September 14, 1993

PUBLIC ACCOUNTS

COMMITTEE

The committee met at 10:00 a.m. at the Colonial

Building.

MR. CHAIRMAN (Windsor): I will call the meeting

to order.

First of all, on behalf of the committee, I would

like to welcome everyone here to the meeting of the Public Accounts Committee.

Next, I will introduce the members of the committee. To my immediate right is

Mr. Danny Dumaresque, the Vice-Chair and MHA for Eagle River; Mr. Oliver

Langdon, MHA for Fortune - Hermitage; Mr. Melvin Penney, MHA for Lewisporte; Mr.

John Crane, MHA for Harbour Grace; Mr. Alvin Hewlett, MHA for Green Bay, and

absent so far is Mr. Glenn Tobin from Burin - Placentia West. They are changing

them all on us now, so we are not quite sure of whom we are anymore. Anyway, at

the moment he is Burin - Placentia West before Mr. Langdon swallows him - now,

you run away and give him half of yours, don't you? That is, Mr. Matthews gets

that. It is going to be interesting.

Anyway, I want to welcome all of you. I would like

to welcome the Auditor General, her staff and the witnesses. Perhaps, first, I

will ask the Auditor General if she would introduce the people with her this

morning.

MS. MARSHALL: Yes, to my immediate right is Mr.

William Drover who is an Audit Principal with the office and who was responsible

for the audit of the Avalon Consolidated School Board. To my immediate left is

Mr. George White, the Audit Manager responsible for the audit.

MR. CHAIRMAN: Thank you. I guess, Mr. Andrews,

you are leading the delegation from the Avalon Consolidated School Board. I

welcome you as Chairman of the Board and the people who are with you, your

officials or members of the board, as they may be. Would you like to introduce

the people with you this morning?

MR. ANDREWS: Surely, to my immediate right is

Mr. Bill Lee, the Superintendent of the Board; on my far left is Mr. Bob

Haliday, Chairman of our finance committee and to my immediate left is Mr. Bob

Johnston, our Business Administrator.

MR. CHAIRMAN: Thank you very much.

I will ask the Clerk now if he will swear in the

witnesses, and I think you have to swear in the Auditor General, as well,

because we are into a new session of the House of Assembly and legally,

therefore, you have not sworn, apparently.

SWEARING OF WITNESSES

Elizabeth Marshall (Auditor General)

William Drover

George White

Steven Andrews

William Lee

Robert Haliday

Robert Johnston

MR. CHAIRMAN: Thank you very much.

I also want to recognize Mr. Thompson and Mr.

Berniquez, representing the Department of Education, who are not here formally

as witnesses, but who, on every occasion that we have dealt with school boards

and matters of education, have been good enough to come along as observers and

to be available if, in fact, we need their advice and assistance anywhere

through. We haven't sworn them in. If we do need their advice or they wish to

speak, we will do so at that point in time, but we certainly welcome their

presence here this morning.

I should mention, at the Table here is Mr. Mark

Noseworthy, Research Assistant with the Public Accounts Committee, basically the

person who does all the research for us and keeps us straight as we go through.

And, of course, Mr. John Noel is the Clerk of the House of Assembly and is

acting as the Clerk of the committee here this morning.

For the benefit of the witnesses, let me say that we

are here to gather evidence, to listen to your opinions and your views on the

matters, in this case, which have been brought before us through the Auditor

General's report. The committee, of course, has a mandate to deal with basically

any matter referred to it by the House of Assembly or any matter that the

committee feels is appropriate for it to consider. Most of our discussions

surround items mentioned in the Auditor General's report. In this case we are

dealing with

Section 4.7 of the Auditor General's report relating to the Avalon

Consolidated School Board and the comments of the report of 1992, relating to

certain aspects of financial administration and controls within the board; we

are simply here to gather evidence, to hear your views and give you an

opportunity, I guess, as well to disagree with, if you wish, the comments of the

Auditor General or to explain your side as it relates to the Auditor General. We

are not here to pass judgement; we will, of course, report to the House of

Assembly and the House will take whatever action, if any, is appropriate. So

don't feel that you are on trial. We are here to gather evidence, to hear your

side and to give you an opportunity - as has happened before this committee on

several occasions, that the Crown agency that has been before us, has had an

opportunity to tell a story that they otherwise have not had an opportunity to

tell publicly, and it has been very much to the benefit of the Crown corporation

or agency involved to do that. So we welcome you and thank you for coming this

morning.

Now, perhaps we will start as we always do and ask the

Auditor General if she would like to make an opening statement by way of

introducing the topics to be discussed today.

MS. MARSHALL: Thank you, Mr. Chairman.

We commenced an audit of the Avalon Consolidated

School Board in March 1992. The audit was directed primarily to those systems

and transactions relating to financial management, fixed assets and purchasing.

Our 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 revenues and expenditures. The board was in compliance with the

Schools' Act and regulations; the policies and procedures were adequate relating

to the control of use and fixed assets and the purchasing system was adequate to

ensure monitoring and control of the purchase function and compliance with

statutory requirements.

As a result of the audit, we reported the following:

In the area of financial management, we generally

found that most aspects of financial management at the board were adequate.

However, we note that there are a number of areas relating to financial

management which need to be improved. For example, policies and procedures in

the financial management area are not clearly defined and communicated to staff.

Also, a number of weaknesses were noted in the budgeting and reporting process.

In the area of fixed assets, we reported that adequate

physical controls do not exist over fixed assets. A fixed asset ledger is not

maintained, annual physical counts are not performed, items are not tagged and

formalized policies and procedures do not exist.

With regard to purchasing in the school board,

policies and procedures to ensure adequate control over the acquisition of

materials are not clearly defined and communicated to staff. Several instances

of non-compliance with the Public Tender Act were also noted.

MR. CHAIRMAN: Thank you very much.

Mr. Andrews, would you or somebody on your behalf like

to make an opening statement on behalf of the board?

MR. ANDREWS: I think we will make a very brief

statement, basically saying that I think we are fairly pleased with the Auditor

General's report. As the second largest board on the Island, we obviously have

the potential for having all sorts of things brought up, but I don't think we

have any real problems with a number of the things that have been presented by

the Auditor General. A few of them, I think, are oversights and points that we

have already indicated we will take care of.

MR. CHAIRMAN: Thank you very much.

Before I start the questioning, I neglected to ask the

committee to review the Minutes of our meetings of June 18, 1993 and August 12,

1993. We have those Minutes before us. Are there any errors or omissions to the

Minutes, and if not, would somebody like to move adoption of those two sets of

Minutes?

On motion, Minutes of June 18, 1993 and August 12,

1993, adopted as circulated.

MR. CHAIRMAN: Perhaps, now, we will begin with the

questioning. Mr. Langdon, would you like to open up this morning?

MR. LANGDON: Okay. I have a couple of questions to

anyone, I guess, in the school board.

I looked at the tender evaluation and tender calls and

so on. I think it was noted by the Auditor General. On page 11, seven instances

were noted where a public tender was not called, the minister was not informed

and consequently, the House of Assembly was not informed of these explanations.

I see the product, I see the amount and I see the board's explanation. You have

glass repair there, for example, where, tender was not called. I don't know the

extenuating circumstances surrounding that, it might have been a storm, it might

have been where you had to go out and do it, but I look at probably within a

very short time you could have called, probably, Avalon Auto Glass Ltd., Speedy

Auto Glass, Apple Auto Glass, whatever, and had a tender with that one, so

probably you could explain that. And the same thing goes with the siding. I

don't know if it was a storm where you had some damage done to Bishop's College

and you had to get the contractor to do it, but these are very significant

amounts of money when it is public money, and obviously with the adequate

tenders not being called, it could have saved the school board, and ultimately,

the Province money.

Roofing is another one, and when you come down to Life

Safety Equipment, again a tender being called and there was no reason given for

that one, so I was wondering if probably somebody from the board could explain

why these things happened.

AN HON. MEMBER: Okay, I will ask Mr. Johnston if

he would give you the details on that. He is probably more equipped with the

detailed information.

AN HON. MEMBER: Just give me a moment until I go

through my file and get the exact details on that.

MR. CHAIRMAN: For the record, we are recognizing

Mr. Johnston.

MR. JOHNSTON: It had to do with the supply and

installation of fire and smoke dampers at Vanier Elementary School, and it was a

purchase from Jenkins and Puddicombe Sheet Metal Limited.

One of the problems that was encountered by the

Auditor General, and it was pointed out, is that documentation, in certain

instances, was not available. Speaking with my staff, the explanation that I was

given is that they thought they did get adequate quotes, the quotes that were

required, but the documentation wasn't available. All I can say right now is,

that is just an excuse. An excuse is not valid, but you have posed the question

and it is our belief that quotes were received but the documentation was not

available.

MR. LANGDON: Okay. If you go back, probably to

page 8, it would look like, then, that is an area you seemed to address, but the

problem at the time was that the tender documents were not deposited in a locked

box upon receipt.

If you go to number 3 on page 109, a review disclosed

that individual files were not maintained for tender call. So really, then, it

was probably the procedure that caught you in this dilemma where things weren't

followed through, where notes weren't made, and it was just being done verbally,

and probably the proper procedure was followed but it wasn't documented, so that

is probably what you are saying occurred in this particular instance here.

MR. JOHNSTON: That is correct. Since the Auditor

General's report has been received, we have revamped our procedures within the

Public Tendering Act to cover both public tenders for those purchases greater

than $5,000 and receiving three quotes for purchases under $5,000; and we have

set up a system where we capture all the information that is required so it will

be available for the review of whomever may wish to see it.

MR. LANGDON: Okay, just one more question before I

sit down. It is with non-compliance of the school insurance committee policy. I

understand - or I think this is the right procedure - that if there were a fire,

then the insurance company would only replace those things that had been

itemized in the school, like the movables; for anything that would not be fixed,

an accurate record would have to be submitted to the insurance company. So, from

what I see here, if there had been a fire in any one of the schools other than

one that had been reported, it would have been a possibility that the board

would have been out a considerable number of dollars if they had not itemized

what had been in the school. Would you say that would be correct or incorrect?

MR. JOHNSTON: We have had fires over the last

several years within our district, and that has not presented itself as a

problem to us.

MR. LANGDON: But if the building had been

destroyed?

MR. JOHNSTON: Well, we had segments of our

building - like a library in one of our junior high schools was totally

destroyed and we didn't experience any problems in restocking that library

through the insurance policy.

MR. LANGDON: Okay.

MR. JOHNSTON: In another school we had a problem -

we lost a full gymnasium.

MR. LANGDON: It seemed to suggest here that if

these things weren't itemized, if we didn't have a full list, then the board,

and, I suppose, subsequently, the government or whoever else was involved, would

not be fully compensated by the insurance company because you couldn't identify

it. Probably, as you said, that is not a problem, but it seemed to be suggesting

here -

MR. JOHNSTON: It is a possible problem, yes, Sir.

MR. LANGDON: Okay, Mr. Chairman, I will let

someone else take it.

MR. CHAIRMAN: Thank you, Mr. Langdon.

Mr. Hewlett, would you like to speak?

MR. HEWLETT: Yes, I just want to speak in general

with regard to the operations of the board in dealing with matters under $5,000,

which does not require public tender. I gather from the documentation that the

board has made certain changes and whatever, but I would like, for the record,

for the board to say what the current situation is. If, for instance, we need

$4,000 worth of carpet or whatever, that the relative or uncle or friend of the

purchasing agent does no longer have the option of supplying that without

tender, or at least, without presentation of two or three bids from various

other people in that situation. I wonder if the board might respond to that.

MR. JOHNSTON: I don't think there was any

indication during this audit that there were any problems whatsoever with

favouritism being provided to any suppliers of the board - I can say that. At

this time, what we are doing to ensure that we don't - that that question cannot

be posed in the future, is, all purchases less than $5,000 have to be

substantiated by the purchasing agent or whomever is purchasing, with a form

that shows the name of the supplier that was contacted, the amount that was

quoted and the date that the quotes were obtained and signed by the individual

who is receiving those quotes.

MR. HEWLETT: In which case, you would obviously

take the low bidder?

MR. JOHNSTON: Yes, Sir.

MR. HEWLETT: Unless the low bidder could not

supply the specifications required by the board?

MR. JOHNSTON: We would expect that the supplier

would have to meet the quality of the product that we want to purchase and be

able to meet the necessary delivery dates.

MR. HEWLETT: I pass, Mr. Chairman.

MR. CHAIRMAN: Mr. Penney, would you like to carry

on?

MR. PENNEY: Thank you, Mr. Chairman. I have just a

couple of questions right now, to be addressed to nobody in particular, to

whoever would prefer to answer it. If I could draw your attention to the report

- I presume everybody has a copy of this report - page 41: This is a

presentation being made to the board by the chartered accountants, and under the

area, Payroll and Accounts Payable, it says, `The problem has existed for

several years or several internal control deficiencies still exist.' I get the

impression that some of the problems they are pointing out and some of the

recommendations they have made had been made on several occasions, that this was

not the first time this was being done. Could you give me some idea why that was

the case - why the problems that have been pointed out year after year would

still exist, why the same recommendations would be made more than one year and

more than two years? And what exactly has been done to make sure that these same

recommendations will not be made again next year, to correct the same

deficiencies?

MR. JOHNSTON: Our external auditors are delighted

to have, over the last three years, forwarded to the chairman of the board their

recommendations as to our internal control procedures. In 1991, we increased our

staff by one person to try to allow us to put in place the necessary controls

and checks that would provide our external auditors with the assurance that

everything is taking place. I met with our external auditors yesterday. Our

audit has just been completed and I can report that all of the points that were

covered in last year's letter have been addressed in 1993. The reason it wasn't

done in previous years, was because of problems we had, primarily staffing. At

times we - in one instance, our chief accountant got called out on jury duty for

three months, and that has a serious effect, and these things drop in the

priority list.

MR. PENNEY: I can appreciate that. As the Chairman

pointed out, we are not here to interrogate you. We are here to gather evidence,

so please don't misinterpret the questions that will be asked you.

If I may continue on that line of questioning, though,

for a moment. Before I became a politician I was a businessman, and I see

auditor's reports and automatically the flags go up. I am looking down through

the balance sheet, if you could turn with me to page 103, and questions

automatically come to mind, where I have looked at so many of my own.

The very first line there shows the difference between

the cash for 1991 and 1992 - the difference being over $1 million. If we look at

that and there is no plausible explanation, we are looking at a 420 per cent, or

thereabouts, discrepancy from one year to the next. Could you give us some idea

what that is all about?

MR. JOHNSTON: If you look at our total current

liabilities, our total current liabilities are $2,005,000. With our total

current assets it is $2,047,000; so we had a working capital position of

$42,000. In the previous year, you will note, our current liabilities were

$762,000 and our current assets were $457,000 for a working capital deficiency

of $205,000; so really, what has happened is that we haven't paid our bills as

quickly.

MR. PENNEY: It is as simple as that - the bills

that were paid compared to the cutoff at the end of your year?

MR. JOHNSTON: I am just trying to recollect. In

Accounts Payable under Accrued Liabilities is where the difference is.

In June 30, 1992 there was the abolishment of the

school tax authorities. The Provincial Government made an advance to all school

boards in the Province for the anticipated shortfall in school tax revenues that

year. If I recall correctly, that was $820,000; so we had $820,000 in the bank

from the Provincial Government as an advance against school tax shortfall.

MR. PENNEY: Okay. Again, if you could turn to page

108, Accounts Receivable, and you come down under `current' - that is

section

11, line 139, Travel Advances - why would the amount of money allocated for

travel advances increase from $139,000 to $198,000 from one year to the next?

That is a 43 per cent increase.

MR. JOHNSTON: These are accounts receivable, and

these are accounts receivable miscellaneous. If I recall, they would be - they

are not travel advances, Sir. They are miscellaneous accounts receivable, and it

is just that in the ongoing operations of the school board,monies become

receivable at different times throughout the year.

MR. PENNEY: Okay. If this money is receivable, why

is it put there under the heading of Travel Advances?

MR. JOHNSTON: Well, the category is travel

advances and miscellaneous.

MR. PENNEY: Okay. What portion of it is travel

advances, then? Let's forget the miscellaneous for a moment.

MR. JOHNSTON: I would consider it very close to

zero. At June 30, we would not have any travel advances outstanding, to my

knowledge.

MR. PENNEY: Then, I would have to ask: Why would

your accountant have even used the heading `Travel Advances' if there are zero

travel advances?

MR. JOHNSTON: This is a form that has to be filled

out and is given by the Department of Education. That is the slot there for

miscellaneous.

MR. PENNEY: Okay, I accept that; fair enough.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Penny. Mr. Crane, do

you have some questions for the witnesses?

MR. CRANE: Yes. There is one thing that really hit

my eye when I was looking through the report. Certainly, with all the expertise

the school board has - being the largest school board in the Province -

AN HON. MEMBER: Second largest.

MR. CRANE: - or the second largest - you certainly

have the expertise to do almost anything you want to do I would think with the

monies you have. I am not saying you always have enough money - but the one

thing that really hit me as funny, was fixed assets, you did not know what you

really have. You have all those schools and all this equipment, but you have no

ledgers and no way of knowing what is there, so you have no way of knowing what

is being pilfered. If you do not know what is there, how do you know what is

stolen? This is the first thing that really hit me.

MR. JOHNSTON: The assets that are presently on our

balance sheet can go back as far as the 1920s; then with the consolidation of

the four denominations in 1969, all of these assets came on our balance sheet,

and subsequent to that time we had purchased additional assets. Granted we do

not have lists, but what we have to remember is that we have twenty-six

individual schools within our district; we have twenty-six principals,

vice-principals, teachers, and our staff are fully aware of the assets that are

available to them within the system. If something is missing, it shows up quite

quickly. Now that is not the formal procedure that we would like to have in

place; it is not a formal procedure. They have not been implemented at this

point in time because the resources are not available to us, and the board has

not chosen to make it a priority at this point in time to put in that formal

control system.

MR. CRANE: You know you are right. You said you

had twenty-six schools and this says twenty-seven. You must have closed one, did

you?

MR. JOHNSTON: We closed one last year.

MR. CRANE: Even with the principals' knowledge of

what is in each school, today, with all the equipment you have in schools, I am

sure there are things that can go out of schools as fast as they can go out from

any other building, and I do not think any of the principals have hands-on

knowledge of everything that is in his school if he has a twenty or thirty or

forty-room school. You know, within the board obviously there have to be some

people who have some time to tag some equipment each year and if you had done

that, you certainly would have been, if not up-to-date, at least partially

there.

MR. JOHNSTON: There is the initial work to bring

this project on stream. To list all our assets is quite an undertaking. That is

one part of it, the other

part is, the ongoing maintenance and to ensure that

that system is maintained correctly. We recognize that that is something that

should be done but it has not been at this point in time a board priority.

MR. CRANE: As Mr. Oliver Langdon brought up, you

must get along a lot better with your insurance company than I do with mine. If

you do not have any idea of what is in the schools, if you have no listings of

it, you can go and collect insurance as you said on a fully burnt library and

get paid for it. I find it very difficult if I have anything to claim from my

insurance, I have to have everything defined right down to the point or I do not

get paid for it, right? You must have a really good relationship with your

insurance company.

MR. JOHNSTON: We do not deal directly with the

insurance company. Insurance is handled through the Denominational Education

Councils and Treasury Board.

MR. ANDREWS: If I could interject on one point.

One of the things we should be aware of with respect to schools is that there

are standards set for the construction and building of schools and maintaining

them, so insurance companies have a fairly good idea of what schools should

contain as basic equipment. In addition to that, as Mr. Johnston can attest to,

the board keeps records of all our purchase orders - all current purchases. If

the insurance company so chooses, they can come back and delve into the records

of the board and find out just what has been purchased in recent times.

Certainly I think that was evident in the fire that we

had in Mount Pearl a year or so ago, in which case we had absolutely no problem

in getting a consensus with the insurance company as to what the contents of

that library were.

MR. CHAIRMAN: Mr. Langdon?

MR. LANGDON: The Auditor General's Report does not

seem to express it in that way, and that is why I was asking you in the first

instance, because you do have copies of things that you have bought, and

therefore you can go back to it, but the report seems to suggest that you did

not have a record of things in the school, if that is the case, Bill?

MR. LEE: I think what the Auditor General's Report

was saying is that we do not have a list that we can go to which has a list of

everything in one particular place. The insurance company, a few years ago,

requested that school boards do exactly what the Auditor General is asking us to

do which, in all honesty, we have not done. We have been able to follow a paper

chase down through the files and find the types of things that Mr. Andrews is

alluding to.

The point that Mr. Crane is making is a valid point.

The point that the Auditor General made is a valid point. We need to get in

place a procedure where each principal first of all initially identifies all

assets in each school and then each year updates it. We do not have that done.

I would add if I could, however, that while Mr. Crane

feels - and I can understand why he feels that way, being the second largest

school board on the Island - that we have a fair amount of flexibility in staff

and so on, as Mr. Johnston indicated, that is a very, very, time-consuming

process. We are pretty well strapped right now when it comes to being able to

allocate time and hire extra staff with respect to doing these kinds of things.

We recognize, we accept the fact that we have to do it. We are going to have to

do it, but I think it is important that this body understand that school boards

right now - and I can only speak for the Avalon Consolidated - are pretty

strapped when it comes to finding excess funds and excess staff to do the type

of work that we are going to have to do as a result of this audit - but we know

we have to do it.

MR. CHAIRMAN: Mr. Langdon.

MR. LANGDON: The co-op program at the university

might be a way that you might be able to get a student in who is doing business

administration or whatever, or doing commerce at the university. Also, the

provincial government has in place funding for graduate students from whatever

faculty - in this case business - and they pay up to 70 per cent of the cost

incurred in hiring the individual, so that could be a way that you could get

around that, by having one of these students hired - graduate students - to do

the work for you.

MR. LEE: I appreciate your suggestions, and we

will definitely take them under advisement; however, we are dealing with a union

and we have to be very careful who we hire to do work in our schools.

MR. LANGDON: It was just a thought.

MR. CHAIRMAN: Thank you. Mr. Crane, are you

finished your line of questioning now?

Mr. Dumaresque, would you like to carry on?

MR. DUMARESQUE: Thank you, Mr. Chairman.

I would just like to say to Mr. Lee that I would not

want you to inadvertently be promoting separatism when you say that you have the

largest board on the Island. The largest board in the Province would probably be

appropriate.

MR. LEE: My apologies.

MR. DUMARESQUE: It is nothing serious, but -

I would like to look at some of the areas of awarding

contracts, and I note on Page 11 the Auditor General points out that there are

two contracts which were awarded to other than the preferred bidder. Would you

please advise us why that happened? Also, one of the contracts was awarded with

government approval and the other was awarded without government approval. Would

you be able to tell us why that happened?

MR. JOHNSTON: The one that was awarded with

government's approval had to do with the general contract on the extension to

the Goulds Elementary School. Our prime consultant came to us with problems,

with the history, I guess, and the experience that the low bidder had on that

job, and expressed these concerns. When we investigated we decided, in speaking

with our legal people, it was within our power to do this and we would have to

make notification to the minister of awarding the contract to other than the

preferred bidder.

In the instance where the minister was not notified,

that had to do with the tender for the supply of services for the plumbing and

heating contract. When we were reviewing the contracts, or the tender documents,

we asked that our suppliers supply to us a list of references that we could

check to see that the supplier could live up to the expectations that we had.

When we checked the references of - who at that point in time appeared to be the

low bidder - those references did not check out and it was our opinion at that

point in time that that person was then not the preferred bidder. So

notification was not given at that time to the minister. It was an oversight an

our part. We believed that because the person could not meet the criteria that

we had set, he was not the preferred bidder.

MR. DUMARESQUE: This issue of references - you say

in the first instance your prime consultant raised the issue of competence on

the part of the low bidder, Eagle Trades, I think that was. In the second

instance it was not the prime consultant that raised the concerns, it was you

asking for references. What is the difference there? Why would there be

references asked for in the second case and not in the first case? What was the

process?

MR. JOHNSTON: Well for a job the size of the

renovation to the Goulds Elementary School we would hire a prime consultant to

oversee that work because we do not have it in-house. I guess you would say that

the prime consultant had the knowledge when opening the bids of the contractors.

So he, through his experience and expertise, was able to say that the references

that this person provided were not adequate.

MR. DUMARESQUE: What was the difference in -

MR. JOHNSTON: But in our case, in the other one,

we did it in-house. We did the tender in-house, it was a much smaller contract.

MR. DUMARESQUE: And anytime you do it in-house you

would ask for references as a normal course of process, normal routine process,

you would ask for references on any of these?

MR. JOHNSTON: If we did not know the supplier. If

you look at the analysis there, the prices that were quoted by the low bidder

were, in our opinion, quite low. We recognize that a company that is in business

has to cover their costs, their overheads and hopefully they try to make a

profit. The prices that were quoted to us raised flags with us. We were

concerned and with that concern we then went out and checked references. Now we

did not check references on everybody, we checked references on the three lowest

bidders.

MR. DUMARESQUE: Did any legal action come out of

this? Did that company -

MR. JOHNSTON: No problems on either one.

MR. DUMARESQUE: So they never questioned your

wisdom?

MR. JOHNSTON: No, Sir.

MR. DUMARESQUE: Okay. Another area on the same

thing where contracts are awarded, and in line with Mr. Hewlett's questioning of

under $5,000, I want to focus in on this board retirement dinner that you had.

First of all I would like to ask the Auditor General the definition - your

office, I think, imply's the board - that in your view, the definition of a

retirement dinner was that it was actually remuneration to the employee's. On

what basis was that? Is there now some kind of a definition of such things that

should prevail if the school board or the AG's offer differ on the definition of

such an event?

MS. MARSHALL: No. When we met with the school

board we focused in on a specific

section of the School's Act. It was

Section 30

of the School's Act, that was my opinion basically when I met with the school

board. They indicated that their opinion differed from mine and I think

basically what we had was a difference of opinion.

MR. DUMARESQUE: Okay. Not to belabour that point

but when there is such a difference of opinion should there be somebody that

sets the definition or something that would override it or is there another -

MS. MARSHALL: When we audit various types of

expenditures, what we would look for would be authority to make the expenditure

and we could not find any regulation, legislation, policy or whatever, that

would allow that type of expenditure. I think some organizations would go on the

premise: as long as there is something that does not disallow the expenditure -

but that is not the way we audit expenditures of Crown agency's.

MR. DUMARESQUE: Okay. To the school board, when

you had this difference of opinion, I note that there are 163 dinners, how many

retiree's were there at that time?

MR. LEE: My recollection would indicate there were

about thirty people who retired plus their spouses, that would give you sixty

and included in that would be, board members and their spouses, board office

staff, superintendent, assistant superintendent, plus the principals and their

spouses. That has been the procedure that we have been using in the past, that

is where you are getting the 163, I would suggest.

MR. DUMARESQUE: Okay, so it is 100 extra people

outside of the people who retired and their spouses. I note that at one board

meeting on the 27th of February, 1992, it was moved that the gifts be continued,

that the meal costs of the retiring employees and their guests also continue but

others be expected to provide them. Then just short of a month later, you have

another board meeting and you rescind the whole thing. What happened in that

month that caused you to go and rescind this decision and why do you think that

was in the public interest?

MR. LEE: The only thing I can tell you happened

was that there were several board members who raised the question after the

initial decision was made I think, in February, and felt that in their opinion,

the process should be continued and they wanted it reviewed and they asked for

it to be placed back on the agenda.

MR. DUMARESQUE: So they were not at the first

board meeting then?

MR. LEE: Some of them were and voted against the

motion, and some of them were not at the meeting at all, but obviously there

were sufficient numbers at the first meeting to pass the motion.

MR. DUMARESQUE: That is right. I note that the

cost of the dinner is over $5,000 - well $5,000 for the dinner and $3,300 for

the gifts. Was there no effort to get a better price, like, would this not fit

under the normal situation of $5,000 and under to get two or three places to

give prices? I know you held it at the Hotel Newfoundland but would there have

been any other inquiries?

MR. LEE: To my knowledge it was agreed to go in

the same fashion that we had in the past, with the particular hotel we have been

using and with the particular company who supplied the gifts. Obviously, that is

a point, which, if the board continues with the retirement parties under the

Tender Act, they have no choice but to do exactly what you are pointing out, but

they did not do it. We did not do it.

MR. DUMARESQUE: How often did these dinners occur,

have you had any since?

MR. LEE: Annually.

MR. DUMARESQUE: They occur annually?

MR. LEE: Yes; generally in June.

MR. DUMARESQUE: Generally in June. Very good.

Okay. I had another question on this tendering process. Looking at page 143,

where we saw two different purchase order numbers and two different invoice

numbers. I draw your attention to 125434, Thomas Glass and Aluminum for

$1,391.00 and further down there is 125435, Thomas Glass and Aluminum for

$4,012.50. Could you explain why that is, because it seems like it is two

invoices for essentially the same thing, if it is right after another in this

particular business, it would seem to be that it occurred fairly quickly after

each other and obviously by having two invoices it would not require public

tender. Is that a fair conclusion?

MR. LEE: We have no control over what the invoice

number will be from a supplier, but we do have control over the purchase order

numbers that we give out.

MR. DUMARESQUE: Right, the purchase order number

would be 3990 and 3992. Again, supposedly, 3991 goes to the same Thomas Glass

and Aluminum, so supposedly these are all happening at the same time.

MR. JOHNSTON: That is correct, and I do not have -

MR. DUMARESQUE: There are five of them actually. I

guess, as the Chairman draws my attention to it, five of them are all in

consecutive order so presumably they would all be happening at the same time.

MR. JOHNSTON: I do not know if there are copies -

there were copies supplied of all purchase orders and all invoices for the

package. I do not know if they are all here now, but -

MR. DUMARESQUE: No, we have them in the sense that

we know the numbers, and the same thing is - from 3994 down to 4000 we have

seven more P.O. numbers and seven more invoices issued to the same Speedy Auto

Glass, presumably all of this happening at the same time.

MR. JOHNSTON: These purchase orders were issued in

August month. What happens is that we experience vandalism throughout the summer

and it has been the policy of the school board, or staff of the school board,

that these repairs are done at the end of the summer, prior to school opening.

Now I would assume that each one of these purchase orders is for a different

job, for a different school.

MR. DUMARESQUE: But all glass?

MR. JOHNSTON: Oh, yes.

MR. DUMARESQUE: You go in at the first of August

or the middle of August or whatever, look through all your properties, find ten

windows gone, so you order ten pieces of glass. I guess the concern that I have

is that if you go in and do that inventory in August and you find that you have

$23,000 worth of glass missing and you want it replaced, is it - am I reading

too much into this - that you feel that the public tendering act is actually

prohibiting you from reacting and putting something in place to have the school

open on time?

MR. JOHNSTON: No, I think the only problem we have

right here is that we do not have the documentation to show that we went out and

got the three quotes.

MR. DUMARESQUE: What I am saying is, regardless of

whether you got the three quotes or not, the fact that we have glass for $23,000

all happening at the same time, why would it not go to public tender?

MR. JOHNSTON: Well, if you look at the first five

purchase orders that were issued, 3889 through 3993 inclusive, those five were

all to Thomas Glass and Aluminum, and they were to Vanier Elementary School,

Newtown Elementary School, Bishop Abraham, I J Samson and MacPherson Junior

High, so they are schools throughout the district. They stretch from Mount Pearl

into the City.

MR. DUMARESQUE: I understand that. What does that

mean as it relates to - whether you have five rooms in a house and you are going

to carpet the five rooms, is it appropriate to call five separate requests for -

MR. JOHNSTON: This is not one building. What we do

is we will go out to Thomas Glass and Speedy Auto Glass and whoever else - Apple

or whoever - and we will say to them: Here are the projects that we want done.

Now, quote on them.

What happened is that Thomas Glass was low on those

five schools, and Speedy Auto Glass was low on the next, but we do not go out

and do - the work that would be involved in putting a spec together to cover all

the schools in our district, we do not have the staff or the time to do it.

MR. DUMARESQUE: That does not make any sense. You

already did it.

MR. JOHNSTON: We do it on an individual school

basis.

MR. DUMARESQUE: You put your specs together and

you went down supposedly to Thomas Glass and said: We have the Vanier School, we

have other schools, and we have a piece of glass 4 x 8 that we want to put in.

Give us a price on this - and supposedly you went and got two others and they

gave you a price as well.

What I am saying is that you already have those specs.

You obviously had to have them if you asked for three requests on them. What is

to keep you, at that point in time, from taking the obviously over $5,000 worth

of glass and putting it to a public tender and letting Thomas Glass and Speedy

Auto Glass and whoever else wanted to sell glass to you, bid on it?

MR. HALIDAY: If I could, what we see here is a

response to each individual school. If these tenders had all been put in one

package, the lowest total would have been a combination of some lows and some

not lows, some higher. By taking each school individually it was the lowest

price for each school that was accepted, and that would have given you the

lowest total for the work.

MR. DUMARESQUE: Yes, I understand that, but why

would that keep you from going to a public tender, because you are reacting to a

specific school? We have seen the same thing with the Public Libraries Board.

They have the same book that is required in fifty locations throughout the

Province but they don't go to a public tender for fifty books, not as extreme as

that, one book for public tender but, essentially, that is the principle that is

being applied and I think that is going to be changed. So, why would you not be

able to order glass for all the schools?

MR. JOHNSTON: Your point is well taken and that is

a way that this could be handled but in the judgement of staff, by going into

the individual schools, we feel that we are getting the best possible price to

do these repairs and that we do take the lowest bid for each project. We don't

feel there is anything to gain by putting it together.

MR. ANDREWS: Just one other comment on this, and I

think I know - I don't get involved, obviously, in the day-to-day operation of a

school but one of the things that you can see if you look at the number of

schools, is that each of our schools is in varying stages of repair or

disrepair, depending on your point of view. If you were to take something like

this and put all the schools together, then the company will have to go around

and look at the different schools. Some schools they will view as a bigger

problem than others, in terms of dealing with them. You may say glass repair is

glass repair but there are different window structures in many of these schools.

So I think the office staff have said, our better bet is to have the businesses

look at each school and try to get the best, the most economical job done within

each school as opposed to trying to combine them, and I think they have probably

come up with the lowest dollar total.

MR. DUMARESQUE: Well, I am not convinced but I can

appreciate your position.

MR. CHAIRMAN: If I could interrupt you for a

moment.

MR. DUMARESQUE: Thank you, Mr. Chairman, that is

fine for me.

MR. CHAIRMAN: I am not convinced either. This, in

my view, is a deliberate circumvention of the Public Tender Act. You could, very

clearly, have called tender for all of the requirements in any schools covered

by the board. And you could have asked for individual prices and then chosen the

lowest ones from each bid if you wished to. But you knew full well that you had

better than $23,000 worth of work to be done. Under the Public Tender Act that

is very clearly required to go to public tender by breaking them down by

schools. I will say to you that we have had examples before where schools have

broken it down by classrooms and tried to tell us that this was not just one

contract. The laying of carpet in six different classrooms in the same school,

the same time, with six consecutive purchase orders is also a very clear

deviation from the Public Tender Act. This one is not quite as blatant, because

you have different schools, but I would suggest it is the same board and the

board knows that every year you are going to spend $20,000 - $25,000 on glass

repairs. I think you were certainly obligated to call tenders for the supply of

that glass service and I would suggest to you that you would have probably

gotten a much lower tender. Anybody who is bidding on a complete package will

give you a lower unit price than they will ever give you on an individual

package here. You had five components in the first one and seven in the second,

so you have twelve different items to bid on. I do not accept for one moment

that twelve individual items would add up to less than the combination of

twelve. You may have some above and some below but the overall package would

certainly have been less, in my view. I may be wrong, but I would suggest to

you, experience would indicate that I am not.

MR. HALIDAY: Mr. Chairman, I would accept your

comments on perhaps the procedure, but it is our boards intention to comply with

purchasing procedures which will get us the best prices on all occasions, and I

would certainly object to your comment that there was any deliberate intention

here to break this up. I would suggest, for instance, the fact that the work

that has been done here just from the list that has been provided, shows that a

number of suppliers have been used, it shows that there hasn't been any

intention to place the work with any particular supplier. The work has, in fact,

been spread out. The best prices have been accepted and I think that is one of

the pieces of evidence that clearly shows it has been spread out, and that

should alleviate the suspicion that there is any intention of trying to place

this work with one preferred supplier. It certainly is our board's policy and

intention to obtain the best prices, and I think we take under consideration the

comments on whether things could be packed. Practices could be changed because

it is our intention to use practices which will result in the best prices. What

we have here is perhaps a practice which hasn't achieved what we want but our

intention certainly is to comply with the policy of achieving the objectives

that you are putting forward.

MR. CHAIRMAN: Thank you, Mr. Haliday. I am not

suggesting that your intentions are otherwise. What I am suggesting is that

unless you call public tenders, you don't really know that you have obtained the

best prices. We have had many cases where government departments, Crown agencies

and corporations choose to take this route because it is more convenient to

issue a purchase order for $2,000 for somebody to repair glass at Vanier

Elementary School than to go through the process of calling tenders. But the

Tender Act is there for the purposes of giving everybody an opportunity to bid,

ensuring that public monies are spent in accordance with the best possible

principles and that, if at all possible, lowest prices are received; and we

accept the fact that from time to time the Public Tender Act can be cumbersome

from the administrative point of view. In fact, it can take more time to go

through the tendering process than to issue a purchase order. We also accept the

fact that from time to time we have examples where the Public Tender Act

actually has cost us more, because perhaps you were able to negotiate with a

supplier with whom you were familiar, a lower price, but nevertheless, the

public interest is protected there, and I want to make another point - you say

you don't have the staff or resources. You are spending $41 million and you

can't put together a tender for $23,000 worth of glass? I am afraid I don't

accept that, Mr. Johnston.

MR. JOHNSTON: Sir, I am not saying that we can't,

but I would like to say that there was no intent, whatsoever, in circumventing

the Public Tender Act with the issuance of those purchase orders for that work.

In one of the discussions we had with the Auditor General, we asked, did she or

her staff have any feeling during that audit, that there were any acts there

that took place that were other than by admission, and -

MR. CHAIRMAN: I accept that. I am not saying it

was a deliberate attempt, if I said that, let me retract it. It may not be a

deliberate attempt, but it certainly does circumvent the Public Tender Act and

is a practice that is not acceptable under the Act, in our view.

Are you finished with your line of questioning, Mr.

Dumaresque?

Let me go back to a few things here. The whole public

tendering process, the whole purchasing process seems to be a little loose with

the board. Your evaluations of tenders, apparently are not adequately

documented. For example, it appears that in many of your tenders or in some of

your tenders, it wasn't clearly stated where the opening were to be held and the

time of the opening and that witnesses are to be there; documentation did not

seem to be available as to which witnesses were present; these sorts of matters,

and there doesn't appear to be a clear policy for calling tenders and opening

tenders, and storing them in a sealed box and opening in public and so forth.

Would you like to comment on the policy of the board or the lack thereof?

MR. JOHNSTON: I think what has happened is that in

the past, the board didn't consider the details or the proof of the details,

necessary to be kept. At this point in time, we realize that we have to be able

to substantiate everything we do and that system has been changed. All that can

be said right now is that we apologize for the lack of the formal procedures in

the public tender area. I don't believe there was anything done to circumvent

the Act, that the spirit of the Act was upheld, but it is the problem of the

documentation.

MR. CHAIRMAN: The principles and the objectives of

the Act may have been upheld, but the Act clearly states the policies and

procedures to be followed and the documentation that is required, so you have,

in fact, violated the Act to that extent. We might accept your argument that

perhaps tenders were properly called and dealt with, but it is also important to

be able to prove that. There is no point in having tender calls if we can't show

- in our business, unfortunately, it is not enough to be honest, you must also

be perceived to be honest. As well, you are dealing with taxpayers' money, so

you also have the same onus of responsibility on you. In politics, you are

guilty until proven innocent and when you are spending taxpayers' money, I think

it is, in today's world, also a fact that you are guilty until proven innocent.

Therefore, it is in your best interest to ensure that not only are you in

compliance, but that you can show that you are in compliance with the Act. So I

would certainly recommend that the comments of the Auditor General be taken

seriously and that procedures and a policy manual be put in place for proper

handling in accordance with the guidelines that are available to you. It is not

an onerous job to take the guidelines and procedures that have been refined by

Treasury Board and other government departments which deal with that, Public

Works and so forth.

I believe you dealt with No. 5. There are a number of

items here on Page 11 that I think Mr. Langdon referred to earlier. There were

seven or eight instances where public tenders weren't called and the minister

was not informed. Can you just give me a little bit more explanation? - glass

repair, $23,000, as an emergency, for example. Was this a great wind storm or

something, or is it the $23,000 we were talking about a moment ago?

MR. JOHNSTON: I believe that is the $23,000 we

were talking about a moment ago.

MR. CHAIRMAN: How could you claim that as an

emergency? - that is my question. This is something that happens every year, by

your own admission a few moments ago, and in August or September - late August

of each year - you want to repair all of the glass. It is hardly an emergency.

It is something that you know is going to happen every year and you know that

next August you are also going to spend another $25,000 on glass. It is hardly

an emergency. It is clearly something that can be predicted. It is in your

budget. I am sure, when you do your budget, you show an amount for glass repair

each year and you expect to do that. Would you like to explain that one, first

of all, Mr. Johnston?

MR. JOHNSTON: We spend upwards of $100,000 a year

on glass breakage. This is glass that was broken during the months of July and

August. I can't say that this was broken on July 1st; I don't know, it might

have been broken on August 20, but the one thing we do know is that, come the

middle of August, the schools have to be in condition to accept their students.

MR. CHAIRMAN: Yes, but I would class that as

ongoing maintenance, not an emergency. An emergency, to me, indicates that we

had a monsoon on 28 February, all the windows in the front of Bishop's College

blew in, and you had to replace, that day, all the windows in the front of

Bishop's College, because otherwise, every schoolroom was going to have four

feet of snow on the floor by the time the students were expected to come in in

the morning.

Obviously, you couldn't tolerate that, and the Public

Tender Act makes provision for you, in that case, on an emergency basis, to get

whomever and whatever is necessary to make those emergency repairs to prevent

further damage as a result of it. That is an emergency. But something that you

know is going to happen every year, you could have tenders called in June

saying: We will have so many square feet of glass to be replaced in these

buildings. You could almost go with a general tender. You could almost go with a

standing offer if you wanted to go that way, a standing offer for repairing

these panes of glass which are 14 x 22, standard things. You can't class it as

an emergency.

MR. JOHNSTON: Your point is well taken, but every

school within our district has different types of windows, different types of

doors.

MR. CHAIRMAN: It doesn't matter. I am sorry, I

don't buy that argument. You could call a tender for glass replacement

requirements. It can have unit prices for different thicknesses of glass,

different types of glass, safety glass, different prices for doors. You can have

those types of unit prices at standing offers. You don't have that many

different types of glass in your school, nor is there that much difference in a

pane of glass broken at Vanier School and one in Bishop's College.

MR. JOHNSTON: I think you have a very good

suggestion and we will consider looking at glass repairs on the basis of a

standing purchase offer.

MR. CHAIRMAN: Do it on an annual basis.

MR. JOHNSTON: And have it match with our annual -

possibly with our school year or with our -

MR. CHAIRMAN: Exactly. All you need is to have a

list of specifications of glass and require - or you could also ask in that, to

have a different price based on the volume. For example, if, in the middle of

January, you have two panes of broken glass, and your supplier will come and

repair two panes of broken glass, he is going to want more to do that than if he

is replacing fifty panes of broken glass in the middle of August.

It is a simple matter of writing a tender

specification. It outlines your requirements and what your supplier is supposed

to do, and calling that tender every year, you may well have a different

supplier every year, or you may have the same supplier every year. But I would

suggest it will reduce the administrative burden on you, in that, when you have

an emergency, then you already have a price in place; so that if, in the middle

of February, you have two panes of glass blow out, you are not then paying

emergency prices for it, you are paying a predetermined price based on a

standing offer that that person is prepared to give you because he or she knows

that: I am doing $100,000 worth of glass this year and therefore I will go up

and do it for nothing if a pane of glass blows out in Bishop's College on 20

February. So, Mr. Johnston, you will, in fact, come out ahead.

MR. JOHNSTON: I will just speak to the standing

offer. The government standing offer is available to school boards in the

Province. It has been our experience that we can purchase at prices less than

the standing offer, and right now we feel that the prices we are getting are as

low as we possibly can get. That is our feeling, and time has shown that we can

buy at less than the government standing offer.

MR. CHAIRMAN: That being the case, then, you have

every right and responsibility to the people who provide you with your financing

to do that, but do it within the Public Tender Act. Whichever way is most

efficient, that is what you are there for as a board. Do that. So we must follow

the Act.

Siding, $10,000, as an emergency, I think, Mr. Langdon

dealt with that. I don't know if we got a satisfactory answer to it but what was

that siding emergency there? Was this wind damage, storm damage or what was it?

MR. JOHNSTON: That was a problem at MacDonald

Drive Junior High School and it was siding that was blown off on the - I do not

know the proper terms - it was at the top of the building that was actually

repaired.

MR. CHAIRMAN: So this happened in a storm and was

done immediately, was it?

MR. JOHNSTON: That is my understanding, yes.

MR. CHAIRMAN: Floor repairs, $7,800, from one

available source. What kind of floor was that, that we only have one available

source for it?

MR. JOHNSTON: That was at Newtown Elementary

School and it had to do with a quarry tile that was on the - I don't know if it

was the gymnasium or in the corridors.

MR. CHAIRMAN: There is no quarry tile on the

gymnasium, I can assure you. It is all good hardwood on Newtown Elementary.

MR. JOHNSTON: No, it is floor repair in the

corridors. It was a matching, I guess, and it said, one available source. I

can't speak to it any more than that.

MR. CHAIRMAN: There was only one source available.

I accept what you are telling me. I find it unusual that - I mean, the floorings

that we have in our buildings today are not so unusual. In our schools, they are

not so elaborate.

MR. JOHNSTON: I am not making excuses but this

school was built in the late 1970s -

MR. CHAIRMAN: 1979.

MR. JOHNSTON: - and I guess we probably had to

match it. That is as much as I can say.

MR. CHAIRMAN: Roofing emergency - I assume that

was an emergency -the amount of $8,500. What school was that and what was the

occurrence?

MR. JOHNSTON: That was St. Augustine's Elementary

School on Bell Island and I recall that we did have damage and that repairs had

to be done.

MR. CHAIRMAN: It was a storm then, it was not just

an ongoing maintenance.

Life Safety Equipment, $7,800. That was the one case

where life safety equipment is - happens all of a sudden or can you explain it?

MR. JOHNSTON: Mr. Langdon brought it up earlier;

that was the purchase of fire/smoke dampers at Vanier Elementary School.

MR. CHAIRMAN: Why could that not have been done by

tender?

MR. JOHNSTON: There was no reason given and I

can't offer an opinion right now.

MR. CHAIRMAN: Building Supplies, $10,400, an

emergency - explain that.

MR. JOHNSTON: What I have right here - these were

purchases on one purchase order over the Summer of 1991, from Hickman's Building

Supplies. The invoices pertain to Virginia Park. We did a new roof on Virginia

Park in the Summer of 1991 and we did the construction in-house with our own

maintenance people. As to why that would be classed as an emergency, I can't

answer that right now.

MR. CHAIRMAN: Or that it would be done on one

purchase order.

MR. JOHNSTON: Well, it was a project that we

received funding for from the Integrated Education Council. The total cost of

the project was somewhere in the neighbourhood of $120,000 which was done -

MR. CHAIRMAN: Surely that was - you did it

in-house?

MR. JOHNSTON: And we did it in-house.

MR. CHAIRMAN: Surely, still, you must know that

you cannot issue a purchase order for $10,000 without inviting tenders or

without giving a good explanation to the minister.

MR. JOHNSTON: Yes, Sir.

MR. WINDSOR: Lockers, $13,000, I mean - from one

available sources.

MR. JOHNSTON: These were from a bankruptcy that

took place within the Province. They were offered to us at a substantially

reduced price, and if you notice the invoice shows that these were purchased

from a salvage dealer.

MR. CHAIRMAN: Okay, thank you.

I want to go back a little bit to the beginning of

these things. Back to fixed assets again, we had some conversation about having

adequate records of fixed assets for insurance purposes. How about for internal

control? There is a tremendous amount of equipment in the various schools, quite

a bit of which in today's world is electronic, highly valuable, very mobile,

very moveable, much of which perhaps from time to time is moved from one school

to the other within the board's system, particularly tables and chairs and

things like that may be borrowed, maybe even video equipment, computers, from

time to time. You are saying not much of it moves, nonetheless, unless you have

an adequate record, unless you have a system of tagging each item, each capital

item - you do not put a tag on every pencil and piece of chalk, but on every

desk and every chair and every computer and every slide projector and every

video machine - do you not have any kind of a record of keeping account of these

fixed assets?

MR. JOHNSTON: We do not have formal records.

Annually we have been supplying one of our schools to the Department of

Education for the marking board, to mark all the high school exams, and to be

able to accommodate the marking board we have to bring in tables and chairs from

the whole district. Each year since I have been here, and I have been here six

years, this has taken place. The tables go back. They are taken from the

schools; they are delivered back to the schools, and the only complaints that I

have had from the principals is that at times there is damage to their equipment

- to the tables and the chairs - but I have yet to have any complaints that they

are missing those tables or chairs.

Now we do not have formal arrangements in place to

document this, but it takes place and we are able, at that time, to keep track

of what we have.

MR. CHAIRMAN: That is in that instance.

MR. JOHNSTON: Yes.

MR. CHAIRMAN: But how about on the long-term

basis? How many television sets does the board own? How many VHS machines? How

many computer terminals? How many basketballs?

MR. JOHNSTON: We do not know that. We cannot

answer that question.

MR. CHAIRMAN: My point is made. Do you not agree

that you should know?

MR. JOHNSTON: We agree that yes, that should be

done. We should have in place a formal policy maintaining records on our fixed

assets, and that is recognized.

MR. CHAIRMAN: Since the Auditor General has

mentioned this in the report, what action has the board taken? Has the board

made a policy decision to direct the staff to put in place that policy and bring

it before the board by a certain time? What has been done?

MR. ANDREWS: To be quite honest, no. It has been

over the summer months and we have not met and it has not been brought forward

to us. Obviously it will be brought to our meeting in September.

I will probably be shot for saying this, by the board

staff, but I am going to say it anyway. I suspect, whether rightly or wrongly,

when the issue is brought before the board one of the things that the

professional staff are going to do is to tell us how much it is going to cost. I

can assure you that the board members are going to look at it very askance

because if they look at the cost of doing that versus the cost of not putting

something in the instructional side of the board's budget, then I can tell you

right now that a vote is going to be very difficult for board members to vote

for spending that kind of money, regardless of the benefits that obviously can

clearly accrue to the board by doing so.

MR. CHAIRMAN: I would suggest to you, Mr. Andrews,

that the board, in directing the staff to bring forward the report, direct them

that in addition to telling the board how much it will cost, to tell the board

also how much might be saved in equipment that may be lost or misplaced one way

or the other over a period of time so the board has that to compare with.

MR. ANDREWS: Quite true, but obviously in terms of

operating the schools at the present time, the feedback that I get is basically

that if there are things missing we hear it from the principals. They know their

schools fairly well. They are not that big schools that they do not know what is

missing.

Quite frankly I am quite surprised. I am involved, as

you well know, in the computer business, and I know I hear stories from

government departments; I hear stories from private businesses, and I am

surprised, and continue to be surprised, that I do not hear those kinds of

stories coming out of our schools.

MR. CHAIRMAN: So you are saying that loss of

assets is not a major problem in your view? You are not aware of any great

amount of loss?

MR. ANDREWS: No. As I say, we have people

representing virtually every school in the district.

MR. CHAIRMAN: Thank you. Mr. Lee, do you want to

comment?

MR. LEE: Mr. Chairman, I would not want to

downplay the point that the Auditor General has made. It is a valid point. I

made that point earlier. We do need inventory tagging. There is no question

about it; and we will do the tagging, we will not have the staff and we will not

hire people, and what it will mean is that our principals, who should be in

observing teachers and working with teachers, will not now be in working with

teachers because what they are going to be doing, along with the non-teaching

staff, is counting desks, chairs and tagging and so on, and it has to be done,

we are not denying that, you make a very valid point and so did the Auditor

General; it has to be done because I think it will eventually save us money and

while I agree with Mr. Andrews that we have not heard of problems with loss of

equipment and so on, the bottom line, if somebody said to me, as superintendent

of the Avalon Board, can you prove it? I would have to say no.

MR. DUMARESQUE: Mr. Chairman, if I may interject?

MR. CHAIRMAN: Mr. Dumaresque, by all means.

MR. DUMARESQUE: Why would it take a principal to

tag a piece of computer equipment or a chair? I mean, the school is closed for

three months a year, do you not have any staff, do you not have any kind of

maintenance personnel or anybody who could go in there any time during the day,

purchasing people or anybody who would be able to put a tag on a piece of

equipment? May be not responsible for the whole school but, my Lord, I mean, to

make the point that you are going to take the principal out of his office to go

tagging chairs when there are so many other people there, at times when the

school is closed, it seems to me that it might be a good field trip or field

exercise for some of your students. Surely, there must be ways and means to do

this rather than take the principal from his office to make him count chairs and

put tags on them.

MR. LEE: I would suggest that the principal will

not be doing the tagging but the principal has to oversee the work; the

principal has to make sure that things are done properly and so on. The people

who will probably do the tagging will be the custodians and the cleaning

personnel and these types of people. When you say there must be people in

school, I would suggest that you visit our schools and you will see how many

people are in our schools with respect to cleaning and custodians and people of

that nature. It is just an extra job for which a principal is now going to have

to accept responsibility, which he or she did not have to do before.

Now, in a context of the nature that we are in right

now, that seems to be ludicrous, and I can see the point that you are making

sir, however I would suggest that you visit some of our schools and spend not a

day or an hour there, but spend a week or so and see what it is that we actually

do in school (inaudible) time.

MR. CHAIRMAN: How many people does a board have in

its purchasing, property management and maintenance divisions, full-time staff

who are attached to the board or schools in those capacities? How many people do

you have in your purchasing department, for example?

MR. JOHNSTON: We do not have a purchasing

department.

MR. CHAIRMAN: You do not have a purchasing agent?

MR. JOHNSTON: No sir.

MR. CHAIRMAN: Who does the purchasing?

MR. LEE: It is done through my department and

through the Director of Facilities and Sites.

MR. CHAIRMAN: How many people do you have in your

department responsible for purchasing and property management?

MR. LEE: Property management? We have three

people.

MR. CHAIRMAN: They would be whom, a director?

MR. LEE: A director and two area maintenance

supervisors, then we get into the union level.

MR. CHAIRMAN: So how many people are there at

union level?

MR. LEE: We have twenty-six custodians, we have

approximately sixty-three cleaners, we have twelve tradespeople and that is the

staff.

MR. CHAIRMAN: So then, whom would you have on the

board, leaving aside the principals and the teachers whose jobs are to educate

the children, how many people would you have attached to the board whom you

could utilize if you were today, to go to Bishop's College and do a physical

inventory of what is available there, how many people within the board staff

would you have?

MR. LEE: Well, the total non-teaching staff is

approximately -

MR. CHAIRMAN: Leaving out the teaching staff.

MR. LEE: Our total non-teaching staff including

school secretaries is approximately, I think, 160 people.

MR. CHAIRMAN: So somewhere out of those 160 people

we should be able to find two or three people who could undertake the task or,

as Mr. Dumaresque said, could supervise some students or some temporary workers

or something of that nature. I realize that we are talking here of a fairly big

job in the first instance, to do that, one-shot, but you do not buy that many

desks and chairs and computers in the run of a year that it would be an onerous

job to tag them as you bring them in if you are buying it through tenders,

invoice or whatever, it is a simple matter of putting a tag on them and logging

them. It is the initial job that we are talking about here, a one-shot deal.

MR. LEE: The point that Mr. Langdon made, looking

at the possibility of getting some people through the co-op program at the

university or something, that will be looked into and if we can achieve that,

well that will put us in a position where we will not have to do the type of

thing that I am saying, okay? All I am talking about is the initial job. After

that, it is a matter at the end of each year of the principal having his staff,

whomever they are, whether they are the teachers or whomever, up-date it for him

and get it into the office but the initial job is (inaudible).

MR. CHAIRMAN: Now I want to move on to other

members but before I do I just want to quickly ask you about your policy for an

appointment of consultants. I have some examples here of when consultants have

been retained by the board, some fairly lucrative contracts. Would you like to

explain some of those? Maybe somebody could help me with finding what page that

is on.

AN HON. MEMBER: Page 18, at the top of the page

there is reference to it.

MR. CHAIRMAN: Yes, I have that but there was a

listing of some consulting contracts, I thought - just a comment on how you

would deal with hiring consultants for various things. Let me just ask you this,

is there a policy in place? Do you have a fixed policy of engaging consultants?

MR. JOHNSTON: There is no formal policy in place

for hiring consultants.

MR. CRANE: On page 6 it says that Neil.

MR. CHAIRMAN: Page 130, 131 you have a committee

apparently, according to these notes, in place to consider consultants.

MR. JOHNSTON: This was an ad hoc committee that

was put in place in the fall of 1990, when the board became aware that we had

some significant construction projects upcoming. At that point in time we called

for proposals from the engineering and architectural community. Fifteen

proposals were received and after that initial review, five proposers were asked

to present their proposals in person to the committee. After that took place,

the committee recommended to the board a short list of three that would be used

in the upcoming construction projects and those three have now been used for

those major jobs.

MR. CHAIRMAN: Thank you, now I will move on to -

Mr. Langdon do you have some further questions?

MR. LANGDON: Yes, just a few, on the arena

operations on page 31, do you people operate, from the board, the Prince of

Wales Arena? Do you put staff there and pay them? Is that the responsibility of

the school board?

MR. JOHNSTON: Yes, Sir.

MR. LANGDON: It is. Just, out of curiosity, just a

general note, does the arena contribute or is it a liability for the school

board? In terms of dollars and cents, do you break even, is there a surplus or a

deficit?

MR. JOHNSTON: Over the last several years, on a

cash basis, the arena's have been a net contributor to the board on a cash

basis. We have two arena's, Prince of Wales Arena and Feildian Gardens. I would

like you to note though that that is on a cash basis.

MR. LANGDON: Yes, I understand that.

On page 31 and 32, I am not going to get into all

specifics and so on but there seems to be some problems, for example, with

payroll. Inaccuracies in the payroll deduction, clearing accounts which have not

been corrected and there has been - it says recurring for several years an

accumulative discrepancy of $28,862 has that been taken care of?

MR. JOHNSTON: Yes, Sir, it has.

MR. LANGDON: That is it for me Neil.

MR. CHAIRMAN: Thank you, Mr. Langdon. Mr. Hewlett

do you have any follow-up questions?

MR. HEWLETT: Just one general question with regard

to major operations, constructions, et cetera, do you comply strictly with the

Public Tendering Act of the Province? Are tenders taken in and put in a locked

box? Are witnesses, contractors and representatives present when the tenders are

opened?

MR. JOHNSTON: Are you speaking now of major jobs?

MR. HEWLETT: Major jobs, yes.

MR. JOHNSTON: Major jobs are normally handled by

the prime consultant and they will go to tender. They will receive the tenders

and then open the tenders with representatives of the board in place -

MR. HEWLETT: Representatives of the board but with

regard to -

MR. JOHNSTON: - and open to the general public.

MR. HEWLETT: - the tendering public or the

tendering bodies, let us say companies or whatever, is it made clear that the

tender for the building of school `x' is going to be opened on day `y' at 10:00

a.m., etc., and that all and sundry are present, or are at least invited to be

present?

MR. JOHNSTON: There are no tender openings at the

Avalon Consolidated School Board that are not open to the general public. Our

ads in the past had not included the opening time, and that was brought up by

the Auditor General.

MR. HEWLETT: And that will be corrected?

MR. JOHNSTON: It is being corrected, yes.

MR. HEWLETT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Hewlett. Mr. Penney?

MR. PENNEY: Thank you, Mr. Chairman. I would like

to pursue that same topic for a moment.

Mr. Hewlett was asking about the actual time and date

of opening of the tenders. Page 20 of this document states that: Our review

disclosed that tender documents are not deposited in a locked box upon receipt.

Could you explain to us what happens to them then?

Where are they placed, and who has access to them? Who might know the contents?

MR. JOHNSTON: One of the requirements that we do

have is that tenders be forwarded in sealed envelopes. They have been, in the

past, received by the receptionist and then kept by either my secretary or the

secretary to the director of facilities and sites.

MR. PENNEY: Still sealed?

MR. JOHNSTON: Still sealed, but not in a locked

box.

MR. PENNEY: Okay. So the tenders are not opened

and reviewed when they come in?

MR. JOHNSTON: Oh no, the tenders are never opened

until such time as the tender has closed.

MR. PENNEY: Okay, so the contents of each

individual tender is not known to anybody until the time that they are all

opened at the same time?

MR. JOHNSTON: That is correct.

MR. PENNEY: Okay.

I made a note of a number of things that I wanted to

touch on, specific little things, but most of them have been asked as the

questions have gone around; but if you will bear with me for a moment, on Page

15 it states that the schools act requires that the school board keep an active

record of all receipts and expenditures, and ensure that each and every grant

received from the department is expended only for the purpose for which it is

made.

The Auditor General states that there were several

examples of non-compliance of this

section of the act. One of them - it says

here, if you go down to number (b): Receipts from the School Tax Authority are

required to be recorded as current fund revenue. However, during 1991, $308,000

of school tax revenue was recorded as capital receipts.

Can you explain to me why that would be?

MR. JOHNSTON: Yes, Sir. I will read from the reply

that we sent to the Auditor General:

It has been the board's policy to balance its capital

fund activity on an annual basis. Since there does not appear to be any current

reporting provision to allow for a transfer of funds from the current fund to

the capital fund, the board provided such a transfer by designing a portion of

school tax revenues as capital fund receipts. If such a transfer had not been

made, current account deficits on account of capital would have been reported.

The transfer was necessary to offset inadequate

capital funding.

If I can explain it, each year we have been purchasing

more capital assets than we have received capital funds, so those funds come

from the current account. So to balance our capital account, which we were told

we had to do, we apportioned a portion of our school tax revenues. Instead of

showing it all as current, we took just enough from school tax revenues to

balance our capital account. It is only on the statement of revenues and

expenditures.

MR. PENNEY: If I may direct a supplementary

question to the Auditor General, having heard that explanation, is that still

not contrary to the school's act?

MS. MARSHALL: Yes, that is correct. The Department

of Education has prescribed that the financial statements be prepared in a

certain format, and all school boards are required to follow that format for

comparison purposes when the Department of Education wants to review all the

financial statements of all the school boards. Therefore, when we conduct our

audit we audit according to the standards that are prescribed by the Department

of Education.

MR. PENNEY: Forgive me for saying it this way, but

it almost sounds like if you want to buy a particular piece of equipment, and

you have already spent the money that you have been allocated to buy equipment,

you are going to take some of the money that has been given to you for

education, and just make a paper transfer and that makes it right.

MR. JOHNSTON: No, sir.

Under the funding formula that we were acting on at

the time of this audit, capital funding that was given to us by the Integrated

Education Council was not adequate to meet the capital requirements of the

board, in that, new construction for a building - we could have a $5 million

building - we would have to come up with 10 per cent of that cost, for roof

repairs that were funded by the Integrated Education Council, they only funded

70 per cent, we had to come up with 30 per cent. Fire Safety upgrading, which is

a big item within the school boards in the Province; the Integrated Education

Council only paid at that time 90 per cent and we had to come up with the 10 per

cent, so it is not that we took money that should be spent on education; we did

spend it on education to put the facility and the equipment in place for our

children.

MR. HALIDAY: As Chairman of the Finance Committee,

I would like to say that I have been on the Avalon Consolidated School Board now

for approximately twelve years. When I came on the board first, our financial

statements that we distributed to the public were very difficult to understand;

it was very complex, a maze of information, and we undertook a fairly

significant project which continued over a period of about two to three years,

to redesign the format of our financial statements and we have financial

statements which are presented to the public and included in our annual report

which is distributed to the public, and I believe that those financial

statements present the results of our operation in a very clear and

understandable form and shows quite clearly where monies have been spent; it

shows a relationship between the current account and the capital fund.

The statements that are referred to in this report, is

that same information which has been included in a preprinted form supplied by

the Department of Education. Until this report came in, I was not aware that the

Department of Education was not getting all of the information that it required

and in fact, the Department of Education has full access to the business

administrator to ask for any additional information, any explanations that it

requires in determining our financial statements. The matters that are referred

to here, all relate to how the information is put into this form for the

department.

The department does, of course as I say, have full

access to our staff if they require any explanations or any additional

information that they want. I also feel that the financial statements that we

present to the public, as I say, it presents that information in a very clear

and very understandable fashion.

MR. PENNEY: I say to Mr. Johnston, I was not

suggesting that there was any deliberate misappropriation of funds or any

deliberate wrong-doing, and I was not suggesting that if money was spent to

acquire a computer that this could not be justified as money spent in education,

that is not what I was suggesting, but there is a process of accountability and

that is the reason why we are all here today. You are spending public money and

the public needs you and demands you to be accountable; that is what it is all

about and if in fact you are spending a

section of money out of one little pot

that maybe should have been spent out of another little pot and you are making

paper transfers, that is what I was getting at.

MR. JOHNSTON: I am not aware, outside of a

specific grant that was for special education supplies, of funds that we receive

that are channelled in a particular way outside as teachers' salaries and

student transportation costs. The other monies that we received in these years

were by way of a pupil grant of $275, which came in, and out of that we had to

maintain our schools, equip our schools and pay all our staff. There were some

other smaller grants that were received which were not specific in nature and

are to be used in the operation of the Avalon Consolidated School Board. I am

not aware of any stipulations as to how school taxes were to be spent.

MR. PENNEY: Okay. There is a

section on page 17

that I would just like to read into the record and make no other comment except

to ask for an explanation.

It says: An annual general return is required to be

completed by all schools by the last school day in September of the school year.

These returns are completed by the principal of each school, submitted to the

school board office for verification, and signed by the superintendent. These

annual returns provide data on the student enrollment in each school. The school

board's major source of funding is provided by the Provincial Government through

various operating grants, and these operating grants are based on this

enrollment data. Our review disclosed that these enrollment figures are not, and

I repeat, are not being verified by the school board.

I said I was going to read it and make no other

comment. I cannot resist the temptation of course. Since the funding that is

provided to the school board coming from the provincial government is based on

this enrollment information, I have a problem with this not being verified by

the board. Maybe I am overlooking something, maybe I am looking at it

incorrectly, help me, please.

MR. LEE: The procedure that we use, and we do not

have any formal policy which says that someone from the board office has to go

out into the schools and actually count the students, okay? But what we have

been doing is that each of the assistant superintendents in my office is being

given so many schools for which they are responsible. When the annual general

returns come in, they are received by the assistant superintendent responsible

for personnel, who in turn compares them with the previous year's enrollment to

see if there are any major discrepancies, and each assistant superintendent will

speak to the appropriate principals of the schools for which they are

responsible. Now those are the procedures that we are using, however, we do not

go out and say, in Bishop's College for example, if there are 700 or 850

students, we actually do not go out and count those, we rely on the principal

and the vice-principal of the school and the teachers.

Now that has been pointed out as a concern, we have

indicated in our response to the Auditor General that we will be putting in

place procedures to do that. Incidentally when this was written this was

correct, the operating grants were based on the enrollment data. Right now the

new funding formula only uses that to a smaller extent but again, you know the

point that is being made here is that we have not been formally going out and

actually counting the students like the principals do. We rely on the

principals, the vice-principals and the teachers, but there are conversations,

there are comparisons from one year to the next.

MR. CHAIRMAN: My impression from reading the

sections is that perhaps the principals have not been reporting to you properly

and that you may have missed revenues due to the board from government. Maybe

the Auditor General would like to comment on that area.

MS. MARSHALL: Yes. This issue has been identified

not only during the audits of the school boards but also with the Department of

Education. There are no standard procedures or policies in place with regard to

what school boards should be doing in doing up their enrollment figures nor are

there standard policies and procedures as to what the individual schools should

be doing when they are coming up with their student enrollment figures. What we

are finding when we are auditing some of the school boards, is that there seems

to be an inconsistency as to whether, for example - part-time students - are

they required to be included in your total enrollment figure? The impression we

are getting is that each school board is treating things like part-time students

in a different manner, so what we are recommending is that the school boards and

the Department of Education prescribe standard policies and procedures so that

at least everybody is doing the same thing and everybody is verifying the same

information in the same manner.

MR. PENNEY: Mr. Chairman, if I may ?

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Ms. Marshall, basically, the comment

that you have made here then: our review disclosed that these enrollment figures

are not being verified by the school board. I take it from what your are saying

that that comment could apply to any school board in the Province?

MS. MARSHALL: Yes. No, I should qualify that. We

have found that problem to be existing in other school boards that we have

audited. Now we have not audited all the school boards in the Province so I

guess I cannot say categorically that it is problem with all.

MR. PENNEY: So it is not unique for the school

board represented by these gentlemen.

MS. MARSHALL: That is right, and it is not

confined to the Avalon Consolidated, it is really also a Department of Education

issue.

MR. PENNEY: Okay, I accept that.

MR. CHAIRMAN: I might add to that, many of the

problems we were discussing this morning are not confined to this school board.

MR. PENNEY: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Penney, are you finished?

MR. PENNEY: Yes.

MR. CHAIRMAN: Mr.Crane?

MR. CRANE: I suggest we break, okay?

MR. CHAIRMAN: I need one by the sound of it! Mr.

Crane.

MR. CRANE: Getting back to that counting again.

Mr. Lee says, we do not have the staff to do it, we do not have the staff to do

this. Sometimes you only have staff enough to do what you want to do, right? - I

do not mean you personally now - but anybody.

I look here at one notation that the Auditor General

made. She says: School board minutes not properly signed. Certainly it does not

take much time to sign school board minutes by the appropriate person or

persons, and the board does not take time to even do that. So if you want to

really get down to what you cannot do because you do not have staff to do it...

I want to ask you another question or two about the

school board offices. How many people, like secretaries and so on, do you have

working in the summertime? Do they work all summer long?

MR. JOHNSTON: Our school secretaries do not work

during the summer.

MR. CRANE: No, not the school secretaries but the

board, the office staff.

MR. JOHNSTON: Yes they do, but they have to take

their vacation.

MR. CRANE: Yes, three weeks, or -

MR. JOHNSTON: Three weeks, four weeks, five weeks.

MR. CRANE: Four weeks, say, but they are there two

months, right? What do they work at during the summertime that keeps them so

busy, other than the time they are off on vacation?

MR. JOHNSTON: Well, I have to say that probably

July and August are very, very busy times within the school board. Our payrolls

have to be met, okay?

MR. CRANE: Yes.

MR. JOHNSTON: Nine hundred people on payroll, that

has to be met every two weeks. There are the purchases. When the schools close

in June, everything comes down at the central office because the schools are

then empty throughout the summer. They expect that when they open up, the day

after Labour Day, that everything is ready for them, and it is a tremendous

amount of work that is involved.

The superintendent, the assistant superintendents, are

still in. They are still working throughout the summer. The central office does

not shut down, Sir.

MR. CRANE: I do not know much about school board

offices. I certainly do not know anything about yours, but do not push the issue

on how much the superintendent and assistant superintendents do in the summer. I

spent three months last summer looking for one superintendent. I have not found

him yet. So I have some reservations -

MR. LEE: Mr. Chairman, in all fairness I cannot

let that statement go by without a comment.

MR. CRANE: I am not referring to you.

MR. LEE: I know you are not referring to us,

because obviously you do not know.

MR. CRANE: That is right; I said that to begin

with.

MR. LEE: Yes, I realize that, Sir, and I

appreciate the point you are making.

I have five assistant superintendents who work with

me, and I can show you documentation that not one of us, in the last four years,

has been able to take our full complement of holidays during the summer.

We operate a school board in this Province of over 800

employees. It is one of the largest employers in the Province, I would suggest,

and it is a major undertaking. The number of times that we have to get called

back, and the number of situations that we have to deal with when principals are

not in their schools during the summer - parents are looking for things; the

Department of Education is looking for things - it is absolutely amazing.

I can assure you that if you call the Avalon

Consolidated School Board and cannot get an assistant superintendent, there is

something wrong because that does not happen very often.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: Sir, you might have an exceptional

school board, right?

AN HON. MEMBER: We do, Sir.

MR. LEE: We have an exceptional staff, Sir.

MR. CRANE: You might, at that, and not knowing, I

will not disagree with you.

Well, Sir, that is about all I have.

MR. CHAIRMAN: Thank you, Mr. Crane. Mr. Hewlett,

do you have any other questions?

MR. HEWLETT: No, I pass.

MR. CHAIRMAN: Mr. Dumaresque?

MR. DUMARESQUE: I just have one question that I

did not get a chance to ask on the issue of the retirement dinners. What is your

feeling now about the issue of retirement dinners? I think you did note that you

said whether you go ahead with them or not in the future is something you will

decide, because the people out there, fishermen, plant workers, and every other

general service worker, cannot look forward to a retirement dinner at the Hotel

Newfoundland, and in the times that we are in, with such difficult decisions

being made financially, what do you think you get and why do you think your

teachers deserve the retirement dinners?

MR. LEE: We have passed a policy, Mr. Chairman,

according to

Section 14 of the schools' act, which says that every board policy,

rules, regulations and by-laws must be passed by at least two school board

meetings. It was given very serious consideration, and it was the decision of

the board to continue with the retirement dinners.

If you look at the policy which is contained in our

policy manual, however, it does not indicate where we should hold them, what

type of gift we should give, who should attend, or anything of that nature, but

it is a recognition that the employees of the Avalon Consolidated School Board

have given sufficient effort and time that the board feels they ought to

recognize that effort, after a certain period of time having worked with the

school board. Whether it will be held at the Newfoundland Hotel or the Radisson

Plaza, or whether we will get one of the caterers in our schools to put it on in

the future, or whether we will hire a church hall, these are decisions which

will be made on an annual basis; however, the board has made a decision to

continue with retirement dinners. The specific actual operations of them will be

decided on an annual basis.

MR. DUMARESQUE: Where did you hold it this year,

this June?

MR. LEE: This year we held it in the Newfoundland

Hotel.

MR. DUMARESQUE: The same as last year?

MR. LEE: Yes.

MR. DUMARESQUE: At $8500?

MR. LEE: Pardon me?

MR. DUMARESQUE: At the cost of around $8500?

MR. LEE: I would say approximately what it cost in

the previous year.

MR. DUMARESQUE: Okay.

MR. CHAIRMAN: As I recall, the comments from the

Auditor General earlier, there is no authority in the act for that - you are

saying that the board does not have the right to make that kind of expenditure,

that is the problem.

MS. MARSHALL: Yes, I was looking for - where do

they have the authority to make this type of expenditure?

MR. CHAIRMAN: Do you want to address that? The

Auditor General is saying that you do not have the right to spend that kind of

money. It is outside the legislative authority of the board to hold that kind of

function, that is the issue here. Not so much as where you held it, what you had

for dinner and what you gave for gifts. I guess we can all look at it and say:

well it is a retirement dinner and at the end of thirty years I suppose teachers

or the staff are entitled to some sort of recognition.

MR. HALIDAY: We have very few opportunities to

recognize the contribution that our staff makes. We are very limited in the ways

that we can recognize both individual achievements and achievements of our staff

as a whole. While we feel that we have a lot that we still would like to

accomplish we are generally proud of the accomplishments of our teachers, they

work in a very difficult environment. We are also proud of our other staff who

are working in a difficult environment with limitations on funds available for

the maintenance of our schools.

This is our one opportunity to let our staff know that

we do recognize the contributions that they make. It is an opportunity where we

recognize people who have been with our board for long periods of time and are

retiring but it is also a recognition to all of our staff members that we do

acknowledge the contribution that they make. Very many of our staff make a

contribution beyond the minimum amount of requirements of their employment and

we feel it is a way of publicly acknowledging the contribution that they do

make.

MR. CHAIRMAN: I do not have a problem with that at

all, let me be very clear. My problem is, how do you do it legally? The Auditor

General is telling you that you are acting outside of your authority. Maybe the

Auditor General can tell us, is there a means that this can be done? Is there

some way to get authority or do we have to change the act to allow school boards

to do this?

MS. MARSHALL: I could not find any authority in

the existing School's Act. Initially when we brought the issue to the attention

of the board - we brought it to their attention, I think it was

Section 30, with

regard to remuneration and after discussions with the school board I went back

and took a second look at it but I could not find any authority for the board to

make that type of expenditure.

MR. JOHNSTON: If I could just ask a question. I do

not think there is anywhere in the School's Act where it says that we are to

spend money on professional development. It does not allow us to but we do do

it. Could we expect in the future to be told that we do not have the authority

to spend the money on professional development?

MR. CHAIRMAN: The Auditor General may want to

respond to that.

MS. MARSHALL: I do not have the act here before me

but there are specific sections in the act that outlines the responsibilities of

the school board and the responsibilities of the superintendent and the business

manager. Most of the things that the school boards do come under the umbrella of

those very general sections and I do not have them here before me.

MR. JOHNSTON: I think it is our contention that -

the retirement dinner is a personnel function, public relations or whatever, and

it has to do with the maintenance of the morale within the Avalon Consolidated

School Board.

MR. CHAIRMAN: I think we are into a matter of

interpretation and we will follow this up further when the next board comes

before us because I am sure that the same comment will be there and we will see

how they try to defend it. Mr. Lee you wanted one final comment on that? I do

not think we should belabour it.

MR. LEE: Yes, Mr. Chairman. The Auditor General is

referring to the duties, `the mays and the shalls', there is a Section, I think

Section 12 and 13 of the Act which outlines what the board may do and what the

board shall do. In all deference to my colleague, there is a

section in that

which says that the board is supposed to provide - in the act, it has been there

since '68, called in-service - and I think that would cover the point that Mr.

Johnston is making.

However, the board is mandated to run a school

district. There is nothing in the act which says that we are supposed to do

anything with respect to public relations. We spend all kinds of money on public

relations. There is nothing in the act, to my knowledge and I stand to be

corrected, which says that we can do that. We put this under that heading. If we

get a directive from the Department of Education that we are not to have

retirement dinners because it is not in the act and they can verify it for us

and that type of a nature, we will be the first ones to comply with it. However,

Section 14 of the act says that, `all rules, regulations and by-laws of the

board must be passed' and I quoted this at the beginning, by two meetings of the

school board.

We have now passed - we did not have it in the past -

in the last four or five months, I think back in April or May, a policy on

recognition of employees. Now if we are not allowed to do that under

Section 14,

that means that policy is illegal, but we would like for someone to tell us that

so we would know the direction in which we are going.

MR. CHAIRMAN: I am sure the Auditor General will

deal with that next year.

Mr. Langdon, do you have one final question?

MR. LANGDON: Yes, on Page 1 of the report, the

Conflict of Interest Guidelines -

MR. JOHNSTON: That has to do with another agency.

MR. LANGDON: Oh, okay.

Wait now. It says: Our audit disclosed that a member

of the board who serves as chairperson of the operations and maintenance

committee is also associated with a company which bids on the contract with the

board.

MR. JOHNSTON: It is not our board, Sir.

MR. LANGDON: It is not your board?

MR. CHAIRMAN: This is a Xerox page from the

ongoing Auditor General's Report.

MR. LANGDON: Okay, I withdraw.

MR. CHAIRMAN: No problem. That is fine, thank you.

Mr. Penney, do you have any further questions? Any further questions, Mr.

Hewlett? Mr. Dumaresque?

MR. DUMARESQUE: No.

MR. CHAIRMAN: There being no further questions,

does the board have any final comment they wish to make before we clue up, by

way of summation?

MR. ANDREWS: Just a final comment, I would just

like to thank the Public Accounts Committee for their patience in listening to

us. I certainly thank the Auditor General's office for being fairly perceptive

and helping us out where we were going astray. We certainly will make every

effort to correct some of the deficiencies that have occurred over the last year

or so.

MR. CHAIRMAN: Thank you very much. Ms. Marshall?

MS. MARSHALL: I would just like to convey my

appreciation to the school board, who spent quite a bit of time meeting with

myself and my audit staff.

MR. CHAIRMAN: Thank you.

On behalf of the committee I express our appreciation

to both the school board and the Auditor General. I want to emphasize again, to

the witnesses before us, that we may have appeared to be rough on you this

morning. Our role in this process is really the final step in the whole

accountability process. As you report to your minister, as your minister reports

to the House, and the Auditor General comments on that and reports to the House

of Assembly, we investigate or conduct hearings and report back to the House of

Assembly. We are the final step in the accountability process on behalf of the

taxpayer, and our role here today was simply to gather information.

I want to thank all of you for the forthrightness of

your answers and for coming forward this morning and giving us the benefit of

your knowledge.

To the Auditor General and her staff as well and, of

course, to the clerk and the staff of the House of Assembly, and my colleagues.

The meeting stands adjourned. We will resume this

afternoon at 2:00 p.m. with the accounts of the Janeway Children's Hospital.