February 2, 2000

PUBLIC ACCOUNTS COMMITTEE

The Committee met at 9:30 a.m. in Room 5083.

CHAIR (Mr. J. Byrne): Order, please!

First of all, I am going to introduce the Committee.

My name in Jack Byrne. For those who do not know me, I

am the Member for Cape St. Francis and Chair of the Public Accounts Committee.

To my right is Tom Lush, the Member for Terra Nova, who is the Vice-Chair. I

would like the other members of the Committee to introduce themselves, starting

with Bob.

MR. MERCER: Bob Mercer, MHA, District of Humber

East.

MR. SHELLEY: Paul Shelley, MHA, District of Baie

Verte.

MR. FITZGERALD: Roger Fitzgerald, MHA, District of

Bonavista South.

MS M. HODDER: Mary Hodder, MHA, District of

Burin-Placentia West.

MR. JOYCE: Eddie Joyce, MHA, District of Bay of

Islands.

CHAIR: Okay. I would like to ask the Auditor

General to introduce her staff.

MS MARSHALL: To my right, Mr. Chairman, is John

Noseworthy. John is Deputy Auditor General with the office. To my left is Mr.

Claude Janes. Claude is Audit Manager with the Corner Brook office.

CHAIR: Thank you.

Would the witnesses like to introduce yourselves,

please?

MR. BUTT: Calvin Butt. I am Chair of the Avalon

West School Board.

MS BROWN: Lorraine Brown. I am former Chair of the

Western Avalon Roman Catholic School Board and I was interim Board Chair when

the new boards were formed - Avalon West.

MR. RIDEOUT: David Rideout, Director of Education

for the Avalon West School Board.

CHAIR: Thank you.

I believe we have some people from the department in

the back of the room.

WITNESS: Not yet.

CHAIR: No?

MR. DOODY: Jim Doody, Comptroller, Avalon West

School Board.

MR. SNOW: Eric Snow, Assistant Director of Finance

and Administration.

MR. LEWIS: Dave Lewis, Department of Education.

MR. HATCHER: Gary Hatcher, Department of

Education.

CHAIR: We have to swear in the witnesses who were

not sworn in before. I think Mr. Rideout was sworn in before. Mr. Butt and the

lady were not sworn in yet.

Swearing of Witnesses

Lorraine Brown

Calvin Butt

CHAIR: Thank you.

We also have Mark Noseworthy here, who is the

Executive Officer. He is in the back right now. Elizabeth Murphy is the Clerk of

the Committee, and Kevin Collins is doing the recording.

The Public Accounts Committee is a Standing Committee

of the House of Assembly. We are there basically to be the watchdog of the

public expenditures, of government spending of public funds. This hearing is a

continuation or reconvening of a hearing we had back in September with respect

to the Avalon West Board, and actually the Avalon East the following day, which

we will continue tomorrow. It arose basically from the Auditor General's Report

and some of the concerns that she brought forward.

At the last hearing, for those people who were not

here, we did not seem to be getting the answers; the reason being that there was

some overlap with respect to the previous boards, the interim boards and the

present boards. There was a report that was commissioned by the Department of

Education that the boards had not received and that we had received, the PAC,

the night before the hearings. We did not think it would be fair to conclude

without the boards having the opportunity to review that report and have you

people back, and other people who are here now, who we thought might add some

light to the situation. Basically from there the information was sent out and

received, we know.

With this hearing this morning, we are going to take a

break around 10:30 a.m. and then continue on. We are not sure how long it will

go. What we would like to do is ... It is going to be difficult not to repeat

some of the questions and get some of the answers that we had at the last

hearings, because we have three new Committee members and we have new witnesses.

I will try to, I will not say control the debate but at least try not to be too

repetitive with respect to the questions and answers, although there are going

to have to be some.

What I am going to do now basically is ask the Auditor

General if she would like to make a comment before I get into questions, and ask

Mr. Rideout or any of the individuals, witnesses, if they would like to make any

comments, and then we will start the questions.

Ms. Marshall.

MS. MARSHALL: Thank you, Mr. Chairman.

CHAIR: I am sorry, one thing just before we

continue: When you are speaking, can you please turn on your mike and identify

yourselves? Okay.

MS. MARSHALL: I would just like, for the benefit

of the new committee members, to give a little bit of background to the reviews

that I carried out of the school boards over the past couple of years.

In 1997 I did a review of the new executive salaries,

and that was in my1997 report. There was a table in that report that I thought

might be of benefit to the new members so I will give it to Mr. Noseworthy to

give to new members. It indicates items which in my opinion were in excess of

the amounts that were approved by the Lieutenant-Governor in Council. That

focuses primarily on salaries.

In 1998 I did an additional review. What I looked at

in 1998 was this: the twenty-seven old school boards came into ten new school

boards and I wanted to make sure that all the assets and liabilities of the old

school boards got carried forward over into the new school boards. There are

three issues coming out of that review. The first was that the ancillary funds

and the trust funds in the school boards, nobody really had a good handle on how

much money was out there. That was the first issue I identified.

The second issue was that the control over the fixed

assets in all the school boards was inadequate. I was especially concerned about

the movable assets, so that was my second concern. The third area that I looked

at, again, was compensation and other benefits paid to employees of the board.

That was the third issue identified in my report.

My understanding is that based on the reviews I

carried out in my office - my reviews were on a sample basis - the Department of

Education contracted with an accounting firm to go out and do an additional

in-depth review of at least some of the school boards. This resulted in the

Kirby Report and that was the report that was discussed at our last meeting. So

that is basically a little bit of an historical background.

CHAIR: Thank you.

Dr. Rideout, would you like to comment, leading into

the hearing?

DR. RIDEOUT: Mr. Chairman, I will just make a

comment, I suppose, that we do have a new chairperson of the board with us

today. He may not be as well versed in some of the issues as the previous chair

because he just came on recently. However, we are certainly pleased to try to

offer whatever clarification we can, realizing that for some of the items we are

in the same position as the Committee. They relate to activities of previous

school boards before our employment in particular, but we will try to help

wherever we can.

CHAIR: Ms Brown?

MS BROWN: No comments right now, Mr. Chairman.

WITNESS: No, not at the present time.

CHAIR: Thank you.

What I am going to do is this. I will not start the

questioning but I wonder would Mr. Mercer?

MR. MERCER: Thank you, Mr. Chairman.

Perhaps if I could start with a couple of questions

related to the former boards? I understand Ms Davis, you are the Chair of the

former Avalon North.

MS BROWN: I am the Chair of the former Western

Avalon RC Board. It is Lorraine Brown.

MR. MERCER: I am sorry.

MS BROWN: That is okay.

MR. MERCER: We do not have Muriel Davis here.

DR. RIDEOUT: Mr. Chairman, if I could? Ms Davis is

ill and informed us late yesterday that she would not be able to attend.

MR. MERCER: So there is no one here to speak to

the Avalon North?

WITNESS: No.

MR. MERCER: We will skip to the Avalon West School

Board. I have just a couple of questions dealing with the AG's comments and the

comments made by Mr. Kirby. You have the Kirby Report, I believe, before you, or

you have access to that report.

The question I need to raise with you is the issue of

the people who were with the former board and who were declared redundant. Those

employees, were any or all of those re-employed by the new District #9? Have any

of those been re-employed?

MS BROWN: Yes, sir. My recollection would be that

most of them were throughout the month of January-February 1997. Actually, for

clarification, when Western Avalon - and I cannot speak to Avalon North

obviously - dissolved on December 31, 1996, all our staff had been notified that

they were declared redundant and there would be jobs available or open at Avalon

West for which they would have to apply, or actually indicate that they wanted

to be involved in the competition. We knew we would hire from within both boards

but we did not at the time know if in fact they would all get jobs. So as of

December 31 they were redundant; no jobs provided at that point.

MR. MERCER: In her 1998 report on page 92, the

A.G. makes the following comment:

"In accordance with Government policy, employees who

transfer between government organizations are required to transfer their earned

leave entitlement and are not permitted to be paid for earned leave entitlement

at the date of transfer. Our review indicated that both of the former boards

paid some of its staff for unused vacation days even though these employees

continued their employment with the current Board."

Care to comment on that?

MS BROWN: Yes, sir. I guess what you are referring

to is that Western Avalon did pay out holiday pay or annual leave pay to

probably five or six, I do not recall the exact number of employees. We were

governed by a directive that said that we could pay out up to fifty days to

people who were severed or declared redundant. I think it was early December

with Western Avalon. Probably the first week in December our board met and

reviewed the list of people who had outstanding annual leave on the books, and

by minute of meeting made a decision to pay out to these people. Some people it

was fifty days, others it was less than that, because these people were declared

redundant. It was the board's opinion at that point in time that these people

had no jobs after December 31, 1996, and had no indication that these people

would be rehired.

MR. MERCER: Would the A.G. care to comment on

that?

MS MARSHALL: The fifty days that you referred to,

that policy, that referred to executives of the school board which would be

superintendents and assistant superintendents. There was no authority to pay out

these amounts that we identified during the audit.

MS BROWN: If I may speak to that, we also had in

place in our board a collective agreement for unionized employees. We also had

staff who were - like, I think the other staff at the time were non-unionized

employees and they had their own contracts with the board. The contracts that we

had with these employees followed pretty much along the lines of the NAPE

collective agreement. You know, what NAPE negotiated for its employees we pretty

much offered to our non-unionized employees because they had no labour contract

as such, so they had a contract with the board.

MR. MERCER: So despite the A.G.'s comments, you

felt by the collective agreements that you were working under there was

authority, if you wish, to pay for unused annual leave days for these employees.

MS BROWN: My recollection is that I think maybe

the people - well, there was an assistant superintendent I would think, or maybe

he was - now, this was a while ago. I'm sure we don't name names here, but we

were discussing our business manager at the time who was an executive of the

board, and I think the secretarial staff were non-unionized. These people had

contracts with the board and we offered to them what would have been available

to the senior executive members.

MR. MERCER: You mentioned the business manager. In

the case of that individual, my information from the Kirby Report is that the

individual was paid for up to fifty days -

MS BROWN: Yes, he was.

MR. MERCER: - and then was permitted to carry over

an additional fifty-three days to the new board.

MS BROWN: Yes, Sir. Do you want me to comment on

that?

MR. MERCER: Well, if the board terminated these

employees, and in your opinion they had no jobs, I am just trying to find the

continuity between the old boards -

MS BROWN: Okay, I think I understand what you are

trying to find out here. Yes, it was our understanding that they had no jobs. We

did not know if they would be hired when the hiring process took place in

January month. Our understanding was that we could pay out fifty days annual

leave. Anything in excess of that, if they were severed, would be lost. So

obviously if our business manager did not get hired by the new board, the Avalon

West Board, and he had days in excess of the fifty - I think quite a few days in

excess of the fifty - that we paid out, it was our understanding as a board that

he would lose them if he did not get rehired. At the time, I think - to go back

then, for the benefit of the Committee, you have to understand the atmosphere

that prevailed at the time of this. We were creating a system that had never

existed before. We were governed by rules - the Schools Act and the Education

Act, obviously - by legislation. We were governed by certain directives that

were open to

interpretation, I guess, directives from the Department of

Education; directives on which we often sought legal opinion.

The legal opinion at the time was that if these people

did not get rehired, any days in excess of fifty were gone; but these people who

did get rehired were allowed - and the Department of Education did not question

this at all - to transfer their sick leave benefits, no question; it was not in

doubt at all. Sick leave benefits were earned benefits, just like annual leave

benefits were earned benefits. So, at the time of hiring then, when the business

manager was hired into a new position with the board - it was not the AED

position, obviously, but he was rehired - he was allowed to transfer his sick

leave benefits. Naturally, the new board thought: Well, if you can transfer an

earned sick leave benefit, without clear direction from the department saying

that you could not transfer your other days, the board automatically assumed

that if you can transfer one earned benefit then you can transfer two earned

benefits. So, if you can have your sick leave, why would we throw his annual

leave in the garbage?

CHAIR: Can I interject here?

I thought, when going through that material, that

there was some direction from the Department of Education with respect to that

issue. Would the Auditor General like to comment on that?

MS MARSHALL: I think the policy we are talking

about here is the policy relating to executive employees of the school board. It

says that you could get paid for up to fifty days of your accumulated leave and

then you would lose the balance.

What happened in the case we are discussing now is

that the employee was not a member of the executive but that policy was applied

to him, so he did get paid for his fifty days. Ordinarily that person would lose

all their other benefits, but in this case the employee got paid for fifty days

leave; plus, they were able to carry over a lot of their benefits when they went

with the new school board so it was like a combination. It was almost like

cherry picking.

CHAIR: Your mike is not working.

MR. COLLINS: (Inaudible). You can use the other

one.

MS MARSHALL: Okay.

Could I just make one more comment? I do not recall

seeing any policy directive from the Department of Education regarding

non-executive employees. It is something that maybe the Department of Education

officials may be able to comment on.

CHAIR: Could somebody from the department comment

on that? You have been sworn in before, though, so it still stands.

Mr. Lewis?

MR. LEWIS: That is correct. There was no directive

set out for non-executive. It was just for directors and assistant directors.

CHAIR: If that is the case, and there was nothing

in writing to give you the authority to do what you did, you are saying there

was nothing in writing to say that you could not do it?

MS BROWN: Exactly. What I am saying to you, Sir,

is that there were things that we had to apply by collective agreement to

unionized staff. There were directives for executive staff, and in the middle of

all this little grey area, or this cherry picking as the Auditor General just

referred to, we had another person for whom there was nothing written; so the

board, in its wisdom, decided: We won't make chalk of twenty-odd people and

leave this person with nothing. That is the basis of the board's decision there.

CHAIR: Mr. Mercer.

MR. MERCER: It does seem to me, though, that you

did make chalk of one and cheese of the other. By your own admission, the board

that you were chair of, terminated employees. The board wound up its activities;

it ceased to exist. You say correctly that you did not know if any of those

individuals would get re-employment; yet, for one employee, he was permitted to

get his fifty days of entitlement as per the policy - dating back to 1989, as

far as the correspondence I see here - and also to carry with him fifty-three

days which, upon termination, he would normally have been required to

relinquish.

MS BROWN: I understand what you are saying there,

but we did not make chalk of one and cheese of the other. All of the employees

who came to the new board did that.

MR. MERCER: Did - ?

MS BROWN: Brought forward their leave, what they

had left, if they had any left.

MR. MERCER: So all employees who were with the

former board, who had in excess of fifty days of annual leave for which they

were paid for by the previous board, carried the balance with them to the new

board?

MS BROWN: It is my understanding that if they had

any days left, they did. Now, I don't know how many days that would figure to -

maybe the AG picked that up in her report - but it is my understanding that if

they had them, they brought them forward. I don't know if in fact they had any

great amount.

MR. MERCER: The only one we have here is the

business manager, I understand.

MS MARSHALL: That is correct. We just did a sample

of employees sufficient enough to indicate that there was a problem at the

school board, and we turned it over to the Department of Education.

MS BROWN: It is my understanding, as chair of that

outgoing board, that a lot of employees - I should not say a lot, but some

employees for certain - did have days in excess of fifty. We could only pay the

fifty. If they had sixty or seventy days and they were allowed to transfer their

sick leave benefits, it made sense to us that if you can transfer one earned

benefit then they brought the other ones forward too. That was the basis of the

decision. I think there were other days brought forward, Sir.

MR. MERCER: So there was a decision given to you

by the Department of Education that they could bring forward sick leave days?

MS BROWN: I don't recall a directive or a piece of

communication, a written piece of communication, but what I do recall is that we

did not have any gripes from the staff about losing sick leave. Had they lost

their sick leave, we would have had a lot of grievances because we were dealing

with unionized people too. What we applied to the unionized people we thought

was only fair that we would apply to these other people who were under contract

to the previous boards.

MR. MERCER: I have some other questions but

perhaps later.

CHAIR: You say there is no documentation with

respect to the carrying over of this extra sick leave, but wouldn't that have

been in some of the employment contracts?

MS BROWN: Exactly.

CHAIR: You are saying you treated these people the

same as the union people, but if it was not in their employment contracts then

did you have the authority to do it? That is what the bottom line is.

MS BROWN: Mr. Chairman, that is exactly a point I

guess I am trying to make in a convoluted way and it is not coming across

clearly. They were under contract. When the boards dissolved, this was a whole

new situation for education and for school boards. It had never happened before

that we - well, that's not quite true. When we amalgamated the Placentia-St.

Mary's R.C. School Board with Conception Bay Centre and North, we carried

forward these benefits. They were carried forward, so I guess this wasn't really

groundbreaking stuff at that point in time, but I don't recall ever seeing a

directive that in writing said to us from any authority in the department that

these people could or could not carry forward. The only directive I ever saw was

that we could pay out up to fifty days, and if they were severed it would be

lost to the system.

I guess the grey area is the fact that they were not

really severed because at some point in time within the month, within two or

three weeks, these people came back to us as a new board, came back to the new

board.

CHAIR: Just to comment on that, in actual fact,

technically, they were severed from the previous board. There was a new board

created, a new entity or whatever you want to call it, and they were rehired. I

think that is what we have to wrestle with ourselves here.

Auditor General?

MS MARSHALL: The other thing, I would just like to

repeat what I said earlier: The fifty day policy related to directors and

assistant directors. It was for the executive of the school board.

CHAIR: Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

Ms Brown, in your answers to some of those questions,

you used the word "assume" many times. I can fully understand that if you are

doing something new then there are going to be problems and everything will not

be clearly written in directives. Wouldn't you, rather than assuming something,

pick up the phone and call the Department of Education in order to get advice

and ask if you can or can't do this?

I recall being a mayor of a municipality. Everything

is not written in the Municipalities Act, but before you would go and disperse

taxpayers' dollars you would pick up the phone and find what you could do and

what you could not, the perimeters that you should follow. Why didn't the Avalon

West Board do that?

MS BROWN: We did, Mr. Fitzgerald. Probably to set

the stage for you, we had legal counsel who was giving us opinions on just about

everything that we did. Most of these questions about sick leave transfer - we

did not have a lot of clear direction from government or from the department.

I would take you back actually to the time that the

new boards were brought together or formed in July and appointed by the

minister. I was elected chair of the interim board shortly after that, early

August maybe, some time in August. We began a series of meetings with the

Minister of Education at the time, Roger Grimes. Once a month at least he met

with the chairs of the ten new boards. We had all kinds of questions. We were

wondering what do we do here? How do we approach this? How do we deal with this?

He kept telling us: We are breaking new ground, we are flying by the seat of our

pants, we are making rules as we go along. I remember on several occasions the

chairs of the ten new boards would say to the minister and his people, his ADs

and his deputy: This is going too fast. There are too many unanswered questions.

There is too much we do not know. Can we slow down this process? Can you give us

a year to make this happen so that we can do it well and do without all this

doubt?

I will quote the minister. The minister said to us, on

more than one occasion, that we are on a roller coaster going at breakneck

speed. This has to be done right away, done fast. So there were all kinds of

things that we were looking for clearer direction on and some of these things I

am sure you will probably raise shortly.

We had legal counsel opinion, the firm that our board

employed, the firm that the former board employed. We were constantly on the

phone to the department. There were letters back and forth. There were some

things that were never, ever clearly covered off. So.

MR. FITZGERALD: Surely, if you were breaking new

ground and if you could not get answers even from the Minister of Education,

wouldn't the status quo be the order of the day?

MS BROWN: Which is pretty much -

MR. FITZGERALD: Would that be the time that you

would now go out and give people raises and give them other benefits, that

clearly, in the reports that I have here, you did not have authorization to do?

MS BROWN: That is a matter for some debate, I

guess, and discussion when you get into specific questions on those sorts of

things.

MR. FITZGERALD: The other question I guess that I

should ask right from the beginning is do you agree with the Auditor General's

report?

MS BROWN: No, sir.

MR. FITZGERALD: Do you agree with the Kirby

Report?

MS BROWN: Parts of it. I did read it. Now I did

not read the Kirby Report or the Auditor General's report in its totality. I

read mostly what pertained to Western Avalon because I believed that was what I

was being called - and the interim board, that first year.

What I would say to you, sir, is that the Auditor

General's report is well put together. I don't know a whole lot about

accounting. I would say that when Ms Marshall examined the accounts and the

activities of the boards, the former ones and the current board, she was looking

at it from an accounting perspective. What I am saying to you is that there was

more to it than an accounting perspective, and you had to live in a school board

atmosphere or a situation at that time to understand what we were dealing with,

how little direction and clarification we got, how many legal opinions we

sought, and that we were dealing with collective agreements too. You referred to

the status quo. We were bound to transfer these collective agreement benefits.

We were bound. There was no question about that. We knew we had to do it. We

were bound to do what the government told us to do with the executive

compensation package. In the middle we had some non-unionized employees who did

not figure into either one of these contracts. The board thought we would treat

them in a fair and equitable way, just like we were treating unionized people

and executives.

MR. FITZGERALD: Do school boards receive block

funding from the Department of Education to pay salaries, look after maintenance

for schools, and what have you?

MS BROWN: Yes, sir.

MR. FITZGERALD: You do. You people had no problem

in giving executive members raises in excess of $1,000, in thousands of dollars

from a step 25 - from what I understand from reading this report - to a step 33?

MS BROWN: With respect, sir, that was after my

time.

CHAIR: Can I interject here? Because that is a

point now, just for clarification. On that very issue, because I was going to

bring it up next, when we were questioning at the last hearings in September -

MS BROWN: Yes.

CHAIR: I stand to be corrected on this, but from

memory, when we asked those questions with respect to salaries and salary

top-ups and what have you, I was under the impression that it had been committed

by the interim board and the new board were just following through on the

commitments made by the interim board. Is that a fair assumption to make?

MS BROWN: No, sir. That is -

CHAIR: Wait now.

MS BROWN: I'm sorry.

CHAIR: From what was said at the last year's

hearing.

MS BROWN: Okay. I am sorry.

DR. RIDEOUT: I do not know if you are getting

confused with some of Avalon East and the trust fund issue because I understand

that was an item with them. In terms of any relationship to the step salary

payment for senior executive, the contract that was signed was signed by the

previous board, the interim board of which Ms Brown was Chair. The application

of the provisions of that contract were handled by the subsequent board,

following her.

CHAIR: Okay, what I am saying is correct then,

that there were commitments made by the interim board and followed up by the

current board. Because there were some questions with respect to the top-up in

the salaries at that time. Did you not just say that the interim board made the

commitments and the new board applied it?

DR. RIDEOUT: The interim board signed the contract

and that contract had provisions in it which the board, after Ms Brown's

departure, examined and said: These provisions mean that we should be paying at

step 33.

CHAIR: Okay. Sorry, Roger.

MR. FITZGERALD: No, that is okay. Because it

bothers me to no end when I see a scale put in place that clearly stipulates

what a person should receive, and when we look at the education system in our

Province today and we see schools with garbage containers out catching leaks and

students not being able to access an education comparable with other areas, that

we can allow school boards, in isolation I suppose from the Department of

Education, decide to take extra money to pay staff over and above what it

clearly stipulates those positions should receive.

MS BROWN: I think, Mr. Fitzgerald, that maybe I

should supply a little background here. At the time of our coming together as

interim boards - and all these meetings we had with the minister and his

officials and the nine chairs of the other boards - we were provided with a

salary package for the director and the assistant directors at that point in

time. When we hired our directors and our assistant directors - I think all ten

boards were in the same difficult position - we had no salary package. It was

open to negotiation. We were still waiting on one from government. So we

interviewed and hired these people and told them: We still do not know what your

salary is.

At some point in time, shortly after their hiring,

probably a month, six weeks, even longer - I do not quite recall, it is that

long ago - we were offered a package by government that said: This is the salary

benefits package that we will apply to our directors and our assistant

directors. I cannot even begin to describe to you the kind of reaction that was

felt throughout the Province. Because in some cases - and I can only really

speak for Avalon West - at that point in time when we saw the salary package and

discussed it with our director - he was to be the director of the second largest

board in the Province, but would be the lowest paid director in the Province,

because of the way of this step progression and where he would be placed on the

scale sort of thing. Naturally, every board had problems with it.

We met with the minister again and over the course of

several meetings, several conversations on the phone with Ms Florence Delaney

who was in charge of finance in education at that point in time, we expressed

our concern about this. We had directors throughout the Province who said they

would refuse to take jobs with this type of pay scale. We did not agree with the

pay scale ourselves, as boards. We had people who would double their workload,

double the geographic distance that they would serve, double everything, and you

were going to be paying them at a salary less than a superintendent of one of

the individual boards that made up that new board.

We had great problems with that. We had difficulty

holding on to our directors. They threatened not to take jobs, so we entered

into a series of meetings and negotiations with Roger Grimes. They were quite

heated meetings and they were frequent meetings. Finally, what the minister did

say to us was: Okay, you can put these people, start them off - in the case of

our board and other boards - on step 25 of the salary scale. You can do that,

but you will take the heat from it publicly. I guess, sir, Avalon West interim

board was prepared to take the heat publicly because we believed that the

benefits package was not sufficient.

CHAIR: I want to interject here again because this

is an issue that when I was going through the material, since the last hearing

and during the hearing, I have a bit of a problem with. That is some of the

correspondence from the minister to the boards, especially with respect to step

25 and step 33.

I saw it again - I don't know what page here - but on

page 6 of the document that you have in front of you, this Public Accounts

Committee here - it is out of the Auditor General's Report actually - there is

this. Under Executive Salaries Not in Accordance With Cabinet Direction,

section

5, it says: "The Minister of Education communicated approved salary scales to

the district school boards on 25 October 1996 and at that time indicated that

the boards did not have the authority to top up' the approved salaries." It

goes on to say then: "...the Minister provided flexibility to the boards in

placing executive staff at a step on the approved scale not in excess of step 25

as long as the boards had other funds to pay these salaries."

The Auditor General said they did not have the

authority to do it; the Kirby Report indicates that the board did not have the

authority to do it. In a letter from the minister - I think it was 25 October,

that one there - it was, kind of to my mind, vague. I do not know if you have

the letter. It is in the file here. He gave, to me, when I was looking at it,

reading it, in one paragraph you could say you could go beyond step 25 but not

to step 33, and then in another paragraph he said you did not have the authority

to go beyond step 25. I don't know. I should have the letter here somewhere.

WITNESS: I think it is on page 66.

CHAIR: Page 66. Of the Auditor General's Report

itself?

WITNESS: No, volume 2.

CHAIR: Volume 2. I wanted to get this straightened

up because I have had problems with that from day one.

Here it is. They are talking about the 10 per cent.

WITNESS: The second last paragraph.

CHAIR: That is right, on page 67, the last page of

the letter. It says:

"However, in light of concerns expressed by School

Boards, we are prepared to provide School boards with the flexibility to appoint

the new Directors/Assistant Directors at a step on the approved scale not in

excess of Step 25 provided the Board is prepared to fund the difference in

salary from other funds available to the Board. I have to point out that School

boards will have to defend to the public, if it becomes an issue, any salary

increases beyond those approved in my previous correspondence."

Here he is saying you cannot go above step 25, and yet

we went to step 33 on it. Can someone explain exactly what went on there to me?

MS BROWN: If I could speak to that, Mr. Chairman,

for a minute.

During my tenure as Chair of Avalon West, we placed

our director on step 25 as per what Roger Grimes kind of gave us flexibility to

do but told us to take the heat for. We placed him on step 25. I resigned as

Chair of Avalon West on November 21, 1997. The first I heard of any step 33 was

when I read these documents that Mr. Noseworthy provided to me. So that was

after my time. Maybe Mr. Butt can answer to the step 33 because I can't.

CHAIR: Would you be able to speak to that?

MR. BUTT: I must point out right from the

beginning that I am at quite a disadvantage here because I only became Chair of

Avalon West a couple of months ago, approximately. I only discovered a couple of

days ago that I had to appear today. I was only given these packages a couple of

days ago and I haven't had time to digest any of this and I think it would be

unfair.

CHAIR: Okay. Dr. Rideout.

DR. RIDEOUT: Mr. Chairman, I will try.

CHAIR: Yes.

DR. RIDEOUT: Could I just go back to a few other

comments without belaboring them too much? They do have some relevance, I think.

One relates to the context in which this change occurred in December

1996-January 1997. On January 1, Avalon West assumed responsibility for the

operation of the schools. To say, I think, it was a roller coaster time in

education was an understatement even for Mr. Grimes. At that time we were very

concerned in bringing the elements of four different school boards together and

creating one new cohesive social system. One of the major concerns that we had

in doing that is all of the uncertainty with our employees in the respective

boards that were coming together. We had to somehow find a way to treat them

with a degree of sensitivity and compassion, I think, because they were all up

in the air. They did not know if they had a job next month, or what their salary

was, and all the usual things that would be associated with that.

We therefore, in December, as employees of the Avalon

West Board, made a conscious effort prior to Christmas to make a determination

of what would be happening to these individuals. Just before Christmas we were

able to finalize what we would be offering to most of them in the new system,

and rather then have them go through Christmas and not know if they had a job we

met with them individually and said: Listen, we are going to be offering you

this position in the new board and you will be rolling over into Avalon West as

of January 1. We did not want that uncertainty. We really felt that common

decency meant you had to give some kind of security to those employees,

especially if you were going to try to now mold them into one new school

district, and you would desperately need their support and help to take the

challenge that was going to be before them.

That sensitivity, I think, was coupled with a notion

on our part at least that we were going to be inheriting the liabilities of

those previous boards. Those liabilities would be rolling over into Avalon West

and both factors, I think - the sensitivity to employees' plight at that time in

that context, coupled with our understanding that the liabilities transferred to

Avalon West - caused us to try to deal with them with some degree of compassion

and humanity in sorting that out.

Whether they should have rolled their annual leave

over or not is something for, I assume, the judge at some point in time to have

determined. We did not want to go through litigation with employees in that

context of whether they should get twelve annual leave days brought forward or

not. It did not seem that it would have been productive to us in that

environment.

I have to go back and say repeatedly that you must

remember the context in which all of this was happening at breakneck speed with

no answers given and no direction provided. The board, having to make decisions

in accordance with its legislative mandate at the time, did its best to make

those decisions and judgments. We as staff at the time, having been going down a

road that we had not gone down before, tried to offer the best advice that we

could to the boards at the time. Legal counsel made a fortune giving advice to

boards at the time because we would rely on them as well and, looking back in

retrospect, I do not think there was a great degree of unfairness to the

employees of the day. That is on the employees that we are talking about, the

non-unionized employees who were not senior executives, those caught in the

middle, and some of the unionized employees.

With regard to step 33 versus step 25, that is an

issue with which I have some familiarity. The difficulty I had personally as a

director of education and the difficulty that the school board had at the time

related to the total structure of the compensation package. It was not a fair

package in my point of view and when I communicated that to the Board of

Trustees they agreed. I say it was not fair for a couple of reasons, when you

apply the package to myself personally.

I was employed by a previous board as an assistant

superintendent. It was a board of less than half the size of the board to which

I was going as CEO. My board of the day did not provide me with a car allowance.

They did not provide me with any kind of a top-up. There was no other advantage

in my compensation package. Now, many of the other boards in the Province were

providing those kinds of top-ups. So other assistant superintendents and

superintendents with whom I was competing for a position would have had $5,000,

$7,000, $10,000 salary top-ups, if you would, would have had a $300 or $400 a

month car allowance included in their compensation, and things of this nature,

which meant that they were anywhere from $10,000 to $15,000 above me even as an

assistant superintendent in the previous system. The unfairness came in because

my salary under that compensation package was not tied to the new job I was

taking. It was tied to what I was making in the old system, and that just did

not make sense from the point of view of justice or fairness, it certainly did

not seem to us.

When you applied the principles, not only would there

have been directors of education in much smaller boards getting paid more than

me, there would have been assistant directors in much smaller boards being paid

more than me. That is what we were struggling with as a board, and trying to

seek some resolution on. Ultimately, I guess, in its deliberations there was

initially a decision of the board that step 25 would be an appropriate

placement. Then, when it was reviewed in the light of the context of the

contract that was provided by the board and what was occurring in the Province,

step 33 was deemed to be an acceptable option for the board to grant, based on

legal counsel, based on the Minute in Council, the Order in Council that has

been referenced. That said: up to step 33.

Now, there are senior executive members in this

Province who are paid well above and beyond step 33, from what I can gather. We

never asked to go beyond step 33 because the Order in Council made it clear: up

to step 33. It was always within the context of up to step 33 was the uppermost

limit that you could go. My contract, I would contend to my board if I wished

to, makes a case that I can be paid more than step 33 if there are other

individuals in the Province being paid more than step 33. We have never engaged

that discussion with the board or with government officials in one instance; not

for a minute, but it just reflects the unfairness of the compensation package

that was structured and provided at the time.

You mentioned earlier the minister's letter of

November 15, 1996, on page 66 and page 67. I was surprised when I got a copy of

that same letter, which appears to me to be from the official record, and on the

second page of the letter, in what appears to be the minister's handwriting, it

says: up to 33. You copy does not say up to 33. If you look at this, and knowing

the minister's handwriting, to me the minister wrote himself on his record: up

to 33. So the up to 33 seems to have been unclear in his mind even as of

November 1996.

CHAIR: The letter of October 25 that we were

referring to from the minister (inaudible).

DR. RIDEOUT: What page, Mr. Chairman?

MS MARSHALL: Is it November 15?

CHAIR: No, October 25. There was a letter dated

October 25 from the minister. (Inaudible).

MS MARSHALL: While we are waiting for that, I

could I just make one comment, Mr. Chairman?

The Cabinet directive - and I have it here before me

now - that Dr. Rideout was talking about did not give the authority carte

blanche to go up to step 33. What it said was that the Department of Education

is directed to ensure to school boards place employees on the approved scale at

the step next highest to their current salary, but in no case above step 33.

That was the absolute maximum. When we went through and placed everybody next

highest to their current salary, it works out to the chart that I handed out to

the members earlier.

CHAIR: That is the point I am getting at. When

they said step 25 is the maximum that you could go on, then it goes ahead and

says in no case above step 33.

MS MARSHALL: It did not even give the carte

blanche authority to put everybody up on step 25. You had to put them next

closest to their current salary. You could go to step 25 if you had other funds

which you could use to pay the increase. You could not use government funds. If

you had other funds, you could. The Labrador School Board argued that they

received grants from the mining company, and therefore they were using some of

that money to top up the salary of their director, so they received funds from

other sources. Most of the school boards did not receive funds from other

sources, therefore they did not have additional funds that they could use to top

up the salaries.

The directors and assistant directors were supposed to

be placed at the salary next to the current salary they were receiving under the

old school board, and in order to come to what that current salary should be the

Department of Education - I believe it was in 1996 - wrote out to all the school

boards and said: Please tell us what you are paying your directors and assistant

directors, include their bonuses and different types of miscellaneous payments,

and come in and give us the numbers. The numbers they compiled are the numbers

in the chart that I handed out this morning. Some of the school boards took the

line that they could go up to step 25 which indicated that yes, they had a

top-up, but they had no money; they had no additional funds from other sources

that they could use to pay that top-up. Then some of the boards on top of that

went even above step 25.

The concern I had when I did the review back in 1997

is that the Department of Education sent out the policies to the school boards.

Some school boards complied, some school boards did not comply, so you have some

people out there who comply with the direction of Cabinet and the Department of

Education - they ended up with comparatively low salaries - while the people who

did not comply with the policy direction ended up with very high salaries.

The review I did back in 1997 indicated one director

was making $95,000 because they did not comply with the policy directives and

some director got $70,000 because they did comply with the policy directives.

Now you have a system whereby it is not equitable. Different boards picked and

chose what they were going to implement.

CHAIR: I want to comment on that because to me it

seems what is happening is that, again, we get into this situation that what is

legally right from the board's perspective at the time, and what is morally

right at the time, could be two different things. Again, we have to look at what

was, I suppose, legally right.

I do not know if I have a mental block on this or

what, but I am still not sure as to how this step 33 came into the picture. The

board is saying it is referred to by the minister somewhere in the

documentation. I think it is in that letter of October 25. That date sticks in

my mind.

WITNESS: No, that is November's.

CHAIR: November.

WITNESS: Didn't you just show a letter

(inaudible).

CHAIR: November 15 or November 16. To me, the

question of step 25 and step 33 is referred to in that letter.

WITNESS: Mr. Chairman, was that from Wayne Oakley?

CHAIR: I think it was from the minister. Anyway,

we will get that and we will come back to it if we have to.

Bob Mercer.

MR. MERCER: Yes, Mr. Chairman.

CHAIR: I am sorry. Did you want to comment first?

DR. RIDEOUT: Yes, Mr. Chairman. This conundrum

over salary scale has been an issue for three and a half years now, I guess, or

just about that. Last year, prior to the current minister coming into office, I

made an offer through my Chair that I would be prepared to have a friendly

referral to the court on the matter and let the case be presented to a judge,

and I would willingly be governed by the

interpretation of the court on it with

no animosity towards my board, government, or anything of that nature, based on

what we thought was the legal advice given at the time that contracts were

entered into at the time. That offer was declined by the minister when it was

given by the Chair of the board at the time. We may have had some resolution if

it had gone forward in that format. That would have taken away some of the

animosity that has accrued since then.

MS BROWN: Mr. Chairman, if I could, for

clarification, refer you to page 65, step 33 of volume 2.

CHAIR: Volume 2.

MS BROWN: You are looking for where did this step

33 evolve from.

CHAIR: What page?

MS BROWN: Page 65. It is a draft letter from Roger

Grimes.

CHAIR: That is the one I was referring to. Okay,

that is the letter. Yes, because I had a note here for the Auditor General to

comment on this.

It says here:

"In response to a number of inquiries with respect to

the above matter, the following additional information is provided:

"1. Assistant Superintendents who have been successful

in obtaining a Director position with a new school board should be placed on a

step on the scale in accordance with the promotion procedure which would provide

them with a maximum salary increase of 10 %. In no case, however, should the

salary exceed Step 33 of the scale. This same procedure applies to individuals

who have been promoted to the position of Assistant Director.

"2. Each Director/Assistant Director shall receive an

increment upon completion of each twelve months of service with the new school

board equal to four steps on their scale. Such increments shall not result in a

salary which is in excess of Step 25."

So that, to me, is where the confusion came in. I

think that is what the Board is hanging their hat on. Would the Auditor General

like to comment on that?

MS MARSHALL: When I look at that step 33 there I

would go back to the original MC. My

interpretation of that is that if the

employee - at the time the new salary scales were put into place - if his or her

current salary was up around step 33, they could be put up at step 33. I would

not interpret that to provide flexibility to the school boards to move their

employees up to step 33, definitely not.

CHAIR: So that (inaudible) -

DR. RIDEOUT: Mr. Chairman, with all due respect,

the Auditor General was not around to give advice to the boards at the time it

happened. If she had been we might not have been in trouble like this.

CHAIR: To that point, the Kirby Report basically

says the same thing as the Auditor General. I mean that was supposed to be an

independent thing, right?

Just before Bob Mercer makes a comment, again it comes

back then to the situation the board found itself in: what was legally right and

what was morally right in their minds. Did they have the authority to do it is,

again, the question.

Mr. Mercer.

MR. MERCER: Thank you, Mr. Chairman.

I realize I am usurping Mr. Fitzgerald.

CHAIR: Sorry.

MR. MERCER: This is an area of questioning I did

not want to get into but since it has been brought to the floor, am I correct in

assuming that this pay scale - is it modeled along the lines of the Hay system?

WITNESS: Yes.

MS BROWN: It most definitely is.

MR. MERCER: Just from my own experience in

twenty-five years in senior management positions in the public service, I am a

little bit familiar with the Hay system. Actually, too familiar with the Hay

system. It as always my understanding that you could progress to step 25. You

could not progress beyond step 25 unless for something extremely meritorious.

Hence, the going to step 25 and then if someone in their wisdom - which they

have never, ever did - decided that you should be step 26, 27, 28, 29, they

could reward you, if you wish, for an additional salary, but in the public

service you would stop at 25. Step progression stops at step 25.

I make that point because yes, I realize that during

the period of the educational reform process things were turbulent. Decisions

had to be made, but I would submit that the rules of procedure and the rules

governing the boards in the administrative procedures that they would follow

were perhaps not in as much disarray as the larger discussion and debate around

educational reform. I just wanted to make that comment in reference to some of

the comments that were made.

The last point I want to make before I give it back to

Roger is that the contract on page 22 of volume 2 related to salaries, is very

simple. It says: "The salary for this position shall be in accordance with the

salary scale agreed upon by the Board and the Director, in accordance with

provincial legislation including regulations." Now that contract states that it

was brought into force somewhere around October 17, 1996. The issue with respect

of going from step 25 to step 33 - and there was a discussion between the

ministers and the board with respect to step 25 - took effect in Avalon West,

according to the information I have, on the pay period ending February 27, 1998.

There is nothing in the original contract entered into by the interim board to

cause them to go to step 33 under terms of the contract, in my opinion. So I

just offer that for clarification or whatever.

CHAIR: Dr. Rideout and then Roger. He might want

to respond to that.

DR. RIDEOUT: Mr. Chairman,

section 18 is the

section of the contract under which the board made that decision.

MR. MERCER: "Other Standing Benefits" on page 23

of volume 2.

CHAIR: Is "whether written or unwritten" what you

are hanging your hat on?

DR. RIDEOUT: Pardon?

CHAIR: Is that what the board is hanging their hat

on, "whether written or unwritten, providing benefits to the Director respecting

Board...," et cetera?-

DR. RIDEOUT: No, Mr. Chairman. I think the

interpretation that the board gave to that

article was that benefits accorded to

other directors of education - I would be eligible to be considered for those

same benefits. If there were other directors of education deemed to be eligible

for step 33 or step 29, or a car allowance, or a new pair of socks, then I would

be permitted that as well.

CHAIR: Roger wants one quick one.

MR. MERCER: Just to finish that off. Yes, I can

see where that clause would come in, but if my understanding of the Hay system

is correct, why would these steps from 25 to 33 come into effect anywhere?

DR. RIDEOUT: My understanding, Mr. Chairman, again

from the best that I have been able to gather from our director's association of

the Province, is it is a version of Hay that has been created in this instance.

It is not the true Hay scale. There is still a lack of clarity, certainly

amongst the directors of education, as to exactly how that Hay is structured and

if it is consistent with the original Hay as contemplated and established. I

have heard verbally and informally that one of the key individuals who basically

created Hay has indicated it is not Hay in his opinion.

CHAIR: Thank you.

Mr. Fitzgerald.

MR. FITZGERALD: Just to continue with that, Mr.

Chairman. We are certainly not talking about the minimum wage here. We are

talking about salaries, I would think, that would be attractive to a lot of

professionals in this Province. I am not certain if I quite understand it. I do

not understand the Hay system like Mr. Mercer, but is step 33 the top step on

that particular scale?

WITNESS: Yes.

MR. FITZGERALD: So you go from step 25 to step 33.

Why wouldn't we look at steps along the way? What happened to the other eight

steps? If we are going to give somebody a salary, why would we jump from the

present salary right to the top of the scale? I am not sure. The other question

I would like to ask is how are those decisions made? When I look through the

book here and I see Mr. Maxwell Trask, District Superintendent, getting a

$10,000 gift upon retirement, and Mr. Frederick Bullen, Assistant

Superintendent, getting a $2,000 gift, and I see car allowances of $450 a month

- and I would assume that that is probably in addition to mileage that you would

get for using your own vehicle - who sits around the table and makes the

decisions? Are there minutes of the school board meetings that show who made the

decision and it is done by the majority of the board? I am lost.

CHAIR: Ms Brown wants to comment on that.

MS BROWN: Mr. Fitzgerald, I cannot comment on Dr.

Max Trask's $10,000 benefit nor Fred Bullen's because that was Avalon North and

Ms Davis is not here today because she is ill. I can comment on the $450 car

allowance. Before I even do that I think, out of fairness to Dr. Rideout, the

decisions made around his salary were made by the board. Any employee has a

right to negotiate with its employer and I guess Dr. Rideout was in the process

of negotiating. If the board in its wisdom - and I cannot speak for them, it was

after my time - but I think in defense of Dr. Rideout that if the board in its

wisdom decided that for some reason they would put him on step 33, I do not

think he should be put in the position today where he should defend what the

board did. Because the board was the ultimate authority.

Anyway, having said that I will go back to the $450

car allowance. At the time when Avalon West interim school board decided - and I

do not know why there is not a minute of meeting. I do recall we did have one

meeting where our recording secretary was not at the meeting and the board

secretary, I thought, took minutes. Maybe that it where they went. I do

distinctly remember a minute of meeting that the board did decide, yes, they

would pay Dr. Rideout $450 a month car allowance. At that time when that

decision was made you have to remember now we did not have a salary package for

him, he was never getting a pay cheque. I think he went some six or eight weeks

before we finally got a pay scale and we could actually issue him a cheque. What

was happening around the Province - and the directors association to which Dr.

Rideout alluded was telling all of us chairs that certain boards are paying car

allowances. We sought clarification from the department. It took a while to get

it, actually it took about two and a half months. We thought we were within our

rights to pay Dr. Rideout a car allowance. The going rate around the Province

was $300, $350, $400, depending on distance and the geographical size of the

board. Our board decided: We will give Dr. Rideout $450 a month. Shortly after

that we did get clarification because we had sought it from the minister and we

were told in no uncertain terms: This must cease, you cannot do that. I think we

were allowed to give him, I do not know, $80 or $85 a month which was in sync

with what the teachers under NLTA were getting. As soon as we found out from the

minister you can't do that it stopped. I think it was probably a couple of

months, maybe; I do not think we got into the third month. We stopped as soon as

someone finally decided to give us clarification. Clarification was often a long

time coming.

You said you understand that the times were turbulent.

I do not think anybody sitting in this room who was not involved with the reform

process has any understanding of how chaotic and turbulent the times were, sir.

MR. FITZGERALD: Would Dr. Rideout be getting a

mileage per diem as well as the set fee of a monthly per diem as well? What was

the mileage -

MS BROWNE: Yes, the same as teachers would.

MR. FITZGERALD: What is that?

MS BROWN: Whatever the going rate is. I do not

know if it was twenty-five cents a kilometer at the time or twenty-eight cents.

Whatever the going rate for -

MR. FITZGERALD: What is it today?

CHAIR: It is twenty-eight cents, I believe.

MS BROWN: It is twenty-eight cents, yes, I would

think, plus -

MR. FITZGERALD: Why would you get a per diem on

top of the per diem that you would get for the use of your vehicle on a mileage

basis? Is it because -

MS BROWN: Do you mean the $80 that they are

allowed to have, why are they getting that?

MR. FITZGERALD: Yes, well it was $450, and now it

is down to $80.

MS BROWN: It was $450 then. At the time, well, I

guess some boards paid more than others because of the sheer geographical size.

It was felt that twenty or twenty-five cents a kilometer, it would have been

back then - because the twenty-eight cents is fairly recent - it would have been

twenty-five cents - in no way would cover the wear and tear on a vehicle that a

director would incur traveling a district the size of Avalon West, and most

boards in the Province felt that depending on size. Actually, the NLTA

negotiated in a collective agreement that there should be something over and

above the kilometer rate. Dr. Rideout might be able to clarify it better.

CHAIR: Okay, I have just a quick comment. We are

going to have a coffee break in a couple of minutes but I want to read this

letter before I go on to that.

MR. FITZGERALD: No, I will just clue up by making

a comment that I get twenty-eight cents a kilometer, and my district is far

bigger than Dr. Rideout's district with the Avalon West School Board.

CHAIR: Dr. Rideout, you want to make a comment you

said?

DR. RIDEOUT: Mr. Chairman, yes, probably just to

give the context. It was common practice in many of the previous boards, prior

to consolidation and reform, to provide car allowances as is common throughout

Canada today. I mean, it is not an uncommon issue. I believe the superintendent

of one of the boards which consolidated into Avalon West was getting paid about

$300 a month car allowance, and the superintendent of the other board that

consolidated into Avalon West was being paid $400 a month as a car allowance in

addition to the mileage rate that was provided. So it was within the context of

that being a standard issue at the time. Boards were used to paying car

allowances. Avalon West just followed through with that trend, increased it

slightly because of the size of the jurisdiction; it had increased

geographically. That was the context in which it arose for about a two-month

period until the minister gave a different directive.

CHAIR: Thank you.

Back to step 33 again. We were getting off that a bit.

There are going to be more questions I am sure from the other Committee members

after we come back from coffee break, but this is the letter that to me caused

the confusion. We have the Auditor General saying one thing. We have the Kirby

Report agreeing with it. In my mind, we had the minister in certain letters

agreeing with what was being said. We had the legislation saying the same thing.

Then the board goes, to my mind, from what I have seen, outside that, making

decisions with respect to the salaries, vacation pay and redundancy pay, and

what have you.

Here is the letter, and it is just a quick letter. I

want to read it right into the record. This letter was sent to the Avalon East

School Board but the Avalon West School Board received it also. It is dated

October 25, 1996. It reads:

"RE: Compensation Package - Directors and Assistant

Directors

"Attached for your information is the approved salary

scales for Directors and Assistant Directors in your school board. Successful

applicants for these positions should be placed on the approved scale at the

step next highest to their current salary, but in no case above Step 33. I

recognize that in many cases previous school boards provided employees with

salaries which were in excess of the approved salary scale. Therefore, in

placing former school board employees on scale, boards should consider the

actual salary paid to the employee and not the approved salary.

"Details with respect to other benefits available to

these employees are attached. However, I would like to highlight a few major

points for your information:

"1. New school boards do not have the authority to

top up' the approved salary for the new Directors and Assistant Directors.

"2. If an individual is selected from outside of the

public service for one of these positions, the board can determine at which

point on the salary scale the successful applicant should be placed.

"3. Through normal step progression, employees can

advance to Step 25 of the approved scale. If an individual is appointed at Step

25 or above, step progression does not apply.

"4. Leave and other benefit provisions will be in

accordance with the executive compensation plan..."

That is what the minister wrote on October 25, and

that is where step 33 came into it. I mean if he had said step 25 and not above

and that is it, what would have happened? I do not know. To me, that is what I

was trying to get straightened out in my mind: what gave you people the feeling

or what you felt to be the right to go above step 25.

MS BROWN: Mr. Chairman, again I cannot speak

because that was after my time. During my tenure as Chair we placed Dr. Rideout

on step 25 of that scale. He wrote that letter in October. In November he wrote

a further letter that said, and you read it into the record, the last paragraph,

in light of our concerns, that he was prepared to offer us the flexibility to

put them on step 25. We did not break any rules or regulations. The minister

said: You can do it if you are prepared to take the heat. We were -

CHAIR: My question now is: Did the minister have

the right to do that?

MS BROWN: Well sir, I do not know about the

minister's rights. I only know that we take direction from the minister.

CHAIR: Or the authority, not rights, but

authority.

I think what we will do -

DR. RIDEOUT: Could I offer one other clarification

on the car allowance, Mr. Chairman? Because I offered with the Avalon West

School Board to agree for them to lease a car for my use rather than mileage,

allowance, and all that kind of thing. The board was prepared to do that but the

minister would not allow it.

CHAIR: Thank you.

What we will do now, I think, is we will break for

coffee and be back at 11:00 a.m. sharp. I'm sure there are other questions that

will be asked, not necessarily with respect to the Auditor General's report, but

other issues that may have come up to private members. We will break for fifteen

minutes.

Thank you.

Recess

CHAIR: Order, please!

Before we continue, I would like to ask Ms Marshall if

she would like to comment on that step 33 situation again, from step 25 to step

33, and what you believe actually happened there.

MS MARSHALL: Between step 25 and step 33, those

steps are there to accommodate people who came into the new boards and already

had high salaries. They did not want those people to have to take a cut in pay

and go to step 25 or below. These eight steps were to accommodate people who

were already at a very high salary.

Off the top of my head, I do not think really there

was anybody in the system that that applied to. I think that step 25 to step 33

was there to accommodate the situations but there was really nobody there at the

high salary, didn't really need to use it.

Mr. Noseworthy did some more detailed work on it so I

don't know, John, if there is anything else you can add to that.

MR. J. NOSEWORTHY: Yes, I spoke with Department of

Education officials too just to confirm our understanding. I guess to put, as an

example, if step 33 on the approved scale was $75,000 and an incumbent was

making $74,000, then that person would go to $75,000 on step 33 and they would

not be penalized by having to go back at, say, $68,000 on step 25. That is why

there was reference to step 33 in the letter, to accommodate those situations.

It is not to have it available, it is just in certain situations.

CHAIR: Thank you. That is what I needed to

clarify.

Mr. Fitzgerald wanted to clue up.

MR. FITZGERALD: Yes, I am not going to clue up

with a question, Mr. Chairman, but I will just make a comment. It seems a little

bit unfair, I suppose, that we are directing a lot of those questions at the

Director of Education, Dr. Rideout, and having him justify why things were done.

It would certainly be much more advantageous to the board and to this hearing if

the people were here who were directly responsible for allowing it to be done. I

do not blame Dr. Rideout. I would do the same thing, sir. If I could get a car

allowance or if I could get a raise in my salary, I would justify it as well. I

think the true people that we should have here are the people who justified

those steps, the people who justified the expenses.

CHAIR: We did attempt to have those individuals

here.

Mr. Joyce wanted to ask a question.

MR. JOYCE: I was just going to ask a few questions

for clarification more than anything. The letter that we were just given from

the Minister of Education was dated October 25, 1996. That mentioned step 33 and

the Chairman mentioned if the education department had the authority or whatever

for step 33. I will just go to page 65, that draft from November 1, 1996. Was

that sent out to the school boards?

MS BROWN: If I could answer, Mr. Chairman? When I

saw this in the package yesterday I remember seeing it before. It is stamped

"draft" here but I have some vague recollection. I think I did see that before.

That is three years ago, mind you, or a little in excess of three years.

MR. JOYCE: I know, yes. Because usually a draft is

not sent out.

MS BROWN: It wasn't really unfamiliar to me.

MR. JOYCE: Okay. I am just going from progression

from the letter to the draft to the letter that the minister sent out on

November 15, 1996, page 66.

His first sentence reads: "I write in response to your

letter of November 14, 1996...," from Mr. Vokey. We don't have a copy of that

letter, of course, it is not here, but is that the final clarification for this

step 33 or what people were allowed to pay? Because obviously it was an issue on

October 25 th and it went to November 1 st where he wrote up

a draft response. If that was sent out, Mr. Vokey - I'm just going on the

sequence - wrote him on November 14 th and then he responded with his

final response on November 15 th .

MS BROWN: I would make the assumption that it is

but I do not know for a fact that it is. I would think, too, that that letter

from Roger Grimes dated on November 15 th to Myrle Vokey - Myrle spoke

on behalf of the ten boards and usually his letters to the minister arose from

meetings of the ten Chairs, I would say.

MR. JOYCE: The last letter that we have concerning

all this was the November 15 th letter.

MS BROWN: To my knowledge.

MR. JOYCE: To your knowledge. Okay.

The other question I was going to ask is this. Of

course in the Auditor General's report there were some monies that were probably

spent in a way that the Auditor General herself said wasn't within the

guidelines. Was there ever any policy put in place after to ensure that this

won't happen again in the school board?

MS BROWN: To which are you referring? Can you be

specific?

MR. JOYCE: There is a number there. For example,

people being paid money on the government credit cards, $1,000 or so. There was

another example of boards being paid holiday pay which is over and above. Does

the board now have guidelines put in place so that this does not happen again?

DR. RIDEOUT: That is indeed the case. I think in

your package Mr. Noseworthy has provided a copy of the policy of the board on

corporate credit card usage. We provided earlier a copy of our accounting

procedures for schools, fiscal accounting reporting and all of that as an

appendix to

section 3.8, review of the Auditor General's report 1998, this

booklet.

CHAIR: That is there, yes.

WITNESS: Okay.

DR. RIDEOUT: The short answer, Mr. Chairman, is

yes, the Board has taken measures to ensure that the interest of the public is

duly cared for in future activities.

MR. JOYCE: This is just a question that is not

even noted in the Auditor General's report. Is there a person on the school

board now whose role is to help out with government funding, federal funding or

grants?

DR. RIDEOUT: I am not sure I understand the

question. We have an Assistant Director of Finance who is responsible for all

financial matters of the board, Mr. Snow. We have a Comptroller as well who

assists him in guiding the operations of that division. Is that what you are

referring to, the financial practices?

MR. JOYCE: Is there a person on your board now

with specific duties to seek government funding?

DR. RIDEOUT: That is correct, we do. We do have a

partnership coordinator and his mandate is to arrange various partnerships with

government, with industry, businesses, HRDC and so on, to try to bring in

supplementary funds to the board for its operations.

MR. JOYCE: Is that a teaching position that came

from the Department of Education or is this over and above what is allocated by

the Department of Education?

DR. RIDEOUT: This current year, that salary is

being funded as - point eight five per cent of a teacher unit is covering his

salary.

MR. JOYCE: It is a teaching unit?

DR. RIDEOUT: Yes.

MR. JOYCE: Thank you very much.

CHAIR: Who else wanted to ask a question?

MS M. HODDER: If I can ask him, in line with what

(inaudible).

CHAIR: Ms Hodder.

MS M. HODDER: I was just noting - and this is in

line with what Eddie was asking there a few moments ago - and that is which

policy existed in the previous boards to govern spending. We know in volunteer

positions as municipal councillors or whatever, we have been governed by policy.

For example, spendings of over $500 would have to be by motion, and of course

over $5,000 by tender or whatever, but noted here in the Kirby Report it says:

"A review of the T4's and T4A's issued by District #09 for the 1997 calendar

year indicates..." set amounts of an additional $3,290 in one instance and, in

another, of $3,231. Further, it says: "During our review of the minutes of the

Board we did not note any minute of authorization for these additional

payments." Would there have been a policy in place that said that up to a

certain amount of funding there would have to be minutes, a policy in place, or

by motion, or anything of that nature?

MS BROWN: Ms Hodder, I think the very thing you

are referring to now happened after my time, but I can speak to when the interim

board - the superintendent has discretionary spending, obviously. I do not

recall the exact amount before it has to come back to the board.

MS M. HODDER: Discretionary to a point.

MS BROWN: Yes, to a point. Those amounts you are

referring to there I think were paid out on the salary and it was after I left.

I really cannot speak to it. It would have to be Mr. Butt, or maybe the past

year, my successor.

MR. BUTT: Again, I am probably not qualified to

answer that because I have not seen any guidelines to that effect and I have not

been tuned into that as yet.

MS M. HODDER: Can you answer?

DR. RIDEOUT: Could I ask what page that is on?

CHAIR: Page 8.

MS M. HODDER: It is page 8 of the Kirby Report in

the Public Accounts Committee papers, volume 2.

DR. RIDEOUT: Is that, Mr. Chairman, the $3,290,

that one?

MS M. HODDER: Yes.

DR. RIDEOUT: My memory is that was due to an

understanding of the board that if we did not use ten days of annual leave prior

to March 31, I believe it was, or it may have been August 31 -no, March 31, I

believe - those ten days would be lost to us. That was a time when we were

involved in an intense activity related to what was at that instance called a

registration of the preference of schooling for interdenominational schools to

determine uni-denominational or interdenominational status and what the parents

wanted. That was the reform that was sort of occurring at that time within the

interdenominational system that was caused after the first referendum before the

second referendum.

At that time there was no way under the sun that I

could have taken ten days of annual leave, it just was not possible. That was

presented to the board and the board disagreed with the decision that you lost

those ten days, because if I had left for two weeks and gone it would have been

just chaos at that time. Therefore, they decided it was unfair, having been

hired in mid-October, to be informed in February, or whenever the date that was

done, that the ten days had to be taken and they just could not be taken. They

were not allowed to be carried over into the summer, they were going to be lost,

and the board then decided they would pay for those ten days rather than lose

them. That was a decision of the board and there would be a record of that, I'm

sure.

CHAIR: Mr. Lush.

MR. LUSH: Thank you, Mr. Chairman.

I want to first say that I can associate with some of

the remarks made by the former Chair, Ms Brown, re the tumult and anxiety and

frustration that surrounded your working environment during the period in

question. I think you are all to be congratulated, particularly the volunteer

members. I am a little less inclined to congratulate those who received pay. I

always get highly charged or highly amused over people who, particularly during

storms, come out and praise the utility companies for going out and fixing

things for us when they are being paid to do so. Now if there were some

volunteers out there I would react quite differently.

Anyway, they worked under difficult and challenging

times, but that was what they wanted. That is what they are trained for and that

is what we pay them for, so I do congratulate the members of the board for the

great work that they did throughout the Province under difficult times and in

uncharted waters for the most part. Though we have to question those things, it

is not likely that we will ever go through such a dramatic change again in

education. We hope some of the things we come up with today will serve as an

example, I suppose, to the kinds of procedures that we ought to put in place to

satisfy people like the Auditor General and the people who want good accounting

systems and want the public's money to be spent in an appropriate manner, and an

efficient and an effective manner. That is the process, the procedure under

which we examine you today.

So I want to again congratulate you and say that even

though a lot of us did not go through it in the detail that you did, from

another forum we also can appreciate that there were some problems.

I just wanted to ask somebody, I do not know who, a

question with respect to the Hay system. You have heard Mr. Mercer's description

of it in terms of its application in the civil service. I am just wondering if

that is the way that boards view it. The system, the Hay system, do we follow

that system unadulterated? Is that the system that all school boards in the

Province feel they are under with respect to their executive?

CHAIR: Ms Brown.

MS BROWN: Mr. Chair, if I could respond to Mr.

Lush. I am no longer involved as a school trustee, it has been some two years

since I resigned, but I recall the major bone of contention seems to be the

directors and assistant directors' salaries. At that time when we had all these

hot and heavy meetings with Roger Grimes about that system, we were told that it

was modeled along the lines of Hay: modeled along the lines. Our major bone of

contention with Roger Grimes at that time, and the department, was that this is

nothing like the Hay system. Because the Hay system assesses what a person does,

and one of the things it would assess would be his or her responsibility. If

this system is modeled along the Hay system and is the Hay system, why then

would the Director of Education of the second largest board in the Province be

the lowest paid director in the Province? He has more responsibility than the

directors in eight other boards. So it would seem like it was a hybrid of Hay.

Now maybe Dr. Rideout or Mr. Butt or somebody can speak to it today, but at that

time, even though they told us it was fashioned along the lines of Hay, our

information and our legal counsel's opinion was that this is not the Hay system.

It may be today sir, I do not know.

DR. RIDEOUT: Mr. Chair, the similarity to Hay as I

understand it - until I am shown differently - is that Hay has thirty-three

steps. Hay goes up four steps at a time and that is where the similarities stop.

Am I allowed to say bastardized?

WITNESS: You can if you like, if the Chair allows

that.

DR. RIDEOUT: Mr. Chair, it is not my word.

WITNESS: It is in the dictionary.

CHAIR: (Inaudible) recorded.

DR. RIDEOUT: It was described - pardon?

CHAIR: This is being recorded. It could be played

on one of the local stations this evening or tomorrow.

DR. RIDEOUT: My mother is not going to read it, is

she?

CHAIR: She might hear it.

DR. RIDEOUT: It was described to me using that

word.

CHAIR: Okay, fine.

DR. RIDEOUT: That was the kind of Hay that it was

described as. Because as Ms Brown pointed out, Hay assigns points based on a job

description that has to be developed and agreed to by the permanent head of the

organization; then that assesses the degree of responsibility, and points are

assigned based on that. As I referenced before, the latest that I have heard

concerning that from the directors of education who employed an individual that

I am told was one of the creators of Hay is that that individual says it

absolutely has no bearing to Hay beyond the fact that it was modeled, in that

there are thirty-three steps and that you move up the steps to step 25. The

point assignment and all of that which is fundamental to it is not consistent

with Hay as I understand it.

CHAIR: Thank you.

Mr. Lush has one more question, then Paul Shelley.

MR. LUSH: I just wanted to make sure that Dr.

Rideout was given a chance to clarify an item mentioned by Mr. Fitzgerald. I may

have been wrong and if I am I certainly apologize, but I believe Mr. Fitzgerald

was making reference to twenty-eight cents per kilometer, was it Mr. Fitzgerald?

I think you said that you had a bigger area than Dr. Rideout. I know it is

small, but it is important to Dr. Rideout to put the right perception on his

area. Unless I misunderstand it, and unless Mr. Fitzgerald was talking about his

responsibility for the Province, you do have a large area, don't you? It takes

in a federal riding almost.

DR. RIDEOUT: Mr. Chairman, we go roughly about

seventy kilometers east to west, from around Chance Cove to Holyrood. We go to

Conception Bay North up around to Bay de Verde, Old Perlican area. We come down

to Placentia, down to St. Bride's, over across to St. Mary's. It is a

significant geographical area. I am not sure what the member's area is like. It

touches on seven provincial ridings. Some are included totally and some are just

peripheral attachments to it, so it is a fair sized geographical area.

CHAIR: Thank you.

Mr. Shelley.

MR. FITZGERALD: Just a point of clarification, and

I think probably Mr. Lush might have backed up the reason I brought it forward.

Because the way I would look at that is the bigger the area you have the more

compensation you would get for gas mileage or for mileage rather than the use of

your vehicle. I would see and I think that you would be able to justify giving a

higher per diem off the top rather than a mileage per diem if you were into a

relatively small area.

CHAIR: Point taken.

MS BROWN: Could I respond to that? I know you are

directing this towards Dr. Rideout. When I was a trustee involved with traveling

the school board district - and as Chair of the board I traveled that big

district a lot in addition to my regular job. I wore out the car. I think in the

course of a few years I may have, with my twenty-five cents per kilometer,

gotten, I don't know, over four or five years, $4,000 or $5,000 in travel but I

wore out a car. My car was worth $22,000 when I started using it. When I

finished with that I had 226,000 kilometers on the car in four years and it was

because of my school board travel. I guess the point I need to make is the

twenty-eight cents is not enough Mr. Fitzgerald, or Mr. Lush, and it isn't, is

it?

MR. FITZGERALD: It is the point I am making -

MS BROWN: Well, good for you, I'm glad to hear it.

MR. FITZGERALD: - but I think we should all play,

Ms Brown, by the same rules.

MS BROWN: I agree with you totally, but I think

what we also have to remember is the $80 or $85 is a negotiated benefit under a

collective agreement. We can't find fault with people for getting $80 if your

side and the union side agreed to do it.

CHAIR: Okay.

Mr. Shelley.

MR. SHELLEY: Just like in caucus, it is hard to

get a word in (inaudible) Roger's (inaudible).

First of all, I want to apologize for having to step

out for a second but it was unavoidable. Certainly I am a new member of this

Committee and without being repetitious from the last time, and understanding

today - like Mr. Butt, for example, being here today for the first time and just

getting information and so on.

I too have listened to some questions and am very

interested, but I want to echo something that Mr. Lush said and commend you too.

Because the truth is that this must have been an horrendous experience. Talk

about a roller coaster, but the dust is starting to settle, I guess we could put

it like that, and certainly there are going to be questions. That is our job, to

ask some of those questions and get the answers. I am more concerned about the

situation as of right now, to be honest with you, at this point in time anyway,

especially with new board members coming on stream. Like we say, the system is

hopefully settling down for the better of everybody.

I don't think anybody asked the question - if they did

you can jump on me right away - on how you control the assets. I know there were

notes made about that in the past. Of course I would like to know if they

actually all have been turned over. More importantly, is there a capital....

[Due to a technical malfunction, a portion of this

committee meeting was not recorded.]

DR. RIDEOUT: .....and amalgamation. The school

building stayed the same. So if we had fifty-eight school buildings, everything

that was in those buildings just stayed there. January 1, there were no things

moving from school to school. Everything just stayed there. The only move that

occurred was a physical relocation of the district office equipment for the

former Western Avalon Board that was moved to the new offices of Avalon West,

and in that case those employees brought their equipment with them. Mr. Doody

had a desk, for example, that would have been brought with him from the former

Western Avalon Board. People who had computers would have brought that with

them.

We would very much like to be able to have a salary

unit called an inventory clerk or something of that nature to do regular annual

updated listings of assets and all of that for the board. The difficulty we have

is that the $50,000 or $60,000 it would cost is not $50,000 or $60,000 available

to us. So we have been reluctant because we know - as you can appreciate, being

a former teacher - teachers and principals at the local level are very

meticulous, that what they have in their school stays in that school and they

have a control on it. We have not yet seen our way to be able to afford to hire

an inventory person to do that for us on an annual basis. We do some of it with

computer equipment, for example because that is one of our most costly items. We

have summer students who come in and help, doing that kind of an inventory check

for us. Realizing now that people do not tend to like board offices - they do

not like to see you bring new people into board offices when you have needs in

schools, obviously - for us to hire a new person at the district office it means

we have to lay off another person to do it because we do not have the money for

it right now. It not something that we find we are able to do so we are

operating with perhaps a little more of a less rigid inventory control system

than we would like, but we are confident that the people at the local school

level and the district office level have a handle on each of the respective

sites and we are able to control it through that mechanism.

MR. SHELLEY: Have they been told that then, that

the onus is going to be on them to control - this could be a lot of moving

around of capital assets. Is it recommended by your board that you do have

somebody there? I know you are saying an extra salary. Somebody that is already

there who just controls that. Because one way or the other, either through your

board, through a new salary or the onus is back on schools, somebody has to make

sure that the focus is on that and that is controlled. That is the bottom line.

DR. RIDEOUT: Yes, Mr. Chairman, that would be the

responsibility of the principal at the local school site and -

MR. SHELLEY: Are they aware of that?

DR. RIDEOUT: Yes, they would be aware of that. At

the district site it would be generally under the assistant director of finance

administration and he is responsible for it at the local level.

Now I know one of the other boards, for example, has

made a request to the Department of Education to provide some salary support so

they can have someone to at least get the initial - if we could get a salary

unit for one year, we could get the first year done, and then it is a matter of

just updating it every year which would not be so unreasonable. It would not be

so difficult. I guess we will have to wait to see the budget when it comes down,

if there is any kind of flexibility provided there. We agree that it would be

very helpful to us administratively. The challenge we have is simply limited

funding for it right now. Even for one year, a salary unit for one year could

help us get a better handle on it, I think.

MR. SHELLEY: That was going to be my suggestion.

Of course, they are using computers and so on these days with inventory, and how

effective they are, that even a contractual job where if you put a system in

place and the truth is - I think it would work anyway - that if you had a good

computer system inventory in place that anybody with very limited amount of time

could still access that information and make sure there is control. Again, the

word is control of capital assets floating around. So it may be a suggestion for

the board.

DR. RIDEOUT: Mr. Chairman, it is an excellent

suggestion and we welcome the assistance to be able to do that. I think it would

be good for the system.

MR. SHELLEY: Could I ask one more?

CHAIR: Sure.

MR. SHELLEY: I just read a little bit of this from

the last hearings, which I was not a committee member for: ancillary funds

again. Really, I am more interested from being a former teacher how all of that

is again controlled and out of control, a lack of control. Any suggestions or

any movement towards some control on that?

DR. RIDEOUT: Yes, Mr. Chairman. As I indicated the

previous time, we are very pleased that we have a policy in place now that is

going to attach to this document here and we have gone through an in-service

with our principals, with our secretarial support people. We now have

implemented, effective September, a computerized accounting system for all

cheque disbursements and all monies coming in from canteen sales, fundraisers

and all of that. Having a little bit of grief because of the workload it is

creating for people but we are about halfway through it now, and that will

address all of the issues related to ancillary funds.

MR. SHELLEY: Thank you.

CHAIR: Thank you.

Before we continue, I am not quite sure how long this

hearing will continue. I don't think we are going to finish by noon. I have a

number of questions myself here, I want to go into this material and highlight

things, and some of them are going to be outside the Auditor General's report.

To me, would the Committee, witnesses and the Auditor General's staff want to

continue on until 1:00 p.m., or would you rather break at noon and come back at,

say, 1:30? I am not even sure - we may finish by 1:00 p.m., we may not. That is

the chance we take, because we don't know what some of the questions may be and

we certainly don't know what the answers are going to be or how long.

MS BROWN: Some of us are fairly long-winded.

CHAIR: Some of us are fairly long-winded in asking

the questions. Not me, now, but...

MR. SHELLEY: Especially people to your left.

CHAIR: What is the feeling around the table?

Mr. Mercer?

MR. MERCER: Go until we are finished.

CHAIR: Mr. Lush?

MR. LUSH: We must go until we are finished. The

question is how we do it.

WITNESS: Without a break.

MR. LUSH: I am all for going until 1:00 p.m.

CHAIR: Do you have commitments to -

WITNESS: (Inaudible) as far as I am concerned..

CHAIR: I am prepared to go until 1:00 p.m. if need

be and have another look at it at that time. Hopefully, it will be over by then.

WITNESS: Mr. Chairman, would there be permission

for one of the witnesses to go to the washroom if he or she needed (inaudible).

WITNESS: She doesn't need to.

CHAIR: Committee members can go so I would imagine

the witnesses can go.

Who is next? Mr. Mercer.

MR. MERCER: I would just like to make sure I have

things straight in my mind. It is usually helpful when you make decisions.

Ms Brown, you were a member of the former board and

the interim board.

MS BROWN: Yes.

MR. MERCER: You were the Chair when the contracts

for the directors and the three assistant directors were prepared.

MS BROWN: I was, yes sir.

MR. MERCER: Two points. Who drafted those

contracts?

MS BROWN: The salary (inaudible) benefits packages

we are talking -

MR. MERCER: No, the contract itself.

MS BROWN: For the director?

MR. MERCER: We have contracts here for each of the

directors and the three associate directors. Obviously, someone sat down and

crafted that document.

MS BROWN: Yes, that is true. They were drafted in

their entirety by the NLSBA, the Newfoundland and Labrador School Board

Association - you see Myrle Vokey's name there, he is the executive director

there - in consultation with legal counsel. Every time we got a draft they would

bring it back to the Chairs - at the meetings of the ten Chairs - and we would

discuss it and say: Go fix this or fix that. That is the origin of that.

MR. MERCER: Essentially by Myrle Vokey's

organization -

MS BROWN: By the NLSBA. The final touches were in

the individual boards' purview.

DR. RIDEOUT: Mr. Chairman, I just want to comment.

The NLSBA, I understand, provided a sample contract as a template that the

boards operated from so there might be a slight difference in the final version.

There were also sample contracts provided by the Newfoundland and Labrador

Directors of Education, their association. Sometimes there might have been a

little element of one or the other that moved into it.

MR. MERCER: The contract document was taken then

as a framework or as a template, as Dr. Rideout as said, and the board then,

through a process of discussions and negotiations with the individuals, came to

a consensus on the specific clauses?

MS BROWN: The executive committee of the board

would have gone further with it in consultation and negotiation with the

individual employees. Then it would have been brought back. They were - all of

them - brought back to full board.

MR. MERCER: That was my next question. The

information that we have seems not to find the paper trail to say that they were

approved by the board.

MS BROWN: If I am not mistaken, I think I saw

copies of letters that I had signed, on behalf of the board, before I resigned

my position as Chair in November 1997. Yes, I'm sure I did. I saw Dr. Rideout's

and I saw, I think, some of the assistants. Maybe it was in some of my own

school board documents.

MR. MERCER: They were approved by the board in

full.

MS BROWN: My recollection is yes, they were. That

is my recollection now, but it is three years ago.

MR. MERCER: The information from the Kirby Report

is that they can find no evidence that they were, and in fact they questioned

the validity of the contracts where had not been approved by the board. That is

why I ask you the question as being the former Chair.

CHAIR: I think Dr. Rideout wants to respond to

that.

DR. RIDEOUT: Mr. Chairman, if I recall correctly

the board authorized the executive to negotiate with the director and conclude a

contract, and I believe it would have been the executive, with the authority of

the board to do so, that did the actual final blessing to the contract.

MR. MERCER: So the board delegated its legal

authority to the executive to consummate and to finalize the contract, is that

what you are saying?

DR. RIDEOUT: That is my understanding right now.

MR. MERCER: Consummate and finalize?

DR. RIDEOUT: Yes. Negotiate. Consummate I am not

sure. It has different connotations for me, but negotiate certainly.

MS BROWN: Also finalize.

MR. MERCER: Those of us who are less familiar with

CHAIR: (Inaudible) can I interject a question? I

do not if you were leading to this or not, and I do not want to jump in, but at

what point in time were those contracts agreed upon? It was with the interim

board?

MS BROWN: The interim board, yes, Mr. Chairman.

CHAIR: The interim board ceased to exist on

January 1, 1997?

MS BROWN: No, the interim board ceased to exist

some time in February with the election of the fully elected school board.

CHAIR: Okay. It was in -

MS BROWN: I think it was February 1998.

WITNESS: February 17, to be exact.

MS BROWN: In 1998? Yes.

CHAIR: There is a question I wanted to ask. There

is a section, "Roles and Responsibilities of the Current Boards During the

Transition Period."

MS BROWN: Which document?

CHAIR: On page 58 of the document, volume 2.

MR. MERCER: Mr. Chairman, for a second, if you do

not mind?

So you are saying the interim board ceased its

activities and wound up and was out of the system on what date?

MS BROWN: I think the election was in - Mr. Butt

says February.

MR. BUTT: February 17 (inaudible) elections.

MR. MERCER: What year?

MS BROWN: In 1998. The interim boards were

appointed in July 1996 and finished in February 1998 after the election.

CHAIR: Just a question on that. I want to get it

straightened up too. On pages 57-58 there are two sections: "Roles and

Responsibilities of the New Boards During the Transition Period" and "Roles and

Responsibilities of the Current Boards During the Transition Period." It says on

page 58: "The current board should not enter into any contracts or make any

commitments after September 1, 1996 without the concurrence of the new board."

MR. MERCER: That being, I presume the interim

board?

MS BROWN: No. The roles and responsibilities of

the current boards - those boards would be the Western Avalon and the Avalon

North, the two dissolving boards, the boards that would dissolve at the end of

December 1996. That was -

CHAIR: Okay, fine. That is good. Sorry. Go on, Mr.

Mercer.

MR. MERCER: So at the end of December 1996 the old

boards were effectively gone. The interim board was now in place. These

contracts were, in the case of the director, entered into in December, I

believe, of 1996 and the other three were entered into in January or so of 1997.

MS BROWN: Yes.

MR. MERCER: Okay.

MS BROWN: I am agreeing with you. I think you are

right. I do not have the dates in front of me but I -

MR. MERCER: Yes, (inaudible), okay. Again, going

back to the comment on the salary provision in the contract, it is a very

general statement in that the salary is to be in accordance with the rules and

regulations of the provincial Legislature, and so forth.

MS BROWN: Regulations.

MR. MERCER: Yes, okay. There is a document which

has not been referred to at this point in time and I believe it antedates your

tenure as Chair, from December 1, 1998 on page 15 in the document. It refers to

a special privileged board meeting whereby the board -

CHAIR: Sorry, Mr. Mercer. Which document, which

volume? Volume 2?

MR. MERCER: Volume 2, yes. A special privileged

board meeting which was called to discuss: "...the controversy surrounding the

contracts in place for senior administrators with Avalon West." I am going to

read the next statement to put the minister's previous correspondence in a bit

of a context: "Concern was expressed over the Minister's threat to disband the

Board if the contracts were not brought in line with Government's directives."

Okay? Then the board, of course, made their decision that contracts entered into

in good faith by the interim board were be honoured. I read the contracts

entered into by the interim board and again, as I say, the

section with respect

to salaries is pretty generic. It is to be in accordance with provincial

legislation, including regulations. I am just wondering how the board - and I do

not know if you can answer this; maybe Mr. Butt can - and I am sorry to have put

you on the spot, but why would the board conclude in December 1998 that they

would be in violation of a contract negotiated in good faith by not extending

the salaries to step 33?

The minister had always talked about step 25, and I

understand the confusion that your Director of Education said about the Hay

system, but everything that I read with respect to what the minister has

written, given my background and knowledge of that system, is entirely

consistent with what the Hay system is in pretty well every letter he has

written. I can rationalize exactly what he is saying and understand that. I can

understand perhaps where Dr. Rideout and the board might not have been able to

understand that. The point I am trying to make here is why - at a special

privileged meeting in 1998, where the minister was in fact threatening to

disband the board if it did not roll back the wages - the board felt that a

contract which was, at it says here on page 15, "negotiated in good faith" and

which contained a very generic statement of salary, was almost a deal breaker.

Then they had legal opinion there which said: You are in your legal right to go

to step 33 so we suggest that you do. Letters were subsequently written to the

minister asking to remove his threat and so on and so forth.

It all seems to me that the minister was very clear.

Again, from my background - I apologize for that, because I have some knowledge

of it - and understanding of the Hay system, everything he said was consistent

entirely all the way through, right up to the letters which he apparently wrote

to the board preceding December 1, 1998. Any comments on that?

MR. BUTT: I think I can identify with this

somewhat. The general feeling around the table at that time was that this was

quite a threat by the minister at that time, the hon. Roger Grimes. We really

felt like resigning, everybody, and as far as I can recollect there was a fair

bit of discussion. We were all convinced that a contract is a contract is a

contract. He agreed with the terms under which these contracts were signed,

especially the fairness of it and the legal advice that we were given. I think

at that time also Avalon East was in a similar position and had taken a stance

similar to this prior to our meeting. I think it was unanimously felt that we

should follow suit.

MR. MERCER: I understand what you are saying. If

the contract entered into in October or December, whenever it was in 1996, with

the director had specifically stated a number, yes, I can buy into that, but

when the statement in the contract is of such a generic nature, frankly if it

were to be interpreted as the minister was interpreted consistently, it would

never have gone beyond ste 25. That statement is never anywhere in the contract

document in terms of a step or in terms of a salary. Like I said, I am just

trying to get my head around why the board felt, as you suggest, inclined to

resign over this as a matter of principle.

MR. BUTT: You could go to page 23, Other Standing

Benefits. We thought at that time as well - as a matter of fact, we were

convinced - that this was part of the contract as well, and a contract had been

signed in good faith. It was signed on the basis of legal advice and we felt

that we really never had a right to change the contract somewhere in midstream

until probably the contract had terminated, and then we would take another look

at it.

I think the present minister, the hon. Judy Foote, has

written us since informing us that once this present contract expires with

respect to the directors throughout the Province that the whole thing has to be

taken a look at again. She was willing to live with it until that time.

MR. MERCER: Yes, I am aware of the letter from the

minister, but at the time this action was taken that letter was not in place. I

have been reading since

section 18 was brought forward before. It still seems to

me, and I guess what we are tying our hat to is, that if there were other

"benefits of policies and practices currently in place, whether written or

unwritten, providing benefits," as it says on pages 23 and 24, anywhere within

the Province that were not now in this contract, they would be passed on to the

individuals named in the contract. I guess that is where the board is hanging

their hat.

I just question that a little bit to the extent that

if the minister has been saying consistently, all along, that regardless of what

might be happening out there - as the A.G. has indicated, some people were doing

things that they perhaps should not have done - the fact that that clause is

there, I am not sure how that would incline the board to believe that they

should also adopt similar policies with respect to these contracts if, in fact,

what was done in other places by "policies and practices currently in place,

whether written or unwritten," were not, in fact, appropriate.

CHAIR: Dr. Rideout would like to respond. I saw

his hand up.

DR. RIDEOUT: Mr. Chairman, I am in the position of

probably being the only person who was at each of these points and junctures,

and it is a bit awkward for me having to try to portray the sentiment of the

board because I was an employee of the board. The only thing I could offer there

is my understanding of

section 18 of my contract was put in by the board largely

because we were not sure what was going to come out at the end of the day in

terms of contracts, benefits and all of that. It was still a cloud of

uncertainty. We had no clear definition of what the executive compensation plan

was when my contract was entered into. We did not know what would be contained

in it. The board, therefore, inserted that clause so that I would not be

shortchanged if something developed after the contract that other directors

received. That was the context in which it was put in there. It was not to give

you a glory clause or anything, it was just to give that kind of consideration.

The best that I could offer is that Mr. Michael

Harrington, legal counsel for the board, met with the trustees. I believe I was

present for all of the meeting. I asked if they wanted me to leave and they

indicated they would prefer that I stayed. He went through all of the background

and the history leading to this, up to reform and where it was at that juncture.

His legal opinion differed from yours, and that was the advice that he gave to

the board based on the sum total of the record from where it began back then to

where it was at that point in time. It was, I think, out of consideration for

what he was saying from a legal point of view, perhaps coupled with what the

board was struggling with morally in trying to get it sorted out and an answer

to it, that led them to reaffirm their initial decision on that salary

placement.

CHAIR: Mr. Mercer, can I just -

MR. MERCER: I just want to finish off on that very

quickly. The discussion here is not so much what has been permitted or not

permitted, but the minister stated step 25, and when the contract was entered

into, both in good faith by the interim board, that is what had been agreed to.

What we are talking about in 1998 is a salary increase from step 25 to step 33.

CHAIR: I think we have had a fair bit of

discussion on salary with respect to this issue and I think, to me, that

question has been answered a while ago. I would like to move on to some other

topics if we could. I don't want to cut you off -

MR. MERCER: If you wish.

CHAIR: I think that the interim board put him at

step 25; the new board decided that to be fair, in their minds morally, that

they should go to step 33 to be equivalent to probably the Avalon East director;

and that is why that clause was put in there in the first place, to give them

that latitude to do that. Right or wrong, that is what we will have to decide.

MR. MERCER: I do not disagree with your comment,

Mr. Chairman. The information that is provided to us on page 15 makes reference

to contracts negotiated in good faith by the interim board. There is nothing

with respect to step 33, anything to do with the contract negotiated by the

interim board.

CHAIR: All right, well, we will have a further

discussion on that later on.

Mr. Joyce.

MR. JOYCE: I am going to bring up salary once

more, but it going to be very brief. Were those positions publicly advertised?

MS BROWN: The directors and the assistant

directors' positions were, yes.

MR. JOYCE: When the position was advertised, was

the salary at step 25?

MS BROWN: No. I think the advert in the paper, if

I remember correctly, said salary was to be negotiated.

MR. JOYCE: To be negotiated.

MS BROWN: We didn't know. We had no clue what it

was going to be at that point.

MR. JOYCE: Because my concern, and I know I am

going to get it from Corner Brook, is that of the contract with Dr. Rideout,

number 11 of the salary, it says, on page 22 of volume 2: "The salary for this

position shall be in accordance with the salary agreed upon by the Board and the

Director, in accordance with provincial legislation including regulations."

It was earlier stated that the reason why you brought

him up to step 33 is because other people across the Province had it, were up to

that level, and he should go up; right or wrong, I am not sure. Was it within

the regulations or was it because there were other people up to step 33?

MS BROWN: Again, I cannot speak for the step 33

one. When I finished with the board Dr. Rideout was at step 25 and the other

trustees or people who remained - I do not know the rationale or the process

that was involved with the step 33.

MR. JOYCE: There may have been other people who

thought this could go up to step 33 where most people thought step 25 was the

top. Other people may have applied if they thought there was a great increase in

salary or whatever.

MS BROWN: Actually, Mr. Joyce, I think at the time

that the advertisements were put in the papers nobody knew what the salary was

going to be - step 25, step 26, step 30, nothing - because there was no

legislation or regulations. We had nothing.

MR. JOYCE: Dr. Rideout, you mentioned earlier to

Mr. Shelley about inventory control, capital assets. Earlier I asked a question

about the person looking for HRDC funding and you mentioned that 8.5 per cent of

a teacher's salary is going towards that.

CHAIR: No, zero point eight five per cent.

MR. JOYCE: Eight point five per cent, wasn't it?

CHAIR: Zero point eight five per cent.

MR. JOYCE: So it was not 8.5 per cent. Okay, fine,

not a problem.

DR. RIDEOUT: Just a comment, Mr. Chairman. That

individual is mandated to produce, annually, sufficient partnership activity

that translates into benefits for schools and students and learning to justify

his continued existence. There is an expectation there that he delivers, and if

that expectation is not met the board then deals with it at that time. To date,

in the three years that it has been in existence, it has more than delivered the

expectation that the board has had and well above what the cost would be in

providing the salary unit. It is something that the board has a very strong

commitment towards seeing the continued success of the partnership role because

it is translating into direct benefits for students and schools throughout the

district.

MR. JOYCE: Okay, thank you, Mr. Chairman.

CHAIR: Anyone else? Mr. Lush. Mr. Fitzgerald,

questions?

MR. FITZGERALD: Yes, I would just like to ask one

other question. The Auditor General in her report noted that a senior employee

of the board owed the board or the Department of Education in excess of $40,000

as of March 31, 1998. Number one: Is this an accurate figure? Number two: Has

there been any effort made to recover that amount of money?

DR. RIDEOUT: As indicated in the previous meeting

and confirmed by the Department of Education, it shows that amount was repaid at

government's rate of borrowing. I think it was about 6.5 per cent or somewhere

in that vicinity (inaudible).

MR. FITZGERALD: So the full amount has been

recovered plus interest?

DR. RIDEOUT: That is correct.

CHAIR: Is that it?

I have a few questions then. Please bear with me.

(Inaudible) just the man now, I will have to wait until he comes back.

WITNESS: It will not be a long wait.

CHAIR: Mr. Butt, you just recently became, they

said, the Chair in the past two months with respect to the Avalon West Board but

you do have a history with the board for some time, don't you, previous to that,

and other boards?

MR. BUTT: Yes, just the interim board.

CHAIR: So, you were with the interim board. Were

you with the Avalon North Board?

MR. BUTT: No, not as trustee, as an employee.

CHAIR: As an employee, okay. Then

secretary-treasurer of the Avalon West, was it?

MR. BUTT: Yes, that is right.

CHAIR: Also, Vice-Chairman of the Avalon West, so

you are not new coming into this position. You do have a fair history with what

has gone on with the boards.

MR. BUTT: Yes.

CHAIR: Do you have the copy of the Hansard of the

previous hearing? Did you receive a copy of this?

MS BROWN: I did receive it. I do not have it here

but I did receive it.

CHAIR: In the Hansard of September 28, 1999, on

page 5, Mr. White - he is not here now - referred to the $40,000 owed by the

senior member of staff. Now we just hit on that. These are Mr. White's words:

"The salary advance - when the employee was hired

there was some dispute as to where his salary would be. He had not received any

salary from government, I understand, from the time of hiring until January; so,

out of common decency and common sense, the board paid him in advance, knowing

that the money would be recovered - not in advance, but gave him salary advances

before it was settled. He did not receive any salary until January but this

account has now been paid in full."

(Inaudible), okay. He is not here now. I asked a

question - oh, he is there. Mr. White -

DR. RIDEOUT: Dr. Rideout.

CHAIR: Dr. Rideout, sorry. With respect to that

$40,000, was there anything that had to be paid back with respect to it coming

out of overtime? Did he pay it back that way, worked off the $40,000 with

respect to overtime, or was there a straight deduction from his salary?

DR. RIDEOUT: Mr. Chairman, I believe there was one

instance in which there was provision for weekend time to be credited towards

the amount.

MR. FITZGERALD: Would that be normal for somebody

who was on salary to be paid overtime in excess of what the negotiated salary

would be?

CHAIR: When I asked that question the last time

the answer, from page 6 of the same Hansard, from Dr. Rideout, was: "My

understanding is that that was that $250 per pay period. The agreement with the

Assistant Deputy Minister at the time, who approved that arrangement, included

interest at government's cost of borrowing. I received confirmation in August

that that indeed had been repaid and at interest."

So I asked the question. It was paid back strictly out

of deductions from his salary because somewhere I was under the impression that

he paid it back through working overtime and that type of thing. Which is it?

DR. RIDEOUT: There was one instance, I understand,

Mr. Chairman, in which there was a credit applied to that amount - I am not sure

the exact amount of time - for activities related to the functions of the board

on several weekends. That would be in the records at the district office.

CHAIR: Maybe you would like to forward a response

on that once you check it back.

I am going to leave the Auditor General's report now

for awhile unless someone else has questions, or they can interject at any time.

This concerns basically some correspondence, letters to the editor - Dr.

Rideout? That is the response there, is it, to the last question?

DR. RIDEOUT: No, Mr. Chairman.

CHAIR: Some letters to the editor in local papers

and what have you concerning some activities of the board and decisions the

board have made, the current board and what have you. Just for clarification

purposes for my mind, and for people who are asking the questions, I have a few

notes made. I would just like to get your response and see what is happening

here.

There have been some major renovations apparently at

the school board offices that you are familiar with. I have been told that

maintenance people with the board were paid, basically, overtime to complete the

renovations. Some of the people that brought that to my attention, and in some

of the letters that I have here, they were concerned that the maintenance people

should have been and could have been putting their efforts into upgrading the

schools, maintenance of the schools and that type of thing. Especially when you

look at, in light of the fact that we have Mr. Hogan here this morning

concerning Laval High School. Would you like to comment on that with respect to

the renovations?

DR. RIDEOUT: Mr. Chairman, the details about the

renovations you can find on our website. It is listed there for the public to

view. The board took a decision June past, I think it was, that we were having

difficulty in not having accommodations for meetings, workshops, in-service

sessions and things of that nature. There was also concern expressed in terms of

our inability to provide the appropriate technology support throughout the

district. We had in excess of fifty employees operating out of district office.

We had one kitchen for the staff that would have been, I suppose, roughly about

six feet by fourteen or fifteen feet, something of that nature, and there were

no facilities there. At the time, for various meetings, we were going out and

renting outside facilities and going elsewhere, or going in on schools and

taking over their libraries and things of that nature for that purpose.

The building that we inherited as a school district

was a former building supply store. It had a fair amount of underutilized space

down in the basement level. In looking at the needs of what we were trying to

accomplish, that area was explored to see: Can we change this to: one, provide a

boardroom for meetings of the board, and two, at the same time provide a

training centre? So that if you were bringing in people to do computer training

you could make a computer lab in that room and you would not have to go