February 9, 1994

PUBLIC ACCOUNTS

COMMITTEE

The Committee met at 10:00 a.m.

MR. CHAIRMAN (Windsor): Order, please!

Ladies and Gentlemen, if everybody is ready we will

begin the meeting. I call the meeting to order and the first item of business I

have is the minutes of October 14 and November 23, can I have a motion to adopt

these minutes?

On motion, minutes adopted as circulated.

MR. CHAIRMAN: I don't know if there any members

of the media here, I don't see anybody, there is not a lot of media in

Stephenville although I expected The Georgian to be here because they

expressed some interest in this issue. They will probably be here eventually. It

is too cold for them I suppose to get started this morning, their cameras are

frozen.

I would like first of all to welcome everybody

here. I would like to introduce the committee members, to my far right is Ms.

Elizabeth Murphy who is the Secretary to the Committee and Deputy Clerk of the

House of Assembly. Mr. Glenn Tobin, MHA for Burin - Placentia West. To my

immediate right is Mr. Danny Dumaresque who is the Vice-Chair and Member for

Eagle River; Mr. John Crane from Harbour Grace; Mr. Melvin Penney from the great

District of Lewisporte and Mr. Oliver Langdon from the District of Fortune -

Hermitage. Mr. Mark Noseworthy is our research person and Jack Oates is over

there with his ears on. He listens to everything we say and do, he records

everything we say and do and he brings it back to the people in Hansard who

transcribe it verbatim, as they do with everything that takes place in the House

of Assembly.

Having said that, therefore I would ask -

particularly of the witnesses who are here for the first time - if you would

speak into the microphone and if I fail to identify you before you speak, would

you identify yourself so that the people back in Hansard, in Confederation

Building who have to transcribe, know who is speaking. They are tired of

listening to our old voices, they can usually pick us out but for the people who

are here for the first time they have a little more difficulty. So I ask you to

please speak clearly into the microphones and again identify yourself if I fail

to do so.

Also I want to welcome the staff from the Auditor

General's office. Perhaps Ms. Marshall you would like to introduce the people

who are with you this morning.

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

Bill Drover, Audit Principal with the office and to my immediate left is Mr.

Claude Janes, Audit Manager with our office.

MR. CHAIRMAN: Thank you very much and I welcome

members of the Board. Mr. Mercer, who is the Chairman of the Board, perhaps you

would like to introduce the people who are with you this morning.

MR. MERCER: Thank you, Mr. Chairman. To my left

is board member Mr. Mike Finn, to my immediate right is our superintendent, Mr.

Andy Butt and next to Andy is our business manager, Mrs. Bonnie Clouter.

MR. CHAIRMAN: Thank you very much. I would also

like to mention Mr. John Berniquez from the Department of Education who

generally sits in as an observer whenever we are holding hearings dealing with

any of the school boards and we welcome him here this morning. We are pleased to

have him here with us.

Now that the news media have arrived - the car was

cold this morning, you are a bit late - we want to welcome you. You are

certainly welcome to be here. These are public hearings, anything that is said

is public information of course. Our records are kept and transcriptions will be

available. If you wanted to take some pictures we will give you a minute to take

some now or you can do some afterward. We do permit voice recordings as we do in

the House of Assembly but not television recordings.

I take it you are from the Georgian ?

AN HON. MEMBER: Yes.

MR. CHAIRMAN: So we are not worried about

television cameras this morning, but we do want to welcome you to the meeting.

Let me say, for the benefit of the witnesses, that

you will be giving evidence under oath. This is not a trial, by any stretch of

the imagination. It is simply a hearing for the Committee to gather information

to report back to the House of Assembly. The Public Accounts Committee, as we

have said many times, is basically the final step in the accountability process.

The issues are commented on primarily by the Auditor General in the Auditor

General's Annual Report. It is brought to the attention of the House of

Assembly, and the Public Accounts Committee is a Standing Committee of the House

of Assembly who deal with many of those items. We choose some of the items that

are reported on by the Auditor General, or brought to the attention of the

House. We may also deal with other items that are brought to attention by

Members of the House, by the House itself, or that the Committee itself feels,

in fact, may be worthwhile of the Committee's time and attention.

In this particular case we are here to deal with a

section commented on in the Auditor General's Report, paragraph 4.6 of the

Auditor General's Report of 1992, dealing with the Appalachia School Board.

Again, we will say we are here simply to gather

evidence, to hear your point of view, to give you an opportunity to explain your

point of view, to give the Auditor General and her staff similar opportunity,

not to enter into a debate or argument, simply to hear both sides of the story

and the Committee will report back to the House of Assembly in due course.

Having said that I will ask the Clerk, if she

would, to swear in the witnesses.

Swearing of Witnesses

Michael Finn

James Mercer

Andrew Butt

Bonnie Clouter

MR. CHAIRMAN: Thank you very much. We will proceed

now with the hearing on this matter. I am aware that Mr. Mercer has to leave

around 11:00 or 11:15?

MR. MERCER: About 11:25, Mr. Chairman.

MR. CHAIRMAN: Mr. Mercer has been subpoenaed to a

court hearing, I think. We will excuse him at that point in time if we are not

finished.

MR. MERCER: Thank you.

MR. CHAIRMAN: I, myself, have -

MR. TOBIN: That is one of the difficulties of

being a social worker in this Province.

MR. CHAIRMAN: Oh, sympathy coming from a former

social worker, and a former minister.

I also have an engagement around 12:00 here in this

hotel, so I am going to try to sneak out, if I can, if we are not finished at

that point in time. If we are not finished, we can come back after lunch, if you

want to do that. We will see how we progress during the morning, and the

Committee can give me direction at the appropriate time.

As I mentioned earlier, we are dealing with the

Auditor General's Report of 1992, and specifically the comments dealing with the

Appalachia Roman Catholic School Board.

The Auditor General made a number of points dealing

with general financial management of the Board, and it is clear from the

information made available to us that obviously there were difficulties in

combining two boards together under one board, and that is to be expected and it

is not unreasonable.

There were certain items that the Auditor General

pointed out and they were a matter of concern. As always, with every public

agency, the purchasing, and the public tender act, is a matter of concern that

seems to come up every time we deal with any board or agency outside of

government departments, and sometimes within government departments too, for

that matter. So there are a number of items like that that have been brought to

our attention.

Perhaps I will ask the Auditor General now if she

would like to make a brief opening statement by way of introduction of this

particular topic.

Ms. Marshall.

MS. MARSHALL: Thank you, Mr. Chairman. In March of

1992 we commenced a review of the Appalachia Roman Catholic School Board. Our

audit was directed primarily to those systems and transactions relating to

financial management, fixed assets and purchasing. Other areas, such as

transportation and salaries, were not included in this review but may form part

of future audits.

Our audit procedures included testing for compliance

with the various authorities under which the Board operates. Our review was

designed to assess: first, whether the financial management system was adequate

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

control of the Board's revenues and expenditures; second, that the Board was in

compliance with the Schools Act and related regulations; third, that the

policies and procedures were adequate relating to the control and use of fixed

assets, and; fourth, that the purchasing system was adequate to ensure

monitoring and control of the purchase function and compliance with statutory

requirements.

As a result of our review we reported as follows. In

the financial management area: we concluded that there were a number of areas

relating to financial management which need to be improved. For example,

policies and procedures in this area are not clearly defined and communicated to

staff. Also, a number of cases were noted where the Board did not comply with

the Schools Act.

In the area of fixed assets, control requires

improvement. All fixed assets are not recorded on the balance sheet and they are

not accounted for by the Board by other methods.

In the purchasing area our concerns related to a

failure to document procedures to indicate that the Board had complied with the

Public Tender Act.

Thank you.

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

would you like to make any opening comments?

MR. MERCER: Yes, Mr. Chairman, thank you very

much. I guess what I would like to say, and you alluded to it, Mr. Chairman, in

your opening remarks, is that both boards had just come together when the audit

was done. At that time both boards were operating, before they came together,

with two different sets of policies, and we were in the formation of putting a

policy manual together at that time, which is still really ongoing.

I guess the main thing was that we were concentrating

on efficiency. At one point in time in the last three years we were well over

$1.5 million down into a line of credit; at this point in time, I can report it

this year, and we are almost through the year now, or well on half-way through

the year, we have not yet touched our line of credit. So I feel that we are

tremendously efficient right now as we operate and set our policies and

procedures in place.

I, of course, handed you the annual report which will

give the Committee an idea as to what we were doing and what we are about at

this present point in time. This is the fourth year that we have come together

right now. I guess that is the big thing we have concentrated on in trying to

bring the two boards together, to operate the educational system in Bay St.

George in the most efficient way possible, to make the educational system better

for the children and much more efficient and cost saving. I think we have made

tremendous steps in that. For the specifics we are dealing with here I guess our

superintendent would be able to address some of those policies and procedures we

have put in place and that have made some difference in the last three years.

MR. CHAIRMAN: Thank you, very much. As we have

said we are dealing with one board now where there were two, when most of the

items referred to in this report were actually being dealt with. Nevertheless

they were items that are of concern and we need to look at that. I guess of

importance to the Committee will be what corrective action has been taken since

the Auditor General's Report began. We are not here to try anybody but are

simply here to find out what took place in the past, what has been done about

it, and what needs to be done about it. The House of Assembly will deal with our

recommendations in due course.

Mr. Penney, would you like to begin questioning today?

MR. PENNEY: Thank you, Mr. Chairman.

As the Chairman has stated this is just the next step

in the process of accountability because I think we all recognize that it is

public funds that are being expended and I think the taxpayer demands that kind

of accountability. Now, having looked through this booklet, and I am assuming,

Mr. Speaker, that everybody, including the witnesses, would have a copy of this?

MR. CHAIRMAN: I think so. Yes.

MR. PENNEY: One of the items here that I am

somewhat concerned with is the statement on Page 6 where the Auditor General

says: our audit disclosed that board trustees are reimbursed while travelling on

behalf of the Board up to $75.00 per day for meals and sundries. This does not

include accommodations and other expenses such as taxis. In addition to the

$75.00 per diem we noted cases where items such as meals, telephone calls, and

movies were claimed as part of a hotel bill. Now, I have some specific questions

to ask as it relates to that but before I ask those specific questions I wonder

if somebody first of all could comment as to the justification of that kind of

per diem and the justification of further expenses for meals in addition to

that, and whether the same practice is being followed today, whether the same

practice is being followed since the Auditor General's Report, whether there

have been any changes?

MR. MERCER: Well, the $75.00 a day has been broken

down. First of all I might comment on the fact of other things being involved

there, movies and different things like that, and the inadequacies that took

place. That was because of the policies of both boards and that has been

corrected. What we have now is the seventy-five dollars is a ceiling; you cannot

spend over that ceiling if you are away for a full day, but the actual per diem

is forty-five dollars a day not including tax, tips and different things like

that, that you would incur if you were away per day.

MR. CHAIRMAN: Thank you, Mr. Mercer. Mr. Penney.

MR. PENNEY: So the per diem then has dropped from

Seventy-five to-

MR. MERCER: Well, what we have actually done is -

MR. CHAIRMAN: Mr. Mercer.

MR. MERCER: The seventy-five dollars a day was

sort of - the policies of both boards were slightly different so what we have

done, is, we sat down and formulated a policy to be much more precise with that,

in that there would be no entertainment and the policy as such would be

forty-five dollars per day excluding taxes or tips or anything like that that

you would incur, and up to a ceiling of seventy-five dollars per day and by no

means, not over.

MR. PENNEY: Okay. In your reply to the Auditor

General, there was a comment made: Sundry expenses are essential since travel

usually brings its own expenses that would not be incurred when at home. Could

you give me some idea as to what those extra expenses would be that you call

essential, and were brought about because of travel that would not be incurred

while at home. Give me some idea as to what that would be.

MR. MERCER: I guess if you were away for any

period of time we were looking at things like dry-cleaning or laundry or

anything like that which you might incur, if you were away for three or five

days depending on if you were away and had to stay longer than anticipated; but

not over seventy-five dollars a day, as we really wanted to express in the

policy that that would in no way take place.

MR. PENNEY: Okay. You also state, and I say you, I

don't specifically mean you, sir, but somebody has stated that the trustees feel

that the per diem travel rate that has been charged up until this audit, was not

unjustified and you have done a comparison with government. I presume that would

mean federal and provincial; you have done a comparison with other school boards

and town councils, those types of things. Can you tell me exactly what groups or

what town councils, or what other school boards or what government agencies were

in fact used to make your comparison?

MR. MERCER: Well again, Mr. Chairman, remembering

that we were dealing with two policies of two separate entities when we came

together first, we sort of let the thing, in the formation of policy we let the

thing - well the audit was done almost immediately after we came together just

that first year and we had not yet formulated a direct policy for the Appalachia

Roman Catholic School Board at that time. At the time of the audit we were

formulating the policy on the travel for trustees and for senior management

staff.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: I would like to just finish with this

one particular item, Mr. Chairman, if I may, that is the only item and I will

then pass to my colleagues.

MR. CHAIRMAN: Go ahead.

MR. PENNEY: You state that the per diem of

seventy-five dollars for meals and sundries was not unreasonable in your opinion

when compared with rates used by government departments. I think the comment

made was: when compared with expense allowances for assistant deputy ministers,

deputy ministers, politicians and then it says meals, entertainment, et cetera

and you say that the boards per diem is not exorbitant.

I have here a copy of the travel rules that comes from

Treasury Board explaining exactly what is permissible and what is not for deputy

ministers. For a deputy minister travelling on the island portion of this

Province, he is permitted six dollars and thirty-one cents for breakfast, eight

dollars and forty-one cents for lunch, thirteen dollars and sixty-six for

dinner, for a total of twenty-eight dollars and thirty-eight cents. If he were

to travel to Labrador that total is thirty-one dollars and fifty-three cents. If

he leaves the Province and travels anywhere else in Canada it is forty-two

dollars and four cents. Now, do you still maintain or has your position changed

- do you still maintain that your rates are not exorbitant in comparison with

those others? Do you still maintain that those rates are justified?

MR. MERCER: Yes, Sir, I do.

MR. PENNEY: Okay, well back to my question, what

other school boards, town councils and government agencies did you poll to make

this conclusion? There is an

article in the paper that the mayor of your town

says that there was no check with the town council in Stephenville and they

maintain that their per diem rate is 50 per cent lower than yours.

MR. CHAIRMAN: Mr. Mercer.

MR. MERCER: I guess, Mr. Chairman, when we sat

down to formulate the policy we just took a middle line. That is the only answer

I can give you. We felt that the forty-five dollars plus sundries, taxes and

tips would not exceed seventy-five dollars but we looked at it as at forty-five

dollars.

MR. PENNEY: I have to make one comment: I totally

agree with the position that the government reimbursement for expenses is

inadequate. I think that is a direct quote, that the government rates are

inadequate. I have no quarrel with that. I don't think anybody questions that

the government rates of reimbursement are inadequate. Probably everything that

government expends in any department is inadequate because we are in rough times

and this is all the public money that they have but those other government

departments don't have that kind of authority to be able to indiscriminately

change the rules. Anyway, Mr. Chairman, I will pass for now.

MR. CHAIRMAN: Thank you, Mr. Penney. I think your

point is well taken. I might say for the benefit of the Board that the

politicians seated before you are entitled to a per diem of forty dollars a day,

by way of comparison for your benefit, and that includes taxes, tips and

everything else. You won't get those kinds of - I guess, contrary to public

opinion, we don't have lavish, first-class expense accounts.

I think the point Mr. Penney was making is well taken,

and it something, I guess, that really comes back to what we are finding, as I

mentioned earlier in my opening comments, relating to all Crown corporations and

agencies, the rules tend to be a little different than for government itself.

Perhaps what this committee is finding is that maybe there is a reason to deal

with that, and maybe a policy needs to come forward from government.

This is one of the concerns that I had as I looked at

many of the items commented on by the Auditor General in the report, and this is

not unique to your board. Don't think that we are acting on your board alone.

Every board that we have dealt with basically has the same types of items.

I think what we are seeing is that many of the rules

and policies of government and the Department of Education that are in place are

not necessarily being followed, and if they were, some of these difficulties

would not be as evident as we go from board to board or agency.

Who would like to carry on? Mr. Tobin?

MR. TOBIN: Mr. Chairman, I have just a couple of

brief comments, if I may. First, I think, as it relates to politicians, you will

find that the Cabinet ministers have an expense account that is much higher than

$40 a day, so probably when we talk about politicians we have to put it in

perspective. The peasants don't have one that great, but the ministers do fairly

well in terms of theirs.

It looks like, under

section 31 of this Schools Act,

the school boards are not allowed - probably I will give this to the Auditor

General - that

section 31 of the Schools Act prohibits school boards from

reimbursing people for lost wages?

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL: I interpreted that

section of the

legislation - it says: "Members of a school board or of an executive or other

committee of a school board shall receive no remuneration for their services,'

so I would interpret that as receiving no remuneration for the services that

they render as a member.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: Well, obviously, if it contravenes

section 31 of the Schools Act, it is not permitted, but I think we should

certainly take a broad look in that respect, and maybe someone should make the

appropriate recommendation to government for it to be changed, whether we have a

role in that or not. Because it is strange if the school boards cannot reimburse

elected officials for expenses incurred, and for lost wages, when municipalities

can. Municipalities in this Province do it, and if municipalities can do it for

elected officials, then I'm not sure why school boards shouldn't do it. And I

don't think it should be a burden placed upon anyone to have to take one's

vacation in terms of serving one's school board or any other -

MR. CHAIRMAN: Mr. Tobin, if I might, just by point

of clarification here, if I can interrupt you just for a moment, what the

Auditor General is saying is that the Schools Act, which is the act that this

board is under, specifically states, and she has interpreted that way.

As I recall, the Municipalities Act was changed a

number of years ago to allow municipalities to give certain levels of

compensation within certain guidelines. They deal under a different act, of

course, although your point may be valid.

MR. TOBIN: The point I am making is that -

MR. CHAIRMAN: The point is that the act now needs

to be changed.

MR. TOBIN: That's right.

MR. CHAIRMAN: You just don't do it unilaterally.

If we don't agree with the act, then there is a procedure to deal with that,

which is in the House of Assembly, with legislation brought forward by the

Minister of Education. So that is another issue.

Please carry on; I am sorry to interrupt.

MR. TOBIN: Probably we could make a recommendation

to that effect.

There are just a couple of things. I noticed the

Auditor General made a few recommendations to the school board as it relates to

recommending that the financial management manual be used for the documentation

and communication of board policies and procedures in the area of financial

management and control. Has the board implemented that policy yet?

MR. BUTT: The policy manual was begun basically as

soon as the board became, I guess, official on July 1, 1990. In fact, we have a

copy here with us if you wish to peruse the policies which have been approved by

the board. We also have a copy of the draft procedures manual, the financial

management manual, which is being worked on within our accounting department.

So, the documentation is proceeding and is added to, I guess, as much as is

possible to be added to each year in our operation.

MR. TOBIN: In terms of the point I addressed

earlier of reimbursement of board members who have to go on board business, do

you continue to reimburse them for their salary losses?

MR. MERCER: We interpreted the act a little

differently. As the act,

section 30, states: `Members of a school board or an

executive committee or other committee of a school board shall receive no

remuneration for their services' - and this is the part that we kind of

concentrate on - `but expenses reasonably incurred by them by reason of their

attendance at a meeting', we interpreted that, Mr. Chairman, as, to lose wages

means taking a loss, so any loss would be reimbursed. So it wasn't remuneration,

but it was reimbursement. That was our

interpretation of

section 30, so we

didn't feel we were breaching the act. And we have gotten some other opinions on

that from our independent auditor, who interpreted that for us the same way,

plus some legal advice on it. So we don't actually get paid for attending

meetings or attending day-long meetings or being out of town. We are reimbursed

for anything that we might lose because of that.

MR. CHAIRMAN: Ms. Marshall, do you want to respond

to that?

MS. MARSHALL: Yes. I interpreted expenses to be

things such as meals or accommodations, but remuneration, to me, clearly conveys

that you are being remunerated for the time that you (inaudible).

MR. TOBIN: Did you have a legal opinion on that,

Ms. Marshall?

MS. MARSHALL: No, I did not have a legal opinion

on that.

MR. TOBIN: You didn't.

MR. MERCER: Mr. Chairman, one example would be -

and Mr. Finn could pass out a copy - that we have an employee who works with the

company. If he would be called into St. John's, say, for instance, to attend a

meeting of the school board, the company will permit him to go providing that

they bill us for his day's wages, otherwise, he would have to lose the day's

wages. But he can go and attend the meeting in St. John's for one day and they

will bill the school board for that day.

MR. CHAIRMAN: Perhaps I can ask the Auditor

General, would you consider an invoice to the board, such as this, paid by the

board. Obviously, this is not being paid to the employee. This employee

continues to receive his salary.

MS. MARSHALL: No, I - no.

MR. CHAIRMAN: Would you consider this a legitimate

board expense?

MS. MARSHALL: No, because that is to compensate

for the remuneration for the employee. It goes back to the person who is

representing the board, so I would not construe that as a valid expense.

MR. TOBIN: The situation is that there are two

different

interpretations of the act, one by the Auditor General and one by the

school board, and I don't know who is in a position to judge or who has the

appropriate

interpretation.

MR. CHAIRMAN: Well, I assure you I'm not and I

don't think this committee is. I recall the same argument, as you quite

correctly pointed out, coming from municipalities a number of years ago and then

we dealt with that. That is perhaps what this board should do, recommend that

the Department of Education have an amendment to the act which clarifies that.

Mr. Butt you wanted to comment?

MR. BUTT: Yes, Mr. Chairman. This particular

policy direction was taken in consultation with the external auditors for the

board, who also expressed opinion on what the act says and what is a legitimate

expense. This action dates back to probably more than ten years ago, having, I

guess, first occurred with the Port au Port School Board. Since that time it has

been informally commented upon by members of the legal profession as to what

does that particular part of the act require us to do? I think, as Mr. Mercer is

explaining, that the members of the school board, itself, are comfortable with

the

interpretation of expenses in the way in which we gave it. We certainly

would welcome any clarification on that particular matter from the Legislature.

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

would you like to continue?

MR. TOBIN: Well, I am sure somebody wants to ask a

question, but I agree that someone has to put an

interpretation on that act and

probably you shouldn't leave it to the Auditor General to do it. May I suggest

that you people contact the Department of Education, as well, and ask for an

interpretation.

I will pass to someone else.

MR. CHAIRMAN: Maybe I'll ask the representative of

the department, Has the department ever dealt with that with other school

boards? Has there been a legal

interpretation from the Department of Justice?

Can you enlighten us any?

MR. BERNIQUEZ: I don't have any particularly legal

interpretation, but it was always my understanding that board members voluntary

MR. CHAIRMAN: Jack, can you hear that? Would you

mind coming up to the microphone for the benefit of Hansard?

Mr. John Berniquez from the Department of Education.

MR. BERNIQUEZ: Mr. Chairman, it is my

understanding that the position of a board member is an elected position,

primarily, of course, and is done basically on their own time. So I don't think

that we would necessarily consider remuneration of lost wages to be legitimate,

although I don't know of any legal

interpretation that we may have. We would

have to certainly look at the act and perhaps contact our Justice officials.

That is my understanding.

MR. CHAIRMAN: Thank you very much.

MR. TOBIN: I would like to ask a few questions.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: That is okay, in that sense, but let me

ask you this: Do you know of any school boards in this Province which bill

municipalities for lost wages for their employees when they are attending

meetings?

MR. BERNIQUEZ: No, I don't.

MR. CHAIRMAN: Have you had this difficulty with

other boards, for example?

MR. BERNIQUEZ: Not to my understanding. This is

the first case that I have known.

MR. CHAIRMAN: This is the only case that has

arisen, and the Auditor General concurs, they are not aware of any other.

Thank you very much. Having said that, I think it

still stands that it needs to be clarified. Obviously, the board has taken one

position, the Auditor General another, and we are not in a position to judge. So

I would suggest that the committee might wish to include in our recommendations

to the House of Assembly that the matter be dealt with by government and by the

Department of Education.

Mr. Tobin, are you finished for now?

Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

I just wanted to touch on the area of the Public

Tender Act. As Mr. Windsor has pointed out, it is not unusual, as a matter of

fact, it would be quite unusual, if we didn't find some exceptions to the Public

Tender Act within the school board. But I notice page 11 references a situation

where, of three purchases tendered by the board, over $5,000, in one instance

the tender was awarded to other than the preferred bidder, and this was not

reported as required by the Public Tender Act. I am just wondering what

explanation there is for not awarding it to the preferred bidder, and what

explanation for not advising the Lieutenant-Governor in Council of the

exception.

MR. BUTT: Mr. Dumaresque, the tender which was

called at that time was specifically for a used service vehicle, and we did not

find ourselves in a position to be able to purchase for a new vehicle where we

would be able to hold to a particular set of specifications that was narrow

enough to be able to, I guess, be absolutely clear on who the tender might be

awarded to.

We had, I guess, been clearly looking for the newest

vehicle with the lowest kilometres, with the most warranty and the best

serviceability, and the Public Tender Act doesn't allow for, I guess, a whole

lot of

interpretation when you look for that type of leeway in your

specifications.

We had some standards, in that we wanted a

six-cylinder vehicle. We wanted low mileage, with considerable warranty left. We

had a range that we were looking at for the purchase of the vehicle, and we

received three bids. The one which was chosen had low kilometres,

three-and-a-half years of warranty left, was a six-cylinder and so on. So in

our, I guess, assessment of the bids which were received, we believed that to be

the preferred bidder.

In choosing this particular one, one of the vehicles,

the higher priced one, was out of the picture because it was higher priced, and

it was a choice between two 1989 models. One was a V8 with high mileage and

virtually no warranty left, and the other was a six-cylinder with only 5,000

kilometres of mileage and plenty of warranty left. So we believed that was the

preferred bidder, and awarded the tender on that basis.

Obviously, if we believed that to be the preferred

bidder, then the subsequent requirement to get the approvals of the

Lieutenant-Governor in Council and so on, we did not believe were necessary.

Through discussion of this particular item, and

subsequent discussions with government purchasing and so on, we have tightened

up our tendering procedures so that we will not find ourselves in that situation

again, and we will be, I guess, much more to the letter of the law in terms of

what the allowances are under the Public Tender Act. So, in effect, that

particular one, we believe that we had the right to choose the best value for

the money that we had available.

MR. CHAIRMAN: Thank you, Mr. Butt.

Mr. Dumaresque.

MR. DUMARESQUE: In the next paragraph, referring

to purchases less than $5,000, it indicates that in eight out of ten items that

were selected, the Auditor General could not determine whether the lowest price

had been obtained because there was no documentation of quotes. Would you be

able to advise us as to whether that procedure has been tightened up, and, if in

fact the Auditor General were to go back now for anything under $5,000, that she

would be able to find the records and verify the quotes and so forth?

MR. BUTT: Yes. Mr. Chairman, that procedure has

been tightened up considerably, so that if anyone were to inspect our tender

calls this time, they could find all quotes and all documentations related to

those quotes. It is just unfortunate that we did not maintain the records in the

way in which the Auditor General wished them to be maintained at that time. Our

policy was to award to the low tender and we have been consistently doing that

throughout my history with this particular school board, but it is just

unfortunate that the documentation was not there to actually show that we were

in compliance on all of the other items referred to.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: A final point on the compliance of

the Public Tender Act, I guess, as it relates to the last part of the submission

by the Auditor General that, in one case some quotes were from two suppliers of

janitorial supplies and it was found that the second supplier had quoted a lower

price but did not get it, and the explanation was that it was more convenient to

deal with one supplier. What kind of convenience was there that would allow you

to divert from the lowest bidder of janitorial supplies?

MR. BUTT: Mr. Chairman, the process in use was an

old one, dating back to when cash flow and, I guess, considering availability of

supplies, it was really hard to match the amount of monies available with what

we wanted, and the process that was used was to ask for quotes on things like

toilet paper that we would use in large quantities, garbage bags that we would

use in large quantities, wax and so on from different companies, and then we

would pick off the quote the items which we believed to be the best price at the

time. Items were ordered basically on a week-by-week basis, so that this

particular manner refers to sometimes the person making the order, who, when

placing it for some items, would include some other items that might not have

been the lowest price; because there was a service truck or a delivery truck

that would be coming with twenty or thirty cases of toilet paper and you request

that they throw in a couple cases of garbage bags that were slightly higher in

that particular company. And having had that discussion, we have fixed that

particular problem because we now will tender a complete package and ask for a

single price for a total quantity of items that we would purchase in a

particular year. We now do not deal with two suppliers, we deal with one

supplier having won the bid through fair public tender.

MR. DUMARESQUE: I just want to touch on one other

area, and that is the area of where the board gave a 30 per cent increase to two

employees just before the amalgamation of the two school boards. Page 165, I

guess. Page 186 shows that the two employees received increases in excess of 30

per cent.

First of all, I guess, I just wonder how the board

could actually do it. Do you have to go - is there any mechanism at all where

you are subject to the Department of Education or Treasury Board or any place

before you make such adjustment? Is this the kind of liberty that the school

board has, that any time if you wanted to reclassify people and therefore give

them higher salaries that you can do it on such an ad hoc basis? Also, apart

from that question, how could this be justified in an atmosphere of very small

increases, if any, from the public service generally in the last three or four

years?

MR. MERCER: I would like to comment on that, Mr.

Dumaresque. That was done before the boards came together. It wasn't done by the

Appalachia Roman Catholic School Board. It was done by the Bay St. George Board

at the time. Of course, that board no longer exists, but, having been around at

the time, I can speak to the issue.

I am not sure of the act, but I feel, and I think I

would be right in saying, that for certain personnel who are not in the

bargaining unit, the school board can negotiate salary for those people, such as

the superintendent, business manager, supervisor of works, and different people

like that. The school board can set their own salary. There is a sort of

uniformity, I guess, across the Island and at that time the Bay St. George Roman

Catholic School Board felt that these people, as the boards came together, were

very grossly underpaid, and it was just a levelling up. There were no past wages

or back wages paid - the wages were paid just as they were - there was no

retroactive pay involved, there was just a bringing up on an even par as the two

boards came together. But that school board doesn't exist anymore.

MR. DUMARESQUE: The answer then, to the question,

is that, yes, the school board does have the liberty with all of its management

people to reclassify at any point in time?

MR. MERCER: Management people are just - I guess

you would be considering just four or five people. There would be the

superintendent, assistant superintendents, business manager, and supervisor of

works. All the other people who work for school boards are in bargaining units,

so the salary is set and arranged as such on their contract.

MR. DUMARESQUE: There was never any submission to

the boards? Well, I guess that may not be a fair question because you were not

there as a school board at the time that these kind of discrepancies occurred.

Up to a 30 per cent increase existed between the business manager for this

particular school and the one next door? It seems kind of unusual that such a

discrepancy would exist but obviously I take your word that it did. You would

have to ask what the business managers, or the others, were doing in those types

of positions, knowing they were so underpaid just next door to another school

board. That is an observation, I suppose, as much as a question. That is it on

those things, Mr. Chairman.

MR. CHAIRMAN: Thank you, Sir.

Mr. Crane do you have any questions?

MR. CRANE: Fixed assets, Mr. Mercer. Looking down

over the list of fixed assets certainly the Auditor General finds many things

wrong with the recording of fixed assets. Of course you would not have to do

much of a study to see a lot wrong with it. I am wondering how in the world you

would ever keep a record of what you have, or how do you know what you have? You

do not know what you have apparently because it says the recording of $203,181

is your fixed assets when documentation shows you have $92 million. Now, that is

quite a discrepancy I would say. Where in the world did these two figures come

from?

MR. MERCER: I think I will refer that to our

superintendent, Mr. Chairman.

MR. BUTT: Mr. Crane, the figure of $92 million

represents 600,000 square feet of building space multiplied by approximate value

of $150 a square foot, if you were talking about replacement, and that would

represent the $92 million. Of the $90 million figure the buildings themselves

would probably be worth in the neighbourhood of $80 to $85 million.

MR. CRANE: So that leaves you with about $6 or $7

million worth of fixed assets?

MR. BUTT: Right, and it has been acknowledged that

that is a provincial weakness in school board operations which is presently

being worked on. In fact there are recommendations now to the Department of

Education to adopt a particular format for doing asset control, whether it be

removable assets or fixed assets, and it is expected that in the next round of

changes with the school board structures those types of things will have pretty

well standard applications right across this Province.

MR. CRANE: Have you made any effort since the

Auditor General's Report to maintain a ledger or to tag equipment for fixed

assets?

MS. CLOUTER: We are in the process right now. We

have a fixed asset manual done and are waiting for approval, I guess, or waiting

for some word from the Auditor General. We had a copy submitted to her, and we

are also in the process of looking at a computerized package to handle our fixed

assets and purchasing tags to do it. We have also made an effort on our

financial statements to set up this approximately $38 million immediately after

the Auditor General's Report on fixed assets.

MR. CRANE: Well, you are certainly making an

effort anyway.

MS. CLOUTER: Definitely.

MR. CRANE: It never ceases to amaze me how a

school board - and you are not the only school board, like Mr. Windsor says you

have assets thrown all over the place, and I am sure in this day and age there

is always the opportunity for someone to steal. You would never know if anybody

was stealing from you or not when you have no record.

MR. CLOUTER: I think, Mr. Chairman, if anybody was

around years ago fixed assets were never recorded in school boards, years ago.

MR. CRANE: I know years ago. There were a lot of

things never recorded.

MS. CLOUTER: That is right.

MR. CRANE: It is a good thing some of them were

not recorded.

MS. CLOUTER: That policy has sort of come down

through the years, so....

MR. CHAIRMAN: I think, Mr. Crane, if I could just

interject for a moment, I think what the Auditor General was talking about here

was more a different way of accounting rather than anything being done

improperly here.

MR. CRANE: Yes, I know, but -

MR. CHAIRMAN: I think the system is in place now -

or you are getting it in place and the Auditor General is reasonably satisfied

with the process?

MS. MARSHALL: Yes, the school boards are working

with the Department of Education and coming to a consensus on how this should be

recorded on their financial statements, and also what procedures and polices

should be in place within each individual board to keep track of their capital

assets. They did submit a copy of the manual to my office which we reviewed and

it looked okay when we did the read through. We are now using that manual in

conjunction with an audit we are currently carrying out to make sure that it is

going to provide all the controls that they need.

MR. CHAIRMAN: Are there no policy guidelines

established by the Department of Education so there is a uniformity of systems

for all school boards?

MS. MARSHALL: No. Prior to the commencement of

audits of the school boards we were not aware that the Department of Education

had issued any guidance or policies or procedures regarding control over capital

assets.

MR. CHAIRMAN: It appears to me - sorry, Mr. Crane,

to interrupt, but I will get back to you in half a second -

MR. CRANE: Go ahead. That is okay, you go ahead.

You are doing fine, thank you.

MR. CHAIRMAN: From our discussions with a number

of school boards there seems to be a different system for every board to some

degree in accounting. Accounting, I always thought, should have been fairly

uniform simply from the basic accounting policies and principles that

accountants should use. I'm finding that that is not necessarily the case, that

auditors do things differently. I always thought I was the crazy one when I did

up my own books and the auditor looked at me, but I realize I was probably just

as right as he was now.

It would appear to me that there would be a great

benefit to the Department of Education - I don't mean to put Mr. Berniquez on

the spot again - from the Department of Education and the Auditor General's

office if there was a standard system in place. It would be much easier then to

compare one board with another.

MS. MARSHALL: There are two aspects to it. One is

the way the assets are recorded on the financial statements. The Department of

Education had issued some guidelines on that, but we had noticed during the

course of our audits that not all the school boards were following the policies

and procedures with regard to recording it on their actual financial statements.

The other issue is the control over the assets themselves, knowing where they

are at and that they are properly controlled.

MR. CHAIRMAN: There are two separate issues here.

The $92 million versus $203,000. Obviously you just didn't record as capital

assets the value of all the buildings and property you had, only what was

purchased that year and you were intending to pay off. That is just a different

accounting system. But control over assets, as Mr. Crane pointed out, and as Ms.

Clouter has indicated, you now have a system, or at least are proposing to put a

system in place. I think that is the biggest concern that the Committee would

have on this particular item.

Mr. Crane, I will put it back to you.

MR. CRANE: Yes, because if you had any write-offs

or disposals of old furniture, you would have no way of knowing what was

disposed of. If you didn't have any kind of a system in place, how could you

figure what was wrote off or what was thrown out? It must be a real frustrating

area to work in if you are trying to keep track of something when you have no

way of doing it, right? That is the only thing. The fact that you are making an

effort to get something in place is about all we can expect from you.

There is one other thing that struck me in the book as

I read through it - and there are many other things - but there is one other

thing. Can you give an explanation as to why the teachers payroll grants were

deposited into operating expenses? We have done a couple of school boards and

this is a new one on me, because I always thought that the government paid money

to school boards for certain things and it was deposited that way, then why

would you deposit teachers' salaries into operating account?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: The situation that Mr. Mercer described

in the beginning of our session today shows us as a school board having

considerable overdraft, and also being very, very concerned about interest

charges and other types of charges that would be coming our way. When Mrs.

Clouter was appointed business manager in this particular region, she asked a

simple question as to why we would maintain an account with a positive balance

all the time, and why we would maintain an account that had a negative balance

all the time when the difference between the interest that you earn and the

interest that you are charged would always result in your being overcharged at

the same bank, and when the question was asked: Is there any particular reason

why you have to maintain two separate accounts, and the answer was, that you can

maintain a separate payroll account in order to be able to clear the payroll

cheques efficiently, we would be going through probably 700 or 800 a month in

that account, and we could not find any particular compulsion to hold the

amounts in that particular account.

We held one general account which we were confident

with, where we could operate our payroll account by means of transfer of funds

into the payroll account, and in the early going we believe that that saved us

thousands and thousands and thousands of dollars of interest in our basic

operating; and we knew what our cash requirements were, we knew that we were

capable of operating that way and it was not contrary to any of the Schools Act

statements and we felt that it was good practice to do so.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: The Department of Education, do they

send out, say, payroll cheques, salaries, an amount of money to cover payroll,

do they segregate that or do they tell you to throw it all into one account? Is

there anything within the department that says you should keep salaries separate

from the general account?

MR. BUTT: We have a separate account for clearing

the cheques, and they just simply ask us for an account number to which the

amount is transferred.

MR. CRANE: Ms. Marshall, what do you see wrong

with that?

MS. MARSHALL: Well I am looking at

Section 12J of

the Schools Act, which says that every grant received from the department should

be expended only for the purpose for which it is made, and the payroll grant is

given for that purpose, to pay the payroll.

Now if that grant is being mixed in with their

operating funds and the operating funds is in an overdraft position, then

obviously the grant from the teachers is being used, albeit temporarily, for

general operating expenses, and I do not feel that is within the intent of the

legislation.

Within government itself, for example, the government

has payroll bank accounts and general operating accounts, and then for purposes

of calculating interest expense the bank themselves net the various accounts and

come up with the net interest expense for the government, and I would think the

same could be arranged for the school board, but it is generally accepted

practice that you would have a separate payroll operating account for your

payroll cheques, and for your operating expenditures you would have a separate

operating account.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: How do you accept the argument then, as

Mr. Butt is saying, that they have saved thousands of dollars by doing just

that? Is there an argument for that?

MS. MARSHALL: I think arrangements can be made

with the bank for the bank to net your two bank accounts. The government does it

that way, and I am sure that the school board could make a similar arrangement

with the bank, but it provides for better control of your expenditures and also

better control of your grants.

MR. CHAIRMAN: Ms. Clouter.

MS. CLOUTER: We do have a separate payroll account

for teachers' payroll. The only difference, I guess, in any other board and

pertinent to the act that Ms. Marshall is reading is that the transfer from the

department, once the teachers' payroll is done, is transferred into our

operating account. The bank has instructions where the payroll account is hooked

to the operating and they just net it out, as she is saying, okay?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Mr. Chairman, we have no concern that

payroll cheques will not be honoured, and we do not believe that we are using

payroll funds for any other purpose. They are just simply sitting in an account

that has certain limits on it, and when the payroll cheques are cashed then

monies are simply automatically transferred at the end of the day to cover

whatever the balance was needed.

We felt it to be important to us to save $3,000 or

$4,000 or $5,000 a year at a time when we were struggling to take care of high

interest rates. We had high interest rates in 1989-'90, and we are struggling to

eliminate the debt which had amassed between the two boards that were

consolidated. We did all of it, and we find now that we are in a better

position, that operating this way is actually very neat for us. It works well.

We can clear all of the accounts. We do not have money sitting idle in an

account drawing a few pennies of interest, and it works well for us. We have no

real basic disagreement with the concept of holding two, but it achieves the

same purpose.

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL; But if you have combined - if you

are using one bank account for your operating expenditures and also for your

payroll expenditures, if you have gone into overdraft on your operating

expenditures then effectively you are using your payroll grant to fund your

operating expenses until you go back into a plus position in your bank account,

so you are temporarily borrowing from your payroll grant to pay your operating

expenditures.

MR. CHAIRMAN: Ms. Clouter.

MS. CLOUTER: We do have two separate accounts.

MS. MARSHALL: You do?

MS. CLOUTER: We have an operating account and we

have a payroll account.

MS. MARSHALL: Okay.

MS. CLOUTER: The only difference is that when the

grant is transferred to our bank account it is transferred to our operating. The

bank, in turn, transfers it to the payroll account.

MR. MARSHALL: The entire amount?

MS. CLOUTER: Yes.

MS. MARSHALL: So you are not using your payroll

grant for operating expenses, for general operating expenses?

MS. CLOUTER: If you went back through the records

it would be very difficult to determine if the payroll amount had been used at

any point in time to pay an electrical bill or whatever. Especially this year.

Because we have not run into a line of credit (inaudible).

MR. CHAIRMAN: Mr. Crane?

MR. CRANE: Yes, go ahead.

MR. CHAIRMAN: I wanted to make one comment here.

As I see it, the money is being used for payroll purposes.

MS. CLOUTER: Definitely.

MR. CHAIRMAN: You are borrowing from it from time

to time to reduce the amount of interest you would pay on overdraft for your

operating account. I don't see that, quite frankly Ms. Marshall, as using

payroll grant for other purposes. I see it as borrowing from yourself, which is

good management of available resources on the Board's behalf. The only argument

I can see with it is that if that payroll money were in a payroll account and

earning interest there would be more interest available for payroll. So whatever

small difference that makes, there is an argument that the interest that would

have been earned by that payroll money which was given in advance by government

should be used for payroll purposes, and I guess it is a policy decision of

whether you need additional teaching staff or you need that money to help with

your operating costs. It is a fine point here.

MS. CLOUTER: Mr. Chairman, we consider it good

financial management to do it the way we are doing it. I have no concerns with

it. I don't think there will ever be a time when a teacher's payroll cheque will

not be cashed as such, because those accounts are hooked directly together.

MR. CHAIRMAN: I was going to ask the Auditor

General, if there was one account - I appreciate your argument that there should

be two, and I agree with that - if there were one account, and all funds were

put into one account, and the payroll cheques were paid and the operating

expenses were paid, would you then consider that you were borrowing from the

payroll account? How would you know?

MS. MARSHALL: No, but the problem that they

experienced was in previous years they have gone into an overdraft position with

their bank account. So, because it is in one account, they are effectively

borrowing from their payroll grant. In my opinion that is not in compliance with

section 12 of the Schools Act.

MR. CHAIRMAN: You would rather they borrowed from

the bank and paid a much higher rate of interest than they would have earned

from the money that is sitting in the payroll account, (inaudible) the bank?

MS. MARSHALL: No. I mean, you can have two

separate bank accounts, and your payroll account will be in a positive position,

and your operating would be in a deficit position, but the bank, as a service to

their customers, should be able to, for the purposes of calculating interest

expense, net the balance in the two accounts. The government ledger does it that

way.

MR. CHAIRMAN: Will the bank do that?

MR. FINN: Mr. Chairman, if I may -

MS. CLOUTER: The interest on an overdraft account

would be much higher than it would be on a positive account.

AN HON. MEMBER: That's right.

MR. FINN: Mr. Chairman, if I may. I would just

like to comment. I think what the Board has been doing in that respect is good,

prudent use of government's monies, and also assists the Board in reducing the

amount of interest charges.

MR. CHAIRMAN: I would tend to agree.

MR. CLOUTER: Mr. Chairman, a check on any

businesses in this area or any other area in the Province, would show that that

is a routine practice in all businesses.

MR. CHAIRMAN: What we are caught up in here is a

strict

interpretation of legislation which says this grant is for payroll

purposes and should not be used for anything else. It is not used for anything

else, (inaudible) used for payroll. It is borrowed temporarily, and there is

where we find there is a fine line there.

Ms. Marshall.

MS. MARSHALL: I still maintain my position.

MR. CHAIRMAN: I'm sure you do.

MR. BUTT: Mr. Chairman, I have difficulty with the

term borrowed. Because I think it is the account in which the money is received.

I would draw a comparison that if in fact your school board was large enough

where you operated with, say, two or three different banking companies, and if

you received, let us say in your head office at the Bank of Montreal but

teachers were going to hold accounts in the Bank of Nova Scotia in another

community, you would receive your payroll into a particular bank account and

disburse it according to where it was going to be used and I don't see that the

idea of borrowing is not what we are intending there; it was simply to have a

place in which monies that the board was owing for all kinds of purposes,

bussing, special operating grants, salaries, whatever, whatever grants the board

was owing were received into one account and then disbursed according to what

was required on a day to day basis.

MR. CHAIRMAN: Thank you, Mr. Butt. There being no

further submissions to this particular item, Mr. Langdon, would you like to

carry on?

MR. LANGDON: As a note about what was said so far,

before I ask a question, it seems to me, that what we have is

an act by the

Department of Education and the school board is looking at the act and saying:

well, okay, there are ways and modifications that we can use to better the

system and you are doing it. Now, whether that is right or whether that is wrong

on the school board's

part is open for

interpretation, because, if everybody

were to do the same thing, and I am not sure what type of a situation we find we

have, but I leave that with you guys.

One of the other points with the conflict of interest

guidelines that you had on page 169, the Auditor General was concerned that a

member of the board who serves as chairperson of the operation and maintenance

committee is also associated with a couple (inaudible) who bid on contracts with

the school board, and we note that this company was not successful in its bid,

however, we also note that we could not find any evidence that the member

exempted himself from pre-contract discussions relating to the tender, and my

question to you is: has this changed or is this a different policy, have you

made corrections to eliminate that?

AN HON. MEMBER: We do have a policy now on

conflict of interest and the situation has changed.

MR. LANGDON: So that he is no longer able to

participate?

AN HON. MEMBER: The member has resigned.

MR. LANGDON: Okay. Also, on page 119: Appalachia

Roman Catholic School Board, Administration Expenses ending June 30, 1992. If

you look at item No. 025, Board Meeting expenses, it went from $16,872 in '91 to

$38,950 in '92; could you give us some reason why that account more than

doubled? Were there twice as many meetings or whatever?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Obviously, we would have to actually

pull that particular year to examine what we are talking about, but if you

remember, that was the year in which the Royal Commission on Education Report

was done and we did find ourselves in that particular year into a lot more

discussions, meetings, provincially and nationally that were related to school

board business, so the amount that is there could represent extra initiatives

that came as a result of the consolidation of the boards, and also other demands

that were put on the trustees from a provincial perspective.

I think that that was also the year in which there was

a national event held in St. John's I believe, and it was held within the school

year which operates from July 1 to June 30 of a particular year. Also sometimes

there are some events that would happen on July 1 in our second budget year but

I remember that year an event held in St. John's was held within another budget

year which actually doubled the expense for one particular national event that

the board normally attends, and that would be the Conference of Canadian School

Boards which was held in St. John's, so that year there were two of those in the

same fiscal year that this board participated in that could inflate figures a

bit, but other than that, we found over the last two years that there are a lot

more demands on trustees in this Province, tremendous more demands, and this

refers to trustees, not to staff.

MR. CHAIRMAN: Mr. Langdon?

MR. LANGDON: Would that also be the reason for

item number 35 Special Events, amounts doubled as well? Would that probably be

related to number -

MR. FINN: At that time I think we had one of our

new schools opened and of course during those proceedings there was some cost

involved in opening the new school here in town, the primary school, Cassidy,

which is a joint services school.

MR. CHAIRMAN: While we are on that page, maybe if

I could just ask about item number 18 there, Bank Charges, decreased from

$78,000 in 1991 to $12,000 in 1992.

MS. CLOUTER: Mr. Chairman, that proves the point

that we were just talking about.

MR. CHAIRMAN: I was wondering, I am trying to give

you an opening.

MS. CLOUTER: It also shows what (inaudible) over

that period of time.

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL: But that was also as a result and

you said that your bank overdraft has declined in that the Board has a better

financial position so I would say that would be the primary reason for that.

That was (inaudible) financial position.

MR. CHAIRMAN: So there is nothing unusual here, it

is just that the situation is improving and you saved some money in interest, a

very significant amount of money.

AN HON. MEMBER: A good story, Mr. Chairman.

AN HON. MEMBER: We retired well over $1 million

worth of debt in the first three years of operation of this school board.

MR. CHAIRMAN: Extremely good.

We normally stop for a coffee break around now, do we

want a coffee break or due to the fact that Mr. Mercer has to leave shortly, do

we agree to carry on?

Mr. Dumaresque?

MR. DUMARESQUE: I wanted to ask a question on the

revenue side. This is a question that came up in a previous school board meeting

- now it is not on any of the pages - I am dealing with the revenue side on

pages 117 and 118. I know other school boards in the Province charge certain

fees for locker rental and other things in the school that students pay for, I

am just wondering if you charge any of those fees that students pay and if you

do, where they might show up in the revenue side of your ledger?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Mr. Chairman, all of the things

contained in our audit are things which the school board itself would have

covered under its umbrella mandate. Items that are specifically related to

school revenues and expenditures are handled in separate accounts related to

that particular school. We do hold responsibility for those and we do audits on

our school accounts. So any item like that, that a student would pay, would be

paid into a school account and then that particular account would have its own

set of records.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: So do you have any idea of the

amount of money that we are talking about, from all of your schools, that would

be collected by these other fees and set up in these accounts, and what kinds of

things would these monies be used for?

MR. BUTT: Mr. Dumaresque, to answer that question

we would need to take a particular school's records and pull off the answer to

that question on both sides of it, both the revenue side and the expenditure

side, but we do have it and every year a school is obliged to supply us with a

statement of account which includes the revenues and expenditures.

MR. DUMARESQUE: That is my point, I guess, that

you do have it and you are obliged to be told about it, but from what I see here

the public, John Q. Public, does not see what revenues are created in that way,

or what net revenues are derived, if any. There may not be any, but that is one

of the concerns that has been raised to me in the past, that these fees are

going up year after year to these students, and parents are saying that when

they ask school boards how these fees are spent, and where they are showing up

in the ledgers, they are not able to get the answers.

I guess some people feel that this money is very

discretionary, and while these monies are discretionary you are still getting

the same students going around to the doors asking for the purchase of various

other things, for paper and for other minor purchases in the schools, and there

seems to be a question in the public's mind that I think would be properly

addressed if you were to show that your schools raised so much revenue on your

revenue side, and the same thing on the expenditure side, in your statements

here.

MR. BUTT: We have begun to move towards the

establishment of finance committees in all of our schools which would have

parent representation on them, and to date every school has established a

finance committee, and while not every school has parents on them, they will

eventually. So any type of, I guess, request that would come from the public

will have a way of getting an answer to that question.

We would hope also to get to the point where schools

will publish, the same as we do, a financial statement of what monies were taken

in, and how they were taken in, and how they were spent. We believe we are

moving in that direction and we will have it becoming standard practice in time.

We do audits on all school accounts, and those are

done in a way in which we expose as much as possible to what the figures are,

and it is our desire, really, that they would be more open.

MR. DUMARESQUE: Okay. Well, would you provide

certainly myself, as one member of the Committee, with a list of the schools and

the information that they submit to you as to what money they do raise and what

money they spend, if it is a positive or a negative, and maybe some idea of the

type of things they spend money on.

Maybe I could ask the Auditor General, on that item:

are you aware of these accounts being there at the school level? Would they come

under your guise as you go through your accounting and auditing process?

MS. MARSHALL: We know that they exist, but no, we

haven't conducted any audits on them. I have just mentioned to Mr. Janes to make

a note of it to consider it for inclusion in a revision to our audit program.

MR. DUMARESQUE: That puts me onto another question

to you, I guess. As you know, earlier when you made your first submission you

did not audit the transportation side of the School Board's accounts. Was there

any particular reason why that wasn't done?

MS. MARSHALL: When we commenced auditing school

boards about two years ago, we started out with financial management and fixed

assets and purchasing, and we have now expanded into busing, transportation

grants. The last audits of two school boards that we did did include looking at

that area. So those items would be included in my next annual report to the

House of Assembly.

MR. DUMARESQUE: Thank you very much. That is it

for me.

Now that I have assumed the Chair I will transfer it

to Mr. Penney.

MR. PENNEY: Thank you, Mr. Chairman. A couple of

questions for clarification. If you would turn to page 18. No, I think that's

wrong. I think there are several page eighteens. I'm looking at the wrong one.

It is part of the 1991 financial statement.

AN HON. MEMBER: Seventy-eight.

MR. PENNEY: Seventy-eight? That wasn't the one I

was referring to but that was one of the questions as well. You will notice

there that there is a notation: Reserve Account - Capital. A minus figure of

$1.077 million. Then there is an explanation, note 5. That is on page 85. When I

turn to that one the page is blank. Could somebody explain to me what that is

all about?

MS. CLOUTER: If you look at page 86 you will see

it.

MR. PENNEY: Page 78, Reserve Account - Capital.

The explanation for it is on page 85, supposedly.

AN HON. MEMBER: The explanation I guess is on page

86, Mr. Penney.

MS. CLOUTER: Again, it just relates back to the

fixed assets not being recorded on the financial statements.

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL: I think, Mr. Chairman, one of the

figures doesn't belong there.

MR. PENNEY: If you go back to page 78, if you were

to try and

resolve those totals, the total board equity is minus

$1.161 million, but you have already, minus $2. something if you add them

together. I think Ms. Marshall, one of those figures probably should not be

there.

MR. CHAIRMAN: Ms. Clouter.

MS. CLOUTER: Well again, the problem is the

investment capital asset at the top of page 86 is in a minus, which goes back to

the fixed assets not being recorded on the statements in that particular year.

If you go to the next year, you will see that fixed assets have been recorded of

$38 million.

MR. PENNEY: Yes, so you do not see a problem with

your balance sheet on page 78?

MS. CLOUTER: There was a problem in that

particular year and again, it was the two boards coming together and as a result

of the two statements coming together, it created this problem.

MR. PENNEY: Ms. Marshall, from an accounting point

of view, does that look okay to you?

MS. MARSHALL: I am trying to add it but I don't

think it adds.

MR. PENNEY: I don't think it adds either.

MS. MARSHALL: I don't think it adds; I am just

trying to -

MR. PENNEY: While she is doing that, the other

item, I haven't found it but there is a notation called miscellaneous and then

it says Pathfinders $172,000, I am just wondering what that was?

MS. CLOUTER: Pathfinders, Mr. Chairman, is a

computerized project we are running in the Appalachia Board and is funded by

CEIC projects.

MR. CHAIRMAN: So there is revenue against that, is

there, from CEIC, total?

MR. BUTT: Yes. To be very specific, it is a

program which is funded under youth strategy, with contributions from the

Sisters of Mercy and the Presentation Sisters to get started, plus contributions

from the School Board which is aimed at heading off potential dropouts within

the school system and giving them an alternative from I guess, the regular

school routines, and it is a very high-cost item; it involves a computer network

of ten computers with a pretty expensive software package that individualizes

the program which the students get and we feel it to be something that is highly

effective in dealing with older teenagers who require additional programming

within our area, and if you refer to our annual report you will find a

section

in there which explains that and tells you what the latest development is on

that, and certainly, if you are interested, that is a project that I will be

only too happy to take you on a tour of,if you have the time.

MR. PENNEY: So there is a corresponding revenue

(inaudible) dollar for dollar?

MR. BUTT: Yes.

MR. PENNEY: Okay. Mrs. Marshall, have you -

MS. MARSHALL: (Inaudible).

MR. PENNEY: Pardon?

MS. MARSHALL: It does not add.

MR. PENNEY: It does not add?

MS. MARSHALL: No, it does not add.

MR. PENNEY: And is it out by that figure?

MS. MARSHALL: Yes, that is what it is out by, you

just have to remove the second, 1,077,547.

MR. PENNEY: So that second 1,077 really should not

be in there?

MS. MARSHALL: I don't think it belongs there, no.

MR. PENNEY: Well, aren't those financial

statements sent to the Department of Education for some kind of scrutiny or

evaluation, prior to your having seen them?

MS. MARSHALL: Yes, Mr. Berniquez, could probably

speak to that, but yes, they go to the Department of Education for review and

assessment and comparison among the various school boards.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: I am hoping I have my page numbers

correct, so that we do not have any unnecessary inconvenience. Page 5, Board

owned buses purchased from the Port au Port Roman Catholic School Board are

recorded as assets and are being amortized over the repayment period; buses

which were purchased by the Bay St. George Roman Catholic School Board are not

being recorded as assets and are not being amortized, could you explain?

MS. CLOUTER: Again, that would be two boards

coming together, one board had one way of doing it and the other board had

another way and that problem has been corrected. They are recorded now.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Page 9: We recommend that the board

verify the enrollment figures on the annual general returns before they are

submitted to the Department of Education, et cetera, and the Boards response;

this recommendation will be examined and some accommodations should be able to

be made. Could you tell us what has happened in that regard?

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Thank you, Mr. Chairman. This point has

been raised by the Auditor General on a number of occasions with other boards

and as I understand the situation - and Ms. Marshall can correct me if I am

wrong - the intent with that particular recommendation was that since the school

board revenues and allocations are so driven by the number of pupils that are

contained in our schools that there ought to be some way of ensuring that people

aren't fiddling with the figures and that they don't end up with numbers being

reported that are inaccurate or have, I guess, not been verified in some way. Am

I correct in that?

MS. CLOUTER: Not so much as fiddling with the

figures but the information is coming from quite a number of schools throughout

the Province and then up through the system into the respective school boards

and then on to the Department of Education. I think there should be a system in

place to ensure that all schools are accumulating this material or this

information in the same fashion and then when it goes to the school boards, the

school boards are using the same process to do what they have with the

information and on to the Department of Education. Just as an example, part-time

students, are they always included as a full time student in all schools for the

purpose of generating the student enrollment figure? It is that sort of thing

that I would like to see clarified to ensure that all the schools are

accumulating the information in the same fashion.

MR. CHAIRMAN: Mr. Butt.

MR. BUTT: Mr. Chairman, in answer to that

question, it was my belief that we are in fact verifying figures as we go

through the years. In fact, I will table with you samples of the work which we

do, where we do enrollment projections, where we do class size monitoring and

all kinds of things of that type that are done independent of the collection of

data related to the student numbers on the annual general return which is

counted on a particular day in the school year, it has to be counted on

September 30, all throughout this Province.

In my work day to day with the school system, the

assistant superintendent's work, the business manager's work and the person who

handles furniture for us, we are all concerned with the number of children who

might be in a particular classroom at a time. So when looking at this one, we

examined what it was that we were being asked to do. While it will take some

looking at to determine whether or not we have a proper verification procedure

in place - and I would certainly be willing to talk to Ms. Marshall about that

and will table with you supplementary reports which are generated independently

of the annual general return - which verify the numbers that are contained

because they are done at different times during the year and that would just

simply allow for a drop-out or two that we would experience in a year. So I can

understand the concern. I believe that one is being met and that at any

particular time we can feel secure that the numbers which are being used do have

checks on them and that they are accurate within the system. If there is some

other system which might be recommended, then I would suggest that it would need

to be a provincial recommendation as opposed to what would be done in a

particular school board to settle this problem. I table this with you for your

consideration in relation to that particular comment.

MR. CHAIRMAN: Thank you.

Mr. Penney.

MR. PENNEY: Mr. Chairman, before Mr. Mercer

leaves, one question. I ask it now simply because I respect that you have to go.

I go back to the very first question I asked here today as it related to the

travel expenses and per diems.

One of the recommendations that was made by the

Auditor General in her report, and I will quote it verbatim, from page 7: "We

recommend that the Board adopt travel guidelines similar to those followed by

government departments under the direction of Treasury Board. These guidelines

should be consistently applied for all officials of the Board."

Recognizing what has been said in reply to my

questions earlier today I will ask you at this time, are you prepared or willing

to comply with that recommendation from the Auditor General's office?

MR. MERCER: I guess I can speak on behalf of the

Board, Mr. Chairman, and say that we are certainly willing to sit down and

discuss that with the executive and bring the Auditor General's recommendation

to the Board and discuss that further.

MR. PENNEY: Very well. Thank you very much.

MR. CHAIRMAN: Mr. Mercer, before you go, thank you

very much for being here, for participating in the debate. We are pleased with

the cooperation we have received from the Board and understand you have to

leave.

MR. MERCER: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: I just have one final question. It

came up before on school boards again, under Special Events on page 119. That

$4,285, is that for a retirement party?

MR. BUTT: That would be any event that the Board

itself would authorize. I guess the practice of the Board would be to hold a

dinner at the end of the year for retiring teachers, caretakers, secretaries,

any of the people who would be leaving the employ of the Board. It very well

could be in there, yes.

MR. DUMARESQUE: Just for our information, I guess,

again. You have a retirement party every year. We know that in other school

boards they also paid the complete meal and accessories for everybody who

attended, not just the retirees. Is that the same practice as you follow?

MR. BUTT: Yes. The invitation list would be the

executive of the school board, the retirees and a guest, and only representation

from senior management.

MR. TOBIN: If all the teachers in that school

decided to attend, I mean, they would pay their own way?

MR. BUTT: No. There is an invitation list, and it

is extended to six members of the executive of the school board and, I believe,

six members of the executive staff, and then the retiree and a guest.

MR. DUMARESQUE: It wouldn't be like the one in St.

John's, I guess, where there were 30 people retiring and 225 people actually

attended the retirement party, and it all got paid. It wouldn't be anything of

that nature.

MR. BUTT: No. The guest list is limited. It

happens in the month of June for those people only who are retiring and to be

recognized for their service. On behalf of the board, they would receive a

simple retirement plaque and the occasion would be a simple evening of a couple

of hours, with a catered meal.

MR. DUMARESQUE: Thank you.

MR. CHAIRMAN: Thank you, Mr. Dumaresque.

Mr. Crane?

MR. CRANE: I have no further questions.

MR. CHAIRMAN: Mr. Langdon? Mr. Penney?

MR. PENNEY: Just another couple of questions, Mr.

Chairman. I would like to go back to the remuneration of pay lost when board

members have to attend meetings. Could you give us some idea just how many days

of salary remuneration there would be over a year? First of all, how many board

members are there?

MS. CLOUTER: Eighteen. We had eighteen of them.

MR. PENNEY: Eighteen?

MS. CLOUTER: We are down to sixteen now.

MR. PENNEY: Approximately how many days per year

would those people be expected to attend meetings with loss of their regular

pay?

MS. CLOUTER: Mr. Chairman, I wouldn't be able to

put it in days, but I can tell you the dollar figure on it.

MR. PENNEY: Okay, that was my next question.

MS. CLOUTER: In one particular year we had $3,000

budgeted for it, and I think we may have used $2,500 of the budget amount.

MR. PENNEY: So it is only $2,500 for the year.

MS. CLOUTER: For the year - a very minimum amount.

MR. PENNEY: Because I'm looking at page 188 where

it says: regular business meetings of the association, six days a year; liaison

meetings with the Minister of Education, three days a year; attendance at

provincial/national seminars, five days a year, et cetera. The total is

twenty-two days.

MS. CLOUTER: Yes, but you would have only one or

two trustees attending one or two functions during the year.

MR. PENNEY: Fair enough. When you look at that,

the first reaction is to take twenty-two days and multiply it by the number of

board members and if you multiply that by what one would consider to be an

average income, it is a lot of money. But when you say it is only $2,500 that is

a considerable difference from what I had envisioned.

MR. BUTT: It is used if a person who is an elected

trustee or a appointed trustee is required to actually officially represent the

school board - that would be like today. There would be some difficulty with

arranging time off, let's say during the daytime, to have this meeting when the

trustees would normally meet in the nighttime and on weekends to do the ordinary

business of the board.

MR. PENNEY: Yes. One last question, unrelated to

anything that I have seen in this report. Does your board provide computer

software for library management to the schools? Could you tell me what brand you

use?

MR. BUTT: We have, this particular year, approved

one pilot project at St. Stephen's High School to use the Molly system.

MR. PENNEY: How much did you pay for the Molly

system?

MR. BUTT: We paid $3,000 or so.

MR. PENNEY: So you just have the one package?

MR. BUTT: And we are piloting it in the largest

school we have to determine whether or not it is the system we feel is going to

be best for our school system.

MR. PENNEY: So there was only one package of

software purchased?

MR. BUTT: Yes, at this time.

MR. PENNEY: Thank you very much.

MR. CHAIRMAN: There is just one item that I want

to bring up here as relates to public tendering and the hiring of consultants.

The booklet tells us that there were no policies in place dealing with the

selection of consultants, and of greater concern to me was that tenders, in many

cases, were called and dealt with by the consultants and the board advised to

whom the consultant had awarded the tender. That seems to be an unusual

practice. The consultant, obviously, is an advisor to the board, but it

certainly didn't indicate any control over the tender procedures,

confidentiality, and the whole question of conflict of interest that was raised

earlier. Can you tell us what you have done, since the Auditor General's report,

on that? Have the procedures changed?

Mr. Butt.

MR. BUTT: Mr. Chairman, at that particular time

when the audit was being carried out, there was considerable debate about the

engagement of a consultant to do, I guess, the design and the on-site inspection

and so on of a major project which we had coming up. What we had done at the

time was call for proposals from consulting companies to submit their packages

and tell us what they could offer us, what their fee structures were and so on.

Actually, that is what has been the practice with all major construction

contracts, to call for proposals and evaluate the proposals to determine which

consultant would be used on a particular project.

I guess, the particular reference here to consulting

and awarding contracts, under construction projects of that type, the

consultants would prepare all the tender documents and ensure that all the

specifications were within appropriate limits for Canadian standards, fire

commissioners, all those kinds of things, and on our behalf, would be a place to

receive the bids. They would evaluate the bids and make a recommendation to us,

and we would, in fact, award a contract to a construction company to complete an

extension or to build a new school. So it is not really accurate to say that the

consultants were awarding the contracts. They made a recommendation to the board

as to whom they would recommend as the company who would get the bid, and in all

instances that I have been associated with in this area, they have recommended

the low bidder.

Further to that, the Auditor General made a

recommendation that we consider the guidelines that are adopted by Treasury

Board for the hiring of consultants, and those were tabled and discussed at a

finance committee meeting, and we are continuing to, I guess, use the same

procedure. We have so few major construction projects that this is going to come

around once every two or three years, that we would actually have to engage a

consultant to do this work for us. So that is a procedure that we use and we

believe it does work efficiently for us, but we still make the decision based

upon recommendations. The consultants also were required to insure that the

Public Tender Act is followed, that the POA allowances are right and so on; they

do all that work for us.

MR. CHAIRMAN: Well, that is the question, are they

doing that, in fact? Let's get back to your hiring consultants again. You are

now following Treasury Board guidelines for the selecting of consultants?

MR. BUTT: Well, we had some difficulty with

knowing how they would apply to us and they are still around. For instance, the

Treasury Board guidelines would give certain limits on who can engage

consultants within the public service and we have an all or none situation. If

we are ready to engage a consultant for a construction project, then the board

decides. So I do not have the authority to engage consultants to design a school

building, let's say. The board would make that particular decision and that

would be as a result of calling proposals.

MR. CHAIRMAN: (Inaudible) the board make the

decisions.

MR. BUTT: Calling proposals -

MR. CHAIRMAN: On the proposals.

MR. BUTT: - and the proposals then would be

evaluated by the finance and property committee of the school board and that

committee would make a recommendation to the whole board to engage a particular

consulting company.

MR. CHAIRMAN: Okay. You get into the construction

project, various tendering activities are involved with the construction

project. Who conducts the tender call?

MR. BUTT: Consultants call all the things

associated with running that particular project. And there is only one tender

call, by-and-large, and that is the tender for the whole project. If we have

furniture that we wish to purchase, we will tender the furniture ourselves.

MR. CHAIRMAN: Okay, so the consultant calls the

tender, the board makes the final decision based on the recommendation from the

consultant. Normal purchasing practices, you invite tenders, what is the

procedure used there?

MR. BUTT: The procedure would be, first of all, to

determine the -starting off with the budget that is allocated for a particular

item. For instance, right now we have just finished calling tenders for

computers. We have a computer specialist who decided on the specifications of

the equipment we were going to purchase; we decided on the quantities that we

were aiming for and the outside limit on the numbers of dollars we wanted to

spend. We called the tenders, received them in our office, they were evaluated

by the business manager and the specialist in that particular field, and then

you arrive at the - hopefully, the bidder who meets all of the specifications

and is able to, I guess, meet the requirements of the tender call; and, as I

said, in all cases, the focus is on the low bidder, to see whether that person

is capable of meeting all the requirements of the tender call.

MR. CHAIRMAN: So the Public Tender Act is followed

and -

MR. BUTT: We believe we are following the Public

Tender Act all the time and that is why, when these types of questions are

raised, we take them seriously and consider them to be anomalies that we will

correct and will not knowingly, subvert the system, because actually, it will

cause us much more difficulty to do it differently than it would be to follow

the letter of the act.

MR. CHAIRMAN: Not an option that is available to

you either.

MR. BUTT: Right, besides that, yes.

MR. CHAIRMAN: Let me ask you this: When the

tenders are received in your office, are these sealed tenders, opened publicly

and subsequently analysed?

MR. BUTT: Yes, and we have such things as not

receiving tenders by fax and so on, that they are all supplied to bidders as

part of the thing. We develop a package and people will have to ask us for the

package if they want to bid on the items we will offer for tender; but it is

sealed, opened at a particular time, opened in public. The bids are documented,

signed by the people who are there witnessing the opening of the bids, and

usually within a week or ten days we will send around to the bidders our

evaluation of the bids, based upon the specifications which we have set.

MR. CHAIRMAN: So there appears to be a

considerable improvement from two years ago?

MR. BUTT: Well, I believe that our procedures,

even two years ago, were good, and while we have learned from the things which

were pointed out to us by the Auditor General's staff, and where we felt there

was a weakness, we are certainly making sure that we do not fall into those

types of situations again.

MR. CHAIRMAN: Do the members of the committee have

any further questions?

Ms. Marshall, do you have any final comments, or

anything you wish to offer at this time?

MS. MARSHALL: No, I don't, Mr. Chairman.

MR. CHAIRMAN: Thank you.

Mr. Butt, do you or anybody else from the board have

any final comments or observations you wish to make?

MR. BUTT: Just a final comment, Mr. Chairman, if

you will.

We supplied you with a copy of our annual report, and

I think that while you have focused on the issues related to the Auditor

General's Report, that our operation is a very, very broad operation that we

would certainly like to make members, I guess, aware of, in terms of the service

that we are delivering, the quality of that service and the commitment of the

people who are delivering the service.

I would certainly welcome any member of the

Legislature who is interested, after you look at our report, to get to know us

in a different light from that of the types of issues which, I guess, have

appeared in the report, because we have, I think, a lot that we are offering to

the children in this area, and since you will also be, I guess, very important

people when it comes to the determination of the education dollar, you should

have some feeling as to the kind of education that children get under our

particular jurisdiction. We would certainly welcome you to participate in our

district's activities, and I would be only too happy to show you through some of

the very exciting projects which we have ongoing.

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

On behalf of the committee, let me assure you that

both the committee and the House of Assembly generally are most interested in

the education of our children and the service that school boards, and people who

volunteer on those boards, as well as the professional staff, give to our

Province and the young people of our Province.

In my own view, what I have heard here today is that

you have made considerable progress in the last two or three years since these

two boards have amalgamated, and with the comments of the Auditor General and

the assistance of the Auditor General's department and the various guidelines

that are laid down by government, I think we will see a different audit

statement in future, no doubt.

I want to thank you all, on behalf of the committee,

for attending here today, for giving us the benefit of your expertise,

experience, in this particular item, and we wish you well in your work on behalf

of the young people of this particular region of our Province. Thank you all

very much, indeed, for being here.

That ends the debate on this particular item. There

are one or two brief items that I need to discuss with the committee. The

witnesses may feel free to withdraw, if they wish. Again, we thank you for being

here.

Before the Auditor General and her staff leave, there

is an item dealing with the Twillingate hospital.

AN HON. MEMBER: Mr. Chairman, if I may, I would

like to pass out our copies of the tendering.

MR. CHAIRMAN: Thank you; please do.

MR. CRANE: Mr. Butt, before you go, how did you

come up with the name for the school board? What does the name mean?

MR. BUTT: Well, it refers to the mountain range

that covers almost all of eastern North America, and would start in Labrador and

move through to all of the Island of Newfoundland down through to the eastern

States.

MR. CRANE: Why did you pick that name? It really

fascinated me to see the name for the first time, and all the way out I was

trying to find a reason why you came up with a name like that.

MR. BUTT: Well, it refers to the mountainous area,

and it seems that every school in our district has a mountain behind it and it

was suggested by a student in Stephenville Crossing.

MR. CHAIRMAN: I am curious about the spelling - I

always thought that Appalachia was Appalachian.

AN HON. MEMBER: There is also an Appalachia.

MR. CHAIRMAN: Thank you, Sir.

Just to continue then briefly, if I may, with the

committee - the item dealing with the Twillingate Hospital which the committee

referred to the Auditor General some time ago and asked that the department do a

review of that particular hospital board. The Auditor General was asked for some

direction in that regard and a resolution from the committee. Since the request

was simply a letter from me to the Auditor General - and that is not good

enough. I don't have any authority, I am just a Chairman of meetings, and the

board must make a resolution to ask the Auditor General to deal with that. To

what degree, I am not - I guess my question, first of all, to the Auditor

General is, Do we need a resolution? I think what the committee assumed was that

we could say to the Auditor General, `Look, here is an area where there was some

concern expressed, why don't you go in and do an audit? Let's see what you find

before the committee goes any further.' In that regard, I would have thought

that the Auditor General had the authority to go and deal with any school board,

hospital board or any other agency. I will just ask her advice on that.

MS. MARSHALL: Mr. Chairman, the legislation under

which my office operates requires that if I do work for the Public Accounts

Committee, it has to be by resolution of the committee.

MR. CHAIRMAN: Well okay, the committee is asking

you for it but you do have the authority to go in and do an audit anyway.

MS. MARSHALL: Oh, yes.

MR. CHAIRMAN: I think that is what the committee

assumed - which was to suggest to you, why don't you do it? But I don't have a

problem with this if the committee will agree. May I have a motion that the

Auditor General be asked to do an audit of the Twillingate Hospital Board and

report back?

AN HON. MEMBER: Seconded.

MR. CHAIRMAN: Carried.

MS. MARSHALL: Is there any particular area that

you want looked at or is this something you are going to leave up to the office?

MR. CHAIRMAN: The area, as I understand from a

letter, the item was referred to us, as you know - you have a copy of the

letter, I think, from the Minister of Fisheries to us, suggesting that there is

some concern in that particular area and that perhaps the Public Accounts

Committee can look at it, the committee can say, `Well, we don't have any

expertise to look at that.' Perhaps we should ask the Auditor General, first of

all, to do a financial audit and see if there are any difficulties in those

areas and, in the course of that audit, particularly look at financial

management and controls down there and give us your advice as to any weaknesses

you may perceive. You may or may not want to recommend to the committee that

there are items of concern that we want to look into and actually follow through

with the hearings or you may say there are normal problems here but nothing that

requires the attention of the committee.

MS. MARSHALL: Okay.

MR. CHAIRMAN: Am I reasonably expressing the views

of the Public Accounts Committee?

AN HON. MEMBER: Yes, I think so.

MS. MARSHALL: Okay, so what I will do, then, is

commence with management practices and expand out into certain areas as I see

fit?

MR. CHAIRMAN: Yes.

MS. MARSHALL: Okay.

MR. CHAIRMAN: Okay, thank you very much.

The only other item I have for the committee is one

which is normally carried at an in camera meeting but I think we can do it here.

We have one item left on our agenda which is Memorial University, about which we

have had many debates. The House has dealt with it and told us now that we don't

have the authority to call the University and that we should go through the

Minister of Education. So I assume we want to do that, to arrange a hearing and

invite the Minister of Education to come and deal with the accounts of the

University.

Can we arrange a time for that? I guess, Mark, it will

take some time to put the information together.

MR. NOSEWORTHY: A little bit of time. I have

already contacted the Department of Education and have received some information

back on the financial statements and some external auditor's reports which Mr.

Berniquez supplied to me.

MR. CHAIRMAN: So it is not going to be possible to

do anything, obviously, before the House opens. We don't know when that is yet,

do we? Does anybody have any idea?

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Within the next two or three weeks,

for sure.

MR. NOSEWORTHY: There is still some information

that I have requested which I don't yet have, but he indicated to me that it

will be forthcoming.

MR. CHAIRMAN: Okay. So anyway, we have requested

the information and when we have that information, when Mark is able to advise

us that he has enough documentation ready for us, then we can choose a time,

perhaps during the Easter recess or even while the House is sitting. There is

nothing stopping us from doing that, although we are all so busy with other

committee work when the House is in session that it is pretty difficult to deal

with it. The Hansard people are pretty busy and everything else. We can

certainly do it early in the spring, although we will have another report I

would think, Ms. Marshall, from you, shortly.

MS. MARSHALL: Yes, it is with the Speaker and it

will be tabled as soon as the House is opened.

MR. CHAIRMAN: As soon as the House opens.

MS. MARSHALL: With regard to Memorial University,

I did not carry out an audit last year. As you know, I had problems getting into

the University.

MR. CHAIRMAN: Yes.

MS. MARSHALL: I am presently having discussions

with Dr. May. It is my intention to go in and commence an audit within the next

two to three weeks. Now, whether or not -

MR. CHAIRMAN: Are you suggesting, that maybe we

should wait until you finish this audit, say, until next year?

MS. MARSHALL: No, I'm not suggesting that. I'm

saying that, just for the information of the committee, I am attempting now to

commence an audit of the University. I am not in there yet, but there is

dialogue ongoing.

MR. CRANE: But if you get in there -

MR. CHAIRMAN: Nevertheless, there were a lot of

items of concern that you expressed last year, that were referred to committee

and that we wanted to get into. We can proceed. Mark will continue to get the

information together and then, sometime in the next two or three weeks or a

month, we will set a meeting.

MR. DUMARESQUE: Yes, we can certainly meet while

the House is sitting and establish a meeting time.

MR. CHAIRMAN: We can have a meeting of our own, by

all means.

There being no further business, I would welcome a

motion to adjourn.

The committee adjourned to the call of the Chair.