October 2, 1992

PUBLIC ACCOUNTS COMMITTEE

The Committee met at 9:00 a.m. in the Glynmill Inn.

MR. CHAIRMAN (Windsor): Order, please!

I'd like to welcome everybody here this morning.

Let me say particularly to the witnesses who are here for the first time, these

meetings are somewhat informal, even though we take them quite seriously and

your testimony is given under oath. We try to conduct the meetings in an

informal atmosphere. I've lead the way by removing my jacket, because it's quite

warm here, and please feel free to do so. Make yourself comfortable. I think

there's coffee outside. Feel free to wander out and get one if you choose to,

but we will have a coffee break. Usually around mid-morning we find an

appropriate time to take a short break.

If there are any news media present I remind them

that the rules of the Committee are the same as the rules of the House of

Assembly in that you're allowed to use audio portions, but sound on tape is not

permissable. Any media who wish to take some silent footage before we start may

certainly do so.

I should introduce the members of the Committee. To

my immediate right, Mr. Tom Murphy, MHA for St. John's South, who is the

Vice-Chair; Mr. Garfield Warren, MHA for Torngat Mountains, who is representing

one side of the House; and Mr. Danny Dumaresque, MHA for Eagle River. Both these

gentlemen are from Labrador. Mr. Bill Ramsay, MHA for LaPoile, will be with us

shortly. He's somewhere in the precincts of the building.

Perhaps I could ask the witnesses now to identify

themselves, starting first of all with the Auditor General. Perhaps Ms. Marshall

would like to introduce her staff.

MS. ELIZABETH MARSHALL: My name's Beth

Marshall, I'm the provincial Auditor General. To my immediate right is Mr. Bill

Drover, the Audit Principal responsible for the audit, and to my immediate left

is Mr. Claude Janes, who's the Audit Manager responsible for the audit of the

Western Integrated School Board.

MR. CHAIRMAN: Thank you, Ms. Marshall. Mr.

Coates, perhaps you'd like to introduce your delegation.

MR. HARRY COATES: I'm Harry Coates, I'm

District Superintendent with the Western Integrated School Board. To my left is

Walter Vincent, he's the Business Manager with our Board. To my right is Ms.

Evelyn Sheaves, senior accounting person in our office.

MR. CHAIRMAN: Thank you very much. I'd ask the

Clerk now if she would swear in the witnesses. The Auditor General and her staff

have been previously sworn and are deemed to be under oath. We would ask the

other witnesses now to take the oath as well.

SWEARING OF WITNESSES

Evelyn Sheaves

Harry Coates

Walter Vincent

MR. CHAIRMAN: Thank you very much. For the

benefit of the witnesses and those present, we should say the role of the Public

Accounts Committee as a committee of the House of Assembly is to gather

information. We consider topics that are referred to us generally through the

Auditor General's report, although we have a mandate as well to consider any

matters that might be referred directly by the House of Assembly to the

Committee, or matters that might come to the attention of the Committee that the

Committee should feel is appropriate within our mandate to consider.

In this particular case we'll be dealing with

issues relating to the Western Integrated School Board as relating to comments

by the Auditor General in the report of 1991. We're all familiar with those

circumstances surrounding financial accountability within the Board and

particularly dealing with administration of the Public Tender Act, purchasing

procedures, and controls over assets and inventory, things of that nature, that

have been mentioned by the Auditor General.

We're here simply to gather evidence, not to stand

trial or judge and jury. You are not on trial. You are here to give evidence,

and the Auditor General and her staff will give us their views as well. It's the

role of the Committee to report to the House of Assembly and make appropriate

recommendations arising out of these hearings. We provide an annual report to

the House each year. We should be doing so hopefully prior to Christmas.

I ask the witnesses, for the benefit of the people

who are recording, this is all recorded as it is in the House of Assembly, and

transcribed by the Hansard staff, who are hidden in the bowels of Confederation

Building and can't see who's speaking. So if I fail to identify you, because I

will try normally to identify each person who speaks, and that's the main

purpose for me doing that - if I fail to do so, please identify yourself before

you speak. Speak clearly, and fairly loudly, so that we can all hear, because we

don't have any public address system here in this room, and speak toward the

microphone as well if you would.

So perhaps we could ask the Auditor General now if

she would care to make an opening statement by way of introduction to this

topic.

Ms. Marshall.

MS. MARSHALL: Okay. Thank you, Mr. Chairman.

This is our first time appearing before the Public Accounts Committee to discuss

the results of our detailed audit of a school board. Our 1991 annual report also

includes comments on the detailed audit of a second school board. As part of our

responsibilities under the Auditor General Act, we plan to perform the audits of

other school boards on a cyclical basis in future years.

The Western Integrated School Board has over 6,000

students attending seventeen schools during the 1991 school year. The Board's

combined capital and current expenditure during this period exceeded $24

million, of which over $22 million was funded by the Department of Education.

Our audit was designed to review the areas of

financial management, fixed assets and purchasing at the School Board. This

review was designed to assess whether the financial management system was

adequate to provide information to management and the Board for decision-making

and control of the Board's revenues and expenditures and to ensure compliance

with The Schools Act and related regulations; the policies and procedures

relating to fixed assets were adequate to ensure proper control and the

purchasing system was adequate to ensure monitoring and control of the purchase

function and compliance with statutory requirements.

As a result of our audit we report the following:

Under Financial Management, we found many aspects of financial management at the

School Board adequate, but there were a number of areas that require

improvement. A strong system of financial management and accounting control is

necessary to ensure compliance with the provisions of the various legislation

applicable to the Board, to ensure compliance with the policies and procedures

required by the Minister of Education in accordance with the provisions of The

Schools Act and to ensure adequate accountability over the public money received

from the Department of Education.

With regard to fixed assets, many of the standard

controls, such as the maintenance of a fixed asset ledger, reconciling fixed

assets to accounting records and tagging of fixed assets, are not in effect.

With regard to the purchasing system, our concerns with the purchasing system at

the School Board relate mainly to a failure to comply with The Public Tender

Act.

MR. CHAIRMAN: Thank you very much. Mr.Coates,

do you care to make any kind of an opening statement on behalf of the Board?

MR. COATES: Well Mr. Chairman, I guess as the

Auditor General has stated, this is a first time for us having gone through such

an experience and I believe we were probably the first board so we did not have

much in terms of guidance as to what we should be doing. It was nonetheless I

think quite a helpful experience, in that the representatives of the Auditor

General's Department certainly made themselves available and made some valuable

suggestions to us, and, for the most part we have been able to make corrections

to our method of operating and I would hope that in the near future we will have

the rest of it done.

MR. CHAIRMAN: Thank you very much, Mr. Coates.

If I may, before we get into questioning, make a general comment. The issues

before us are not matters of any suggested misappropriation or anything else, it

is simply a matter of tightening up on procedures.

The comments that you made in a general way to this

being the first time; in fact, I was not quite aware until speaking with Mr.

Drover and Ms. Marshall just before this meeting, really, today and yesterday

were the first two agencies outside of departments of government that have been

audited by the Auditor General's department and considered by this Committee, so

we are breaking new ground here and I think it is very important.

The role of the Committee is to be I guess, the

final arbitrator and the final accountability process in the financial

management of taxpayers' dollars, and this process is a very important part of

it, meeting with agencies. We have found, by the way, in a number of committee

meetings this year and groups with whom we have spoken, one of the real

weaknesses we hear is the understanding of the Public Tender Act and the

importance of that Act and how it is to be applied by all Crown Corporations and

Agencies and any bodies funded by government.

We have a couple who are funded by government who

disagree with the fact that they are even to be governed by the Public Tender

Act and we will be dealing with those in very short order, let me tell you. So

there are those who reject the concept altogether; yours is not one of them, but

it is important that all agencies understand clearly the importance of that Act

and how the Act is to be applied and that it must be applied, that it is

legislation and it has to be followed. So that basically is what we are here to

look at today and if we can accomplish an increased awareness by Crown

Corporations and agencies and departments of government for that matter, as a

result of these meetings, then I think the committee would have, perhaps

performed a valuable function. Mr. Dumaresque, would you like to begin this

morning?

MR. DUMARESQUE: Yes. Thank you, Mr. Chairman.

I just have a couple of questions stemming from the

information with which we have been provided. As we have noted, in dealing with

the hospital boards and others in the government agencies, there seems to be a

merging trend that the Public Tendering Act has not been followed to the letter.

In most cases we find that it certainly is not being done deliberately, but that

there is some confusion over some of the things which may or may not be deemed

to go through public tender.

I just wanted to ask you about the items noted on

page six. I do not know if you have that report, or the same kind of

documentation with which we have been provided; but in particular the invoices

numbering 19578, 12683 and 17188. Further down we talk about the fuel oil

contract and how these are matters which should have been reported and gone

through public tender. So I guess my question to you is: While we can understand

that they never went to public tender, have there been some corrections made,

and have there been any measures to see that this does not happen again?

MR. COATES: Yes. We have been, in fact, from

the time that Mr. Janes visited us. We made corrections even in the process that

was followed with the matters in progress. There are, however, I guess, a couple

of things which we do not fully understand; although I believe there are

provisions available for us to contact appropriate senior officials of

government with respect to some of the tenders. For example, in the matter of

florescent light bulbs we were advised by our senior maintenance person for

electricity - I should tell you, Mr. Chairman, that the board does much of its

own maintenance and construction in-house, and we had employed with us, at the

time, a person who was responsible for all electrical and plumbing, and we were

looking after it ourselves.

Our experience had been, upon his recommendation,

that we were purchasing florescent light tubes that were guaranteed. Now they

were at a little higher price than what we could get by tender, but in the

school you will appreciate, in an operation such as ours, that to be sending a

person around a district installing electrical light bulbs and ballasts very

often is rather expensive. So we were buying things which had a warranty of two

years.

Now when we went to tender, based on the

recommendation of the Auditor General's Department, of course these higher

priced bulbs did not win the tender, and this year we are finding that what we

have saved in the purchase of the bulbs we are more than losing in sending our

people around the district working on the fixtures again. In fact, sometimes we

are even having to go now to outside electrical suppliers just to get some of

the maintenance done. So we have complied with the Act, but I must say that it

has been a bit of an additional expense to us.

I would also like to advise the committee that

while we did not actually do a public tender, and we were not having public

openings of tenders, we did invite quotations. For example, in the fuel oil

matter which was identified we had invited all suppliers of fuel oil in the

respective areas to submit a quotation to us. These were opened based on the

principles of the Public Tendering Act, but they were not opened in public. In

other words they were always opened in the presence of people who signed them

in, and they were always opened at the same time, and there was a deadline for

their submission.

In some of our schools, for example on the south

coast, all suppliers are not able to supply fuel oil to Grey River or Ramea, so

we were just going to the people specifically who could supply the goods that we

required. Then we invited them to supply a quotation; however, upon the visit

from the Auditor General's Department we did make corrections right there and

then to some of the quotations that had been invited but had not been opened. So

we made those corrections immediately.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Mr. Chairman, thank you.

Another issue I'd like to raise is, when we met with the Public Libraries Board

they had an

interpretation on how they were to order books. I wonder if you

could just tell us how the school board goes about purchasing books -

periodicals and textbooks. Because I know that it was about $160,000 or $170,000

in the last fiscal year.

MR. COATES: I should tell you we did bring some

evidence of the way we're doing business now. We have one complete set from the

time we called tender to the time of awarding the tender. If you'd like to have

that I brought it for you.

Mr. Chairman, if you would wish, I could go back to

the very beginning. We, as officials of the school board, the senior staff of

the school board, endeavour to predict the amount of revenue and expenditure

that we're going to have, probably starting as early as February. Much of it is

based in the initial instance from the number of students who we anticipate

being in our district. That's important, in as much as that the district has

been declining for a number of years, and much of the government grant comes to

us on a per pupil basis.

When we have that fairly well established in our

minds we then ask the schools - without telling them what any figure is; because

of course the board hasn't seen the figures yet - but we do invite all

principals to start early on thinking about what they're going to be requesting

of the school board budget. Then we ask them to firm it up about February, or

sometimes they do it even a little earlier than that, or a little later. At the

same time we're asking our senior maintenance person to inspect all the schools

and to make a list of what he thinks will be necessary.

We started - I suppose in accounting terms it might

be called a zero based system. We don't tell anybody what the dollar is, in as

much as that we may not know it ourselves precisely. So if we take the instance

of instructional supplies, and it's the instructional budget that you're

addressing, and perhaps more particularly it's the instructional budget that is

not covered or supplied by the Department of Education through the school

supplies division.

Our principals then will make a list of all they

need for their schools. Usually - and I can't think of an exception - in

consultation with the teachers in the classrooms. Indeed, our beginning budget

statements ask that the principals give clear consideration to, and have a clear

understanding of, what the program will be for the next year, and that teachers

have the same understanding. So within the school itself it's a collaborative

effort on the part of the principal and the teachers. Then they firm it up for

us in February or March - some of them will be as late as March - and they send

it in to us, everything that they require. Sometimes it will certainly be far in

excess of what the board is able to provide. Sometimes it's not far along.

When it comes to my office then an assistant

superintendent for curriculum instruction takes each budget, and based on the

priorities recommended by the principals, then she will judge the priorities of

one school against the priorities of another school. There's no doubt about it

that that can end up as being a rather inequitable way of distributing funds

around the district. However, we take the position that distributing funds

equally among unequals is rather inappropriate. Because some of our schools are

small, we feel that they require a much higher per capita expenditure than a big

school. Our schools range in size from fifty-seven students to about 850.

So in order to get a reasonable standard of

education in a small school we have to spend perhaps a couple of thousand

dollars per student,

whereas in Herdman Collegiate it might be eighty dollars

per student.

MR. DUMARESQUE: Excuse me.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: I appreciate your explanation,

Mr. Coates, but I was wondering in particular about the public tendering

process. For instance, if you have 6,000 students and you have 1,000 math books

for Grade XI, or 500, whatever the number may or may not be , what is the

procedure that you use?

MR. COATES: Yes. I'm sorry. I guess I should

have realized more clearly. In the case of the vast majority of the textbooks

used in our schools, they're provided through the Department of Education, and

the Department of Education goes through a process of selecting which textbooks

we'll have. For example, the textbook for Grade V social studies will be

approved by the Minister of Education, and the textbooks will be selected

usually by the director of curriculum, often times in consultation with

districts through the means of provincial curriculum committees. In actual fact,

based on the recommendations of the committee, those textbooks, which is the

vast majority of what we use in the school, is in actual fact bought through the

Department of Education. We don't buy them directly.

MR. DUMARESQUE: So you don't buy any books. So

you pay $170,000 for books, periodicals and textbooks directly to the

government, or...?

MR. COATES: No, that's the

part I was talking

about. Our own school board was in the position of utilizing - as I think the

Auditor General noted - about $2 million of privately generated funds. What I

was addressing to you was the way we use those $2 million of school tax revenue

(Inaudible), essentially.

If I just may continue. So then once these requests

come into our office and they're prioritized by our assistant superintendent,

the teachers basically will go through catalogues and select materials that seem

to be most appropriate for the courses they teach. It's done in consultation

with our program coordinators as well, who are recommending specific things.

These orders are then placed on documents which we provide but the teachers have

themselves selected the precise item that they wish. These do not go to tender,

and they would be different from each school. For example, some school might be

ordering atlases of one sort or another for a particular grade, another school

might order ten other atlases by another author.

So these are then brought basically to Ms. Sheaves

and she processes them after making the appropriate notations. So no, these are

not tendered, and they're basically in small amounts. We wouldn't have anyone

ordering, say, $5,000 worth of atlases. Each school would order whatever was

needed.

MR. DUMARESQUE: Right. While you might not

order $5,000 worth of atlases, obviously with $170,000 for textbooks, handbooks

and periodicals, you must at times place an order for ten atlases and fifty

other books. As you say, you go to a book supply company or a catalogue that

might have been provided to you. This is where I wanted to get some clear

direction. I just wonder, on the comment that you made about the funding that

you were getting outside of direct government. I don't want to put words in your

mouth, but are you saying that because you were getting money outside of direct

government that that gave you the flexibility to make these kinds of purchases?

MR. COATES: No. What I was indicating there is

that unlike a number of districts in the Province which didn't have a sound tax

base - they chose to use their money differently. I guess that's the fairest way

to say it. We were providing, out of this amount that you're talking about,

perhaps $100,000 would go directly back to the Department of Education. The

remaining money which I was mentioning is the way this district was able to

provide an enhanced level of education, beyond what would be funded by

government.

MR. DUMARESQUE: Okay. Maybe I'll bring it right

down to where we were with the Public Libraries Board. They are of the mind that

they do not have to tender for books because they look at books in a singular

way and can order them on their own basis. If they have ten Robinson Crusoe and

ten atlases, as far as they're concerned that would mean two different orders,

and therefore not be subject to the $5,000 limit, even though combined they may

very well be. So what I want to get is your understanding of whether that is a

proper thing, and certainly whether that is something that would have been

beyond you not going to public tender. I don't get that gist from you, but I

guess I would like to get it completely clear.

MR. COATES: Yes, and I would be pleased to do

so.

There have been instances when we would think that

perhaps it would be inappropriate to go to public tendering. One of the items

that I would note for you these days, I guess, is the purchase of computer

hardware and software, which has been a bit of a sore point with some districts.

In our immediate area prior to us being - I was going to say our concern being

heightened about the Public Tendering Act, but that wouldn't be quite correct -

but there were certain areas where we were inviting quotations as I indicated

before but not through public tendering. In one instance we had begun a

relationship with one of the suppliers of computer hardware and software whereby

excellent service was being provided, but the computers perhaps were a little

more expensive. We debated in our own minds how we might deal with it and

decided that in fact we would begin tendering. So we ended up being supplied

this instructional material from certainly beyond this area, and it was done in

compliance with the Public Tendering Act

whereas we were not sure it would be

for the long term benefit of the kids. I am thinking, for example, that we

bought some computer materials for Burgeo and it ended up costing us about $500

a day to get it serviced,

whereas had it been bought in Corner Brook we would

have just - pretty well we had received very few invoices for servicing.

The good thing about the Public Tender Act in that

instance is that once the suppliers realized that we were going to do everything

through public tendering then they sharpened their pencils. I guess that it was

pleasing to us to note as well that they have now begun retraining their

personnel in the sorts of networks and things that we are using.

So yes, you are quite correct, even though, as I

mentioned before, it wasn't always what we considered the proper thing to do in

terms of educational benefits, but I think in the long term benefit the

application of the Public Tendering Act was done correctly and to the advantage

of the Province. So yes, we are doing it.

MR. DUMARESQUE: Thank you very much.

MR. CHAIRMAN: Thank you, Mr. Dumaresque. Mr.

Warren.

MR. WARREN: Thank you very much, Mr. Chairman.

I have a question or two also. I would like to

refer back to the auditor's report on page 5, Mr. Coates, and develop one of

your fixed assets: computers, in your seventeen schools throughout the district

according to your financial statement, $1.7 million of equipment and material

supplies. I noticed the auditor has taken exception to the fact that you have

not maintained a good inventory or a good record of your inventory, I guess,

when you are looking at probably theft and spoilage and everything else sort of

thing.

My first question is in the seventeen schools,

which are in a broad geographical area, have you witnessed or are you aware of

any theft? I guess it is almost impossible saying there is no theft, but is it

very noticeable?

MR. COATES: No. We haven't had that experience

in our schools. Our biggest problems, I guess, some years ago were stemming from

vandalism and we initiated a project that there be more pride taken in the

schools, in actual fact, rather than trying to crack down on the vandalism,

especially when they are outside the school personnel. But within the school

itself we made a big effort to point out to teachers and to students that money

spent on vandalism was actually a waste because all we were doing was replacing

stuff that was already there,

whereas if there hadn't been the vandalism we

would be able to buy new things. That went a long way to curb vandalism from

within the school, and with vandalism from outside of the school parties, we

simply dragged them off to court. Just this fall we had a couple of serious

break ins, but that was more of a problem to us than theft.

However, I should like to address your implied

question. We always had a partial inventory. I have to say partial because this

system was inherited by us in 1969. Walter goes back to 1972, but when the

Province's educational system was reorganized in 1969 and the integrating bodies

came together - and we are representing the Integrated School Board here - we

inherited a considerable number of denominationally owned schools. Basically

what happened, the denominations withdrew from the school system and the school

board of the day employed one person basically to wander around and make a

listing of what was in the school.

In preparation for this hearing, Mr. Chairman, I

went back to the original report and it was a rather detailed

summary of the

buildings and the condition in which they were in 1969. Where there was an

enumeration of equipment, it was just all lumped together in the financial

records to be what it was; so we would have to say that we have a partial record

of what exists in our schools.

In more recent years, particularly with the

construction of a couple of DREE schools in our area, we then began to develop a

list of equipment in the schools, together with the serial numbers and so on.

The biggest problem we have in that though, and the

Auditor General's Report is quite correct, we have not tagged these assets.

When, let's say for example, a piano got moved from one school to another it was

always the responsibility of the superintendent to authorize that move, but we

did not take a careful journal of what happened to the piano. As I am sure you

would be aware, on any given year we would move a fair bit of stuff around. In

actual fact, I guess in my short tenure with the board of some thirteen years,

we have probably closed fifteen schools, so a lot of stuff has been distributed.

Each year, particularly if we change a school from being a junior high school to

an elementary school, all the junior high equipment gets distributed among the

other schools.

The Auditor General is quite correct there. We have

not tagged the assets, and I do not think we have made a thorough listing of

movements.

Since then, however, and I would refer to a memo

sent by our business manager in 1991 - I have copies for you, Mr. Chairman, if

you wish - we have asked the principals to ensure that they have sent to us

lists of additions of equipment such as computers, TV's, et cetera, to your

inventory, transfer to another school of equipment, and an inventory of all

school equipment as of June 30 each year. That is now coming in, but it is not

fully to the requirements of the Auditor General's Report in the sense that we

have not tagged our supplies, and I do have some thoughts on how we might do

that, which I will be pleased to get your reaction on for direction.

MR. WARREN: Maybe, Mr. Coates, you can continue

on the undertaking and probably tell us how you intend to tag it, or if you have

other means of complying with the suggestion of the Auditor General, or is there

some other means that you think you can do it better?

MR. COATES: I do not know that we can do it

better. It is just that at the moment it is the size of the task that is at

hand, and if we had to do it say in immediate order it would consume a lot of

resources that we do not have at the moment.

We have given some thought at perhaps organizing

some sort of a

schedule whereby say between now and let's say twelve months from

now - in the first twelve months we would tag everything that would be of $1,000

value or over, and we could manage that; and perhaps the next twelve months $500

and over. But there is going to have to come a point where it is possible but

perhaps it is not wholly beneficial. Now I get down to the level of school

desks. A school desk costs about $125 more or less, and I suppose we would have

7,000 or 8,000 desks in our district; but we have not bought a school desk

really - a new school desk - in about five years. That is because our

enrolments, like all enrolments in the Province, are declining rather

significantly. About 3 per cent per year, some years, down to 1.5 per cent other

years.

So as a result, in Herdman Collegiate I would guess

on any given day, maybe ten desks, in some way or another, are going to be

damaged. Whether you get a big person sitting on a desktop and cracking it off,

or tipping a desk back and breaking the legs off it, what we've been trying to

do is we'll match a good top with a good chair and make a good desk and throw

the pieces away.

So what we'd be doing is we'd do a lot of

reorganization of equipment, or whatever, and make do with it the best we can.

So I'm not sure how practical it would be to tag assets much below $250.

MR. WARREN: Maybe, Mr. Coates, I'll go to the

Auditor General and ask the Auditor General what would be the Auditor General's

feeling on just such a proposal.

MS. MARSHALL: I would like to see something a

little more detailed. The fixed assets which the school board has - if you look

at the financial statement for June 30, 1991, totals $20 million. I realize a

lot of that is in land, schools and office buildings, big assets. Really, you

should have a listing of those and that shouldn't be very difficult to come up

with. But when you look at things like equipment and furnishings, I mean at this

point in time, and even based on the system that you're describing there now,

you do not have a listing of exactly what's in that $1.7 million.

MR. COATES: Since your officials visited we

have asked each school to provide to us an inventory of what's in the school,

and we began that last year, based on the visit of your officials. Now the

schools are in fact doing that. I brought along a sample of one of our mid-sized

schools and they're listing everything by classroom. For example, I'm looking at

the art room here, where they're identifying a filing cabinet, a kiln, an

exhaust hood, a kilnsetic, I guess, some oven mitts to take the things out of

the kiln, a manual, a tabletop, a printing press and a paper cutter. So they're

taking it down. That's since the visit of your officials.

MS. MARSHALL: Okay. So just to carry on, you

should know what's in the $1.7 million, and know that it still exists. Also, are

there assets in the school which didn't get recorded in the $1.7 million. Of

course, that should be included there.

MR. COATES: I think we'd have to recognize, as

I said at the beginning, in order to do that we'd have to declare an evaluation

day, I think, or a valuation day. There's no doubt in my mind some of that $1.7

million probably is not there. As Mr. Warren was saying, over the years we've

written off, if you like, very little. For example, a photocopier that was

bought, say, four years ago was being replaced, what we've added to the

inventory is the increased cost of the photocopier. As such, I guess the old

photocopier hasn't been officially moved from the inventory, but the value of it

has been just supplanted by the new photocopier. I think what you're asking is:

if we took a total inventory of our schools now, would that total inventory come

up to about $1.7 million? I would -

MS. MARSHALL: That's correct, but based on what

you're saying it would be highly unusual if it did come to the $1.7 million.

MR. COATES: Yes, because whatever we inherited

in 1969, in some cases, we don't know. But that value might still be there,

although we -

MR. WARREN: So your desk that you had in 1969,

if it was valued at sixty dollars at that time, are you saying that desk is

still on the books at $60?

MR. COATES: It could be, yes. What the Auditor

General is saying, we haven't specifically removed let's say a group of desks.

MR. WARREN: Do you allow depreciation each year

on your equipment, and if so, how much?

MR. COATES: No, we haven't been doing that

because basically we're not a profit-oriented company. So it didn't mean a whole

lot to us to go through the normal processes of depreciation for tax purposes

because we don't have to do that. That's the reason I would say that perhaps we

hadn't paid as much attention to accountability as indicated by the Chairman

heretofore because we were more interested in developing education opportunities

for the children. Perhaps we were looking at the wrong areas for accountability.

We were taking accountability as success in student results and that sort of

thing, and there's no doubt about it, I think we would all agree that's

important. But this aspect we hadn't placed emphasis on until it was brought to

our attention last year.

MR. WARREN: I have one short question, Mr.

Chairman. Mr. Coates, in response to a question from my colleague, Mr.

Dumaresque, on your extra $2 million that I think you said the majority of it

came from the school tax, and you considered probably you never had to follow

the Public Tender Act to a certain degree because it was monies collected

outside of government. Now the school tax has been eliminated, and I understand

there will be an increase in funding to the board, which means it will be in

place of this $2 million. The other $2 million, we'll say, will be government

money. So you would be more inclined then to change your process again, will you

not?

MR. COATES: I think I might have led you astray

when I answered. If you thought that I answered we treated school tax money

differently from government money, we didn't really. We didn't in fact at all.

In response to Mr. Dumaresque, I was indicating to him the reason our board was

in a position to spend an additional $100,000. Now we always treated our school

tax money very circumspectly. In fact, it was primarily devoted to capital

projects. We had what I consider super relationships with our school tax

authority, and the rate of collections in this area I believe was well above

average for the Province.

SOME HON. MEMBERS: (Inaudible).

MR. COATES: I would just indicate to you, Mr.

Warren, that we did not treat the expenditure of school tax monies differently

from direct government funding for two principal reasons. One is I was saying

that we enjoyed exceptionally good relationships with the school tax authority,

and more particularly with our people. Because at any time we could indicate to

them that we were maximizing the use of the money they were making available to

us.

For example, when the reorganized high school

program was brought on stream, we were in a position - for example in Lark

Harbour, the government gave us I believe it was $60,000 to enlarge the school.

What we did as a board was build a new gymnasium, full-size, a new science lab,

and added three classrooms. That kind of money came from the school tax

authority. That expenditure was done totally even with public tendering then, as

far back as that.

So no, we never distinguished in distribution of

funds from one or the other. In fact, it all went into our kitty. We didn't keep

a separate ledger or anything for school tax or other sources of income.

Everything went together and everything was handled in accordance with standard

practise. We have really not varied in our practise until this visit by the

Auditor General's department where certain matters were pointed out to us.

Like, for example, going directly to public tender

rather than inviting quotations. But even under our old system we never bought

any goods or services without getting several quotations. We recognize right up

front it wasn't strictly in accordance with the Public Tender Act.

MR. WARREN: Thank you very much, Mr. Coates.

MR. CHAIRMAN: Thank you, Mr. Warren.

Mr. Murphy, would you like to continue?

MR. MURPHY: Yes, thank you very much, Mr.

Chairman. Mr. Coates, and to your people, welcome. Just a few things that I'd

like to cover.

First of all, I notice that the Auditor General

pointed out to you about enrolment. Of course, operating grants are very tight,

very much associated with enrolment. You made the comment about declining

enrolment. I find it a little strange that we don't know how many people - or

you don't how many people you have enrolled in your schools. Can you tell us

what you have done about that particular situation?

MR. COATES: I am not at all certain that the

Auditor General was quite familiar with what we actually do, in actual fact. We

began the 1992-93 school year as senior officials in February of last year, as I

indicated before. We must do that for a variety of reasons. First and foremost

is to try to predict the amount of revenue that we are going to get and that,

perhaps, is most important for this committee; but for the life of a

superintendent it is not very important at all. What is really important for a

superintendent is whether or not you are going to take a teacher from a

particular community. So for my sanity, if I am going to remove a teacher from a

community - and I should tell you that our overall employee roll is declining by

eight units per year - so each community very jealously protects the number of

teachers it has. Yet, I have to advise teachers as early as February of the

previous year whether or not they are going to have a job the next year.

Otherwise, in accordance with the collective agreement, we are going to have

them on our staff the following year, and government does not pay for additional

teaching units.

So it certainly is in my best interest, personally,

and I do not know if you can get better motivation than that, to be as precise

as I can in anticipating the number of children who will be in our district in

the subsequent September.

That was particularly so when we were closing

schools here in the Corner Brook area. My predictions were very carefully

scrutinized, and I think with few exceptions our margin of errors is about 1 per

cent.

As of September 30 then, we were asked by the

Department of Education to complete an annual general return. That provides

demographic data on the number of students in the school, and the teachers and

so on. These annual general returns give a snapshot of the number of students in

the school on September 30 at the close of the school day.

We ourselves ask our schools to give us a

pre-enrolment form somewhere in the middle of September, and then the enrolment

for the month of September; so we actually have three sets of enrolment data

coming in for September alone. In addition to that we get our monthly reports

which are prescribed by the Minister of Education; but we have gone a step

further than that and have for some time. We generated our own form and we asked

schools, on a monthly basis, to send demographic information on the students who

are transferring in or transferring out of our system or, in fact, who are

dropping out. We get that by the child's name, the date of birth, the religious

denomination, and the parents' names. We can trace, from the annual general

return in September to the end of June, every child who has moved in and out of

the school, and of course the monthly figures at the end.

We have not, however, understood what the Auditor

General is recommending when he says: You actually have verified it. We verify

it by comparing with the annual report and tracing children through each class,

in each age group, by denomination, by parents, for the whole year.

The only thing I could see the Auditor General

would be suggesting is that I, or one of my officials, would actually go into

the school and do a physical count of the children there. I am not sure what

that would serve. It would give us a snapshot at that moment. Children could be

sick; they could be pipped off; they could be on field trips; they could be

anywhere. In any event, it would be a snapshot at that moment. So we feel, if

you like, that our paper trail for each child in the district is valid, and I

don't really know what would be the benefit of my trotting around to every

classroom in the district and counting the number of kids. But we do have a

paper trail of every child from the entry to school to graduation, to dropping

out or to transfer.

MR. MURPHY: Well I certainly wouldn't expect

you to go in and do a head count at recreation time or at school opening or what

have you. And I don't know but the Auditor General would have to answer that for

herself, but I would imagine that this has been identified because of the paper

and not because of the actual physical count of students. Perhaps the Auditor

General would like to comment on that.

MS. MARSHALL: The matter you alluded to is the

paper documentation. What we found, looking at the system, was that the

information is documented on paper and it flows from the schools to the school

board and then on into the Department of Education. This information is used to

determine the bulk of funding that goes out to the various school boards. As

that information flows through the system there is really no verification. It

seems like the information is accepted and just flows through the system.

Because of such a large amount of funding involved we felt there should be some

type of verification procedures carried out on this information that is flowing

through the system. We weren't recommending that you go out and count every

child in the school.

The other concern that we had was this procedure is

in place within various schools and the school boards, and we have not

determined that there has been precise instructions given as to how this

information should be calculated both within the schools in the Province and

within the school boards. So it is quite possible that each school is doing it

differently and each school board is doing it differently. So we would just like

to have the system looked at and determine what verification procedures should

be put in place. That was our basic concern.

MR. MURPHY: I would have assumed that what the

Auditor General was looking at was what the other school boards throughout the

Province were doing in responding to the enrolment question, and I guess it is

fair to assume - perhaps we should never assume - that what I see here would be

the comparison associated with other school boards and the verification paper

trail, so to speak, as you alluded to, Mr. Coates, was not being done with the

consistency that the Auditor General would require.

It is sad when you have enrolments going down,

knowing that your operating grants, as we all understand, are fixed on that and

costs are going up. Then again there is a procedure, and I guess what my

question is: Have you looked after the paper trail and the standard forms that

are now in place for other school boards, and is the Auditor General satisfied -

are you satisfied that you are doing that?

MR. COATES: Mr. Murphy, on behalf of our

district I would say that the form to which I referred is a local form and I do

not know if any other school board would have it. I am satisfied simply because,

I guess, I am still here. What we have been doing has been accurate and is being

well used. Like for example this year there was no quibble by any PTA or parent

group which, let me assure you, are the watchdogs of what I do in terms of

enrolment; but in addition to all the departmental forms - of which I did not

mention any except the annual general return which I understand is as much a

federal document as a provincial document.

The form to which I refer was developed some years

ago by us, and I could tell you, for example, that Stephenville Integrated High

School began last year with 334 students. I could take you from the 334 students

in September down to the 322 last June and tell you that we had a considerable

number of transfers in, transfers out and dropouts - thankfully not many of the

latter.

I could tell you, for example, in November of 1991

that we admitted two students. Tracey Laney who was a Roman Catholic child came

from Port au Port, and Desmond Robinson who was an Anglican came from Gillams -

that is within our own district. In the same time we had five children

transferred out, and I can tell you their sex, their religious denomination,

date of birth, their grade, their transfer date and where they have gone. We

even traced the ones out of the Province, in this instance, and I can tell you

that we had three children who ceased to attend the school. One graduated; one

dropped out for some reason; and one went to the community college in

Stephenville.

Now I can tell you that for every school in our

district; but that is not a form which is prescribed by the Department of

Education. That is a locally generated form that we have used for some years. I

do not know whether it is of any interest to you.

MR. MURPHY: The only thing that I would think,

Mr. Coates, is that if particular document were suitable for auditing purposes

that the Auditor General obviously would accept that document. I do not know who

develops a form or who develops a paper. I think what I would expect in an audit

is that if I am the auditor that I am satisfied that the document is in place

that looks after the procedure of enrolments.

I do not want to beat it to death. I just wanted to

ask you about it because it is important. You know, as I know - who know better

than you - the few dollars that are available and how difficult it is; but I

suppose every school board is subject to that same problem. That is why I asked

the question.

I just have a couple of other small questions.

MS. MARSHALL: I just did not want to belabour

the point, but the concern we had was just not with the school or the school

board, it is with the culmination of all this information at the Department of

Education. We have conveyed our concerns also to the Department of Education

because they are using this information, which I feel is not thoroughly

verified, and allocating funding based on it. So I just wanted to indicate that

the Department of Education has also been aware of our concerns.

MR. COATES: I would support that. I was only

addressing from our board. The Department of Education does not get this form.

We are not satisfied ourselves that the Department of Education form was giving

us the kind of information we wanted, so I am only addressing from my board's

perspective. I agree with the Auditor General. We felt that the Department of

Education forms were not sufficient. That is why we developed this one.

MR. MURPHY: You know, Mr. Coates, taxpayers may

have a problem in understanding that seventeen school principals could not

report to you the number of pupils in that school. They might have some

difficulty with it. That is why I ask the question. It should not be a great

problem to identify your enrolment even, I suppose, monthly is the requirement,

I think. It should not be a problem.

I asked the question because I sensed that it is

some kind of a problem. You've gone for your own reasons and extended it, okay,

you've extended your forms and what have you and that's fine. Still and all,

there are criteria that are laid down by the department and I obviously would

expect that the Auditor General's department would look at that criteria as

being the criteria to do the audit. They have seen that has not been done.

That's why I asked the question.

I just want to make a comment on these fixed assets

because in my former life before this life, I used to be involved in security

and what have you. Again, I just want to make a comment that in each school -

you know, to have a ledger on fixed assets, to bring it up to date, it takes a

physical count. I had some problem with that and I think the media is filled

every single day with what you identified as vandalism. Again, it's difficult if

you don't have that fixed asset contained somewhere in a ledger and somebody

knows that it's either been taken or destroyed or thrown somewhere, whatever the

case may be. I would like to see that tightened up, and your explanation is

there, and I think you're looking for some advice on it.

Just a couple of quick questions on this PGA Glass

situation and Custom Carpets. Now, Mr. Vincent, you just handed me a document

which I handed to the Chair and I had a look at the face of it. First let me

address the PGA Glass situation. The answer that you reported to our clerk, Mr.

Porter, as shown on page 8 of the document, was: "Best price available to supply

type of entrance needed."

Now that is obviously an explanation. I find it

wanting, to be quite honest with you. The first thing that would come to mind,

are there other people around who can do the same type of competent work?

Obviously you had something in mind, or your engineering or maintenance people

had something in mind. Your school board might have had something in mind.

MR. WALTER VINCENT: Mr. Chairman, that decision

in respect to PGA Glass, I think you're referring to, was made based on the

recommendation of our maintenance supervisor at the time who had, as Mr. Coates

already indicated, gone out and asked for quotations on specifics with respect

to an aluminium entrance, I think it is, for the school in question. We took his

advice and proceeded from there.

MR. MURPHY: I didn't see any documentation that

you went and asked other contractors and what have you.

MR. VINCENT: What I've passed along to the

Chairman there now are the procedures that we now have in place in respect to

public tendering. Just to elaborate a little bit on the public tendering, there

is no question, as I indicated in the letter, that our board, from my point of

view, will certainly be adhering to the Public Tender Act to the greatest

degree. I don't need any hassles and I'm sure nobody else at the board needs it.

What we passed along are the procedures that we now have in place.

MR. MURPHY: I have no doubt that PGA Glass does

excellent work. That's not my question as such. The only thing is, is that there

are some other glass people out there who may feel very confident that they do

excellent work and what have you, and would like a piece of the action. Of

course, it comes back to Mr. Dumaresque's and Mr. Warren's questions, that we

need to ensure that everything is done, that all those who are out there in the

private sector supplying goods and services get an equal opportunity to get a

chance at that contract.

The same thing would apply to carpets. I don't know

that there are any more people in any kind of a business in Newfoundland. Every

time you turn on t.v. you see Mr. Baldwin screaming, ranting and raving, and

what have you. Everybody is selling carpet. Again, the response on the carpet

for Burgeo, page 8, was: "Best price available...." Now I looked at that and

again I would assume you're going to give me the same response, you know. I

think the Chairman and I are the only two people here not selling carpet.

MR. CHAIRMAN: Not yet.

MR. MURPHY: Not yet. But we may very well have

to!

AN HON. MEMBER: (Inaudible).

MR. MURPHY: That is right. So, you know, I am

satisfied that that is now in place and what have you. I have some other

questions but I get a sense of a movement. I will pass it back to the Chair and

he can decide.

MR. CHAIRMAN: Thank you, Mr. Murphy. Mr.

Ramsay, do you have some questions you would like to put forward?

MR. RAMSAY: Yes, I do. On page 18. Do you have

a copy of all the booklets now? Yesterday we were operating with people who

didn't have the booklet.

In number two, I note the borrowing without proper

approval. It is not specifically that I note, but the accounting practice that

you spoke of whereby you write cheques but the cheques are not disbursed until

later on. This in effect in my mind would provide a wrong impression - I

wouldn't like to use the word false impression - of your financial position at

year end, as I understand accounting. I find that the Auditor General doesn't

note that. They note the non-compliance because without the explanation there is

a non-compliance factor, but with the explanation there is an improper

accounting factor which would allow the board to show a different financial

picture, not having disbursed the monies. So first and foremost I just want to

ask for an accounting opinion on that from the Auditor General and then refer it

to you.

MS. MARSHALL: Yes, you are correct. That is an

improper accounting treatment.

MR. RAMSAY: It is an improper treatment as far

as accounting goes therefore it doesn't give the correct position.

MS. MARSHALL: Yes, that is correct. It doesn't

reflect the correct financial position of the board.

MR. RAMSAY: So therefore it could allow the

Auditor General or an auditor to provide a qualified opinion of the accounting

statement.

MS. MARSHALL: What you would have to do is

evaluate that with regard to its materiality on the financial statements. So you

would have to look at total assets and total expenditures, and total revenues

and come to a conclusion after that type of assessment.

MR. RAMSAY: With regard to that I just wonder

where that kind of practice is in place. As far as the board goes does this

affect in any way the necessity of funds generated from the Department of

Education or in your reporting then with this variation that is there and the

way government monies are handled, does this affect it in any way? Is there a

reason for having your books - I don't know if you would call it balanced or

what have you by having the cheques written but not issued? What was the

rationale for that?

MR. VINCENT: I would just like to ask a

question in respect to this particular item. What we do at the end of a year

instead of setting up a large accounts payable and having to set that up as

payables we issue the cheques and hold them until we receive funding to let them

go. So it is not materially affecting the financial statement of the board. We

are moving the liability from an accounts payable position into the bank

position. It doesn't affect the bottom line of the financial statement of the

board.

MS. MARSHALL: No. That is right. It does affect

your working capital. It is still not proper accounting treatment.

MR. VINCENT: You know we could very well, I

suppose, do all that and do a journal entry at the end of June and reverse it in

July. The reason for it, and the only reason, is to clear the accounts payable

and there is nothing sitting around that we have to fool around day after day

with; nothing else, pure and simple.

MS. MARSHALL: From my perspective in my opinion

I would prefer to see the liability increased rather than show your back bank

balance decreased.

MR. VINCENT: Yes.

MS. MARSHALL: I couldn't see the rationale for

what you would do with that internally.

MR. VINCENT: That is an internal rationale, if

you want. The point I want to make again, is it does not affect the bottom line

of the financial position of the school board.

MS. MARSHALL: No, that's right, and it doesn't

- but it does not indicate the correct financial position of the board as of

June 30. Because it shows a higher amount in your bank overdraft and a lesser

amount in your accounts payable, and it should be reversed. That would be the

correct financial position.

MR. VINCENT: Okay, I'll accept that. But the

liability, in my way of thinking, was transferred to the bank account, as

opposed to the accounts payable position, so the bottom line wasn't affected. So

we didn't really get excited about it. Then that was explained to the people who

came in, and I have no difficulty with leaving that liability in the accounts

payable at the end of June as opposed to increasing our bank liability.

MS. MARSHALL: That's right, but it still

conveys the incorrect financial position of the organization as of June 30.

MR. CHAIRMAN: If I might interrupt, it amounts

to me sitting down at the end of the month and paying all my bills, and not

mailing the cheques. I'm only fooling myself. It might make me feel good to

write all those cheques but I still owe that money.

MR. VINCENT: I don't have a difficulty with

that.

MR. CHAIRMAN: Your bottom line is the same, but

I think the point is well taken,

Mr. Ramsay.

MR. RAMSAY: The point with reference to it that

I wanted to make was, it doesn't come across as anything being wrong with it per

se. It's just not a proper accounting procedure. Because school boards are

handled financially the way they are - I'll give you an example that I find

unnerving in another area of government finance. That's municipalities.

I've had two municipalities where a new council has

taken over. Because that kind of thing was in place, and there was poor

financial management, it allowed the previous council to run along - because the

cheques had been made out and this sort of thing, but no reconciliations - to

give a false impression to the electorate of their financial position prior to

the election and following that, when it was found out that these cheques hadn't

been mailed. Because that part wasn't referred to. In the financial position -

you know, the bottom line wasn't looked at. But they said: we have no payables

left, so therefore we're in good shape, all our bills are paid - when they were

not.

So this is - depending on how deep someone would go

in reference to the bookkeeping - it can give that false impression. That would

be a concern. Although I found at the time it had a lot to do with the poor

accounting practises that were in place in seven municipalities, which is not

necessarily the case here, because it can be traced down to that.

Again, if you look at - we have a bank overdraft of

X. Based on the way - like you say, you run it over to your bank, part of your

ledger. Then it's not necessarily that you have unpaid bills, it's just that

you're running over in your cash position. So it can give a different impression

I think.

AN HON. MEMBER: I know what you're saying.

MR. RAMSAY: Yes. Anyway, that's all I have

right now.

MR. CHAIRMAN: Mr. Coates.

MR. COATES: From the point of view of the

school boards, Mr. Chairman, that has been a great concern of ours, that the

availability of grants from the department hasn't matched the timing of our

biggest need to spend money. I refer particularly in years prior to this

inspection having been done.

We have big bills coming in - not big in number,

but a lot of them - just prior to the opening of school. As you can imagine,

that's when all the teaching supplies come in, and so on. The grants to cover

those costs don't come in until some time in the fall. So you find, as I think

Mr. Ramsay is getting at, we have severe cash flow problems at certain times of

the year, and at other times we're kind of flushed with money. It's a real pain.

MR. CHAIRMAN: Are you saying, therefore, if you

have a $1 million line of credit, which normally would deal with that kind of a

situation, are you saying to us that a million dollar line of credit is not

enough to handle the variances?

MR. COATES: Yes, and since the visit of the

Auditor General's Department, the line of credit has been increased to $1.75

million, but we feel that it is unfortunate to have that kind of bank

indebtedness because we know that the money is going to come. Most of our major

suppliers have no problem in allowing us to run up, for example, Light and

Power, they have no problem in letting us have bills of $50,000, $60,000. I mean

they could be getting a good rate of interest because they know we are going to

pay it and will pay it before June 30 or thereabouts, so what we have done,

rather than allow the suppliers to hit us with their interest costs, we have

simply gone to the bank and said: look, give us a line of credit at prime or

slightly over prime, it is half the interest cost that we would have to pay

otherwise -

MR. RAMSAY: Rather than paying 2 per cent per

month.

MR. COATES: Yes, that is right. - but our own

preference would be, of course, to get the grants in a more timely fashion but

perhaps government has a reason not to do that.

MR. CHAIRMAN: I suppose we could convince the

taxpayers to pay up front (inaudible).

MR. COATES: Yes, well that is the same problem.

But as the Auditor General has said, from the material point of view, our board

has always been able to secure favourable interest rates through the banks and

we have always, at the end of the year, come out in a favourable financial

position, but there are cash flow problems during the year.

MR. CHAIRMAN: Mr. Ramsay, have you finished

with this?

MR. RAMSAY: Yes, I have just finished that part

of it and I will get into something else after. Back to the Public Tender Act in

non compliance. I just point out, and apologize for not being here at the time

when it was discussed. I suppose I have revisited based on the choice of words

used by Mr. Murphy yesterday; he got me back by calling me at ten o'clock this

morning although he may deny that.

MR. CHAIRMAN: I refer you to the memo that was

circulated by the clerk (inaudible).

MR. MURPHY: Thank you, Mr. Chairman.

MR. CHAIRMAN: You were not excused, Mr. Ramsay.

MR. MURPHY: Perhaps the school board would not

excuse your -

MR. RAMSAY: No. I am ready for the strap now, I

would say.

MR. MURPHY: Yes, you have to stay later.

MR. RAMSAY: Yes. On the Public Tender Act,

yesterday we had some discussions concerning the filing of exceptions with the

Department of Works, Services and Transportation. Has it been your practice in

the past on any exceptions to the Public Tender Act that they be registered with

the Department of Works, Services and Transportation? I note that you have

committed in your letter to following the Public Tender Act to the letter and of

course this is one. The hospital board we dealt with yesterday had some concern

that when they sent this information in they never received a reply so they had

no knowledge as to whether or not it was actually dealt with properly. This is

the thing, any exceptions are noted and tabled in the House of Assembly monthly,

and the minister is obligated to provide these. If he does not do it, he is

legislatively incorrect in not so doing, so I just wanted to ask you about that.

MR. COATES: In actual fact, your minister is

okay, we have not asked for any, however, perhaps as we get more into dealing

with the Public Tenders Act, we may very well want to do that. Our experience

has been, because the number of our tenders are fairly small, that we get some,

I am tempted to say, fly by night operators, especially when the economy is as

it is. When we go, say to get a school painted, well I suppose just about every

three people get together and one of them can paint. We have tried to get some

road work done around our schools to facilitate the school-bus operation and

some small operator came in, I think probably bidding $15,000, $20,000, did the

road and we have been ever since trying to get the guarantor to pay us what we

lost. The guy was in business long enough to do our contract. Before the

warranty was due he was gone.

In our painting contracts, we try to paint a

certain proportion of our schools each year. We have felt since that everything

should go to public tender. In so far as the best utilization of government

funding is concerned, we have found to go to someone who has some experience

painting to give us a lot more value for our dollar than just three or four

people getting together to paint. However, even though we have those feelings

it's very difficult to substantiate that this man and his wife and two children

can't paint, because they haven't not painted. The thing is they've never

painted, either.

So we haven't gone for an exception but I would

foresee the time when we probably will have to. So far we've strictly adhered to

the Public Tender Act and we're finding out that maybe seeking some exemptions

will be beneficial. Right now we're fully committed to it, and unless the

problem gets worse we'll probably try to live with it as it is.

MR. RAMSAY: Okay.

MR. COATES: In small contracts, like painting a

school, which is probably worth $15,000, let's face it - any bunch of youngsters

can get together and have a go at it. We had one tender last year for painting,

the tender was so low we felt he couldn't buy the paint.

MR. RAMSAY: I think that's your right under the

Act, that the lowest or any is not necessarily acceptable.

MR. COATES: But you have to seek a formal

exemption not to.

MR. RAMSAY: Yes, exactly.

MR. CHAIRMAN: Mr. Ramsay, before you finish -

you were about to go to another topic?

MR. RAMSAY: Yes. But anyway, go ahead.

MR. CHAIRMAN: Can I interrupt just for a

moment? I want to get into this discussion of the Public Tender Act, because a

great deal of the problem you're having here is perhaps not understanding fully

the mechanisms available to you within the Act. I was going to go back when

other members finished their questions to some similar statements you made in

relation to light bulbs. In that you are now using a light bulb that does not

have the same length of life and you found your maintenance costs go up.

MR. COATES: That's right.

MR. CHAIRMAN: I say that's a problem of your

own making. When you called the tender for light bulbs, why did you not specify

long-life light bulbs? So the ones that you are now using would not have

qualified for the tender. If you have evidence, based on the expertise available

to you, based on your experience now that you've had - and I suggest that this

past year using the lesser quality light bulbs has now given you some very good

experience - if you can document that, then I'm sure nobody will question - in

fact, we may well want to recommend to other boards: have a look at the longer

life light bulbs, because your maintenance costs, your replacement costs, are

more than the light bulb is worth.

If you can justify - if the board feels it can

justify, and can document - that this better quality light bulb is the one that

you should be using, then you should have specified that. Then these cheaper

ones that are burning out quickly would not have qualified, and people wouldn't

have tendered.

I think it's still a valid point that there's

probably more than one supplier that can supply a long-life light bulb. Unless

you're talking about the long-life light bulb company that does provide a

special long-life light bulb, and they burn out almost as quickly as the

short-life ones do. I've bought many of them at the door and haven't had great

success with them.

Nevertheless. The same is true here now of your

road improvements and your painting. It's a matter of writing your

specifications to protect yourself. If you specify painting contractors that can

verify a certain amount of experience, and if you ask them to show contracts,

then you have the right, as Mr. Ramsay just pointed out, to decide that: we just

don't think that this contractor is qualified to do the work, that he has the

experience and the stability, and will be around a long enough time to do the

work.

Now you have to be very careful in that. A

contractor who was disqualified for those terms may well come back and question

it. So the board has to know that they can clearly show, if questioned by a

disqualified contractor, that that contractor really was not qualified. So it's

a difficult area.

What I'm saying to you is that within the Act there

are provisions there that allow you to do that sort of thing. Now, if you go too

far with that, and make your specifications so tight that only one particular

person who you want to do the job can bid, then this Committee will come down on

you like a ton of bricks too, I suggest, and the Auditor General's department

will come down on you. So there is a fine line, of course, and that is where it

is important to know the Act, to know it well, and to apply it.

We have had many other agencies before this

Committee to whom I have made the same speech. These people just really did not

understand the Act. If you want a purple car, specify a purple car. Do not, when

the tenders are called and the purple car is the more expensive one, well I have

to take a red car - you just did not specify a purple car, or you did not

specify one with automatic transmission or whatever the case may be, within the

guidelines that are available to you. Quite often that is the problem with the

Act.

I think it is clear that the Public Tender Act will

not always give you the cheapest product in that specific case, and I think your

comments were quite apropos in that in your experiences over the long-term you

have found that it is to your benefit. I think that is government's feeling and

that is the whole theory behind the Public Tender Act, that in the long-term you

may not get the best product in the first tender, but over the long-term and the

life of the project, I guess, the protection given against issuing contracts to

an individual - and you mentioned the term you had built up a relationship with

somebody, and that is great from a service point of view, but the danger is that

that relationship builds up into something else - that the person's price is

going up and you are paying more because you have developed a relationship. So

by issuing strict specifications, if a contractor is not performing, then you

have a way and means of getting rid of that contractor and getting somebody with

whom you can have a good working relationship as well as a good financial

arrangement.

The same applies to computers. You talked about

computer hardware. Everybody, unfortunately, has to tender for computer

hardware. We had an issue yesterday where another board with which we spoke had

a problem where they had software and maintenance being provided by the person

who supplied the computer hardware. The way around that is that when you buy

your hardware you also tender in the same tender for supply and service so that

you do not buy your computer hardware from a particular supplier and then you

are locked into a single source of providing service and maintenance to that

particular hardware. Obviously you want to go to the person who is qualified and

who will do it and not disqualify the warranties that are built into the system.

So you call for your computer hardware and you call for servicing for a useful

life - whatever the useful life of that computer is. In today's world ten years

is probably the best you are going to get out of it, and you are doing very

well. I do not know whether you would want to lock yourself in for ten years,

but I think you know what I am saying, that there are ways and means with

dealing with all of these problems simply by applying the act carefully.

Mr. Coates.

MR. COATES: Mr. Chairman, the board would

certainly thank you for that. I guess perhaps that is one of the reasons why we

have not asked for any exemptions, because we felt we never had the baseline

data. We felt, in all honesty and giving due regard to the Public Tendering Act,

it was unfair to disqualify people when we did not have any baseline data on

them. Certainly what you are saying is supporting our own view.

We made a commitment to give the Public Tendering

Act, as written, a good try, and where we found exemptions would be required we

would have the data to back up that request. So that is the reason, I guess, in

response to Mr. Ramsay's question, we have not asked for any exemptions because

we have not had the experience.

We are committed to the Public Tendering Act, not

only because it is

an act of the Legislature but also we found, in the matter of

the computers that I mentioned earlier, is that it meant the local supplier was

going to have to - and in fact we know now that one of the local suppliers has

trained one of their people into the network that we are using. Unless he does

that, they cannot get our business because the service is not there, and I think

that is healthy for us.

MR. CHAIRMAN: It is healthy for them, too.

It is probably an ideal time to take ten minutes

for a coffee. Mr. Ramsay, when we come back we will allow you to continue on

with your other lines of questioning.

If that is acceptable we will adjourn for ten

minutes.

RECESS

MR. CHAIRMAN: Order, please!

We will call the meeting back to order and, as

indicated, I will go to Mr. Ramsay and let him continue his line of questioning.

Mr. Ramsay.

MR. RAMSAY: I do not want to belabour the point.

My colleagues are telling me that if I had been here earlier I could have asked

more questions, so I will meet that head-on first.

The thing that I'm wondering about, and it's not a

concern as evidenced by the Auditor General's report, but often when I'm looking

at financial statements I've run across situations where capital and current

expenditures are intertwined. Oftentimes some current expenditures are

undertaken under capital account as I suppose a choice of accounting. You

account for something in capital as opposed to current, or whatever. I'm just

wondering how this board sees that kind of thing. Just a general view.

The only other thing I have was with reference to the

cost for school bus transportation and the efforts being made. As we did

yesterday, we asked one question of the single most important, in the opinion of

you, Mr. Coates, or I suppose as a spokesperson for the board, as to what could

be the most important area for getting the maximum bang for the buck, the

maximum effect, out of the money that is available from the board and from other

sources.

So it's a two-part thing, initially about the capital

and current, and then on to the other issue of what it is that you feel is the

best way. Is there some way that the department and yourselves could come up

with a better overall system? Maybe, like you mentioned, cash flow, and that

could be very important as well. I just leave you with that and see what you

think about it. I suppose the other one is more to Mr. Vincent as far as the

capital and current.

MR. COATES: Before I ask Wally to comment, I would

like to draw to your attention - because it certainly came up in the Auditor

General's report - there was an interest item noted, I believe, in

Schedule 9(

C) of the Department of Education reporting manual of some $312,837 of interest

noted as interest expense pertaining to school construction. That in our view

was certainly entered by our agents in error. But I would draw to your attention

as well the statement of revenue and expenditure on the auditor's report. [PAGE

37 OF THE BOOK] I'll note that it was correctly identified then. So it was in

error in the reporting manual but it was picked up and corrected in our

auditor's report.

MR. RAMSAY: Okay.

MR. COATES: Apart from that, I would ask Walter

then to comment.

MR. CHAIRMAN: Mr. Vincent.

MR. VINCENT: I'm not sure I understand your first

question in respect to capital and current expenditures. Are you asking me how I

would like to see the thing operate in respect of -

MR. RAMSAY: No. I don't see any of it here, but

oftentimes we would have, on going through financial statements in the past,

certain places have the practice whereby they account for some current

expenditures under capital account. I just wonder about that with respect to how

strictly you apply your capital account-current account expenditures.

MR. VINCENT: We apply it in accordance with the

requirements by the department in respect to the reporting manual. That's

inter-fund transfer account between current and capital account to keep the

capital account balanced. Also, the requirements as laid down by the DECs in

respect to funding that they would provide has to be considered capital as

opposed to operating funds, although in pure accounting practices it certainly

doesn't make too much sense to me. But it's what they require, and we report in

accordance with their reporting manual.

MR. RAMSAY: Because a lot of times there are the

little variations like that that can cause headaches. A person like myself who

has to look at it afterward would say: how come that's over there? Why is this

under capital and not current? Until you get the guidelines....

MR. VINCENT: We report in accordance with the

guidelines, yes.

MR. RAMSAY: I suppose, Mr. Coates, that as far as

the single most important thing in your mind that we could do to get an overall

more efficient system of operations, as far as the finances from government or

something that would in tune make your financial management and the operation

smoother, as far as efficiency of operation or what have you, what would be one

thing that you would recommend? Because of course in our capacity we make

recommendations to the House that in turn are considered and possibly government

would consider through our communications to the departments involved. So.

MR. COATES: In this particular area, I think one

of the items that we should look at - and we've certainly brought our minds to

bear on it, especially since we received the Auditor General's comments on our

operations. I believe one of the things we ought to look at gets back to where I

was before - in what you tag and what you don't tag. I think it would certainly

be helpful to us in keeping track of things if we could sort of accept maybe a

list of what's a capital asset and what's what we call in the school system

consumable.

Now I indicated earlier that perhaps putting a fixed

value of, say, $250. Anything less than that is probably hardly worth tagging in

some operations but yet in others is probably fairly significant. Like, for

example, school desks. For all intents and purposes, they're on the go all the

time. As I said, they're literally consumed in some instances, especially as

they get a little older. It would be very helpful to us if somehow we could come

up with some sort of a definition of what's a capital asset and whatever's not

capital would go into current.

We used to have a system years ago, I guess prior to

my becoming superintendent, that anything, I believe, Walter, that was under

fifty dollars -

MR. VINCENT: Seventy-five, yes.

MR. COATES: It was seventy-five? Okay,

seventy-five, wouldn't be considered capital. I'm not necessarily sure that you

can fix it that way or that we would agree on what it would be, but it would

certainly be very helpful to us if there could be some working arrangement

between what the Auditor General would accept and what the Department of

Education would accept, and transmit that to school boards. Because at the

moment I feel as though we're not living up to the spirit of the report if we

don't get into some considerable detail, and I'm afraid that -

MR. RAMSAY: Administratively shackled, I suppose,

by the effort that you'd have to make.

MR. COATES: Yes. Mr. Murphy also noted earlier

that things come into and go out of the schools. In our case - I'm not sure how

true this is generally - we do move a lot of stuff around schools, for a couple

of reasons. One is, it eliminates the need to purchase. The other reason is

there's a critical shortage of space in most of our schools, particularly the

older schools, in that they never designed equipment storage rooms big enough.

So that if a trampoline is going to be used by two or three schools, we only

have one and that's usually transported around, and you can't have the

trampoline and the archery butts in the same school at the same time.

So there's a lot of stuff moved around. So it's not

only having a list of what the board owns, but we certainly would need to keep -

it would almost be a full-time job to have a person keeping track of what's

being moved around our district right now. It could be simplified I think if

some sort of a definition could be arrived at as to what we have to keep track

of. I fully recognize that. The other day I took a truckload of musical

instruments from one school to another. Now, as a result of this report, we've

asked the guys to note the serial numbers of what goes out of their school, and

the other guy to note the serial numbers of what comes into his school, and that

gets sent to Walter. I think that's very helpful, but it's time consuming.

AN HON. MEMBER: Time consuming.

MR. COATES: It's time consuming, but it's very

useful. Because I think as Mr. Murphy was mentioning, some of these things could

be subject to theft. The thing is, the value of them would be more than meeting

my requirements. But I'm not sure that some of the little items like desks and

things, which we move a great deal, just keeping track of everything may not be

that necessary.

So it would be very helpful to have some sort of a

specific guideline on which all parties agree. Because we'll never know when the

job is properly done. We'd like this to be a learning experience for all of us.

MR. RAMSAY: That's all, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Ramsay.

Mr. Warren.

MR. WARREN: Thank you, Mr. Chairman. Mr. Coates,

you're operating roughly around a $22 million business, if you want to look at

the financial part of it. Your auditor, D.R. Powell & Company Limited, how long

have they been doing the audit on your books, do you know?

MR. COATES: We tender our auditing services. I

believe the first time they tendered it was for a three-year period, and I

believe they were successful in getting another one. So this would be their

second contract period.

MR. WARREN: For a three-year period. So you go

through the tendering process.

MR. COATES: Yes.

MR. WARREN: I notice there on your financial

statement, page 38: "Fees - $17,024." That's the cost of the audit, or is it

some other thing besides the audit?

MR. COATES: No, no.

AN HON. MEMBER: Do you want just the details?

MR. COATES: That's under Administration, in legal

fees. That's our solicitor's fees, including the audit fee and any other legal

requirements that we might have throughout the year from lawyers and that sort

of thing.

MR. WARREN: What does an audit cost?

MR. COATES: The audit cost - I stand to be

corrected - but I think it's $3,750.

MR. WARREN: That's $3,750 for the whole business?

MR. COATES: Yes, for the audit.

MR. WARREN: Seventeen schools under -

MR. RAMSAY: A reasonable price for a $22 million

audit.

SOME HON. MEMBERS: (Inaudible).

MR. COATES: He also does the audit for the Roman

Catholic School Board here in town. I think he does them all at the same time,

but it is a reasonable fee. I think, Mr. Chairman, on behalf of the board I

would say to Mr. Warren, years ago, before we started tendering for auditing

services, I believe the first time we tendered the price of our audit was

probably less than half what it had been the year before. So the tendering

process has been very helpful.

We also, by the way, tender for banking services as

well. We've found that - like our line of credit and the service we get from the

bank is much cheaper now than what it used to be. As I say, we've been into

certain aspects of public tendering for quite some time. As we've mentioned this

morning, not in all the areas that perhaps we ought to have been in, but in

those two services alone it was very helpful to the board.

MR. WARREN: What is your total complement of

employees, including teachers, in your board now?

MR. COATES: It varies from time to time. In the

summer we do hire an additional small maintenance staff. Our janitorial service

is partially contracted and partially employees of the board. When we

consolidated with Burgeo and Ramea they were already into a board employee

system. We have been tendering our janitorial service and we find that we cannot

do it as cheaply and as effectively as a contractor. The contractor has been in

business probably for twenty-five years, so they've got a pretty good handle on

it. Better than we could.

So I suppose direct employees, we could go as high as

400, from time to time. Recognizing that some contractors work, the contracting

have the same people working in our schools, and that would be a bit more.

MR. WARREN: One final question, Mr. Coates. What

is your complement at your school board office?

MR. COATES: I can give you a breakdown. I'm

Superintendent. I have only one assistant superintendent. Then we have one

business manager. In his office there are two people, Ms. Sheaves and one other.

We have three secretaries and nine program coordinators.

MR. WARREN: Thank you. Mr, Chairman.

MR. CHAIRMAN: Thank you, Mr. Warren.

Mr. Dumaresque, any questions?

MR. DUMARESQUE: Thank you, Mr. Chairman. I'd just

like to touch on the subject of teacher salaries. I know about the

administration and the relationship between the two. I notice that from the 1988

financial statement, 1989, 1990, 1991 - in 1988 you had a $13 million salary

budget, in 1989 $16 million. I gather that's because you took over in other

areas. From 1989-1990 there was a 7 per cent increase, from $16.2 million to

$17.4 million. From 1990-1991 there is a 4 per cent, or a 3. (Inaudible) per

cent increase, in salaries, $17.4 million to $18.1 million. You indicated

earlier that you're looking at eight teachers or eight units a year being lost,

which would work out to about another 3 per cent. How is that being accounted

for in the increases, because there have been no significant increases, have

there?

MR. COATES: It happens from a variety of sources.

We usually have retire four to six people a year. These naturally are the older

teachers. In a number of instances, they were also the lowest qualified. So when

they were replaced they were replaced by much more highly qualified people, and

consequently higher paid.

Secondly, teachers who are at less than the top of the

scale, get yearly increments as they go through. So any teachers who have less

than eight years experience would all get a built in scale increase. Then it is

also possible for teachers to upgrade their qualifications in the summertime and

hence increase their salary. So it comes from a variety of sources.

MR. DUMARESQUE: Yes. On the administration budget

I noticed that 1989 - 1990 there was a fifty per cent increase from 302 to 441

and that has been stable for 1991. Why would there be such an increase in the

administration budget for those?

MR. VINCENT: Up to 1988 the salaries for the

assistant superintendents and the superintendents were carried under the teacher

salary portion and got switched to administration in 1989.

MR. DUMARESQUE: (Inaudible).

MR. VINCENT: Yes, it was being allocated under

teachers salaries and then got adjusted to administration.

MR. DUMARESQUE: Right. So that would actually then

also distort the teacher salary position as well.

MR. VINCENT: Yes, exactly.

MR. RAMSAY: And make it more magnified.

MR. DUMARESQUE: Yes. From that overall analysis

you are still seeing a fair growth in teachers salaries even with declining

enrolments. Is that the result of the contract, in the sense there is a 2.5 per

cent layoff factor there?

MR. COATES: The maximum number of teachers we can

lose is 2 per cent, and that is 2 per cent of our teaching force. That for us

usually comes down to about eight teachers. It could be seven or eight, but most

years it is eight. One of these days we will be down to seven.

MR. DUMARESQUE: Yes.

MR. RAMSAY: Do retirements usually account for

that?

MR. COATES: Actually I am not quite sure how to

answer that. Our district began in 1969 as a declining district. For the last

dozen years or so what I have tried to do is instead of laying off people I have

tried to encourage other people to take leaves. I do that for several reasons.

One is that it usually makes two people happy, the person who wanted to go on

leave anyway gets the opportunity to do that and the person who doesn't want to

be laid off gets to keep the job.

I suppose some day there will be a kind of reckoning

when all the people on leave want to come back to work and there won't be enough

retirements. At the end of this year if all the people who will have to be laid

off are counted in we would probably have twenty-three people who we would have

to lay off because I have that many people on leave when actually there is no

job that they are on leave from. But we don't tell anybody that so everybody

goes along quite happily and we have never had to lay anyone off.

MR. RAMSAY: I would not want your future

(inaudible).

MR. COATES: Yes, I suppose it will come, but it

seems to serve all parties rather well. It helps stabilize our teaching force,

but at the same time we can do some movement from within. So people are fairly

sure that they are going to have a cheque this year. The people on leave, as I

say, have been very helpful. We have had a couple of people doing advanced

degrees in specialized areas which will be helpful. That is another reason. I am

sorry, Mr. Dumaresque, I didn't get into that.

But our board together with the neighbouring boards,

we get into those itinerant services which must be jointly operated. The

Province doesn't recognize - I don't mean that the department doesn't recognize,

but the people generally don't recognize that there is more cooperation among

boards than some times is seen. For example, we take advantage in certain parts

of our district of the psychological services provided by the Port aux Basques

Board and we are using speech pathology services provided by the Port au Port

Board, and in all fairness we have to hire some itinerant people as well and

they are outside the teacher salary regulations. Last year we did hire a couple

of people like that, so that would be a slight increase as well.

MR. DUMARESQUE: I have one final question that is

just a point of personal interest to me, with respect to student assistants.

What impact has the funding provided to your school board this year had on your

student assistants?

MR. COATES: We had been utilizing three criteria

for student assistant deployment, and it is difficult to say which is more basic

than the other in that we have been servicing basic personal needs. We have been

hiring student assistants to look after children who simply had to be lifted

around. Often times they were physically disabled children, so that was

portering, lifting, helping to feed, and so on. Then we had another group of

children who needed to be protected, in one way or another - two basic groups.

Within our district we have a couple of open custody

facilities operated, I guess, through the Department of Justice, I suppose - or

operated by social services under the auspices of the Department of Justice or

whatever. So we have had to take in several students whom the court has not seen

fit to take out of the school system, but if you put them in the school system

they have to be, if you like, guarded. We had to deploy two or three student

assistants for that purpose last year.

Then we were also using the criteria of programming,

and that is the area which was discontinued this year. Insofar as the first two

criteria are concerned, they were basic personal needs, and I am on record as

having said that these criteria have been applied fairly throughout the

Province. Based on these two criteria our district lost about 35 per cent of its

student assistant time.

What we find regrettable is that due consideration was

not given to programming needs of students and, bearing in mind that our sole

purpose for existing is to educate children, it seems to me that one of the

basic needs that we ought to be providing, as an educational institution, would

be for programming needs. It is those programming criteria that have not been

provided for this year. So we have children who have made quite considerable

progress in their educational development who now are not served.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: I do not want to belabour the

point but I am very interested in this. I am just wondering, from the board's

point of view or through you to the board, how do you interpret the

responsibility for being able to move funds from one item to another to meet a

need like this? Are you told, and are you under the impression or even under the

law, as you see it, that you can only apply a programming budget of this nature

and you cannot adjust another - maybe some kind of a salary component or some

kind of an administrative expense that could go to meeting this basic need?

MR. COATES: I think we could. I believe it is

within our discretion to move some funds around. The trick is, from where do you

take it? Like, for example, last year in our total budget I think we might have

shown an operating surplus of perhaps $20,000 or so, and on a budget of that

size it is a pretty small amount. But our fixed costs, so to speak, are pretty

much including everything that we receive in terms of revenue. Heat and light

alone takes up a considerable amount. We do put about $400,000 into our

instructional budget, as we addressed this morning, and we do put a fair sum

into our maintenance budget.

I suppose you could clip some money off the

instructional budget or the maintenance budget to meet the needs on a one-shot

deal, but to do it on a long-term basis we would think would be inadvisable. But

yes, we do have some discretion over how much maintenance we do and how much

instructional materials we provide. I suppose we could class a student

assistant, if you like, somewhere in the area of instruction. You'd have to take

it from either your maintenance budget or your instructional budget to provide

it. Outside of that we have very little discretion. In fact, over the years

we've kind of calculated, I guess in-house, that a school board is operating in

any kind of a decision making role probably on less than 5 per cent of the total

budget. It's hardly worth worrying about.

MR. CHAIRMAN: Thank you, Mr. Coates. Are you

finished, Mr. Dumaresque?

MR. DUMARESQUE: Thank you.

MR. CHAIRMAN: Thank you very much. Mr. Murphy, any

final questions?

MR. MURPHY: Just to pick up on the question from

Mr. Dumaresque to Mr. Coates. You talked about 35 per cent loss. What would that

come out in in dollars?

MR. COATES: I think they paid eleven dollars an

hour.

MR. VINCENT: Yes. I think the reason for the loss

is the increase in salaries from one year to the next year, really.

MR. COATES: There's kind of a trick here. The

student assistants, I believe, are making somewhere in the area of eleven

dollars an hour, and it's about thirty hours a day. So it would be $1,500 a week

to restore everything.

MR. MURPHY: Fifteen hundred dollars a week. You're

looking at how many weeks in your school year?

MR. COATES: It would be roughly thirty-three

weeks.

SOME HON. MEMBERS: (Inaudible).

MR. MURPHY: Excuse me, I'm thinking days versus

weeks. Divide seven into 200 and I'll probably get the answer.

AN HON. MEMBER: (Inaudible) $50,000.

MR. MURPHY: Because percentage sometimes doesn't

drive it home. So you're saying $50,000 for your particular board would have

kept you on a plateau, grandfathered the students that were in the special

program as such. So $50,000 a year, or in this fiscal year, would have handled

that program 100 per cent.

AN HON. MEMBER: Probably, yes.

MR. MURPHY: I just wanted to pick up on that

because it is important to Mr. Dumaresque, and it is equally important to me. I

feel very strongly about the loss in that area.

MR. CHAIRMAN: Sounds like you have an ally come

budget time.

MR. COATES: Actually, I think we should be fair to

the Department of Education. I'm sure Mr. Berniquez behind me could do this more

ably than I. The Department of Education did not actually, to my understanding,

remove any money from that budget. What they did was move around what was there.

Because they felt that some school boards had been overstaffed in terms of

student assistant deployment, and other school boards didn't have the services

available.

In our own case, as I said, we had given equal

emphasis to the programming aspect as we had to the other two aspects. Other

districts in the past had not done that, so when they got in on it then we had

to drop ours.

MR. MURPHY: I see. So what you're saying is that

there's a system of prioritizing within the Department of Education -

MR. COATES: Yes.

MR. MURPHY: - and funding hasn't dropped off.

MR. COATES: I don't think the overall funding

decreased.

MR. MURPHY: No.

AN HON. MEMBER: No, no.

MR. COATES: As a line in the budget. It was just

moved around.

AN HON. MEMBER: (Inaudible).

MR. COATES: Yes, that's right.

MR. MURPHY: Okay. Just one small question, because

of some statements you made about the positiveness of tendering. You found it at

the bank level and what have you. One thing comes to mind now, especially when

we go driving around in our area - I don't know if it's happened out here in the

west coast - but all of a sudden we see the oil companies, they've found this

new way to sell gasoline for fifty cents a litre rather than sixty cents a litre

in certain areas of the Province.

The Auditor General made some comments about not being

able to find documentation and what have you to support your fuel tender, which

is in excess of $150,000. You folks were getting ready to go to tender. How has

that come out, Mr. Vincent, or perhaps Mr. Coates? Have you done better now?

MR. COATES: Actually, as we indicated earlier,

when Mr. Janes was in our office we had already solicited quotations, but in

compliance with his interest we re-retendered, or, if you like, we tendered for

the first time. All the people who had given us quotations lodged the same

letter with us. I think it's fair to say that in our experience in the last,

well, let's take the last five years, we've had very favourable fuel oil prices.

In fact, they've been very good.

MR. CHAIRMAN: Mr. Vincent, you wanted to add

something?

MR. VINCENT: Yes. Yesterday, or a few days ago, we

had a request from the Government Purchasing Agency for our requirements for the

year on gasoline and on diesel fuel that we use in the schools, so it looks like

to me, this agency now is going to call a provincial-wide tender. We were going

to call for our own next month but I am going to hang back and see what kind of

a tender they get because it could mean a significant savings to us.

MR. CHAIRMAN: They may be going to call it or they

may be simply trying to get a handle on total purchasing requirements -

MR. VINCENT: They have the information, yes.

MR. CHAIRMAN: - which is something government has

been trying to do for some time now.

MR. VINCENT: I must check with them to see.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: That brings me to my final question. I

know through experience that volume purchasing is very impacting. If ten of us

leave here today to go to Humber Motors to buy the same automobile, even though

we are individuals, if we go in collectively and we talk, we are going to get a

better price. I was wondering, at your school board levels, when the boards get

together, and I assume you all get together, if you have talked about collective

purchasing throughout the Province? You have the Integrated here on the West

Coast, if you were with the RC and the Pentecostal and you decided that you were

collectively going to go to tender for fuel. I would think, I do not know, but I

think that it probably would have a better impact because one oil company is

going to say: well, if we go in at this price we are going to get all the volume

business. Is there any move in that direction?

MR. COATES: Yes, for certain basic supplies, and

perhaps the most notable one would be the paper supply, where there is an

opportunity to go in with a provincial group. As you have noted with gasoline

however, it is sometimes not beneficial to do that. For example, if you were to

go to a public tender, I doubt that you are going to get your gasoline in St.

John's for your 50.9 cents per gallon,

whereas, here on the west coast, we are

going to do it for a particular reason.

One of the exceptions, we as a board, have not

participated in the paper contract. Most of them do get together to have a

provincial supply of paper, but for a number of years we had solicited our own

tender and we were getting paper cheaper than the main group, but Walter advised

me that this year our tenders were not as successful so we will be with the

provincial group as well.

There is one other major area that we go to tender,

and that is all the school-bus operators get together and they put in one tender

for about fifty school-buses and that has been very beneficial. So for a number

of basic areas we are working as all the school boards together and in the local

area, we may, from time to time also work with the RC School Board as well,

locally. In the case of the auditing, as Walter mentioned before, D. R. Powell

and Company now I think are doing most of the boards on the West Coast, so as a

result they have streamlined their operation, they have introduced computer

programming which makes it easy for all parties.

MR. MURPHY: Thank you, Mr. Chairman. Thank you,

Mr. Coates.

MR. CHAIRMAN: Thank you, Mr. Murphy. I think the

committee has pretty well exhausted their most important questions for the day.

I think it has been a very thorough examination actually, I do not think we

should belabour it any further. Perhaps what I will do is ask the Auditor

General if she has any final comments or observations to make before we

conclude.

MS. MARSHALL: I just have one comment. Mr. Coates

indicated that he had an interest in further discussions with our office on the

control over fixed assets, so we are available to meet with you whenever it is

convenient.

MR. COATES: Thanks. As well, Mr. Chairman, I

certainly would like to thank you for the opportunity. I mentioned to you

privately over coffee that the deputy minister of Education was in our office

this morning and I guess caused us to be a little bit late, but he told me that

this would be a real learning experience for us and that we would have a greater

appreciation for accountability, and I think that has been the case.

I also wanted to thank you particularly for the advice

you gave us on the public tendering. We certainly want to develop some baseline

data and to try to do the best we can with the available monies. There is no

doubt about it, we have benefited greatly as a district through our tendering or

solicitation of quotations in the past and I see no particular reason why we

cannot continue to benefit in the future.

I did have a note to suggest that we have tried to get

a handle on how we could do our fixed assets within our school system, but I am

sure it is true of the Province as well, and I would thank Ms. Marshall for

making that offer, because we will either have to have an evaluation day or to

set up some parameters because (inaudible) School Board was of no particular

exception in terms of the way we came into existence, and I suppose the kinds of

situations in which we find ourselves. I suppose one might look forward to the

day when the educational system will change and we will have to do it all over

again but that is in your domain rather than mine.

Thank you very much.

MR. CHAIRMAN: Thank you, Mr. Coates. On behalf of

the Committee, I would like to thank all of the witnesses who have been before

the Committee today. I particularly want to thank the representatives of the

board for your forthrightness and frankness in answering the questions, it is a

learning experience for us as well. As a Committee of the House we are here, as

I said in my opening comments, to gather information. I think it has been a

worthwhile exchange. I think it is important for the Auditor General's office as

well to hear the direct opinions from you people and also, I guess, to hear the

views of the Committee members as well, so it is a worthwhile experience for all

of us and all who may be observing either directly or indirectly the procedures

taking place at this Committee today.

I think it has been very useful, the information has

been useful to us and as an overall observation I think the report of the

Auditor General on your board in fact was an excellent report and gave you a

very high mark. The issues that were before us today were not ones of great

consequence, but they are important and it is important that we deal with all of

them, but overall, I think your board has shown itself to be a very capable

administrator and I think you are to be congratulated for that.

Thanks for coming forward today and giving us the

benefit of your time and your thoughts. I thank the Auditor General and her

staff for being here once again as well, and members of the Committee of course

who do an excellent job in making my job very easy. By the time I get back to

myself there are very few questions that I need to put forward; the Committee

has been very diligent in their research and their questions.

I thank the staff, the clerk and the recording staff

and the representative of the Department of Education who came forward today and

was available should we have needed his expertise and advice and it is good as

well to have his department here in observing I guess, these proceedings and the

discussions that were held as well.

On motion the Committee adjourned to October 20th.