July 10, 1991

PUBLIC ACCOUNTS COMMITTEE

(UNEDITED)

The Committee met at 10:00 a.m.

MR. CHAIRMAN (MR. HEARN): I think we are just

about ready to roll. First of all let me welcome the people from the Department

of Education, the Student Aid Division, the Acting Auditor General and his staff

and Members of the Public Accounts Committee. We are still waiting for a couple

of people to come, but they will drop in, I hope, during the proceedings.

Today we are doing something that is perhaps a

little bit different to some degree, it is the first time we have had a

department back who had been here previously, although it is really not because

their penance was not fulfilled. I suppose there are a few more issues. When we

call departments or agencies in front of us it is not because you have done

anything too serious. It is not like the old days when you did not know whether

you were going to be exiled or crucified or whatever. Things are a bit different

now. It is a matter of clarification and we give the Auditor General's

Department a chance to explain concerns the Members will have about what is

going on in departments or agencies and, of course, it is a great chance for the

department or agency to explain why they have not conformed exactly, perhaps,

with the wishes of the Auditor General or the Auditor's Office, and it does

clear the air quite often.

I remember last year, I believe when we had the

people from the Student Aid Division in, it was a tremendously a rewarding

experience for not only the public who picked up some of the information, but

certainly for the Members of the Public Accounts Committee, because we had a

much better insight into the workings of the Student Aid Division. So I will not

say we are glad to have you back, but it is nice for all of us to have groups

and agencies come in to discuss certain points or problems that they might have.

Hopefully, through the process and through our recommendations, problems that

you might be experiencing yourselves, and certainly those of the Auditor, might

be clarified at least to some degree.

With that, we do have perhaps some people who have

not been sworn in, I believe Mr. McCormick and Mr. Snelgrove. That is worse than

yesterday when somebody had Norm's name down as Harrison Snelgrove, and they

were looking for Harrison Snelgrove. So, Norm, we are having problems with you.

I am not sure if the third member of your panel has been sworn in. I do not

believe she has.

AN HON. MEMBER: No.

MR. CHAIRMAN: Okay. So Elizabeth if you would.

Then we will ask each group, each leader, to introduce the members for the sake

of the press, and I will introduce the Members of the Public Accounts Committee.

SWEARING OF WITNESSES

Norman Snelgrove

Cyril McCormick

Daphne Stockley

MR. CHAIRMAN: Thank you, Elizabeth.

Mr. Hart, if you would introduce the people with you

this morning.

MR. HART: Thank you very much.

On my immediate left I have Mr. William Drover, Audit

Principal; Audit Senior, Wayne Moores, sitting next to Bill; and at the end of

the table we have Audit Manager, Bernard Howlett.

MR. CHAIRMAN: Mr. McCormick.

MR. MCCORMICK: Thank you Mr. Chairman.

I have with me this morning Mr. Snelgrove, Director of

the Student Aid Division, and Ms Daphne Stockley who is our EDP Specialist with

the Student Aid Division.

MR. CHAIRMAN: Thank you very much.

I should mention, I suppose, once again for the press,

Mr. Chris Hart is the Acting Auditor General and Mr. Cyril McCormick is the

Deputy Minister of Education. I think it is a good time to publicly congratulate

Mr. McCormick. It is the first time officially, I think, we have been together

since he has been appointed. Congratulations, Sir.

MR. MCCORMICK: Thank you.

MR. CHAIRMAN: The Members of the Public Accounts

Committee are: On my immediate right, the Deputy Chairman, also new in the

field, Mr. Aubrey Gover, the Member for Bonavista South; on my far left is Mr.

Bill Ramsay, the Member for LaPoile; two gentlemen have who just joined us,

Alvin Hewlett with the beard, the Member for Green Bay and Glenn Tobin without

the beard, the Member for Burin Placentia West; and on my left Elizabeth Murphy

who is right now acting as our Research Officer in the absence of Mr. Porter,

and Elizabeth is also the Deputy Clerk of the House of Assembly.

I would also like to welcome the press. It is good to

see some of the press come out to our deliberations, and then if there are some

points clarified at least we get all the facts out properly.

So with that, usually how we operate is we ask the

Auditor's Office to make the opening statement listing the concerns raised and

then we ask the department or agency, if they so wish, to make a response and

after that we just throw it open to Members of the Committee or an interchange

between the witnesses.

So, Mr. Hart, if you so wish or one of your Members to

make the opening statement.

MR. HART: Thank you very much.

I would also like, before we start, to take this

opportunity to congratulate Cyril on his recent appointment. I was just

commenting to him before we came over that it did not take us very long to get

him in here. He was appointed on July 1 and I think it is probably a week or so

now, so he is off to a good start.

I would ask Wayne Moores if he would read the opening

statement.

MR. CHAIRMAN: Just before you start, a reminder

that when you speak try to be relatively near the microphone. It is not for

amplification but only for the record. When you speak also it would be better if

you identified yourself because when the script is being typed up it is rather

hard sometimes to pick up the different people unless you say your name before

you make your comments. Thank you.

MR. MOORES: Mr. Chairman, the Newfoundland Student

Aid Programme is administered by the Student Aid Division of the Department of

Education. The Programme was designed to provide opportunities for students of

this Province who lack adequate financial resources to pursue post-secondary

education. However, the intent of this Programme was to supplement, rather than

replace, the financial resources of the parents and/or the student.

The Student Aid Programme consists of: One, loans

Two, provincial allowances which are not repayable; and three, deferred

bursaries. For the year ended 31st March 1990 the Province's expenditure on this

Programme was $15,639,513 as reported in the Public Accounts for the year ended

31st March 1990.

Our review and evaluation disclosed the following: The

Student Aid Division was not always in compliance with the Student Allowance

Regulations and the Canada Student Loans Programme administrative criteria;

reconciliation procedures were not adequate to ensure completeness and accuracy

of financial records; cash was not always deposited on a timely basis and

cheques were not stamped for deposit only; the accounts receivable

section does

not review the no-show, part-time withdrawal reports on a timely basis; the

accounts receivable

section does not monitor which educational institutions are

providing no-show, part-time withdrawal reports, computer generated reports

contained errors; the allowance for doubtful accounts was not adequate based on

past collection activity and the age of accounts receivable; applications for

financial assistance were sometimes processed without adequate documentation;

supervisory review procedures were not adequate; student aid system overrides

were not always authorized by an appropriate official; and the documentation for

computer system security changes was not complete.

The new Student Aid System was implemented on 27th

March, 1989. No reconciliations could be located at the Student Aid Division to

ensure all files and records were converted to the new system.

The recommendations of the Public Accounts Committee

of the House of Assembly pertaining to our 1986 Report item on the deficiencies

in recording and collection of student aid overpayments have not been

satisfactorily addressed by the Department of Education.

Government expenditures for student aid is

significant. It is essential that an adequate monitoring and control system be

in place to protect the Provinces interest. The implementation of our reported

recommendations will improve the system of control over the Student Aid

Programme and should ensure the completeness, accuracy and timeliness of the

information produced by the system.

MR. CHAIRMAN: Thank you very much.

Mr. McCormick.

MR. MCCORMICK: Thank you, Mr. Chairman.

I will just make a brief statement because I think

what we would be more interested in doing is to reply to any particular concerns

that the Committee may have. I think we are very cognizant of the need for some

of the minor accounting procedures to be a little more efficient and a little

more, I guess, emphasized.

As you know, we have spent the major part of our

efforts over the last two years in bringing about major changes to the student

aid system. Last year we gave what I think was considered a successful

demonstration of what these changes had brought about in terms of delivery of

the service to the students. We now have a completely computerized system. We

have status terminals in many of our educational institutions where students can

go and find out the status of their particular applications by simply asking for

the information from the institution and using computer terminals.

With respect to what we consider some of the elements

of the audit this year that we have addressed, we have replied to the Auditor

General's draft report and given him assurances on what we feel are the major

issues. I will mention just two of them here, and we can look at the others

probably in discussions later.

One is the question of the time for a particular

semester. We have been administering the combined inter-session and summer

school period at the university as a semester, and this was questioned in the

Auditor General's report. As you know, we are the administers of the Canada

Student Loan and the Provincial Grant Programme, and it is the Canada Student

Loan criteria that we generally apply in this case. We undertook to discuss this

with the Canada Student Loan people and they have now advised us that we are

within our right to determine that and to assess it as a semester. So we will

discuss this with the Auditor General again and indicate what our decision will

be. It is a provincial decision to decide what prescribes a semester, so we

would probably be inclined to make sure that we would not short change the

students in any way, and if that is not contradictory to any Canada Student Loan

regulations then we would give the student the benefit in this situation.

The other item that I wanted to address was the

question of the appeals committee. We have taken action to now fill a couple of

vacancies on that particular appeals committee, and that should be functioning

this fall. On the question of the decisions made by that committee, we have

indicated to the Auditor General where provisions are made in the Canada Student

Loan Act to allow that committee to have discretionary judgement to waive

certain areas in special circumstances. I think these were the two areas that we

were concerned about.

I would also like to inform the committee, while I

have the opportunity, that we did make a number of major improvements to the

programme this year, particularly for certain designated student groups. This

has to do primarily with the grant portion which the Province has control over.

The provincial grant has been increased from $1,000 per semester to $1,120 for

single students and from $1,250 to $1,600 for single parents. We have changed

the definition of single parents to include all students with dependents. So we

have made improvements for that category of student.

We have increased the day care allowance from $1,800

per year to $3,000. The allowance for the cost of room and board and

transportation and books has been increased, and we have made assistance

available on a weekly basis instead of a semester basis. We now have the

provincial allocation of grant consistent with the Canada Student Loan

allocation. We have increased the cost on the provincial allocation by $1.7

million. So we are concerned that we address the needs of the students as a

first priority.

I thank you, and I am prepared to address the other

items on questions.

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

Mr. Gover.

MR. GOVER: It seems that some of these issues have

been raised before and have been outstanding for a period of time, and it seems,

from my reading of previous reports and this year's report, that some of the

issues have been addressed. So I guess my first question is to the Auditor

General.

I believe it was back in 1985-86 that there were

questions raised with respect to the deferred bursary programme, and that does

not seem to be a concern, at least directly, in the findings in the current

year's report. So I wonder, have those particular concerns, concerns with

respect to the deferred bursary programme, been taken care of, because there is

no direct reference to that in your report this year?

MR. HART: Yes, I would like to say up front that

there have been significant improvements in the overall system. In our report of

a couple of years ago we pointed out a number of issues that had been addressed,

and most of the areas have been addressed. Sometimes what happens in

implementing any new system, particularly a computerized system, is there is a

period of time it takes to get everything implemented as required. It is just a

learning experience all around. So there has been a definite effort on behalf of

the department to address those concerns.

The major concerns we have now, I guess, come down to

compliance with guidelines, and in some instances it is a matter of

interpretation, as Mr. McCormick pointed out. We can only go on the basis of the

regulations that are in place and apply them from an audit point of view and

that perspective. So one of the concerns we have, for example, is that in

determining the eligibility of a student for a student loan there are certain

income requirements and the guidelines are not always followed to the letter of

the law. I can understand, as Mr. McCormick pointed out, that the interest of

the student has to be of prime consideration, and from an audit point of view,

we are not insensitive to that, but we have to look strictly at the guidelines

that are in place and ensure that the department adheres to them as they are

stated. Other than that, obviously there would have to be a review and a

revision of those guidelines.

In terms of the bursary programme, I think I will pass

that one off to the audit senior because he was more directly involved in that.

MR. CHAIRMAN: Mr. Drover.

MR. DROVER: Mr. Chairman, just to add to what

Chris had to say, the bursary programme that was raised by us in the 1980s was

addressed with the new system, and our main concerns in this visit to student

aid result from the implementation of a new system.

What often happens is that in implementing a new

system, certain controls are lost or we feel are lost, reconciliation

procedures, reconciling input that is coming into a computer from outside. I

think if you take most of the recommendations on page 101 of our report, you

will find that they all address the issue of supervisory review and this is of

the system itself. A lot of the policy areas, as Chris says, we have dealt with

in discussions with the department and the department has implemented them.

Just one short comment, to answer the Vice-Chairman's

question, to our mind, as a result of this review, the bursary system has been

handled, the recommendations and so on.

MR. GOVER: Yes. This is what I would like to

establish, I suppose, for the department's benefit and for the public's

knowledge, that, although student aid is coming back before the Public Account's

Committee, it seems that it is not a situation where it is coming back with

deficiencies that were identified in 1986, and still remain uncorrected. There

were at least two deficiencies identified in 1985-1986, one of them having to do

with the deferred bursary, and as you have indicated, that has been corrected.

What seems to have happened is, as a result of this new system that student aid

has put in place, various, I suppose, transitional difficulties that have been

associated with the new system. These are new concerns as opposed to old

concerns which we are now addressing. Would that be an adequate assessment of

the situation?

MR. DROVER: I think, Mr. Chairman, that is a fair

comment. I guess the main emphasis here is on the system, controls within the

system, reconciliation procedures, proper authorization, proper approval and so

on. I do not think we are attacking the policy areas to the extent that we did

in 1986. There have been some improvements in the system, yes, but there are

certain weaknesses in the present electronic data processing system that we feel

should be addressed by the department.

MR. HART: Mr. Gover, if I might add to that too,

there are some common areas of concern, I guess, and they seem always to be

there in relation to student loans. One is in the area of the adequacy of the

allowance for doubtful accounts which reflects the uncollectibility of them, and

the other one is in the collection effort in making sure that you recover those

loans that are advanced. That is a perennial problem. It is not just common to

Newfoundland, it is across the country, but from an audit point of view, it has

to be pointed out and I guess will continue. Those are the only comments I would

add to that.

MR. GOVER: Yes, I appreciate that, Mr. Hart. But I

just want to establish that basically the department has made efforts to correct

the situation. Now we have a new system, and like any new system there are going

to be difficulties associated with that new system.

But as you indicated, there is one matter that was

raised in 1985- 1986, which concerns the reporting by educational institutions

of change in status of the students, whether the students drop or add courses, I

guess, or fail to show or withdraw. That was reported in 1985-1986, and the

Public Accounts Committee then made recommendations that educational

institutions be required to provide weekly reports of withdrawals of students,

and greater emphasis be placed in brochures on the responsibility of students

and institutions with respect, I suppose, to change in status. I see in your

report this year, what you have found is that the accounts receivable

section

does not review the no-show, part-time withdrawal reports on a timely basis.

Then you also go on to say, the accounts receivable

section does not monitor which educational institutions are providing the

no-show, part-time withdrawal reports. I gather one of the principal sources of

overpayments to students is that, while the student applies on a certain basis

and gets his loan and grant on a certain basis, i.e. being a full-time student,

subsequently changes his status. These changes in status are not caught and as a

result, the student winds up with an excess of funds over what they would, if

the change in status was caught.

So that seems to be a persistent problem since

1985-1986. It was identified then and it seems to be identified now. I just

wonder if Mr. McCormick or Mr. Snelgrove would want to indicate exactly what the

nature of the problem is there and what is being done to rectify that particular

problem.

MR. McCORMICK: I will certainly make a comment,

Mr. Vice-Chairman, but it is one unfortunately where we have to depend on

another agency other than ourselves to respond. We have not only advised

institutions of this problem and asked that they report this on a timely basis,

but we have gone so far as to send them forms to report it on. The next step, as

recommended by the auditor, is that we probably have to now check on when they

send us that form because we are still not getting it in the required time

frames recommended by the auditor.

There are two or three problems that the institutions

have. One is that students have, as you know, particularly at the university, a

drop and add period. They also have the issue of whether the students get the

courses that they applied for. So it could end up that the student applies for

five courses and ends up with only three, and it could be that the student then

opts to do some other courses. The other thing is that a number of institutions

are allowing people to change programmes, particularly in the private sector,

once they find out they are not suitable and want to switch to another. So all

these require that they be reported to student aid because they may affect the

amount of student aid that student would get.

There is another policy decision that we are actively

pursuing and that is to make issuance of financial assistance to students on a

semester basis instead of on a full academic year basis. We may be able to

correct some of it in that way, but we need to get the institutions to fill in

these forms and get them back to us.

Is there anything else you want to add to that?

MR. SNELGROVE: I just wanted to say that I think

the auditor's concern is that the schools are not reporting. We send the forms

out to the schools and tell them that if students withdraw to send the forms

back to us. Now if we do not get them back we assume that there are no

withdrawals in the institution. They would not report to us students who

withdrew unless they had a student loan, so some of their withdrawals could be

students without the loan.

MR. CHAIRMAN: How many institutions are covered by

the Student Aid Programme?

MR. SNELGROVE: In the Province?

MR. CHAIRMAN: Yes.

MR. SNELGROVE: All the post-secondary

institutions, I think all the community colleges, all campuses at the

university, and six or seven private training schools, as well as the schools of

nursing.

MR. CHAIRMAN: So really a lot of your decisions

would depend upon this interchange of information, and you can understand that a

lot of it would be late or not coming.

MR. GOVER: Just to pick up on that point as well,

I can appreciate the Auditor General's concern on that particular issue from an

audit point of view, and I am glad to see that perhaps steps are being taken to

correct it. The last time, just from a practical point of view, shows what

problems this causes in the form of overpayments.

The last time the committee met we were provided with

a document from Robert Smart who indicated that the average number - the

document was dated 89-09-01 - that the average number of student aid

overpayments in one year would be about fifty. The average amount of these

overpayments annually is about $40,000 to $45,000, and the total amount of

overpayments for all students is about $300,000. On average the number of

students who apply for student aid is about 14,000 applications. Would those

figures be approximately right?

MR. SNELGROVE: The fifty overpayments he is

talking about would be new accounts that we put in the system each year, it is

not fifty students who are overpaid. We recovered, I think, last year somewhat

over $300,000 of overpayment from the deferred bursary fund. These fifty

students are students where there is no deferred bursary amount for us to

recover from, and then we have to set up a new account. There could be as many

as several hundred students who have changed courses or have withdrawn or gone

to part-time which would cause an overpayment. We can do a recovery from the

deferred bursary fund if there is any money in the fund, if we have an account

on the student.

MR. GOVER: It seems that you take statistically.

There are approximately on average 14,000 applications accepted for student aid

every year, and of those 14,000 applications what number result in overpayment,

and what number of those would be uncollectible? Do you have any idea of that?

MR. SNELGROVE: It is difficult to say what number.

I would say maybe 600 or 700 a year would have some sort of overpayment through

withdrawal or switch programmes where we would have to do recovery.

MR. GOVER: That would require an adjustment.

MR. SNELGROVE: Yes, these are adjusted

applications.

MR. MCCORMICK: You would have to make a

distinction, Mr. Chairman, as to whether you are talking an overpayment because

we would not classify an overpayment if it is one that requires adjustment

because they changed their program or the length of the program was shorter or

longer. In the main our concern with regard to overpayment rests with the

provincial grant, because the other is loan which is a federal collective

responsibility. But the fifty that Mr. Smart is referring to, on average we

would have fifty new accounts that would come up into this category. So the

others would be part, and there could be anywhere from 400 to 600 that require

adjustments in which we would pick up, but they would be people who are already

in the system. On average, of the new people coming into the system, we find out

that it would be on an average of fifty new ones that would result in that

category.

MR. GOVER: So basically, on a roll over basis

there are 14,000 applications a year and out of that batch of 14,000

applications at some point down the road 50 of those are going to result in a

problem?

MR. MCCORMICK: It could be, on average, yes.

MR. GOVER: On average. Which is not even 1 per

cent. I think, I worked it out today, it is .3 per cent. On 14,000 applications,

1 per cent would be 140, so it is approximately .33 of a per cent of the

students accepted that eventually result in an overpayment to the Province.

MR. MCCORMICK: Provincial grant, yes. So it will

end up in accounts receivable.

MR. GOVER: Yes. So while it is important from an

audit point of view, and I agree with what the Auditor General says, as a

practical point of view the system does seem to work accurately 99.5 per cent of

the time. Would that be a fair statement?

MR. MCCORMICK: Yes. You are discounting the ones

that we can pick up there on deferred (inaudible) which would be of interest to

the Auditor General as well. Yes, I agree that we would not see that as a major

problem, and I did not mention it in my opening statement because we would not

see that as a major problem. One student overpayment is a problem, but I mean it

is not a major problem in the numbers that you noted. I think we are satisfied

that the system works very well in that regard. Until we have everyone covered,

we will have to work on it.

MR. CHAIRMAN: Just out of curiosity then on the

same thing, the same ratio certainly would not apply to the loan program I

presume. It would be much more difficult to collect.

MR. MCCORMICK: That would be held by the Federal

Data Bank. And I would suspect that it may be a little different than the

provincial one, because they are (Inaudible). Do you have any idea on that?

MR. CHAIRMAN: Mr. Snelgrove.

MR. N. SNELGROVE: Well the Federal Auditor General

reported this year that one out of every six students default under student

loans. So that will be approximately 16 per cent?

MR. GOVER: Mr. Chairman, I just have one final

question.

MR. CHAIRMAN: Mr. Gover.

MR. GOVER: What is the procedure the department

follows when a student is found to have an overpayment? What procedure does the

department follow to collect that overpayment?

MR. MCCORMICK: Mr. Snelgrove can address that.

MR. SNELGROVE: When we determine that an

overpayment exists we revert first to the deferred bursary account of the

student. If we owe a student some money from previous years we would do the

recovery from the deferred bursary account. If there is no deferred bursary

account we would notify the student of the amount of the overpayment and what

caused the overpayment, and would ask for immediate repayment. If the payment is

not made within a relatively short period of time there is an accounts

receivable set up, and then on a quarterly basis we send a statement to the

student advising him or her of the amount and try to collect it that way. We are

not always successful in collecting it.

MR. GOVER: Do you have any idea what the average

overpayment is in terms of dollars?

MR. SNELGROVE: It is approximately $300,000 out of

the Province for about 800 accounts.

There are 734 accounts which comes to $313,000.

MR. GOVER: Seven hundred and thirty-four account,

$313,000.

MR. SNELGROVE: And this dates back to the

mid-1970s.

MR. MCCORMICK: This is accumulative.

MR. GOVER: So that is?

MR. SNELGROVE: About $450, I would say

approximately.

MR. GOVER: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: Just briefly, Mr. Chairman, I have a

few questions I would like to address to Mr. McCormick. I guess, when you look

at the overall issue of what is taking place today in terms of the structure of

student aid, I think for those of us who have been in political life - I know

for the eight years that I have been around, apart from Crown Lands, Student Aid

has been the other thing that has consumed most of my time as a district person,

and I believe we all fall into that same category.

Every year it seems to be getting increasingly

difficult for students to attend post-secondary institutions. As I understand it

again this year, there has been an increase in the cost of tuition in most

post-secondary institutions. While there has been some modification to the grant

structure, I am wondering if your policy or if the situation affecting student

aid is eliminating any people from attending university, if you have any

understanding or any information that leads you to believe or understand that

people are unable to attend post-secondary institutions because of the clause in

the Student Aid Programme. I am not just talking about this year, I am talking

about in the past.

MR. MCCORMICK: I cannot think of any situation

where a student has approached our Department and said that they just cannot go

to a post-secondary institution because the financing is not available. I have

not had that experience. We have had situations where students feel they do not

have enough money, they are there and they do not have enough money. I think

that is because they initially thought that the Student Aid Programme would

cover all their costs, and not be a supplemental aid. There are areas where, in

the past, we did find out that people were having difficulty, and I identified

them in my opening statement. We looked at single parents, who certainly had a

problem, so we tried to increase the provincial side. We could not do anything

on the federal side. So I think there are still categories of students who

probably need access to more than the normal amount of allocation.

I cannot say that the people are not eligible. There

is a changing environment, I guess, where there are students who, as they get

older, figure they should be able to be dependent versus independent and these

kinds of things, where parental contributions can be arguable. We have been in

negotiations with the Federal Government now for a number of years on the fact

that our administrative criteria for the Canada Student Loan Programme has not

been updated since 1984. That presents problems for some students, but I really

would not be able to say that there are students not getting to post-secondary

studies. There may be students who think they are incurring more debt than they

should, but I have no experience of people not getting a post-secondary

education.

MR. TOBIN: In terms of the modification, as you

said, and the improvements that you made to the Student Aid Division, does that

offset the increase that has been allocated in tuition fees?

MR. MCCORMICK: The tuition fees are automatically

included as an assessed cost. So, any increases in tuition fees would have no

effect on the eligibility of students. That would automatically be allowed as a

cost.

MR. SNELGROVE: We will pick up any increases.

MR. MCCORMICK: We will pick up any increases and

allow that as an acceptable cost. So, they will get financing to counterbalance

that.

MR. TOBIN: Does your Department have any figures

on how much it would cost a student from outside of St. John's to come in and

attend university, say for a semester.

MR. SNELGROVE: Approximately $3,000 a semester.

MR. TOBIN: Three thousand a semester?

MR. SNELGROVE: About $6,000 for the year.

MR. TOBIN: About $6,000 a year for two semesters?

MR. MCCORMICK: Yes. That is based on using

resident fees.

MR. TOBIN: So, for someone to get a degree today

in - I was going to say law, but I will not do that, they make too much money

afterwards - commerce, like the Auditor General and his people probably have,

you are looking at an expenditure of somewhere in the area -

AN HON. MEMBER: Five years.

MR. TOBIN: - of close to $40,000?

MR. MCCORMICK: Yes. It will be an investment in

their future.

MR. CHAIRMAN: Mr. Hewlett.

MR. HEWLETT: Thank you, Mr. Chairman.

I must say, I am starting to feel somewhat dated, and

this grey hair is giving me away, but I did a five-year programme at Memorial

and got two degrees, and I think I came from a relatively poor family, and I

racked up a total of, I think, $5,000 in student aid loans. I think I got the

maximum grant just about every year. Inflation is certainly at work here.

MR. TOBIN: You're lucky to be out.

MR. HEWLETT: Yes. It is the first time I have felt

lucky to be old.

When the House of Assembly was in session earlier this

year, I had, I guess, an exchange of point of view with the hon. Minister of

Education with regard to the Student Aid Programme, specifically with regard to

the

definitions of full-time student and part-time student and, I guess, the

introduction of a computer system that can more readily identify on a timely

basis, although according to the Auditor General, not timely enough, but can

identify on a more timely basis the status of a student. I was given to

understand by people I have talked to and by students, that in previous years if

you took three or more courses you were deemed to be a full-time student and

therefore qualified for student aid as if you were doing five courses. But in

the last go around it was changed so that the grants and the loans that you got

matched the exact number of courses you did. So this sort of threshold limit of

three courses to be full-time appeared to have changed.

Now the Minister of Education sort of disputed that in

our debates in the Assembly and indicated that no, computerization is now

allowing us to do what the Public Accounts Committee has always said we should

do, and that is exactly tailor the amount of the assistance to the number of

courses. He disputed the fact that there was a policy change. Was there a policy

change or was it a matter now of technology allowing you to implement a policy

that was, for want of a better phrase, un-implementable before?

MR. SNELGROVE: Well it was not un-implementable

before. It was done more or less on a manual basis and it was done over a period

of time. With our new computer system we could identify the people doing three

courses and adjust the applications in a couple of days. What we really did,

with students who are doing three courses they just pay for three courses only,

and we allowed them the full tuition that would cover five. So we had to do an

adjustment there, but the adjustments were done fairly quickly. I think the

problem was not doing the adjustments, it was the timing of it. The adjustments

were done just shortly before the provincial grant cheques were issued. We did

not have time to send a letter to the students so we drafted up a notice and

attached it to each cheque. I think it was done within two or three days before

MR. HEWLETT: You did the deductions from their

upcoming share.

MR. SNELGROVE: Yes, so we would not cause anymore

overpayments. I think it was the timing of it rather than the doing it. It was

just a matter of efficiency.

MR. HEWLETT: So you have a system that is more

readily attuned to doing that. But the question that I found difficult to get an

answer on at the time was the whole notion of three or more being full-time as a

matter of policy, or were we skirting the rules and regulations in prior years

of the student aid system, or was it a matter of it being cumbersome and

difficult to keep a timely tab on who was doing more than three courses or less

than three courses? Was there a policy change? I could never get an answer.

MR. MCCORMICK: I think I would add to Mr.

Snelgrove's answer, that we are dealing with separate items here. One is that

students are assessed and are allowed expenditures that are educationally

related in assessing what their financial assistance will be. Therefore, any

expenditures that they incur are claimable. The expenditure they incur for

tuition is fully reclaimable, whatever that is. The tuition for a full-time

student at one time used to be a set amount, now it is based on courses. So in

implementing the amount of money that the students are eligible to receive, we

simply add up what their expenditures are. So the implementation is probably a

little more efficient, but the policy is the same. If the tuition fees are

increased, they are automatically allowed to claim whatever out-of-pocket

expenses they have to make towards that, and they are allowed to use that to

assess the amount they are eligible for. Therefore, what the Student Aid

Division has done is only implemented the changes of any tuition fees that may

be, in some places, I suppose, it gets up to a limit, I think it is four courses

and the student pays the same amount as if they were taking five. So it works

out sometimes to the student's advantage, and other times to their disadvantage.

In the case of three courses it does not add up to the full amount, so some of

them could not be allowed to implement a cost they did not incur. That is

basically all we did.

MR. HEWLETT: One other question, Mr. Chairman.

MR. SNELGROVE: May I take this one step further?

MR. CHAIRMAN: Yes.

MR. SNELGROVE: At the time we are processing

applications we cannot tell how many courses students will do. They are not even

registered themselves. We are processing now for September so we assume they are

going to do the full course load. So, we will have to come back and do an

adjustment after, if they do less than, what you would call a full course load

of five courses.

MR. HEWLETT: One other question. I was given to

understand that the notion of part-time, full-time, three or more courses being

full-time, probably grew out of the Federal Student Loan Programme. If there is

any statutory or regulatory recognition of that categorization of people, full

and part-time, it came from the Federal Programme of Canada Student Loans rather

than provincially, Is that a fair comment?

MR. SNELGROVE: Exactly. The Canada Student Loans

administrative criteria would define full-time for student aid purposes at 60

per cent of a normal full-course load - a full course load at Memorial

University being five courses while 60 per cent is three. So, with three courses

you could be considered for student aid as a full-time student.

MR. HEWLETT: With regard to a loan you mean?

MR. SNELGROVE: Well, a loan and grant. Our

provincial student aid programme is the integration of Provincial and Canada

student loan. We use the Canada Student Loan administrative criteria as a base

for determining eligibility.

MR. HEWLETT: So, the basis for your making

deductions after you find out a student's status is based on the expense claim

section presumably of the student aid application rather than an upfront

determination of full or part-time.

MR. SNELGROVE: That is right.

MR. HEWLETT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Ramsay.

MR. RAMSAY: Thank you, Mr. Chairman.

With regard to MHAs dealing with student aid, and I

know that you did mention that the criteria courses are a little more, for want

of a better word, I suppose, a liberal application of the Federal guidelines

that are there now, insofar as the qualifying of students. I note the Auditor

General has mentioned that it should be a supplement to financial resources of

the parents or the student. I find that in cases where students are not fully

aware they are possibly eligible, even though the solid criteria would say they

are not, and go through a lot of cases where we provide information on the

financial background of the parents and thus have their rejection maybe adjusted

to a certain amount of acceptance depending upon what portion would be allowed.

I found that to be a bit difficult, I guess, because there was nothing ever in

writing, it was always as was suggested by someone at student aid, 'Well tell

them to do this and we will provide a form for you to do it.' It was rarely

suggested to the student but more often with the prodding of an MHA you would

get this information and assist them in arranging their appeal, I suppose, would

be the right case.

I just wonder, with relation to what the Auditor

General has stated about that, how does that apply, this situation where

students can sometimes, I guess, apply on the basis of net income of their

family once legitimate expenses have been deducted from their income, versus the

application of say a T-4 or an income tax return that is often assessed?

MR. SNELGROVE: An application is processed based

on the parents earning power for the previous tax year. In some cases the parent

contribution assessed is so high that parents just cannot afford to make the

contribution and we go through an appeals process where we review the parents

income and their expenditures to determine if there is any flexibility in

providing assistance. We have not documented the appeals process in our

brochures anywhere but we are finding it difficult now to get students to read

what we have already written. So, by putting more information there they may not

read it anyhow.

The thing is what we do is send out a student

contribution appeal form with the notification when it goes out, and we send a

notification saying this is what your parents are expected to contribute. In the

brochure we have a

section on appeals which goes into some detail about the

appeal, saying that if students are not satisfied with the results of the

process they have the right to appeal. So we go back through the parent

contribution or the parents income and family size and extenuating

circumstances, hardship and things like that, and try to build a bit of humanity

and decency in it by looking to see if there is some way that we could assist

the student.

MR. RAMSAY: That would be accommodated, I suppose,

on the provincial aspects of it as opposed to -

MR. SNELGROVE: Well, it applies to both because

the Canada Student Loans administrative criteria says that there would be an

appeals mechanism but they have not defined the mechanism. The mechanism is left

to the provincial discretion.

MR. RAMSAY: Okay. One other one, Mr. Chairman,

concerning the private institutions in the Province, although they seem to be

assisted somewhat by federal training monies and also by other assistance

through development agencies or whatever, do they add an additional burden - I

would think they do - to the Student Aid Programme, although some may question

it being a burden or an investment based on the capabilities of landing a job by

the individuals who are trained in these institutions?

Secondly, what amount of the student aid budget, of

say taxpayers' dollars provincially and even of federal loan dollars, would be

provided to students going to private institutions versus the publicly funded

institutions here in the Province?

MR. SNELGROVE: I wouldn't say that private

training schools are a burden. They provide an educational service for the

people. For the 1991 loan year which ends now the end of July, we awarded

$3,270,000 in Canada Student Loans for students in private training schools, and

approximately $2 million in provincial grants.

MR. RAMSAY: Two million in -

MR. SNELGROVE: Provincial grants.

MR. MCCORMICK: I guess I could add to that. Most

students who attend private training institutions become eligible for the

maximum amount, because the fees are relatively high.

MR. RAMSAY: So, in turn, the total then of $5.2

million of the total budget is $15.6 million, this year's (inaudible)

MR. SNELGROVE: No, no! It is $2 million. That

would be the provincial budget. It would be approximately $2 million.

MR. RAMSAY: $2 million of the $15 million.

MR. SNELGROVE: Our budget this year, loans and

grants for 1991, is $49 million.

MR. MCCORMICK: So, it is $5 million out of $49

million, then.

MR. SNELGROVE: It is $5 million out of $49

million, 10 per cent. Ten per cent is going towards private institutions.

MR. MCCORMICK: For students attending.

MR. SNELGROVE: Yes. Who in turn pay it to the

private institutions?

MR. RAMSAY: Okay. Well, that is all I have right

now.

Just one thing for the Department, for the Auditor

General, I note in the first paragraph of your opening statement, you state in

the last sentence, `However, the intent of this programme was to supplement

rather than replace the financial resources of the parents and/or the students.'

That part of the statement sort of leaves me hanging because I was looking for -

I know it relates to a lot of the things you have identified, but it does not

specifically state that this, in effect, is allowing students to get into the

Student Aid Programme, not necessarily as a supplement only but as that would

suggest, as a fully funded thing. I was just wondering where that was going,

that part of the statement.

MR. HART: If I could answer that, that statement

is basically taken right from the booklet issued by the Newfoundland Student Aid

Programme. One of the objectives of the programme is intended to supplement

rather than replace the financial resources of the parents and/or the students.

Now, from our perspective we have somewhat of a concern, from an audit point of

view again and realizing that practicality does not always enable an

organization to do things the way we would like to see it done, one of the

situations is that anyone applying for student aid is required to indicate the

income of their guardians, if that is applicable in their particular case. We

could not satisfy ourselves that there was any independent verification of the

reported income levels, which would, in the end, determine how much student aid

they were eligible for.

So, that is a concern, but to administer something

like that obviously would impose great hardships in resource requirements at the

Department level. There was no verification, for example, back to the income tax

return or anything of that nature. So, if you, as a parent, applied on behalf of

your son or daughter, I guess there would be the ability to not disclose your

income fully, because there would be no systematic follow up of that income

reported. So, I guess that is what it is alluding to.

MR. RAMSAY: Which you would think allow some

people to, if they were so inclined, to mislead or use misleading information to

allow the full granting, and you know people with high incomes still managing to

get their students into the student aid program.

MR. HART: I think the potential is there, but I do

not think it is, from a personal perspective, I do not think it is a major

problem.

MR. MCCORMICK: Mr. Chairman, I must interject.

MR. CHAIRMAN: Mr. McCormick.

MR. MCCORMICK: The student aid people do demand

income tax verification and have an arrangement with Revenue Canada to verify

that. So there is a process in place to get that information and I guess we do

it - there is a disclaimer on the form that allows us to do that.

I think from our perspective in reviewing what was

actually happening the process may be in place, but it is not applied

consistently at least.

MR. DROVER: Mr. Chairman, if I might add.

MR. CHAIRMAN: Mr. Drover.

MR. DROVER: What is accepted is a working copy of

the tax return. And what Chris is pointing out is that the information that is

contained there has not been verified by alternate means or anything of that

nature. While the system is in place to, I guess, have support at the Revenue

Canada level, and the individual who applies does sign a release form, we could

not find evidence within the system at the present time indicating that these

controls had taken place, when in fact they may. But we could not find

verification procedures, evidence of such procedures taking place. The Federal

Government may be able to, I guess, verify the procedures and that, but we could

not find that was being done in our local student aid thing. We could not find

evidence. Now they may be doing it in an informal manner, but the process that

is acceptable is a working copy of a tax return. I guess as Chris pointed out

you are really accepting the word of the individual who sits down and does that

process, and that is all we are saying from a strict audit point of view. As

auditors we are pretty well sticklers on detailed verification. In other words

if you say something let us verify it outside your (inaudible).

MR. CHAIRMAN: Mr. Snelgrove.

MR. SNELGROVE: Mr. Chairman, we do accept working

copies of the income tax returns. We will not accept an application from any

dependent student unless there is an income tax return attached to it or if the

parents did not file income tax returns a written statement of income. With

regards to written copies we have identified a long list of people that need to

be verified. The verification was not done for the last year or so because our

verification officer was temporary assigned as the operations manager. Since

January of this year that person is gone back to his job and verification is

taking place.

AN HON. MEMBER: (Inaudible).

MR. SNELGROVE: Yes, we can do the verification. We

can go back to six years to do a verification. So we have identified people with

working copies and we are in the process of doing that.

MR. CHAIRMAN: Even though a number of complaints

that I get as an individual member about student aid it is gone down since

computerization, I think that has taken a lot of problems off the shoulders of

the MHAs in particular. But when I do get them most of them are concerned about

the amount of money that the parents are expected to put in. You know, a lot of

them say my parents are expected to contribute X number of hundreds of dollars,

and they had a bad year. Because it is basically based upon the income tax

return. If I am going to university in September and I have my application in

now which is being considered by the Student Aid Division, and if my parents

income tax return, working copy or whatever, is in from last year when there was

a good caplin fishery and my father made, say, $50,000, my mother worked twenty

weeks on the plant and we had a good year. This year there are no caplin, the

plant is not open, and my parents can't contribute anything, how do you

rationalize the change? You know, if we are both working at the Department of

Education or whatever, we know we have a steady check, and we did not get an

increase, so there is no change, right. But certainly in rural Newfoundland

where the income of a family could change, not only change but change

drastically, be almost eliminated in a short time from year to year, how do you

make that adjustment or do you depend entirely on the appeal process? And even

in an appeal, how do you verify the fact that they made nothing when it is not

income tax time?

MR. SNELGROVE: In the initial process we have to

take your income tax return for last year to satisfy the requirements against

the Student loans. We would look at it in the appeals process; we look at those

cases on an individual basis; we rely on statements from parents, written

statements to confirm that their income is substantially lower this year.

Where we have the option to defer parental

contribution if we wish, we could process the appeal based on the new financial

information you have given us, providing that the parents would sign a document

to provide income tax returns later in the year when they are filed and promise

to repay any overpayment. That is an option we have, it is something we have

come up with ourselves, it is a deferred parental contribution. You know, we

just cannot leave the student hanging in September.

MR. CHAIRMAN: So you can re-adjust and the student

has access? I think we will take a coffee break for five minutes or so and come

back and conclude.

RECESS

MR. CHAIRMAN: Order, please!

Shall we have the motion to adopt the minutes?

On motion, Minutes as circulated, adopted.

MR. CHAIRMAN: I should mention that our next set

of hearings will be the 30th and 31st and probably the 1st pending and the

witnesses at the time will be the Executive Officers I guess of the DECs,

Denominational Education Committees and we will be talking about accountability

in relation to school construction in particular and we also hope to have school

trustees attending during that session. Get your tickets early, it should be an

informative session.

Okay, that should be sufficient and we will pick up

from there. Does anybody, either the Auditor General or the witnesses during the

last round of discussions, was there anything that you wanted to clarify or

comment on?

Yes, Mr. Tobin?

MR. TOBIN: Mr. Chairman, (inaudible) will have to

come back this afternoon?

MR. CHAIRMAN: I think we have basically a few

points that were raised and that is about it. Does anybody have any questions?

Mr. Ramsay?

MR. RAMSAY: I have (inaudible).

MR. CHAIRMAN: Mr. Hewlett, okay.

MR. HEWLETT: Part of the student aid process: the

student, if my memory serves me correctly, is encouraged obviously to find

summer jobs between semesters and so on, but is ordinarily deemed to have worked

a certain amount, is that correct, No. 1. And No. 2, given the reality of the

current economy out there now, someone is deemed to have earned a certain

student income, is this sort of increasing the number of appeals that the

student aid division would get, because obviously summer jobs for the students

right now are becoming increasingly hard to find?

MR. SNELGROVE: When we process applications, most

students are not aware, may not have jobs, some would have to have them; they

are not really sure of how much money they make during the summer, so we assume

that all students work at the minimum wage.

We assess the student contribution based on the

minimum wage earnings, when we send out the notification we also send them a

student earnings verification form, where they can report their earnings and we

would do an automatic adjustment.

I am not really sure you could call it an appeal, it

is more of an adjustment to your application based on your true earnings.

MR. CHAIRMAN: It is done up front with the

application itself, is it?

MR. SNELGROVE: No, no. It is done after the fact;

up front we assume the student made the minimum wage.

MR. HEWLETT: What kind of a delay in processing

would that incur for a student who, you know, (inaudible).

MR. SNELGROVE: It really does not cause a delay in

processing. The application is processed during the summertime. The adjustment,

I guess we roll them over about every three weeks after we get the appeals done.

Most of them are done in the first semester.

MR. HEWLETT: You mentioned earlier one other

thing, that contributions vis--vis grants, to single parents and what not,

there have been some increases in allowance for child care and so on.

During the last flurry of publicity with regard to the

changes in implementation of the aid programme with the deductions and the

grants, I had instances of getting some calls from single mothers who at that

particular time had sort of gotten caught in the removal of their maintenance

allowance from allowable social assistance plus being deemed as a part-time

student and having certain tuition deductions taken out and this put them, by

accident of timing, I suppose, in a rather unfortunate position very quickly.

The increases that you mentioned with regard to single parents, would that

accommodate the shortfalls there do you think?

MR. MCCORMICK: Mr. Chairman, I will ask Mr.

Snelgrove to give the details. The adjustments that we made are applicable

strictly under the Student Aid Programme and through the allowances that we

permit the student to be assessed for. The maintenance income of parents who are

on social assistance is an issue that is being dealt with through social

services, and there is some question of what people like single parents are

being assessed as resources. In terms of the Student Aid Programme we would only

apply what we consider educational generated cost, and as referred to earlier,

this is a supplement programme to a student's cost, so we give them the benefit

of any cost that are deemed to be incurred as a result of having to pursue

education studies. And what would happen in that case is that if they have to

get day care, for example, by being out of the home to pursue studies, then, of

course, they get allowed for what we give them. But the question of how much

they can get through working with their social worker on social assistance is, I

think, being addressed by a committee now. Maybe Norm might be able to elaborate

on that, so the two are separate for us at the moment.

MR. CHAIRMAN: Mr. Snelgrove.

MR. SNELGROVE: The increase in the Provincial

grant from $1,250 to $1,600 really was designed to offset some of the needs that

were not met. Students, when their applications are processed, could have a

certain level of need but because of ceilings on the loan and on the grant,

$1,000 a semester saving, and then the $105 from the Provincial grant would

leave you with a need that was not met. Increasing it from $1,250 to $1,600 was

to reduce that need that was not met.

MR. HEWLETT: In your reduction, I guess, in your

income now as a social services recipient would show up in your system as a

reduction in income on the person's income as stated on the form. I presume that

is where is that would show up.

MR. SNELGROVE: In a lot of cases students will

apply to us for assistance before they would go to social services or we would

not see any social services income or social assistance income.

MR. HEWLETT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Ramsay.

MR. RAMSAY: Yes, I have just one question. I will

mention a specific situation that I ended up in, and it brings to light

something along the lines of what the Auditor General is speaking about as far

as checking into, and, again, it is something that may be impossible to catch,

but I would wonder about

definitions of certain monies that students have made

available to them. I had two students with very similar academic backgrounds,

and very similar social backgrounds as far as their income situation with their

parents. They were not very well off, and both having applied, both received

something called a fellowship. One in placing this fellowship amount on their

application mistakenly or otherwise called it a scholarship and it was not

determined to be allowable income or whatever and that individual student

received the full amount of a student aid grant, the whole works. The other

student, like I say also from a relatively poor background financially, called

hers a fellowship and it was considered to be income because it was a fellowship

and then even though she knew her friend had the same thing, yet they were both

treated differently in through the process and even after an appeal, it was an

unsuccessful appeal, we had to go and try to get some money for her through

short term organizations or whatever to enable her to continue, in which we were

successful and she has done quite well and actually garnished a scholarship at

the Institute that she attended. But it made me wonder about the catching of

such a thing as a fellowship being called a scholarship and these sorts of

different points that are possibly one in a hundred, even less than that, that

may in fact effect the system but cause hardship for one and not necessarily for

the other. She was adamant that it not be mentioned that her friend had this

scholarship written in because that then might jeopardize her friends having

garnished the full amount.

Anyway, I just wondered about that situation as far as

Mr. Snelgrove goes and the kinds of checks and balances that are in the system

to prevent that kind of situation from happening and hardship on one and not on

another.

MR. SNELGROVE: Under our policy, fellowships and

bursaries are taken where they are awarded based on need, they are taken in

their entirety as a resource. For a scholarship, under the Canada Student Loan

criteria there is an exemption of $600. So the first $600 scholarship is not

counted anyhow. If the scholarship was $1,000 we would only consider $400 as a

resource. If you had a fellowship we would apply the whole fellowship against

your (inaudible).

MR. RAMSAY: So, in calling a fellowship a

scholarship then that certainly does afford a much improved situation for the

person that would call a fellowship a scholarship.

MR. SNELGROVE: Well, a scholarship is a $600

advantage.

MR. MCCORMICK: The rationale for that is based on

that in general terms bursaries are given on some basis of need, student aid

allowance is based on financial need. So, both of them are considered resources

that are being provided individually. In terms of scholarships, these are

rewards for academic achievement so there is a distinction made between the two

and that is consistent with most of the Canada Student Loan policy across the

country. Granted there is no way to guarantee that people will identify them

under these categories.

MR. RAMSAY: They could accidentally call it a

scholarship and therefore be afforded better opportunity (inaudible).

MR. MCCORMICK: In the main we will know. There are

public awards lists from Institutions as to whether or not they are scholarships

or bursaries. We can find from the student affairs office of both institutions

whether or not these are based on need or academic achievement. But that is the

only way, we have found no system to enable us to determine whether people are

always telling us the truth yet.

MR. CHAIRMAN: I presume that the Student Aid

Division is like every other agency, there is always somebody who knows how to

beat the system.

A few points I would like to mention. Looking at the

concerns raised by the Auditor General, the reason why we are here I presume,

none of them are, as mentioned earlier, earth shattering in the sense of being

the type that would point a finger and say you fellows are completely out of

control or whatever, most of them are relatively minor but a lot of them are

checks and balances that would assure, certainly from an auditor's point of

view, that the system is up to par, but a lot of them are fairly simple things:

the reconciliation procedures, cash not deposited on a timely basis, cheques not

stamped properly, computer reports with some errors generated, supervisory

review procedures not adequate. Some of these things listed would lead one to

think that there might be a shortage of personnel and that leads to the question

of whether or not you, like everyone else, were hit by the recent cutbacks and

if so what effect it is having on the delivery of your programs?

MR. MCCORMICK: Mr. Chairman, on the Student Aid

Division, when it made the major change to move from a manual system to a

computerized system it was envisaged to be able to have efficiencies in terms of

being able to produce a little more with a little less so we have attempted to

apply that and we do have, I guess, this year two less positions in the Student

Aid Division. Whether or not they are part of that efficiency or part of

something that would have taken place whether or not the efficiencies were

brought in is a matter of

interpretation, I guess.

MR. CHAIRMAN: I presume the answer will come. If

the checks and balances were not done the computers will not do them on their

own so I presume the next report will determine whether or not you are able to

handle them and then we can determine whether or not the loss of two positions

will have an effect.

MR. MCCORMICK: We would certainly want to see if

we can address them within a complement and if we cannot we will certainly

recommend to Government that we do it with the necessary resources that we need.

MR. CHAIRMAN: I suppose this is to some degree

hypothetical because decisions are always changed, but concerns about the amount

of funding that will be coming from the federal side over the next few years for

health and education, can you see perhaps severe problems in relation to the

delivery of your program or are we going to be able to maintain enough dollars

there to make sure that students are not deprived of the necessary loans or

grants coming from the Province? Do you have any indication that there will be a

drastic cut in that area?

MR. MCCORMICK: I can only say, Mr. Chairman, that

we are at the moment collectively, the provinces through the Ministers of

Education, are discussing with the Federal Government, specifically the

Secretary of State, the Educational branch, are doing a total review of the

Canada Student Aid Program. They have just released to us a copy of a consultant

report that they had done on the system. I guess from my recent discussions it

would appear that they wish to take some action to streamline the system and

bring about anything they can do to make the system more effective. Our

understanding is that there is not going to be any increased amount of money in

terms of access to the students, but if there is to be any additions or

increases to the caps on the weekly allowance, or on the administrative

criteria, it will have to be found within the money that exists there at the

moment, which means they have to find some more efficiencies and there will be

things where they have to save the money in other parts of the envelop in order

to make any changes, so we are operating under the assumption that if there are

changes it will be within the amounts that are there.

MR. CHAIRMAN: We have in the Province a rapidly

declining school enrolment at the primary, elementary and secondary levels. So

far it is an advantage, I suppose, to the Province to see that many more of our

students are staying in school and going onto post-secondary. Has there been any

indication of a levelling off of the amount entering post-secondary

institutions, or is it still fairly rapidly increasing with the new private

colleges and the other post-secondary institutions this year?

MR. MCCORMICK: I will ask Mr. Snelgrove to address

that, whether or not the increase this year was any different than last year?

MR. SNELGROVE: There is no significant increase in

applications, neither have we seen much of a decrease. It is pretty well level.

There are somewhere between 14,000 or 15,000 applications a year. It has been

like that for the last two to three years.

MR. CHAIRMAN: So eventually we are going to get to

the point where our post-secondary registration is going to start dropping, too,

undoubtedly?

MR. SNELGROVE: I guess (inaudible).

MR. CHAIRMAN: No. I guess I am trying to point out

that if we can hold the amount of money that the Province is putting in and even

what we are getting from the Federal Government, well then our students will not

be any worse off. The worst of it is if they start saying, `If you are students

now you need fewer dollars,' and start going backwards. Because, without the

Student Aid Programme very few of our students would be able to attend

post-secondary institutions right now. It would be a shame to see them deprived

because of the cost.

MR. RAMSAY: I have one question, Mr. Chairman.

MR. CHAIRMAN: Mr. Ramsay.

MR. RAMSAY: In a lot of our groups, as you just

said, Mr. Chairman, is there a figure, as far as quantity of students that avail

of student aid and provincial grant funding, who graduate. Is there a percentage

rate? Say, do 70 per cent of people who avail of student aid graduate, do 50 per

cent, or 30 per cent? Is there some quantification of that?

MR. CHAIRMAN: Mr. McCormick.

MR. MCCORMICK: Mr. Chairman, I am not sure if we

have that. In a study that was recently completed there was a certain amount of

data generated in terms of participation. I am not sure if we have the

information regarding the number of students that complete, because most of it

is geared around a maximum of twenty semesters per student who can access

student aid. Because those might be students who are doing three credits a year,

or could be doing six credits a year, I am not sure if we can say they have

completed their degree or not. The only way we could indicate that is whether or

not they started to make payments on their loans after six months, in which case

they have stopped their studies. The completions, I do not think were in that

data. If the member is interesting in following up, we could have the Division

look at the report that was done to see if we have that data. I do not recall

it.

MR. RAMSAY: Yes. Perhaps you could send it on the

Committee and we will distribute it to the members, just as a point of interest.

MR. MCCORMICK: Sure. We will check and see if we

have that data. The question is: What percentage of the students who are

receiving financial assistance under the Student Loans Programme are completing

their studies? Is that correct? Whether it is a degree or a diploma.

MR. RAMSAY: Yes. I am sure that might be

extrapolated from the average figures of those who complete and the average

number of students who might be utilizing student aid anyway.

MR. MCCORMICK: We might be able to get that

straight from the Canada Student Loan Branch of the Secretary of State. That

might be available. We will check that out.

MR. CHAIRMAN: One of the major problems, I guess,

faced by members of the committee and other MHAs in relation to loan repayment -

now, I know this is not your shop, it is on the federal side, but undoubtedly

you are involved. The first call is always to the Student Aid Division and

whatever. Where students are graduating, finishing, or leaving the institution

and have been out for the six months and are expected to start repayment, but

have not been able to find employment, what are the procedures there and what

are the regulations in relation to repayment?

MR. SNELGROVE: Students are required to repay

Canada Student Loans six months after graduation. The loans are interest free

while they are in full-time study and for six months thereafter. After the six

months, if they are still unemployed or have physical or mental disability, they

can go back to their bank and apply for interest relief. What that means is the

Federal Government will extend the loan payments for a period of up to eighteen

months in addition to the original six. They will allow the interest relief in

blocks of three months at a time. Every three months you would have to apply,

but you could extend your payments and your interest free period for an

additional eighteen months. But you have to go through your bank to -

AN HON. MEMBER: Is this a total of two years.

MR. SNELGROVE: Yes, twenty-four months of interest

relief.

MR. CHAIRMAN: Mr. Ramsay.

MR. RAMSAY: Under collection you talk about the

loans repayment, collection of, say, your accounts receivable. What methods do

you use? Do you ever go the long arm of the small claims court or is it just the

friendly notice that arrives quarterly and no other efforts made to reclaim it?

How does that work?

MR. SNELGROVE: It is just a friendly notice so

far. Last year we have gone through some recoveries through the teacher's

payroll for people in that system and we are presently looking at the public

service payroll to try and get some money back. If the accounts are not paid we

keep them in view all the time. If a student applies for assistance and they are

in the accounts receivable we just refuse the application until the account is

taken care of. But we have not gone to the small claims court yet, that is an

option.

MR. RAMSAY: I was just wondering, you mentioned

that was back in 1975 and I am thinking of seventeen years ago almost, some of

these must be very severely in arrears so there is no interest added, I would

say.

MR. SNELGROVE: There is no interest on it but we

are getting some of those back now so that people are coming back to school to

re-educate and as they are applying we provide the notice, and the notices are

in their file and we find that we are getting some payment back on it.

MR. CHAIRMAN: Mr. Snelgrove, how many people are

employed at the Student Aid Division?

MR. SNELGROVE: We have thirteen full-time

positions and four summer positions, seventeen positions in all, but we could do

with twenty.

MR. MCCORMICK: We are efficient we do with

seventeen what we normally do with twenty.

MR. GOVER: That is a perfect bureaucratic

statement, we can do it with seventeen but we need twenty.

AN HON. MEMBER: But we might be able to manage

with thirteen.

MR. CHAIRMAN: Mr. Hart do you have any concluding

comments, Sir?

MR. HART: No, I would just like to say that we are

not insensitive in the audit office we are very aware of the need of providing

student aid and that sort of benefit within the Province.

Our concerns are basically systematic in nature, I

guess, from an audit point of view. First of all, I guess, it starts with the

eligibility for receipt of student aid. Again, from an audit point of view we

have to look at the criteria in place to make sure that those are followed

religiously in determining first of all the eligibility for it and from that

point of view once the aid is granted the system has to be such that it would

properly record and document and make sure the proper reconciliation and

supervisory procedures are in place. I guess, the third element would involve

the collection of that once it is granted and once it is properly recorded. So,

we are looking at the past record of delinquent accounts and that sort of thing

and we believe that probably some improvements could be made in the area of the

collection of those accounts.

Again, as I mentioned earlier, it seems to be a common

problem but I think the Department has made great advances in going from their

manual system to a computerized system and they are

considering all of the recommendations that were made and addressing them. We

are hopeful that things will improve considerably.

MR. CHAIRMAN: Mr. McCormick.

MR. MCCORMICK: Mr. Chairman, I would just simply

add that in response to the Auditor General we will certainly make every effort

to clear up particularly the administrative items that probably can be fixed

relatively easily. We also have undertaken to address the two or three major

issues that have been identified. I certainly thank the Auditor General for the

acknowledgement that we have made an effort to comply and to be as cooperative

as we can. Certainly if the Accounts Committee feels that we need to do things

that we have not done, let us know and we will certainly make every effort to do

it.

MR. CHAIRMAN: Thank you very much and I am sure

the recommendations made will hopefully appease the Auditor General in relation

to his concerns and hopefully help you and your Division improve in your own

areas.

We certainly thank you for coming in and we also have

seen tremendous improvements in the area and wish you all the best in your new

position. Hopefully, we will see all kinds of wonderful things happening again

in the Department of Education.

That concludes our present set of hearings, we have

exhausted our witnesses.

Meeting adjourned.