a little later.

I think also, before I go any further, that I have to underscore the need as well as the fairness of having to read this report in context. I reference comments made by the auditing team themselves in the introductory part of our auditor's report. I think you will find this on page 1 of our executive summary, which is virtually a lift from the auditor's printed document, having to do with the auditor's comments.

I highlight the following: "The board finds itself in a difficult situation, wherein the region it serves has experienced explosive growth in recent years." Our population virtually doubled from 1985-90.

The board has been relatively assessment-poor, and this situation and condition will persist until such time as the education funding models in this province are redressed and radically changed from the current models.

It must be remembered that there is a limit to the rate of tax increase that any board, and certainly our board, can impose upon its ratepayers. I mean, we are always told that the easy way to balance a budget is to raise the tax commensurate with the outstanding balance between revenue and expenditure. We know, especially in these times, that would be a silly notion to advance in any community.

We appreciate the last paragraph: "The conclusions and findings contained in this report should therefore be read in the context of a board whose staff must devote an ever-increasing portion of their time to the challenges and problems created by high growth. Under these circumstances the time available for maintaining and strengthening controls over assets and expenditures is certainly at a premium."

So, inasmuch as we were aware of a number of areas that needed attention, we simply did not have the time or the resources to address them quickly enough or vigorously enough. In that whole gamut of committing resources to improve the operational aspects of the organization in terms of efficiency, effectiveness, checks and balances -- not the least of which would be a sophisticated information management system, computerization, which we are just starting to get into now -- with a student population of 37,000 students and an employee workforce in excess of 3,000 people, we have been hurt by lack of automated computerized systems in our particular board. We are on the mark now, however, and we are making good progress in that area; but it has been a while coming.

So, I think if you put the auditor's report in that umbrella context and recognize our realities, especially since 1985, in terms of growth, in terms of limited resources, in terms of a frenetic pace, it is not too difficult to understand that we did not achieve the level of checks and balances that we might have achieved under different circumstances.

I also suggest that inasmuch as we are responding to each and every one of these suggestions advanced by the auditor to one degree or another, some more vigorously than others, we will not achieve the desired level of checks and balances in all areas until such time as the aforementioned educational funding issue is redressed.

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This evening we are off to a special board meeting starting at 5:30, struggling with our budget again. Our mandate, of course, is to balance our 1991 budget. We are carrying a deficit of some $18 million into this budget year. We cannot possibly address with equal vigour and sophistication everything that needs to be done while we are stymied with that kind of purse.

So we are clearly hoping that within the next year or so there is a demonstrable change in this area of educational funding. I am not talking particularly for Catholic school boards. I am talking about redressing the situation that exists between assessment-poor and assessment-rich boards; poor boards and rich boards, relatively speaking, and I am not speaking in a denominational vein there.

I assure you -- and you can tease this out in a series of your questions -- that where the auditors brought problems to our attention, these are being addressed. I am not quite clear on what kind of follow-up the auditor intends, but I dare say that a year from now a number of areas will be vastly improved over the state they were found in last October, November, December, when the auditors were there.

I talked about this with fellow directors generally across central Ontario and southern Ontario. We made presentations to fellow colleagues in other school boards and generally we believe that provincial audits of school boards should continue and should prove to be beneficial. It is always good to have an external source take a look, as long as that external source has some general understanding of the nature of the enterprise that is being examined.

But in my final analysis, until the funding situation is redressed and made more equitable between those assessment-poor and assessment-rich boards, I think you are going to find that the assessment-poor boards will always have some modicum of difficulty in terms of checks and balances and practices, and that has been manifested in a number of areas in the context of our own report. l suspect that you will probably want to hit on one or two of those in the context of your questioning period, so I will stop there and permit you to proceed as you wish.

The Acting Chair (Mr Ruprecht): Thank you very much, Mr Bobesich, for your remarks, especially your comments that your concerns subsided after you met with the auditing team. We appreciate that. The first questioner is Mr Cousens.

Mr Cousens: Mr Chairman, I am just very pleased to represent the area that is served by the York Region Roman Catholic Separate School Board. By way of personal comment I would just like to let the members of our committee know that I have had dealings with these gentlemen and their predecessors in their various positions for over 10 years and I know that I speak on behalf of the community to say that the community is genuinely pleased with the kind of service and support that the board gives. I do not think there is anything in the auditor's report that comments on that, but I just have to say that my relations with this board have been outstanding and I respect the job they are trying to do and the way in which they go about it.

I guess to that extent it becomes somewhat difficult when you start realizing that the board is under such duress with its management of its finances, for a variety of reasons, some of which have been touched on by the director and others through their written comments. I have one concern, and rather than make it into a trick question, which I would do normally --

Mr Hope: Oh no.

Mr Cousens: Now, Randy, today I am going to behave. l am taking lessons on it.

Yesterday we had a presentation by the Ministry of Education, and one of the things they said was, "All school boards in Ontario must have equitable financial resources to provide a base level of education programs and services." That is one of the principles that underlie the granting of provincial funds to school boards: that all school boards in Ontario must have equitable financial resources to provide a base level of education programs.

You have a deficit of $18 million. The public system in York region has a surplus. How can the ministry come into a committee of the Legislature and say that all boards in Ontario must have equitable financial resources, when in fact two boards in my area do not have? Could you comment on that? What is the reality for you? Do you feel you are getting a fair shake when it comes to provincial funding? Are you treated the same as a public system? This is the trick question: Are you being forced into being almost crooked in the way that you are putting the books out in order to deal with a ministry that is not being straight in the way that it is giving the funding to the board? Are you being put into a position where it has become necessary to play the game?

To me, there is just a tremendous amount of problems where on one hand everything is going to be equal, and Bill Davis said it, back on 11 June 1984, and then we come along today and we are starting to see the continuation of the long-term battle for boards struggling to provide equal services, cutting back programs. Okay, I do not want to lecture. Could you comment on this?

Mr Johnson: How many questions was that?

The Acting Chair: I am trying to determine: Was this the trick question or was it not the trick question?

Mr Cousens: I am not too sure now, either.

The Acting Chair: And maybe the word "crooked" you want to withdraw?

Mr Cousens: I did yesterday.

Mr Bobesich: I do not mind the crooked questions; it is who is asking. No, we have never been crooked. I think we have tried to be creative.

Mr. Jackson: Ha! Way to go, Frank.

Mr Bobesich: I think our creativity is being called into question in a couple of instances, but I think we want to dialogue around that creativity and clearly and satisfactorily demonstrate that that creativity was invoked on behalf of programs and students, and that will bear anybody's scrutiny.

On the question of a baseline program, I would be interested in hearing a definition of what constitutes a baseline level of education because I dare say that a baseline program in the greater Toronto area bears very little resemblance to a baseline program in northern Ontario. But assuming that we get some kind of consensus on what constitutes a baseline program, then we would have to get a provincial consensus on the cost of that program. And then we would have to have some kind of adaptable formula that would compensate for various nuances across this province.

Now if, in fact, the government comes to a position where it defines a minimal level of services to be offered each youngster in the province or, for simplicity's sake, a baseline program and determine a reasonable financial allocation in support of that, then the next question I would have to want to have answered is: "Will all boards be obliged to live up to that limit of expenditure or will there still be potential for some boards to access additional revenues in some other new and creative ways where there is a greater base of wealth?" Which brings me back to some of the initial ramblings I guess I was on about, and that is the need to critically not only re-examine -- because, God knows, we had enough commissions examining education funding in this province over the past decade; we have had a lot of talent look at the question. What really needs to be done is the fundamental restructuring and remodeling of the funding model.

So it is kind of a hand-in-glove answer, I think. What constitutes baseline? What is a reasonable cost for baseline? And where will the moneys to support those educational programs come from? Will they continue to be heavily drawn upon local ratepayers? Will they be provincially funded in toto? I do not know, but the question is far more complex, and in the last part of your comments or questions there is absolutely no equity between funding of the separate school system and the public school system in York region.

I say that with no malice towards my colleagues there -- as you know, we have an excellent relationship -- but they are wealthy and autonomous and sophisticated, and the reality for us today is that we are responsible for educating about 37% of the youngsters in York region and at best we accrue 22% of the assessment. Now, if that mathematical difference does not constitute an inequity, I do not know what else does. Even if that portion of the inequity were closed, it would significantly alleviate some of the problems we are suffering today.

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Mr Cousens: Mr Chairman, I think the director has touched on an issue that, when we are making a report, I would like to come back to and draw a note to it, which has to do with the ministry statement about equitable financial resources and what in fact is happening.

The disparity that we are talking about is very serious. How can this board, based on the inequitable financing it is now receiving for its educational program, escape the deficit financing without at the same time reducing the quality of the program? I have shared this with Greg Sorbara and other members from other areas when we have had meetings with your board. It is one thing that you have now got yourself an $18-million deficit but how can you get rid of that and still maintain a quality program, which to me is one of the underlying concerns of the whole community?

Mr Virgilio: If I may, Mr Chairman. That is the very thing we are coming to grips with right now in our budget meetings, and it is very difficult because, of the 30% of our budget that is discretionary, the other 70% being tied up in collective agreements with our employee groups, it is very difficult to cut anything out of that 30% without having a dramatic effect on programs and on the kids we are servicing.

Most of the trustees are faced with the issue of making dramatic or drastic cuts in programs and in other areas: secretarial time, consultants who would impact on the education that is delivered to our children. We are resisting those changes because we do not want to affect that quality of education that is being delivered. But at the same time, we do not want to be seen as being defiant of the Ministry of Education guidelines in having a deficit, as we were perceived last year. It was not that we were being defiant; we were just simply trying to express the need that our ratepayers wanted for the children, that all of us want. So we are finding it very difficult to come away without having a deficit budget. We are really having troubles getting to that point, Mr Cousens.

Another thing that we have not touched upon, and maybe you have not touched upon: the inequity that prevails between assessment-rich and assessment-poor and funding. On top of that, we have the greater Toronto area; all the boards are suffering from this immense growth that has taken place in the last 10 years. Just in the last five years, our board has grown from about 17,000 children to about 37,000 children. That is an increase of 20,000 kids. How do we house those people? As a result, in this construction period in the last 10 years, we have incurred a debenture debt of almost $60 million, and on top of that we have to pay interest on that debenture. Every dollar that we raise in taxes, some of it has to go to paying the interest charges. So we find it very difficult and we want to avoid a deficit in trying to maintain the programs. The whole problem is exacerbated by the level of growth, and we have a great deal of portables in the whole of York region. I would venture to say, and in fairness in talking about equity, that people who have moved into the York region, through land transfer tax and the different taxes that are paid to the province, probably contribute a lot more -- the net gain to the province from the people who have paid taxes is unproportional. They are not getting the services in York region, and I would venture to say all the growth boards are under the same concerns. That is one of the key issues that has to still be met, but it is impacting in our particular board and it is impacting upon our ability to deliver programs. The payment of interest is causing us to not have the money to put into programs and in other things. So it is becoming difficult for us to maintain programs without a deficit.

Mr Cousens: Mr Chairman, I will take my turn when the questions come along again. I just think it is tough when you have this kind of inequity between two boards as we are seeing, and I think we are going to have to come back to it time and time again. But, unfortunately, this is not the committee to do it in.

Mr Jackson: First of all, Mr Bobesich, it is good to see you again. As you have been in before committees of this nature, not on auditing factors but on and off for the last six years, l have enjoyed your presentations and I am enjoying this one, actually.

I will get to your comment on being creative in a moment, but I want to thank you for presenting it in this fashion so we can read the board response and I would like to flow through that very quickly and engage you with respect to some of your comments.

The first one that catches me is on your page 4 in the budgeting process. I certainly want to enforce and support your response that the timing of final budget approval is a direct function of this province and this has been identified by trustee associations, the business officials and the select committee on education, and we have not received any response from the government. It is clearly an inhibiting factor for accountability that you are on a school year for program start, and yet you are on a government calendar year for funding, and the taxpayers who fund you are on the calendar year starting January 1. You have to reconcile those three budgeting transfer periods. I would like to bring that to the committee's attention because we might be in a position to recommend, yet again, support for your point, because I could not concur with you more.

I want to ask you, though, and with the presence of your chair of your board, who I again am welcoming to an all-party committee, about the issue of auditing committees. You are very careful and skilful with your wording to talk the difference between your board budgeting process and expenditure under pressure. But audit committees perform a function different from a budget committee. I would like to hear your response as to whether or not you would not feel it appropriate, because of the situation you find yourself in publicly, as well as for the best interest of taxpayers, to implement an audit committee, which would have to be initiated by the trustees if you felt it was a high priority. Could I get some feedback from an elected trustee, chair of the board, if you have discussed it? Do you have one? Are you considering it? Are you being pressured to have one? Could you speak to this committee about that?

Mr Virgilio: I was the chairman of the audit committee up until two years ago when we disbanded that committee and we restructured the procedures at our board into three committees. I would venture to say that my experience on the audit committee was not anything like the scrutiny that we put to our administration when it comes to our finance and property committee. I understand what you say about a budget, but at our finance and property committee, we really and truly delve into all areas. I do see a need, though, for a smaller group that would delve into matters more deeply, but one of the things we find is that time is such a premium in our board for the meetings that we attend. It just gets to the point where it is overburdening, but we do perform the functions of an audit committee. Whether a smaller group that would examine things more deeply would be more beneficial, it is something we have to consider, but we really do look at all areas. At the budget time, yes, the two may be different, but I think we do give it a good airing at our board.

Mr Jackson: It begs the question what your auditing committee did prior to two years ago. You may not feel comfortable responding to that.

Mr Virgilio: Well, we had the terms of reference of the time.

Mr Jackson: Could you table those with the committee?

Mr Virgilio: Sure, we can do that.

Mr Jackson: I certainly would be interested in looking at those, but having been a trustee, as has Mr Cousens and yourself, we know the old adage that the administration likes to keep us busy reading papers and away from the more meaningful aspects of accountability. That is well known. You know the old saying, "Treat us like mushrooms: Keep us in the dark and covered in manure," and there is a lot of truth to that amidst the humour. Sure, if I was an administrator and I wanted to keep the trustees busy, I would keep them on a property and finance committee, but not necessarily on an audit which looks at systems and procedures.

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That is only a personal comment. I do not want to monopolize the time but I do want to get to the four points that struck me in your report. I am fascinated by your response to payroll and employee benefits, the issue of giving full experience credits and full granting of grid movements for half-time teaching. My understanding is, there are very few boards that are doing that. You indicate in your response that the practice will be reviewed and maybe changed.

That causes me some concern because you go on to say "subject to a legal interpretation." So, having bargained extensively in collective agreements, do you have -- I will call it what it is -- an under-the-table agreement with the teachers' federation not to touch this, therefore not to put it in the collective agreement, just leave it alone? I feel justified in asking the question because I know they exist. I am not saying they exist in your board, Frank, but I certainly would like to question why you may change it subject to a legal interpretation when these matters have been resolved board after board all across Ontario.

Mr Bobesich: I will try to answer that. This is one of the surprises. I completely forgot about this practice that was instituted in 1972. I had been part of the board but certainly I did not follow negotiations or contractual matters tightly. So when this was printed and I sat down with staff, we reflected on how this happened, and years ago this was an incentive to attract especially part-time teachers when we were introducing kindergarten to the far northern portions of York region.

Years ago it was hard to get part-time people travelling up to the north end of the region: Simcoe, Sutton, Keswick. It is reversed today; everybody wants to live up there, so we do not have the same need for the incentive. So it was introduced for a reason --

Mr Jackson: And for surplus and redundancies. That is how we used it in Halton.

Mr Bobesich: Well, let me finish this -- and we just maintained the practice. I suspected it is our fault that we did not critically review this practice or consciously review it. I do not know to what extent it has ever been broached with our teachers' group. I have no idea what their reaction would be to a change in this particular practice, and the reference to the legal opinion was cited because one of our staff indicated it would be prudent to check with the attorneys: because of the long-standing practice in the board, can we simply, arbitrarily, undo it overnight?

So it is being investigated. I would not predict the outcome relative to this particular practice for September. I am not aware of any casual or formal understanding around this clause with the teachers' group.

Mr Jackson: I would presume it was a motion of the board to create the incentive and the package, as it was in our board, a board motion, then we entrenched it in the collective agreement

Mr Bobesich: It is not entrenched in the collective agreement. I would have to search the archives for the motion, but it is a topic that is being now pursued and our negotiations just started. What item this constitutes on the agenda, I do not know, but it is alive. It is on the table.

Mr Jackson: Mr Chairman, I have only two more, if I can quickly go through those, and then that would complete my questioning.

Asset management on number seven. Can you tell us approximately the figure that you recorded on your books for reported vandalism and theft last year? You know what I am getting at here?

Mr Bobesich: No, if we cannot report a figure for theft and vandalism, I guess what I can assure you of is that we do not have any reported incidents of stolen furniture and equipment or desks or chairs. What we have lost is the odd piece of audio-visual equipment and some of the higher tech stuff like computers. And we shared that kind of information with the auditors. If you require, we can fax to you an insurance statement for the year 1990.

Mr Jackson: My understanding of the impact of the area that you are very narrowly addressing here is, a limited inventory control lends itself to abuses in terms of theft and tracking and it has implications for your insurance policy, which we also know runs at large and is adjusted in accordance with the kinds of thefts that are reported and those that are claimed. Because the auditor and you may have treated it in a narrow way does not prevent the committee from looking at it in its broader context, and the fact that maybe your finance or audit committee may have looked at it from that angle as well.

If I could finalize with the computers and the portable classrooms, I again want to support you in your second bullet on portables. And I have raised this in your absence before the ministry, support for several of your concerns. I have to suggest to you it is almost borderline lunacy that we are throwing children out of schools, new schools, in order to make room for day care kids. So it is in that context that the auditor has to try and figure out the appropriate and inappropriate use of portables in this province.

However, I do want to ask you a question. "The equipment will be returned to the elementary school panel and/or monetary credit given to the elementary panel when we get approval for new secondary schools and related capital funds for these new high schools." Why would you return the computers to the elementary school when you are expanding the demand for them with new high schools? I am trying to understand what you mean by this. Aside from the other point, which is, "If you give me more money, we will return the -- " I could read it two ways here. Could you enlighten us a little more clearly on what you mean here?

Mr Bobesich: I will try. First of all, have we dispensed with the second bullet on portables? We are not going to worry about that?

Mr Jackson: No, I just want to say you are bang on and this committee should be telling the ministry that they better get their functional rated capacities updated because they are 25 years old in this province. So I discounted the auditor's comments in this area and we talked about that and he is not threatened or offended by it. He understands the point we made.

Mr Bobesich: Okay. Very simply, on the first bullet, it has to do with the grant-eligible microcomputer systems grant. In context, I am sure you will read the fuller text in the auditor's report. The GEM grants were designed to enable school boards to purchase computer and computer-related equipment for both the elementary and the secondary panels of their school systems.

A certain amount was apportioned, or elementary schools were eligible for a certain funding level and secondary schools were eligible for a certain funding level. What we in fact did, because we had some notion of local autonomy meaning prioritize your local needs and spend money accordingly, we took all computer-related moneys under the GEM grant and dedicated it to the purchase of computers and computer-related equipment in favour of the secondary school. By doing that, we violated the letter of the policy statement from the ministry. Now every dollar was clearly spent for computers but the question, or the argument, I suppose, was what right did we have to put those elementary dollars in to the secondary school.

The need was far greater at the secondary school because of the demand on the student population for these programs, not only for pure computer science programs but for computers which were being introduced and which continued to be introduced and supported, technological programs that were running. We had no other source and so for that period of time we determined the best utilization, given our curriculum priorities, would be to take that money and put it into the secondary school.

The statement in the latter half of that paragraph says that if we have in fact violated the letter, if not the spirit, of that particular law in terms of a policy, then we shall try to redress that situation by either accessing additional capital moneys in the future, which will come on board as new schools are being approved -- and they are being approved and they are being built and we will get capital money -- so we will take an equivalent portion of moneys and reallocate it --

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Mr Jackson: Ah, now I understand.

Mr Bobesich: -- back to the elementary, and/or we will simply take the computer equipment that was purchased at the secondary level and put it into the elementary level and buy new stuff for the secondary. One way or another, we would try to make restitution or reconcile the situation by using future money. That issue is still being debated with appropriate ministry officials, and that is the only one where I claim, with no small intention of humour, that we try to be creative in responding to our curriculum needs with available provincial funds. Clearly, we did not have sufficient moneys or capital to do it without the aid of those funds, and I do not implicate anyone else. I just know, as I sit here, that this is not a unique practice; that is, creative prioritization is not a unique practice to us in this province, probably shared more often than not by school boards across the province, for obvious reasons.

Mr Jackson: I thank you for that explanation. Mr Chairman, I just wanted to bring to Mr Bobesich's attention that Hansard, for this committee, should be made available to you because we did discuss this matter at length this morning. I did refer to it as a half sin, if you will pardon the expression --

Mr Bobesich: We can relate to that.

Mr Jackson: Yes. And it was a half sin by virtue of the fact that all the moneys were spent on computers. But if I might lend my own bit of side humour, I could not help but chuckle when you indicated that some of your accounting progress was inhibited by your lack of access to computers. I might have suggested that you have several in the secondary schools that might be useful, but I will leave that good-humoured exchange and thank you for your very straightforward answers under a very difficult set of circumstances. You were the first board in this province, and I think you have handled it quite admirably, and I know that my colleague Mr Cousens agrees with me completely, that you are to be commended by your responses.

Mr O'Connor: I want to welcome you here today, and I know that discussion around school boards and funding has been going on for some time, and some members of this committee have been around for some time in that discussion. We hope you do not feel this anxiety needs to be here; I do not think it needs to be. I think you should feel yourself welcome, and try to help us through so that we can make a report to the Legislature.

As I am a York region MPP, I understand the high growth and the pressures you are under, and being parliamentary assistant for the greater Toronto area, the high growth within the whole region is something that we have got to try to get a grip on and try to talk about and be quite frank about and try to see how we can cope with the direction that we need to head in in the future.

There are just a couple of different things that were not talked about within the audit that maybe you could just share a little bit with me. I know you have been quite good in your response as far as the purchasing and the plant and transportation end of things, where there has been pointed to problems that could be part of your deficit. I am just wondering now, in the capital grants and new schools, as far as the funding goes for that, some of the direction that we could go in, and perhaps if we could have a little bit of discussion and maybe can work together on some of these things, if you could share with me the auditing that goes around capital expenditures, because I realize they must respond to the board. Perhaps you could just enlighten me a little bit.

Mr Sabo: In terms of new school construction, a great deal of controls are put in place. We do have an approval process through the ministry; you are aware of that. We apply for funding; funding is received. A program that is required or is projected is filed with the ministry, the ministry approves that program and then there is actually a formalized tendering process. An architect is appointed, drawing up the designs, review with the board all the way, through each process; a tender is let, a tender is approved, and then from the point of tender to the point of opening there is a series of approvals of any change orders, etc. Any large change orders are brought to the board if they are outside the normal municipal requirements or what have you.

That process is completed and we access funding from the ministry in accordance with a specified payment schedule. The differential between what it actually cost us versus what we received in grants has to be then funded through debenture issue. Is that what you want to know?

Mr O'Connor: You are kind of working in the right direction. What I am interested in is perhaps some sort of internal audit of where some of your capital money is being spent because of the high growth area, and the circumstances that you face because of that.

Mr Sabo: Okay. Capital is defined as pupil accommodation. Pupil accommodation is our largest single source of capital expenditure. That is where we have the new schools, we have the additions, we have the portables. As Mr Virgilio mentioned, over the last 10 years we purchased 267 portables, which are required because of pupil growth. A number of things are out of sync. What is approved for portable classrooms does not agree to what we actually use them for. Collective agreements define class sizes, which define needs for portables. Translating that to the ministry policies, many of our portables purchases are not approved, and in effect we do not receive funding for them, and therefore 100% of those costs have to be borne through debenture issue.

Capital, in terms of new school construction, is the same situation. We are at the mercy of the marketplace. A year ago we were paying $110 a square foot; we are now paying $90 a square foot. But this is the first downturn. We were going in reverse, and our projects, for all intents and purposes, like all other boards, were in a situation where the approved costs as defined by ministry guidelines or regulations did nowhere come close to approximating what actual costs are. So the differential -- always that differential between what is approved and what we receive in grant -- must be levied on our taxpayer, which must then be levied on our assessment base, which is poor in comparison to other boards. Compounding that, there is not a board in Ontario that can compare in terms of growth and magnitude of growth that we have incurred. If you are privy to the school board statistics on debt per pupil, we are off the scale. The average, I think, is in the neighbourhood of $100-$200. We are $1,000 or $1,200 per pupil, so we are off the scale.

On that kind of capital expenditures we do, since I have been with the board, I have been involved in about 32 projects. We try our best to provide projects that are functional, that are cost-efficient, and I think we do a fair job. There are always those who would argue that you can build a box, you can have a smaller play area, you do not have to have this and that, and that is true. But I think what we are producing and building is comparable to what our coterminous and other boards are building in this day and age.

Other capital expenditures outside of pupil accommodation are those such as computers -- the largest one is computers in education -- which are our largest purchases. Six years ago we had manual typewriters. We now, only now, effective 1 January, 1991, have a computerized purchasing system. I, as superintendent of business affairs, up until six months ago did not have direct line access to accounts, because we did not have the computerized sophistication. That is computerized systems, and that is very disappointing, but as the board each year went through a budget process there is not a lot that can come out, and typically plant support or non-educational support items are let go. One of the things that was mentioned by both Joe and Frank is that what this process did was give a heightened awareness to the need for financial controls, the need for documentation, the need to have a file with backup. A file with backup does not do anything for the kid in the classroom. It is just an audit trail and the costs associated with maintaining controls are excessive.

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So, those other capital items really become outfitting of a school. You have to have desks and chairs. Again, the funding that is received per classroom has never been enough to do what we are supposed to do to outfit a school. We have new libraries which, if we spent the money as defined by the ministry, they would be bare libraries. We have to maintain a minimum level. So there is always that supplementary capital funding for the rapid growth. That is the big area.

Mr Bobesich: May I ask you a question, Mr O'Connor? It has very much to do with this theme of capital construction and we are awaiting, of course, announcement from the ministry with regards to capital projects and hoping for the best. But we have some concerns, especially in high-growth areas such as York region. I am not only speaking for York but, basically, a consortium of boards constituting the GTA.

We were very much looking forward to some capital assistance for advancing needed school facilities via lot levy legislation. We hear nothing about that. We do not know the status of that. We have some suspicions. But under the same theme of radically changed education funding, I think there is a need to address very critically changes in capital funding, especially for high-growth boards. Until we hear about the status of lot levy or some alternative, we are going to be cast in the same position we were cast in a few years ago when we were building five elementary schools and one secondary school a year, floating all kinds of horrendous debentures and then digging ourselves into a further hole.

I am hoping there will be some kind of response within the near future, Mr O'Connor, with regards to that particular initiative or some companion initiative to assist high growth boards with capital projects.

Mr O'Connor: You had mentioned earlier the high-growth board coalition or whatever you call yourself. I have met with several of the other chairs and they have expressed their concerns about the lot levy. It is unfortunate that you did not express yourself to me earlier; we could have shared a little more discussion around that. I am glad that you realize it is necessary that we do talk about this and the government is going to come up with something on that.

I commend you for the terrific job you are doing under the pressure you are under, and I am sure you must have a great deal of difficulties trying to cope with it. One area that I was concerned about and read something about in some of the briefing notes prepared for us was the staff and morale level. I am sure you must have been trying to find Catholic teachers to fill your schools for staffing purposes. You must have a tremendous job trying to locate and hire the appropriate staff. Seeing how that is a high proportion of your budget, perhaps you could share some of the problems you face in light of that.

Mr Bobesich: A couple of years ago we were facing a significant teacher shortage across the whole province. We were experiencing additional strain around that shortage in the greater Toronto area by virtue of the cost of living in the greater Toronto area. So when we were combing the faculties across this province -- indeed, across the country; we went from coast to coast to faculties of education in pursuit of teaching staff -- inasmuch as many young people wanted a job with our board, when they were apprised of the cost of housing and cost of living, they simply begged off. So we were in a tremendous state of worry and activity a couple of years ago.

Last year, the situation was not as bad in terms of the teacher shortage or the demand because the growth slowed down. Two years ago, the growth and the shortage were quite significant in our region -- they intersected; the two factors intersected at that same time made a terrible situation. We are looking for a very modest growth for September, and I am not quite as worried about a teacher shortage for September.

I think what is impacting on teacher morale at the moment, or what might be impacting on teacher morale at the moment in our particular jurisdiction, is this horrendous exercise that we are going through right now in terms of trying to come in with a balanced budget, where in fact that process is requiring that we reduce some levels of service, that we reduce some levels of programming -- not cut out programming but reduce some levels -- and in fact reduce the number of employees in certain departments or divisions. No doubt that is not only causing a morale problem; it is causing anger and stress in some people. I want to read just a small paragraph that was, for once, quoted accurately in a local newspaper about what I think our task is right now, and you, as government officials, surely understand this and appreciate this challenge. I am chiefly concerned at the moment about achieving a balance between maintaining the fundamental integrity of our programs and services -- that is in our school system -- and demonstrating a concerted effort to exercise fiscal responsibility in working towards a balanced budget. So, on the one hand, I have a group of very dedicated and caring trustees who do not want to cut into programs and services. And the staff was very cognizant of the consequences of not balancing a budget in terms of the penalty we suffered last year. So if you want to talk about morale, there is stress. Ask me about morale and stress.

Mr O'Connor: I can share that with you because we, as a government, are also in a deficit situation. Anyway, I hope you do not feel we are trying to centre you out as any sort of a problem here. We understand the growth situation and the problems you face related to that. We are trying to keep this on a friendly note. Thank you for coming, and keep up the terrific work. You have got a formidable task ahead of you.

Mr Johnson: I have listened with a great deal of interest to the presenters here today, presenting on behalf of the York Region Roman Catholic Separate School Board, and I am pleased to know that you had a good relationship with the auditor and the audit process and that you accepted and welcomed the close scrutiny that an audit would bring. I might mention that the universities were not so amenable to that particular sort of audit.

I have listened very closely to what you have had to say today and this is a great learning experience for me because I have not had to deal specifically with these sorts of issues in the past and it is very enlightening. I understand there have been many variables that have brought you into this deficit situation. I am not sure if it was yesterday or earlier today I heard the ministry indicate this equality of funding given a certain baseline, I guess, so I understood there were equalities throughout the education system when it came to funding from the provincial government. Yet I hear today that you have 37% of the students in the York region and only 22% of the funding.

Mr Bobesich: Of the assessment.

Mr Johnson: Of the assessment. I am not entirely clear on this discrepancy. It appears to be a discrepancy to me and I was wondering if you might be able to share a little more detail. I have listened very closely to what you have to say and every once in a while I thought I was going to understand the situation, given the information you have been telling us and some of the dialogue I have heard. Your indebtedness, as I indicated, is a result of many variables. Is one of those variables the fact that you did not receive a fair proportion of funding from the government? I am concerned because I do not quite understand.

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Mr Bobesich: Mr Johnson, we will try to put that in context very succinctly. First of all, to be fair, funding is equal up to the grant ceiling. And let me just guess, it is $3,500 an elementary pupil right now. I do not know if that is absolute, but suffice. So every kid is entitled to $3,500 for his or her education. The fact of the matter is, there is not a board in the GTA who educates the kids for $3,500 a pop. Some are spending as much as $5,000 a kid. So the few boards who are struggling around that $3,500 ceiling cannot possibly offer the range of services and programs that wealthier boards who are spending $5,000 offer. That harkens back to Don Cousens asking what is a baseline program? It depends on where you are coming from, what part of the country you are at.

So, I have to be fair and say yes, it is all equal; everybody is entitled to that grant ceiling figure, both at the elementary and secondary. Where it begins to fall apart dramatically is in the area of a board's ability to raise additional moneys to do an accurate or an adequate job, or a more than adequate job. The boards that have very little access to assessment have no chance, and the boards that have access to unlimited assessment -- like the Metro boards, which do not, in fact, receive any grants at all -- they have so much assessment that they do not want the Provincial Auditor to come into their school operations because they claim there is no transfer of payments here. That is an interesting argument, is it not? Nevertheless, the inequities start there. So, up to grant ceiling, yes.

Then we get to the assessment dimension, and how assessment rich or poor respective boards are really begins to speak to the equity question. I am going to ask John to fill in a few of those technical holes. Your question also harkens back to a theme that I advanced in terms of redefining and remodelling education funding: Local ratepayers, home owners, cannot continue to make up the differences in local taxes for the cost of education. That has to be redressed. There have to be other models. I am convinced there is sufficient talent and intelligence and wherewithal in this province, not so much to absolutely increase the number of dollars spent on education, but derive new ways of obtaining those dollars and apportioning them in a different way. John, maybe you could speak to a few of those technical aspects.

Mr Sabo: Just a couple of facts. I think the key fact is, educating 37% of the pupils and receiving only 22% of the assessment, it cannot be equal. It will never be equal. The only way you can deal with it is if you spend significantly less than the coterminous board or the board that you are comparing it to, to get around it. There are statistics that show for our case, 1989, while we are spending at a level of $4,500, our coterminous board is spending $600 more than us per pupil and the Metro Toronto board is spending $1,500 more than us per pupil -- this is elementary -- and is able to do so because of the differential in assessment. So, it is not equal. The statements by the Ministry of Education stating that there is a base level of funding, we have yet and would love to get it -- an analysis of what is included in that base level, and on key things like: What do they include for pupil-teacher ratio? What do they include for salaries for staff and teachers?

That is not reality, because I am aware of one or two of the 168 school boards in Ontario who are spending below the ceiling; everyone is spending above the ceiling. That is just on operating costs. That is only the tip of the iceberg. We cannot spend the same per pupil. Then you add that to debenture debt where two boards are each building a school: 3.5 times the impact is on our ratepayer than on the other board. Just numbers: 1% tax increase for us raises a million dollars, roundabout. For our coterminous board it is $4 million. That kind of differential is enormous for those costs above the defined approved level. And we have met with the ministry. I know their difficulties. They have a limited pot of funds. We have suggested ways of taking that limited pot of funds and redistributing it more equitably, having a higher ceiling. But those are the differences. So clearly the statement that funding is equal is nonsense. We are not even close. Take the pooling legislation. The Treasurer at the time when that announcement was made said, "It is a move towards a fairer..." and was very clear in saying "a move towards a fairer..." Not that it is now equal. Even after the six years, it will only be "a move towards." That kind of differential is staggering, and that is why there is no surprise that 25 separate school boards were in deficit and no coterminous board. Frank highlighted, clearly it is not separate/public; it is assessment poor/assessment rich. The ability for an assessment-poor public board is far less than an assessment-rich public board. You know, at Timmins or Muskoka or whatever, the ability to spend per pupil is far less. It is a funding flaw.

One of the big problems is that of having education funded by local tax base. One thing we are starting to say is that probably the only solution is take it off the local tax base or put it in a pot or do something, because it does not work. You have got -- and I do not want to get into a longer debate here -- the whole default clause. You are automatically a public school supporter unless you designate separate. You can be the chairman of the board and he will move to another house; he is automatically public unless he designates it separate. Those flaws -- and they are flaws -- force that differential. We are not asking for 50% of the funding. We would love to have the 50% of the access of assessment but if we have 37%, you know, we just need the same access per pupil, otherwise it will never be equal. There will always be that discrepancy.

Mr Johnson: Why is there that difference between the 22% and the 37% of the students?

Mr Sabo: The main reason, the large one, is commercial. Up until very recently, all publicly traded commercial was automatically all public. And in the residential -- the main area -- those who have students in our schools have to be supporters of our system to be educated in our schools. Those are not the problem. It is the ones who are Catholics and could be separate school supporters but do not have any children in our system. Then we are into a situation of saying, "Our taxes are too much; let's switch," or do whatever. So we are caught in that twist. On top of that, there is a mechanism that was approved -- the ministry access to pooling funds -- which, if you are aware of the pooling legislation, is a function of the residential split. So what you have in residential determines your share of pooling; so we are caught in a bind.

We issued to the ministry last year a statement saying that we are forced to be in a deficit because you force us to levy the same tax increase as our coterminous board, because if we do not, we are going to lose on the commercial. And in effect -- as the auditors rightly pointed out in the budget process -- it was not a function of the budget analysis and determining what we need and raising the necessary funds for it; it was more a function of, we have to raise whatever the public board raises. If we are too far apart, those who are not taking advantage of our services are going to leave. It is hard to argue against that. They are saying, "Hey, I can't afford the $200 or the $100 more. Can't do it." It is a compounding effect, and until that is corrected, we are in this perpetual nightmare.

Mr Johnson: So if I heard you correctly then, you have to be at least on a par with the public school system with regard to service --

Mr Sabo: Competitive.

Mr Johnson: -- the service that you give to the students; otherwise you would lose some of the tax base, I suppose.

Mr Sabo: Yes, except I twist that around a bit, because the service is one clear element but it is the tax rate, what we end up levying on our ratepayers for that service. I dare say I think there is a clear difference between what we offer, but there is that pressure. It is a compounding effect.

Mr Johnson: Well, I was going to suggest that maybe you had spent beyond your means, but I realize that that you have to do that.

Mr Sabo: We are spending $600 less per pupil and we have a deficit.

Mr Virgilio: Just one comment, Mr Chairman, if I may: In our board and most separate boards, we have a department called assessment department, which the public boards do not have. And that department's function is to go out and try and identify separate school supporters and to get them on to the rolls as separate school supporters, failing which they will be public school supporters and therefore lose even that much more. And we have been successful over the years, but it is that default provision that really causes us problems. But it necessitates an increase in our administration to have that department. So really the system is working against us.

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Mr Bradley: Mr Chairman, I want to deal with a couple of areas in the report that perhaps have not been touched on. I apologize for being late; I had to do some work at the University of Toronto at noon hour. So I will deal with the issue of payroll and employee benefits, which is on page 6.

I know that the first part of it was dealt with by Mr Jackson. The last item says the auditor noted many of the students employed by the board in summer and who earned over $200 were related to board employees. There has been increasing criticism in the public domain -- it has probably always been there -- but increasing criticism in the public domain about nepotism in public bodies.

One recognizes that if it is a private sector firm, the boss may employ his daughter or son, or her daughter or son. When it is from the tax dollars coming in, people expect there is going to be equal access. I noticed what your response was. You must have a different part of the province than I represent, because those jobs would not go begging in the Niagara Peninsula at the present time. I recognize our unemployment rate is always higher. In the Legislative Assembly, sons and daughters of the members of the Ontario Legislature cannot be employed by the government of Ontario, I believe, under the rules and regulations. That has been changed.

Mr Charlton: In recent history that is true.

Mr Curling: Unless we change it.

Mr Bradley: And yet I see an organization significantly funded by the provincial government that does not have that policy. Is it your intention to move to a policy where in fact sons and daughters of employees of the board of education will not be eligible for employment?

Mr Bobesich: Through you, Mr Chairman, I hope not. I hope that will not become a hard and firm policy for a couple of reasons. We are really sensitized to your concerns about nepotism, but that is a fact. I was embarrassed to have this reality printed in the context of this audit report, but it was a fact.

Now, I would agree with you in this forthcoming summer. If we, in fact, have any positions available for young people -- if any, you know, two or three -- I think there will be high competition for those jobs this year. In our region, in the past several years, we did not have a heck of a lot of kids competing for some of these jobs. Some of these jobs are not very glamorous; they are kind of dirty. We did post notices; we did apprise staff -- or principals in secondary schools.

Perhaps we did not publicize that as visually, in terms of big posters and more places, as we might have. We shall do that in the future, provided we have positions. In fact, as a result of this, we have determined that the posters will be very prominent in all high schools. It will be spoken to. But to say that no offspring of employees are eligible, I think would be a little bit unfair for a couple of reasons.

Number one, if we have the same condition that we had in two previous seasons, where we simply did not have kids that were interested or kids started and did not want to stay because it was hard washing those desks and chairs all summer, then we are looking for kids midstream. And number two, we have found through experience that the sons and daughters of employees, especially senior employees, tend to do a heck of a good job because they have a different sense of commitment to that job because they know what the expectations of the parents are. So the organization benefits, the kid benefits, and everybody benefits. So to blatantly say, "No employee offspring will be employed by the board in the summer," I do not agree with.

Mr Bradley: I thought it would be interesting that you know what the rules and regulations are around here because I think most people in the world think the rules and regulations related to that around the Legislative Assembly are somewhat different than they are. And I can certainly understand that you would not want to prohibit those individuals from having access to the jobs. I think your answer there is quite appropriate. However, this finding by the auditor would not be unique to your organization, by any means --

Mr Bobesich: I know.

Mr Bradley: -- or virtually any organization, and I recognize that the hiring is often where you feel it is going to be reliable.

Mr Bobesich: Yes.

Mr Bradley: The point I would make, however, is it would be similar to certain other instances that we could think of in this world, like the Ontario civil service, the federal civil service, municipal civil service, that very often the people who are least in need of the money from those jobs are in fact the people getting those jobs, and that poorer people in the province of Ontario who do not have access to the levers of power, who do not have friends in high places, have kids that do not have access to those jobs. So I am pleased to hear that your posting and your advertising will allow more of those people to be in a position to access those jobs. The real crunch, of course, comes when the hiring takes place.

I do not want to sound like I am lecturing on this, and I understand fully what you are saying when you talk about reliability. I suppose that public bodies funded by taxpayers' dollars will have to be in a position -- and can come back at taxpayers who are critical for this, by the way -- to take a greater chance in hiring people who they believe, to begin with, may not be as reliable as those who are the sons and daughters of superintendents or whatever we want to use.

I am not using that in any incriminating way or anything, but people in that position naturally are going to try to be reliable because their mother or father happens to be in that position. But it seems to me that public bodies may have to reach out to other people who do not have that same opportunity as those who have people who are in influential positions.

The second question I would like to deal with is that of transportation. And I will not bore the committee; we did deal with transportation somewhat this morning. On page 3 it says, and you will bear with me if you have already dealt with this, "The board did not award bus contracts based on the lowest tendered price." I understand that you are going to do it. You say you are one of the few boards in Ontario which employed the competitive bid process and you are going to review it and a decision taken in favour of the most cost-effective mode of obtaining transportation service.

I recognize there is always a question that arises when you do not take the lowest bid. However, there are circumstances where it is appropriate not to take the lowest bid. What was the circumstance that I missed out on there?

Mr Bobesich: I am glad you raised this question, because this is one area of the audit that we are turning to our advantage. First of all, not only are we continuing with a rigorous housecleaning of that particular service unit. It had started, but the rigour of it continues, so I am glad to be able to talk to about that, because we referenced at the outset of the report that we are taking remedial action on all of these things and transportation is certainly a focal point.

Now, the question of tender versus competitive bid is an interesting question, and we have not declared for or against in unequivocal terms, but rather really mean what we say when we say we would like to take the approach that gives us best value for our dollar in terms of economy and service.

We were burnt a few years ago when we went with a low tender operator. We were really burnt, because in essence what happened to us during the first month of school in September was that buses were not showing up, kids were being left unattended, mothers and fathers were calling the school board and screaming at us in no uncertain terms. The company was just not able to provide the service.

At the same time, and perhaps this is also common to your region, there was a shortage of qualified bus drivers. The coterminous board upped the pay schedule for bus drivers and virtually attracted a lot -- using nice language there -- attracted a lot of these bus drivers. So we were left in a situation where the company neither had sufficient rolling stock nor qualified drivers. Now, you explain the tender process to those parents under those circumstances and they will tell you what they think about the tender process. But we are really quite conscious of getting the best value for the public dollar.

Further, if you want specific information about what we are doing, Mr Sabo just had a meeting with a number of concerned companies around this issue. We are working closely with our coterminous colleagues in terms of reducing transportation costs. I just want to tell you that we are increasing the number of shared routes. We are looking at a reasonable cost for service, and for the first time in many years our board is addressing its transportation policy.

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That is an item for tonight's agenda. I suggest it is going to be a bit of a heated item, but heretofore we have had, I think, a very generous transportation policy, and we are looking to change that transportation policy, which I predict will precipitate a storming of the bastille next month when the good citizens find out that the kids have to walk a little further.

But nevertheless it is an area that has contributed to some of our deficit situation and it is an area that we are just going to have to hang tough on. And so transportation is being tightened and is being economized. And we are really looking forward to future -- I hope in the near future -- definitive rules and expectations as well as funding statements from the ministry regarding transportation.

Mr Sabo: If I may add to that, on transportation, that was an issue that we had long discussions with the Provincial Auditor on, the merits of tendering versus negotiating and whether the principles of tendering, which apply to a new building, a product, can be applied to a service, and how do you measure the less quantifiable items as safety and service and all of those items.

I was pleased to see in the Ministry of Education response to the provincial audit that they would be providing to us by the end of January guidelines on tendering of bus services. We have not received them, and I am told they are reviewing it again, because very likely they have realized it is not that easy. It is not an easy statement to come up and just say, tender. I mean, the easy way out, to be very honest, from an administrative point of view: Tender it, low person gets it and our life is made easy.

We have meetings with our bus companies. Over the last few months we have reduced a significant number of routes. A lot of our bus companies are very worried about losing routes and ceasing to exist as companies, and forcing the monopolies to start to develop and the bigger companies will take over the smaller companies. There are negative, definite negative impacts along with that.

We are meeting with our coterminous board. If it does not happen this year, it will for sure next year happen that we jointly work together. They have had a negotiating process in place, which I think has worked well for them. We are looking at their process to see whether we can incorporate it. But clearly it is not like tendering a building. The service components are incredible. We have worked very closely over the last few years. Our bus companies have developed safety programs and you cannot put that in a spec. So we are looking at it and we would welcome any guidance from any area.

Mr Bradley: I commend you as well on your efforts to work with the coterminous board. I think what all of us have seen over the years is, in certain parts of the province, some ridiculous situations developed where I think, when everybody sat down and looked at it, everybody said: "These are ridiculous circumstances and we can in fact have some common routes. We are going to be able to better service the people." And, yes, you are going to have people from different school systems on the same bus, but the cost is going to be more effective, and it may be that you will get a better deal -- I do not know that, not necessarily -- you may get a better deal out of the companies when you do that. So that is certainly commendable on your part.

Mr Bobesich: One other initiative that really is being accelerated because of this deficit and the need to cut wherever we can without hurting programs is to further pare transportation costs by having some schools, especially secondary schools, start a little earlier in the morning, like 8:30, so that we can utilize the same bus for double runs. We have had a little bit of that. Now we are expanding that more systematically for September and even looking to pilot perhaps one or two elementary schools. We have calculated that that whole cumulative effort in the transportation area will make a significant monetary difference within a year.

Mr Bradley: Looking at -- because the auditor overall looks at this -- the total cost of education, you have recognized as well as everybody else in the province -- he is perceptive of these matters, and I am sure you are -- that there is a growing group of people, a very vocal group of people at least, if not growing, who are concerned about the costs of education and are, at the local level and I guess at the senior levels of government to a lesser extent, putting some considerable pressure on to limit the increases in costs or in fact to cut back on those costs.

You also find it no doubt amusing, from time to time, although you may not say it is amusing, to note that some of the same people who are demanding the service are demanding the lower taxes, and that is always an interesting balancing act in itself.

But I put it in this context. There is probably a growing opinion that is not shared by many in the separate school system that there should be one single board that would handle all education in Ontario. This has been rejected by separate school boards across the province. But a variation of that is what you are talking about in terms of -- I guess people recognize the differences and the reason for those differences -- a growing body of opinion that says there are certain areas where there can be shared costs.

One looks at transportation, where you are making some significant moves in that direction. One looks at the potential for maintenance staff who are not involved in instruction of students. One looks at purchasing, where many boards are involved in some joint purchasing projects. Some look at the area of consultants, where it may be in specific fields that consultants could be of use to both boards of education.

What efforts are being made in York region in that direction, recognizing that no one is saying you are moving towards a single board or anything, but in terms of the co-operation, what areas are your two boards working in to bring some cost-effectiveness to education and maintain the same level of service that you would like to maintain?

Mr Bobesich: In addition to the transportation initiative, we have a historical agreement with the coterminous board. We jointly founded and promoted an audio-visual media resource centre and library that teachers from both systems access. We share a common audio-visual technical repair service. Those are two.

We share some expertise, not so much on a contractual basis, but on a lend-loan basis. We will do something for them or they will sit with us on a certain task force or a project. And that is as much a function of good neighbours as a predetermined type of collaboration.

Mr Sabo: In purchasing, our purchasing department has been working very closely in terms of, recently, garbage removal, waste management, recycling. That is a significant issue in York region as in other areas. We went out on a joint tender. We do a number of joint tenders on large items and are looking to expand in that area wherever we can.

In the area of plant, we are meeting tomorrow, as a matter of fact, in terms of reviewing some plant services, not yet sharing, but we share ideas at this point. We have a very good working relationship. The trustees have a liaison committee that meets regularly. Tendering of transportation is one, lot levy initiative is another, working very closely together in all those areas.

Mr Bradley: The other area I am thinking of when you talk about plant -- I guess this is plant to a certain extent -- you may be familiar with the Lincoln County Board of Education experiment with two elementary schools on one property. They exist in fact in York. I am not certain of that at all, but Michael J. Brennan and Pine Grove, in the north end of St. Catharines, share the same property. One is a separate school, a Roman Catholic separate school board school. The other is the coterminous public school board in the area. It has, according to most people who have approached it with an open mind, been very successful.

Are you moving in that direction of sharing property, sharing buildings, recognizing that the schools are entirely separate but they are still part of the same unit in terms of the physical building, and the property?

Mr Bobesich: Well, yes and no. Let me qualify that. School sites have had to increase as of late because of the need to provide additional space for child care centres and related parking, and so the actual size of school sites is increasing for both boards.

Now, in conjunction with municipalities, I think we are doing some very nice planning in some of our municipalities. Markham comes to mind, where we have a public elementary school and a separate elementary school, certainly in the same location, but what they share or what divides them is a common park. That is working really nicely and we are advancing that kind of planning in a number of municipalities.

But I do not think that I would want to say, and I do not think the other board would want to say: "Let's buy a common site and put up two schools. You go north, I'll go south and we'll share the middle." No, I think there is another way of approaching the same objective that you are advancing, working in concert with the municipal planning authorities, developing a piece of land that serves both educational as well as community recreational purposes.

What we have done in that regard is we build into our schools community washrooms which are accessible to recreational department activities and communities at defined periods of time. That seems to be working fairly well. I think we are moving towards that intent and that theme without actually buying a common piece of land, but planning it in concert.

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Mr Bradley: Just an observation, which may or may not be accurate. If the new administration at Queen's Park is going to provide, indeed, 60% of the cost of education on average across the province, my guess would be that they will do so based on conditions to which the minister has alluded that, in fact, there be some co-operation and cost saving at the local level. Perhaps those boards of education who move in that direction early, as your board has moved in some areas, will be those who will receive some favourable consideration from the government, because I cannot believe, for the life of me, that when it comes down to the crunch, they are going to provide 60% of the cost of education, as it was, of an unlimited figure that is going like this for ever unless, of course, we have discovered oil in the province of Ontario.

Mr Bobesich: I guess I have two observations on that comment, sir. The first is: 60% of current dollar value, or is that 60% going to include and encompass an expanded number of initiatives that may be laid on to school boards? I think you have to really look at reasonable funding in the context of what the baseline level of expectations is, whether they be expectations articulated of the government of the day or the local community.

Funding equals expectations. The other comment that you made is if, in fact, there will be preferential treatment or favourable treatment of those boards who have indicated a willingness to co-operate and extend mutual initiatives, I have no doubt that we would benefit from that.

There is one other point that I would really like to go on record as making. If ever the day comes when the government, the Ministry of Education, recognizes and funds appropriately those boards who have made tremendous efforts to accommodate all exceptional children in this province in the area of mainstream special education, I want to tell you we would get a bonanza, because we are running, undoubtedly, and offering, undoubtedly, one of the best special education mainstreaming programs in this province. It is a program that we are hurting with right now because of its tremendous costs. It is just blatant silliness to think that you can educate hard-to-serve youngsters with a tremendous range of exceptionalities at the level of current funding. It just is not possible. And a consequence of that is that this minister, at least I think in spirit, has recognized the reality that has to be translated into some kind of support because we cannot continue to serve those special needs youngsters without additional assistance. I just want that to go on record, because we would qualify for the bonanza.

Mr Bradley: You have had the opportunity through my question, then, to put on the record in Hansard that particular point and with Ministry of Education officials listening carefully and government members listening carefully. Hopefully your message will get through.

Mr Cousens: I wanted to follow up on something Mr Bradley was asking about, and it has been an issue of great importance to the committee, and that is transportation costs. I think Jim did a service by getting the answers we did from you. Why do you not, as the Roman Catholic separate school board, have the same transportation policy as the public system?

Mr Bobesich: I think you might -- oh, I am sorry, Joe.

Mr Virgilio: That is okay.

Mr Cousens: The politician will answer.

Mr Virgilio: The politician will answer because we are nice people. I think tonight we are going to readdress that and we cannot speak for the board of course, but we think we are going to move to that this evening to have the same walking distances. But I can tell you, and I do not know if you were there that evening, Don, but as soon as you start changing those walking distances, we had our boardroom full of people for two or three months last year. We had boardrooms full of people saying "Our kids are going to get attacked; they are going to get killed by cars," they are going to do this they are going to do that, and it really is gut wrenching when people come with those type of arguments and you are saying, "Well, you have to increase the walking distance."

We have in our board regional differences as well. But I think the concern we have is that we were trying to be good to our ratepayers and, consequently, we have had to pay for that.

Mr Cousens: Just because I think it is such an important issue -- and if you are able to not only have a similar transportation policy as the public system and if, in fact, you have a working relationship -- and I do not see any reason why it could not happen by virtue of the similarity of boards in interest on transportation matters -- that if changes are made by either board on the transportation situation, both boards could have, through their joint committees, some working through of that so that it is not a surprise to one board or the other. Could you then, and would you, give consideration to further use of the town and regionally provided bus services? And to what degree can that become part of your solution, especially with the main routes, where you are involving certain major routes that are provided in the town, so that the town can buy into the solution as well as the other board?

Mr Virgilio: We are negotiating on the secondary level; it is the young kids that we have a problem with.

Mr Cousens: I understand.

Mr Virgilio: And in our board as well, as you know, we have junior kindergarten, whereas the public board does not, which is also causing difficulties to us. But we have tried, on the secondary level, to negotiate with the different towns. Unfortunately, when you get into the northern regions, it is more difficult. The services are not there where you have not the density.

Mr Cousens: I understand.

Mr Virgilio: But in Markham and Vaughan we are trying, and Richmond Hill as well.

Mr Cousens: I am encouraged by the answer and the challenge you have with it. I have one further comment on it and that has to do with the level of urgency that can go into it. The problem you have got is that you are limited so much in resources from a staff view to implement change. I mean, the policy can be developed by the trustees, and then to have someone implement it, as Mr Bobesich knows, it is next to impossible to do that. But if you may look at possibly having outside consultants or some assistance so that you could implement some of the changes in transportation as early as this fall to begin to effect more speedy savings to the whole system. Now mind you, it is an election year for the trustees, but I just suggest that might be something you could be looking at.

Mr Virgilio: I think we are going to have to make a lot of tough decisions this year and, election year or not, they are going to have to be made.

Mr Cousens: I have one other question, if I could, Mr Chairman. It has to do with one of the auditor's conclusions when he talks about the budgetary processes being satisfactory. However, the setting of the local tax rate was more dependent on the rate set by the region's public school board than on the budgeting process. Would you mind commenting on how that one works? There is a certain amount of realism that takes place in the school board. Would you just give some comment?

Mr Virgilio: I think it was alluded to earlier, and I think I was probably one of the people who said it first, that we go through this whole budgetary process and, having been involved with it five other times, you go through that whole process of needs and wants and things that you would like to keep. Then you get to the point where the public board sets its rate and, in order to give the wants and things you would like, it would take an 18% increase or more and the public board comes in at 10% or 11%. That is what happened last year and we said, "We cannot have that great differential because it would scare away all our ratepayers who do not have children in the system." Consequently, in order to retain those ratepayers, we have to reduce our mill rate to coincide with the public board and the budget, and that is where we end up most times. Every time we have done it, that is what has happened. No matter what our needs are, we have to come in close to what the public board has. That is what happens at budget time. Unfortunately, it is a truism, it is not a reflection. It is just trying to keep the assessment dollars in our board.

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The Acting Chair (Mr Miclash): Thank you, sir.

Mr Bobesich: Mr Chairman, that is the political reality. However, I must say to the auditors that I appreciated the comment they made about the process being satisfactory. I think they were satisfied, as well as pleased with the amount of data that administration brought to the trustees, the amount of information that was brought before, to enable decision-making, and the processing that actually took place, because we were concerned about that and we wanted to make sure that we were in fact bringing the kind of information forward that ought to be brought forward, and so that the trustees had that at hand. I think that was confirmed by the auditors, and my staff were appreciative of that because they worked hard at that. In the final analysis, the reality of life says you will be competitive in many areas if not all.

The Acting Chair: Thank you for that, sir. Mr Hope.

Mr Hope: First of all, thanks for coming. I guess my questions will be quite direct. I do not know if you have a copy of an article that was in the Toronto Star, 3 January, and it talked about slashing maintenance costs.

Before I get into that, I would like to ask one specific question. Is there currently a municipal property tax revolt in your area?

Mr Virgilio: Not yet.

Mr Hope: Okay. Then my second question would deal in context of what we are talking about here. We are talking about teaching staff and salaries. What is the absenteeism ratio of the teachers? Do you have that?

Mr Bobesich: That is a difficult question. We took a stab at trying to put together some stats around that question, and the problem is that we just started to computerize these data about a year ago, so our comparison to previous years is shaky at best, but it appears on our first draft attempt that it was something like six and a half days per teacher, per year. That is subject to more rigorous substantiation over the next several years; 6.5, 6.7. I do not have that report in front of me, but nevertheless I think that rings true.

Mr Hope: What are the salaries? Just for my own information, because it all leads to questions. What is the salary of teaching staff?

Mr Sabo: We are competitive in comparison to our public board; we are very close. I think at maximum we are within $300 or $400. The maximum salary range -- I do not remember numbers -- I think is $60,000. That is a classroom teacher, but that is an A4, fully qualified, 10-year-experience teacher, and they can start all the way down from, out of university, typically -- I do not know -- $28,000 or $30,000.

Mr Hope: I guess my question then leads into, because of the wage structure in itself, and I hear the absenteeism ratio, then the teaching quality must be there, and the enthusiasm behind the teachers must be there to continue quality education. When I start talking about the wage structure, you can have repercussions out of withholding wages from teachers themselves, and when you withhold wages from teachers, usually there is a repercussion. They usually leave.

When you start talking about slashing costs, you talk about slashing maintenance costs in that article, and when we start slashing preventive maintenance costs, then we start having to address it down the road, as more capital moneys have to be put in for fixing up the damages that could have been done through preventive maintenance. I know you are faced with a huge deficit of $18.5 million, and I guess I am just questioning the strategies behind using that method. Number one, looking at the teachers' salaries, and also about the slashing of maintenance.

Mr Bobesich: In terms of slashing maintenance costs, maintenance responses will be prioritized, and of course, priority A items will be done -- leaking roofs and malfunctioning furnaces -- but certainly, I guess stuff that would be considered cosmetic will not be done. Even if there are some areas that ought to be attended to on a proactive basis, in hopes of not incurring an additional amount down the road, we really do not have much choice about it. I mean, you find some money somewhere or you do not. It is easier to take it out of maintenance costs than it is to take it out of instructional services.

Secondly, trimming teaching staff in some departments, I just got this note here that talks about reducing some level of support staff, in terms of consultants, and special-ed support services, from central office rather than in classrooms. Classroom situation is governed by the collective agreement and that, of course, is respected. That is not being tampered with.

In terms of your reference to costs, to expand upon a note that John made, and you may find this somewhat of an anomaly, I think at the moment our teachers enjoy among the highest levels of salary in Catholic boards in the province. We were clearly cognizant of the need to be competitive, for the very reasons that one of your colleagues raised a little while ago, to attract new teachers into this area, to enable them to live in the GTA. We had to be competitive. So we did our very best to do that. So they enjoy a very competitive wage today, and when you talk about slashing costs, I do not see anywhere on this page where it talks about slashing salaries or wages. Where are you inferring that?

Mr Hope: That was one on the second page, "the biggest area of cuts will likely be in the teachers' salaries which make up 70% of the board's budget."

Mr Bobesich: I suppose that that is a reference to future negotiations, where I think an attempt will be made to try to reduce to some extent the total portion of budget which is directed towards employee salaries, teachers and otherwise.

Mr Virgilio: Mr Chairman, one of the concerns I have as a trustee in talking about salaries and wages is, I find it very difficult. Because we are dealing, as a school board, with a unit of teachers, if you like, or caretakers, etc, and there is always this comparison factor. It is not that we are not making enough, it is that the other board is making more and everyone wants to leap-frog over the other board. "We want to make as much as, if not more than, the coterminous board, or the other boards in the area." I think that is an area that we really have to come to grips with.

I am not suggesting our teachers do not deserve the money they make; they do. But the question becomes, every time you go into negotiations, it is a comparison of, "Well, they have so much in this board; we deserve just as much." When do we stop that? You talk about the cost of education -- 70% is in salaries. Now when do we say to ourselves, "We have got to put a stop to this for a certain period of time"? That pendulum has swung from when teachers were not making any money to the other way around, when they are making very good money. A lot of our ratepayers are saying, "Teachers work 10, nine months out of the year. They have got a job. A lot of people in our region and the rest of the province do not have jobs." So I think for you to say that because we would not give them money the morale would come down is really unfair. I think the sooner everyone starts talking about salaries as not being something that is deserved every year because of cost of living -- I mean, the cost of living goes up because salaries go up every year. It is a vicious circle.

Mr Hope: I would have to disagree with you on some of the comments you have put forward.

Mr Virgilio: It is a vicious circle that is not going to end, and if the province is not going to provide us with the finances to pay for the increases in salary, we are going to have to take it out of our ratepayers, and that is where it becomes really unfair to everyone. That is a political comment, not something from the administration, but I think something has to be addressed. The stress that revolves around negotiations is really something that should also be considered, because, again, it is the divide and conquer aspect of it, that each school board has got the lever of the kids. It is really going on strike. I mean, the impact that it puts on trustees and administration is really an unfair impact. It really and truly is.

Mr Hope: Okay. We could probably get in a long debate about that, but I really do not want to do that.

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Mr Cousens: You might not win, Randy.

Mr Hope: Oh, I probably would.

Interjection: There are a few negotiators sitting over there.

Mr Cousens: Ah, you are talking to one of the star trustees.

Mr Hope: Okay. When I look at the article -- and I guess I am trying to compare because I do not know York region, what its geographic figurations are like -- and it says, instead of a 30% tax hike, you opted out of that and it does not say anything about the percentage that you did implement. I would have to ask that question. It was in the article and I hope I am not throwing you off If I am, just tell me so and I will get you away from that article, because it was something I have advantage to over you. It just says in the third paragraph from the bottom, "To operate in the black the trustees would have had to raise the school taxes 30%. Instead, they built the $18.5-million deficit into the budget."

Mr Virgilio: That is what I alluded to earlier, I think the public board came in at 10.2% or 10.8% and we came in at approximately 11, just one point ahead of theirs.

Mr Bobesich: The year before, we raised our mill rate some 18.5% and the coterminous board, I think, went as high as 16.5%. So there was a two-point differential. Last year, it was 11% for us and 10.8% for them. Those are facts for the years 1989 and 1990. This year, my only assumption is that it will be competitive no matter where the coterminous board levels off. It will be a competitive rate. I am trying to glean where this article came from because the first part is nonsense in terms of the school year. But at any rate, in the context of processing the budget or in budget deliberation, there are always equations that are drawn. One of the equations that may have been drawn was simply to illustrate that in order to come in with a balanced budget at that time, given the revenue in terms of general legislative grants plus assessment, we would have had to raise the tax 30% in order for it to equate and balance. Clearly, 30% is not something that any board would levy on any community.

Mr Hope: That leads to page 4, where you talk about a five year plan to balance out the budget from 1991 and retire the deficit in 1995. If you are trying to stay competitive with the other school boards, how are you going to deplete that $18.5 million, which will probably escalate as we go along through the four years? How are you then going to deplete it in four years?

Mr Bobesich: First of all, we live in eternal hope. Secondly, we are quite conscious and cognizant of the reality you are alluding to, but we are also hopeful that at last there will be some substance to back up the rhetoric of the past five years, in terms of improving the funding situation, redressing the assessment problems, redressing the funding models, and actually increasing and bringing into line the per-pupil cost of educating youngsters in this province today. Somewhere along the line, some government has to follow up in a substantive form with all that historical rhetoric, and if it does not happen, then I ask what is the consequence? What is going to happen? Are they going to close us down? What are we going to do with 37,000 kids? Do you close down a school system like you close down a tire plant? We are trying to be responsible and reasonable and we are doing our darnedest to exercise responsibility in two domains, the instructional domain to the kids and the fiscal domain. All I can say to you is we will continue to do our best and then our fate goes into the hands of the ministry and we will see what happens this year. Last year, when we could not balance, the Education Act was invoked, grants were withheld and that penalty cost us $300,000. That is $300,000 we had to go to the bank to borrow on top of the debentures and other loans we had. Well, $300,000 will buy a lot of stuff and we did not get that money back. That is the penalty that we suffered. Are we going to suffer another penalty this year? We have no place else to go, we have no programs to cut and we have no frills left to cut. So, I lay the case before the officials and the government of the day and I ask you very sincerely: what else is there to do? My kids have to have some education, some educational programs. What would you have us do? So we will do our best over the next five years and we are sincere in that, but our success will be very much predicated on how quickly and how effectively other reform measures, which have been promised, take effect.

Mr Hope: I do not know who made the promises but I guess I will have to look at it. I am not in the Ministry of Education. In York region, is there more than one municipality?

Mr Bobesich: Nine.

Mr Hope: There are nine? Are there, in the municipality itself, areas that are being subsidized? For instance, where you have a higher mill rate in one area versus another area in the property tax issue?

Mr Sabo: Sure. The mill rates are by municipality and York region does not have an equalized assessment. They go through a process of equalizing and the mill rates that are produced are, in theory, supposed to equate to the assessment that is attached to a house. So, in theory, the household of a certain value in Vaughan should be paying the same as in Schomberg.

Mr Hope: With all due respect, I am one of the people that support the Catholic separate school system. I do pay the additional moneys and let me tell you, my taxes are not comparable to the public sector but that is my choice. I hear what you are saying about the sector that does not have children, that is not using the school system. I guess it is just the point of view from a person who pays to the Catholic school system that, with all due respect, I prefer having my children going to a Catholic school system and I will pay the differential for the quality of education. Yes, it may cost me more but, at the same time, I still want my board not to have a deficit and the quality of the education of my children is one of the key issues with me. The unfortunate part is, through past governments, the failure to comply with getting moneys into the school system. But at the same time, we have to deal with the issue of quality education, because as we have more illiteracy -- people who are in grade 9 and 10 still cannot read and write -- we have serious problems. We have to develop ourselves because, with the market change of everything else, we have to be more competitive. The people who hold the responsibility and the key to our future are the people who are the trustees and also the board of directors in making sure the quality education is an issue. Making us understand as taxpayers, in order for us to maintain, if we are to go to a Catholic school system, we will have to pay some of the differences in prices.

Mr Charlton: I will be very brief. Just a couple of quick questions, one for Mr Bobesich. I was intrigued earlier with Mr Jackson's questioning about item 5, the salary determination purposes for part-time teachers. Your response was that it was a program or a procedure that you had forgotten about and that it was now being looked into. Someone jogged my memory over the course of the afternoon and I am just wondering if it might not, in terms of the board's response to that issue, read just a little bit better if it said, "Practice established in 1972 because of a need to attract and keep good women teachers in the system."

Mr Bobesich: Actually, it might have said "good part-time teachers in the system."

Mr Charlton: Part-time women teachers?

Mr Bobesich: The fact that the majority of them may have been women is fine.

Mr Charlton: Is it likely that is what the union's position on the issue is going to be?

Mr Bobesich: It may be, but I have not discussed it with them yet.

Mr Charlton: It might be good if you could find that original motion that was passed and the debate around the motion as well.

Mr Bobesich: I intend to.

Mr Charlton: On this issue of assessment and provincial funding, we have talked about the 22% and the 37%. My understanding of what was said earlier is that, even at the end of the six-year program that allows you to wade into the pool gradually, you still will not be, even in basic terms, at 37% of the assessment base.

Mr Bobesich: That is correct.

Mr Charlton: Roughly, where will you be at the end of that?

Mr Sabo: Twenty-nine. That is optimistic.

Mr Bobesich: Which is commensurate with the level of residential and farm assessment. That is where it is capped. The commercial-industrial will come in to the level of residential and farm and they will coincide at that point, which will not equal the total population.

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Mr Charlton: Okay, so right now, with 37% of the students, you only have 29% of the residential and the farm assessments. If you managed between now and the end of the six-year program, through your assessment office, to get up to the 37% residential and farm, this program would allow you the other, to float the 37%?

Mr Sabo: Never happen. Never happen.

Mr Charlton: It is a hypothetical question.

Mr Sabo: It cannot happen. That would imply that every person who is able to be a separate school supporter chooses to be a separate school supporter. It just will not happen. Just the default clause alone and the people's willingness to sign a piece of paper will not happen.

Mr Charlton: I understand that but the question was, if you got there, the commercial would float to the same level. Whatever level you get to in terms of residential and farms is where the commercial will end up.

Mr Sabo: Theoretically.

Mr Bobesich: Yes.

Mr Charlton: Okay. Now, because this may help us a little bit in terms of things we may want to think about recommending to government, can you tell us of the financial problems that boards like yours are having? Let's take last year's budget, an $18.5-million shortfall. How much of that is the assessment problem? I do not want exact figures; just give us some ballparks in terms of how much of that we can resolve in this assessment package. How much of it is because of provincial funding equations, formulas, that do not hit the mark, that do not recognize the real cost of education today? And how much of it is something else?

Mr Sabo: To start with, the $18.5 million is an accumulated deficit over the two years. Last year's deficit was about $12 million. Clearly, assessment is built into it because that is part of the funding model as a whole. If we were at an equal assessment per pupil, as 37% of the assessment, we would not have a deficit for one particular reason. We are spending $600 less per pupil in operating costs than our coterminous board. Because we are spending less than, in theory, we would be --

Mr Charlton: Laughing.

Mr Sabo: We would be in a much better position because, you know, we are receiving an equitable amount of assessment and spending less.

Mr Charlton: But presumably, though, the desire to get to the educational level of the other board will always be there. So let's forget about the $600 you are spending less.

Mr Sabo: Okay.

Mr Charlton: How much of what you need to get to where educationally we should be in this province as a standard, is a fault of the assessment system for separate school boards and how much of it is a provincial funding problem?

Mr Sabo: I think they are one and the same. I mean, the funding model is based on assessment wealth and generates the grant level you receive. So as long as we were funded the exact same level of assessment per pupil and both ourselves and the coterminous board face the same penalties, then the balancing equation would be that the tax rate that our ratepayers have will be the same, and therefore instead of having them raise 10% last year, they might have had to raise 18% and it would have evened out.

So it is so related I do not know how we would break it apart, except to say that another factor is that of debenture debt. This year in our budget we just went through a process, $16 million in this year's budget is to pay debentures. If we eliminated that, a 5% tax increase this year would balance us and put us into a slight surplus. So it is related. Had we had assessment over a period of years, we would not be in this situation. That is clear. That is the assessment wealth. There are two balancing elements: grants and taxation. Given that both are providing similar services, it should all equal out.

Mr Charlton: Then why do the public boards still have the complaint about the level of provincial grants? You are telling us you are going to shut up if we give you the assessment and go home.

Mr Sabo: No, no. Because of the balancing element being on the ratepayer.

Mr Charlton: All we are asking you to do is to tell me the second part of the answer. How much more are you going to come back at us for after we fix the assessment thing? What is it the provincial contribution has to be to make the system work in the way that you have described to us? You want to see it work in your presentation? Do we just have to go to the 60% and will that automatically fix it?

Mr Sabo: I do not know.

Mr Bobesich: Mr Charlton, you are asking a very difficult question. It is a good question. It is a very difficult question from my perspective because I have to go back and ask the fundamental question of what will constitute a baseline program for an elementary student or a secondary student. If we can factor some reasonable cost of that program for the elementary or secondary kids, so we have two figures in front of us, then the next question is, how do school boards realize those per-pupil moneys?

If we stay with some form of taxation rooted in property tax, then your question or struggle, I guess, becomes more germane in terms of, is it 60% provincial and 40% local. I do not think we are going to find a resolution in that model. I think the current model has to be changed completely into some other form.

Mr Charlton: I do not disagree with you. We are not going to go anywhere with this, so I will let you have a last comment then I am going to make one last comment.

Mr Bobesich: I wish I could give a reasonable answer to your question. Like, if the province gives you X, what will your Y be? Or vice versa. I cannot in this context right now.

Mr Charlton: Well, until you guys who are out in the front lines are in a position to start telling us what the real costs are, it is not very likely that those of us sitting up in here are ever going to come up with the right answer. We may make some improvements and we may come close. We may miss the mark because we are going to need you, we need that frontline input in terms of what the real costs are. We need the boards of education in this province to start looking at what is the difference between you and your coterminous board. What are they getting for their $600 per student that they are spending? What is it buying in educational terms? And is that what we want or can we afford to forget that or is it perhaps even worth more than $600? All of that stuff is going to have to come from the board level because it obviously does not exist in the ministry.

Mr Bobesich: There are costing data available from the ministry that are a summary of board expenditures, of course.

Mr Charlton: But you also know it does not agree with anything that you ever tried to calculate when you are working out your budgets. Is that not right?

Mr Bobesich: Yes. Your question to me still comes down to a basic definition of what will constitute a baseline program, and then how do we factor the costs in current dollars for that. I will struggle with that for a while, but I am sorry, I cannot answer your question.

Ms Haeck: I also have to admit that I am not out of the educational field, but I am very much interested. Obviously this does make up a very large portion of the provincial budget and I am interested in when you are planning your capital building costs or projects. Obviously the events over the last few years have blown those particular projects totally out of the water. What kind of lead time are you working with in light of the fact that you may not have a complete handle on what is going to be happening development-wise in York region? How much juggling can you do in order to meet demands that may be coming up in the next five years?

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Mr Bobesich: I will just give you one historical response and Joe can give you his perspective. We have yet to complete a school in time to satisfy the new municipality or the new community occupying a new subdivision. There is always a lag time. There is no proactive action. One of the appeals of the lot levy legislation was that, in fact, as development was being proposed and approved, school planning would commence, you know, in tandem with the planning of that subdivision. So as the houses were going up, the schools conceivably would be going up, and occupancy dates might be within reasonable proximity of each other. But there is always a lag time. Now if you want to dissect your question more specifically, like what is the time frame before we ask for approval, we wait for approval, we get approval --

Ms Haeck: How many years?

Mr Sabo: For a secondary school you are talking a two-year construction phase. Planning, added to that, four years before a secondary school is realized, if everything goes the way we want. We apply for, we receive approval for, we design and we build, and there are not strikes in between. Elementary school is a little shorter. We have been successful in using many repeat designs, fast-tracking. We were in a position unfortunately -- unfortunately from a financial position -- of advancing schools in advance of grant receipts because we had 5,000 children showing up next year and we needed some place to put them and we were building schools like that.

One thing that is happening now with the leverage of capital funds, we have a secondary school that we occupied two years ago for which funding was over a four-year period so that the school opens day one and we are applying over two, three years to get the grants for it. On paper it sounds like we are getting grants, but it is deferred and we are borrowing money still to bridge.

Ms Haeck: Do you have a planning department within your board?

Mr Bobesich: We did not have a planning department before last year. But we finally succumbed to that need and hired somebody to do planning.

Ms Haeck: Who was giving you your stats as far as being able to anticipate --

Mr Bobesich: We were; John and I. That was the planning department.

Ms Haeck: Oh, I see. And the municipality was providing you with housing stats or whatever?

Mr Sabo: We had stats. Again, we also worked with a coterminous board. We had a good handle where we were at. We were successful in terms of school boards and receiving allocation. We never received what we needed. As an example, in the five years, we built 32 projects. So obviously we could not have built any more than what we received. So we built everything we could and made do, which we were forced to.

Ms Haeck: Where there obviously was the kind of growth that you were seeing in York region, I sympathize with your plight. Because obviously, in order to meet this demand, I am surprised you are not all a whole lot greyer than you are. And I speak to that starting at age 21 and we have been working on it for a while. Oh, it is a long time. A long, long time.

Mr Jackson: How much information are we going to get here?

Ms Haeck: I do not know. We will have to see. Vaughan has grown astronomically. I do not think I am telling anyone sitting in this room anything new. This is a very nice, handy little map. Looking at this, this is what we have seen in the paper for the last two years is the burgeoning area of southern Ontario.

In your relations with the municipalities, have they given you any sort of advance warning as to really what was coming down the pipe so that you could really be dealing with some of these things? Obviously, hand in glove is absolutely required, so that you can deal with a situation that is just going through the roof from a planning perspective.

Mr Sabo: We have worked very closely with some, not so closely with others. We have nine, as was mentioned. Vaughan was very co-operative with us. We are finding that recently municipalities are starting to look very closely at their bylaws and saying, "Jeez, allowing you to start before getting certain building permits, we cannot do that any more." So in that last four or five years we did a lot of things, worked very closely with some of the municipalities. Vaughan is an example of a very close working relationship. I cannot say the same for all. But they work very closely with us, in some cases helped us arrange for land. So we have worked closely with them, and planning stats from a regional and municipal basis, we have our staff tracking developments, and we have a factor that we apply for projected enrolments and we, for all intents and purposes, have been pretty close.

Ms Haeck: To what degree would the ministry be able to assist you -- not just the Ministry of Education but the government in general, even the Ministry of Municipal Affairs, in providing, say, an obligation on the part of the municipalities to be working with the boards of ed in order to provide the kind of services so you could be meeting the demands of the educational system further down the road?

Mr Virgilio: If I may, I think that it is part of the planning process. The municipality can give us figures on the number of subdivisions to get approved. But having said that, knowing that the numbers are going to be there, we have on many occasions had to wait, and there have been schools that have been badly needed and the ministry has not given us the allocation we needed. That was the reason why lot levies were such a great idea, because then the moneys would be available as the projects came on stream. Now, that may be taken away from us again and we are back to where we started, hoping that the ministry will give us funds to allocate a project we know we need desperately. So it is not really our concern -- that has not been, up to this point -- dealing with the municipalities, per se. As we have identified the needs and have not got the funding from the ministry, that is where the problems have arisen.

Ms Haeck: I see. Thank you very much.

The Acting Chair: Thank you very much, Mrs Haeck. I just cannot think of a better way of ending off the question, and from such a young member. Gentlemen, I would like to thank you for appearing before the committee.

I would like to remind the committee that we are meeting to discuss Lakehead Board of Education at 10 o'clock tomorrow morning.

The committee adjourned at 1626.