The Committee met at 10:00 a.m. in the Colonial Building.

MR. CHAIRMAN (Hearn): Order, please!

We are a little shorthanded this morning, however a couple of the Members will be joining us very soon so we can get through all the preliminaries anyway.

First of all let me welcome Mr. Breen and Mr. Hearn from the School Trustees Association. It is their first time here so they are fairly unfamiliar with our procedures, therefore, I will quickly outline what we do.

The only reason we have you here is not because of any great offences you have committed or anything, the reason we bring most people in front of us is because of comments made by the Auditor General in his reporting. In our scrutinizing of the Auditor General's Report each year we try to highlight matters of concern and interest. Number one: areas where we think that by having some open and frank hearings before the Public Accounts Committee we can approve the overall accountability in relation to the collection and expenditure of the public dollar, which is our main job; the other reason sometimes is so that comments made or suggestions made by the auditor or perhaps by the Department or Agency need to be further explained or clarified and quite often our hearings help to do that. We always say to the witnesses that because you are mentioned in the Auditor General's Report does not necessarily mean there is anything wrong with the accounting in your Department or Agency. Quite often the auditor has an idea of how the thing should be done perfectly, according to him or his Department. Of course that is why he is there, to be the watchdog on the government dollar, and departments and agencies sometimes have their own systems which are quite adequate, proper and correct but may not be exactly what the Auditor General wants. In our discussions quite often we find a common agreement or sometimes the right to disagree and that is fair ball.

How we operate: We usually ask the Auditor General's Office to make the opening statement just highlighting the concerns raised in his report and then we will give the witnesses a chance to make any comments they want in relation to that or general opening statements. Then the Members of the Committee usually start the ball rolling by questions to either one group or the other. I think yesterday the Auditor General's Office had more questions thrown at them than the other people. But we had a very, very enlightening discussion, I think, yesterday on the field of education and the financing of it. I am sure today will be just as rewarding.

We will have to swear in the witnesses as neither one of you have appeared before us before. Elizabeth Murphy on my left, the Clerk of our Committee and the Clerk Assistant at the House of Assembly, and filling many roles these days, will do the swearing in. Also, we have with us this morning Bill Drover from the Auditor General's Office, Bill is the Audit Principal; and George White also from the Auditor General's Office and George's title is Audit Manager. We have Kevin Breen who is the President now of the School Trustees Association and the former Past President, Jim Hearn, no relation for the record. I always say that, but it depends upon his performance, I might acknowledge some relationship if he is good.

The Members of the Committee who are here this morning: Alvin Hewlett on my far right, the Member for Green Bay; the Deputy Chairman, Aubrey Gover, Member for Bonavista South; joining us we will have Jim Walsh, the Member for Mount Scio and hopefully Art Reid who is the Member for Carbonear. Two other members who are not in town and who could not make it to this set of hearings are Glenn Tobin from Burin - Placentia West and Bill Ramsay from LaPoile.

The microphones in front of you are not for amplification, they are just for the record. All our conversation, as is everything that goes on in the House of Assembly, is recorded by Hansard. In our Committee of the House everything you say is recorded and if there is any dispute later on you will have access to your words.

We also welcome the lone reporter from The Evening Telegram. It is good to see the press covering these hearings because, as I said yesterday, I think any news agency which wasn't here yesterday missed some very worthwhile information in the exchanges. Sometimes it is unfortunate when stuff like this does come out in a very open general forum and in a detailed manner, that some of the reporting agencies are not here to report it. Some of them seem to be here only if there is something extremely controversial. So maybe we should have done a news release yesterday saying that we had found some missing money or something at the School Trustees Association. I am sure we would have her blocked over there this morning. Anyway, it is good to see The Telegram covering the hearings in detail.

With that, I will ask Elizabeth to swear in our witnesses and then we will get into the opening statement. It is going to be extremely warm in this place as it is not air conditioned, so don't hesitate to take off your jackets as I am doing.

Mr. Kevin Breen.

Mr. James Hearn.

MR. CHAIRMAN: Thank you, Elizabeth.

As usual, we will ask the Auditor General's Department if they would make the opening statement.

MR. DROVER: Thank you, Mr. Chairman.

As I explained yesterday - I apologize to the Members of the Committee who have been here through so many meetings on transfer payments, I think they have probably heard the summary a number of times in the past - transfer payments are a unique form of expenditure of Government funds. In the Province of Newfoundland the total transfer payments to school boards, hospitals, municipalities, and other agencies exceed 50 per cent of the Province's annual budget. It is a form that presents a unique situation dealing with auditors in that you do not see invoices coming in for services rendered and it is a form that most governments across the country use by utilizing transfer payments to pay for services in hospitals, school boards, universities or colleges. In Newfoundland it approximates around $1.5 billion per year.

The first time we reported on transfer payments was in the 1989 Annual Report of the Auditor General. At that time our audit centered on two major departments, Education and Health. We had reported in the previous year on the Department of Municipal Affairs.

In the Department of Health we have already addressed those issues before the service committee. We have had a number of hospitals in to discuss it. We are now dealing today with what centered out of the Department of Education. I think it is important that the Committee appreciate that our visits were to the Department of Education, not to the school boards at that time and not to the Denominational Education Councils. So we did not assess any system within those bodies.

As I pointed out yesterday, in the current year we have visited a number of school boards and we have visited a number of these bodies and we have also gone back to the Department of Education. And in the 1991 Annual Report of the Auditor General we will be commenting in considerable detail, as a follow up to this report item.

Relating to the Department of Education, we commented on the problems in dealing with what we call accountability control over the reporting aspect of what comes in from the school boards. All Auditors General feel that if the public money is spent there should be complete and full accountability of it. I think our findings of that year included - and I might read from those - the audited financial statements reported on by external auditors submitted by the school boards to the Minister each year. We reviewed these financial statements for the year ending the 30th of June 1988 and our review disclosed that the legislation permits certain funding to be withheld from the school board that fails to submit its audited financial statements to the Minister by the first of September. Since the date of receipt of the financial statements by the department was not readily determinable, we used the dates of the auditor's reports to gauge their receipt.

Of the thirty-five auditors reports examined, sixteen were dated subsequent to the first of September while one was undated. Of thirty-five school boards, nineteen had not signed their financial statements. This means that the members of the board, the Chairman and one other member of the board, had not signed. That is the traditional method used by them, which is contrary to the normal practice indicating formal acceptance of the financial statements.

The legislation requires that the auditors of the school board inspect and report on the sufficiency of the bonds. Three auditors reports noted that certain employees were bonded but none commented on the sufficiency of the bond coverage. Departmental officials could not provide us with any other correspondence showing separate reporting on the sufficiency of the bond coverage by the external auditors. We could not find any evidence that the department had taken any action to ensure that school boards complied with the legislation. In addition unsigned financial statements were not returned to the school boards for proper approval. The reports issued by the external auditors on the financial statements of the school boards use, without exception, the standard wording of an auditor's report. That is referred to in our field as the attest audit report or a short form report. Such wording assures the reader that the financial information contained in the financial statements reported upon is presented fairly in accordance with the stated accounting principles on a basis consistent with that of the previous year. Such reports add credibility to financial information supplied by the school board, without question, it does add credibility. However there is another point that I think a committee of this nature should be aware of. This financial information shows that the money was spent but does not give adequate assurance to the Department of Education that the money was spent for the purposes intended by government, nor that it was spent with due regard to economy, efficiency or effectiveness, and also it does not give assurance that all the legislation such as the Public Tender Act and others were complied with. I think this committee addressed that issue yesterday and addressed the issue of how you get that, and I think we suggested you could get the external auditors to do another expanded report, or whatever.

Management letters issued by external auditors to the school boards as a result of the audit process, are not forwarded to the department, hence the department is not made aware of any weaknesses in management and internal control which exists within the school boards.

The Department of Education, under the authority of the Minister of Education, issued a reporting manual for school boards which established the uniform accounting and reporting system for all school boards. All but four of the school boards have submitted financial statements in the prescribed format for 1987-88. We could not find any evidence that the department had used these financial statements for the intended purpose of cost analysis and comparison. Budgets of school boards are not required to be submitted to the Department of Education, although the majority of the grants paid to the school boards are based on student enrolment, budgets are a tool that could be used by the departments to establish the financial objectives of a school board and to measure its performance. The internal financial statements would also be useful for monitoring costs and for determining funding requirements.

Our review of the financial statements of the school boards show that eighteen of the thirty-five school boards had accumulated deficits at June 30, 1988. We think that is a concern that should be noted. If there are deficits being accumulated out there, they are eventually going to have to be addressed.

Grants paid to school boards are based primarily on student enrolment, the details of which are supplied by the school boards to the Department of Education. The department does not have an adequate system in place to check the accuracy of this information which is used to pay approximately $400 million. Without going too far, the system that is in place at the present time is one dealing with the population structure without getting into the details of the statistical data within the Department. Our enquiries within the Department concerning the reporting process showed that few formal reports were made by the school boards to the Department concerning their responsibilities for performance in the provision of education within the Province. In addition there was no formal reporting by the Department to the Minister for presentation to the House of Assembly on how it had discharged it's responsibility for the approximately $450 million spent on education. We talked yesterday about the field of reporting in the Legislature, and I think we addressed it in each one of the last three reports, we are suggesting it and I think it is happening across the country, where the Minister would rise in the House and table an annual departmental document report in a prescribed format that would then show how the Minister is accountable and eventually going on down the line to how he holds the others accountable. It would be a document that is prepared specifically for the Members of the Legislature so that they could understand - in other words you approved $600 million for the Education sector and the Minister comes back to the House and says this what I did with the $600 million. That document is one we have been suggesting for a number of years and I think you are going to find in the near future that it is going to become a generally accepted practice. It is becoming practice in some provinces now. I understand, for instance, that New Brunswick recently gave that type of direction, that this is what would be in reports, and I think if one were to refer to our last year's annual report one would get the type of format we are talking about here.

Mr. Chairman, that addresses our comments in the 1989 report. One must appreciate that report is now a year and a half or so old. We must also appreciate that that audit concentrated under the Department of Education, the comments and complaints if you want to call them complaints, but our summarization there relates to the system in place at the Department of Education level. It is only in the current year that we have gotten out to some of the school boards. I cannot comment on the current review.

MR. CHAIRMAN: Mr. Drover, as you mentioned yesterday, the Auditor General's Department is presently doing some audits at the school board level and I understand you have completed two. I believe that is what you mentioned. Was it two?

MR. DROVER: We have completed one on either coast. We have gone over some short questionnaires with them. We have completed one in-depth audit on the west coast and one on the east coast.

MR. CHAIRMAN: So next year we will have specific reference to individual school boards and then you will see what is happening at the school board level. From general observations, as you say, it is from the Department audit that the educational funding, just to put it in perspective, most of the $500 or $600 million that is given out each year is not spent directly by the Department. Unlike most Departments it is farmed out to denominational education school boards and the Denominational Education Councils, as they mentioned yesterday, they receive about $27 million of that for capital construction and the rest goes to school boards. That is a little bit out of whack in reality because you are looking at $400 million or so, a fair amount of money, but most of that, something like 77 per cent, or more than that, probably 80 per cent of it is taken up in teacher's salaries alone, which really, even though they go to school boards sort of come directly from the Department so it is really a figure which is perhaps, when you talk about school boards having that kind of money to spend, is really not correct. They employ teachers but the money is sort of followed right through from the Department as such. The money is sort of cut out beforehand. The boards pay salaries based on qualifications and whatever and they have no room to move or manipulate that salary vote. They themselves only have direct control in expenditure over the operational funds plus whatever money they collect. As they report back, they do have their own reporting systems, their own audits or whatever, as the Denominational Education Councils had. They not only had their audit but they also had their annual report which gave a breakdown of every nail that went into every school type of thing and the boards undoubtedly had the same thing. I think the point the Auditor General raised, and I say this for the witness's sake, was that there was no independent outside backup on the total expenditure of that money. So, I am interested in hearing what the members of the School Trustees - or how they see this problem, if it is a problem, from your perspective, in the reporting back of the money spent. The idea of the Public Accounts Committee I suppose is to see that every dollar is followed to the end and then someone is accountable for it. If there is a gap somewhere in this reporting back these are the gaps, I guess, that the Auditor General would like to see filled, you know tightened up.

MR. BREEN: Yes, Mr. Chairman, when you mentioned $450 million or whatever, I think you could probably isolate that down to about $65 million if you extract teacher's salaries; you extract the capital grant which is funnelled through the DECs; if you look at school transportation which is contract based and paid by Government - it has to be approved by Government - or the school board busing where the school board owns its own busing and has to be approved by Government otherwise it is a 90-10 split, 10 per cent by the school board and 90 per cent by Government. You are talking roughly about $66 million I would think in calculation of monies that boards have some flexibility, and I say some because out of that you have support staff salaries - and you are constrained by collective agreements in that area - so when you look at monies really that are discretionary monies you are looking at what is in the instructional budget, which is very little.

School tax monies represent about another $30 million which boards have discretion to use between operating and capital depending upon the situation with a particular board.

So, I think $450 million is kind of overstating the magnitude of the monies that are available to be directed.

Certainly, as a school board, I have always felt very comfortable with the fact that we had a chartered accountant for them and say for my own board, Ernst & Young would come in at the end of each year and would do an exhaustive audit. In my view it was an exhaustive audit, they would spend close to a month up there pretty well, and the Board would be given a statement and they would come in at the meeting of the board and go through it. Sometimes we would have a management letter, other times we would not, but certainly we felt some comfort in the fact that we had been given a fiscal clean bill of health at the end of the day.

In terms of the Department's role, I presume spot audits or in the old days I guess there were inspectors, if that were to be done I cannot see anybody having a problem with that, there is no one wanting to hide anything. I guess the biggest problem we have is that we do not have enough to go around. In terms of preparing a budget and submitting it to government so they could better plan their own fiscal deployment of money, if that would get us more money to do the things that we have to do, well so be it. But, my own experience has been over the last twenty years that we seem to be in a catch-up position all the time and that programmes are planned, initiatives are taken and we are asked to do these things without even knowing where the money is coming from to do them or what the resources are.

So, if this process of consultation or inspection or whatever would fine-tune the system a little bit better and would allow probably for better planning, long range fiscal planning, I do not think any school board in the Province would have an objection to it. But I think to a school board you would say right now that we submit an annual financial statement to the department. Presumably the department, if they are not happy with that statement, have resources within Government that they could consult and find out if there is something wrong with this particular school board. If it means a team of auditors going in and having a look at it from top to bottom I presume that is within the mandate of the department to do, since they are paying the shot. I cannot see anyone in our organization having a problem with that.

MR. CHAIRMAN: I do not think, as we have gone through the different hearings with all groups and agencies, I have not seen anyone yet who has argued against proper reporting and so on, and in some cases because of the system set up, it is not perfect, it is not what the Auditor General's office probably would like to see; there is always room for improvements and quite often it is one of our own recommendations as we make our own report, that some fine tuning had to be done in the reporting system.

Mr. Drover.

MR. DROVER: I may add for information purposes, one of the issues we mentioned was that a number of the boards were running deficits and I think both you and Kevin have pointed out the limited budget that is provided, particularly in the operating area in the school board. That, I guess, emphasizes the situation in permitting a school board to run a deficit and that if it does run a deficit or accumulate it, there is obviously the possibility of large interest payments required, in which case there is a possibility that maybe the amount that is required to be paid on interest could be coming from funds that were intended by other sources, either to the Department of Education level or by the Legislators themselves to be utilized in the education sector and that is a possibility that they might have to concern themselves with.

The other thing is, to address the issue to which Kevin referred to on the financial statements. Certainly, no Auditor General gets into a position of criticizing his peers. I mean Ernst and Young - I take considerable pride in the fact that I trained with Ernst and Young, but, that is not the intent.

The public sector auditors perform an attest audit which is the two paragraph standard format that goes on the financial statements of the Province. I think one must appreciate that in this field, in the public sector, where you are using provincial money or which is referred to as public money, there is a second part of that, in that, in addition to getting a report on the financial transactions of the body, one must also get a report from an independent, whether it is Ernst and Young, Peat, Marwick, whatever firm, or whether it be in fact maybe the Auditor General, but that you get an independent assessment that: OK in addition to its financial transactions, you took the money that you gave it, it paid this out and it had a lot of strong controls over its financial transactions, there may be other legislation that is in place, such as the Public Tender Act, such as Local Preference Policies, which really one must comply with, and the public sector auditors I think, would have to admit themselves that they are not engaged at the present time to do that.

We have had, and I pointed out to the committee, and I apologize for stating it again today, but I am stating it under another topic; we have had a lot of discussion over the last couple of years with the Department of Health, in working with an in-house committee, with Mr. Lemon and with members of the Treasury Board Secretariat, whereby the Department of Health will now request certain hospitals to have their auditors do an expanded review.

In addition to getting their financial statements, attest audit financial statements themselves, they will then have a list of about seven or eight points which the auditor adds his opinion to; in other words, did they comply with the Public Tender Act? The auditor answers 'yes or no' and then the auditor issues an opinion back to the Department of Health.

That really would go a long way to strengthen accountability in an independent format, that is basically what we are talking about; we are not talking about criticizing in any way, shape or form, any financial statements that come in from the school boards, we would address that behind the scenes afterwards, but that is not the criticism. The criticism is that there is another part of this process. Now the other thing I might add, and I am not sure if it came out clearly yesterday, is that the Auditor General's office has the capabilities to do that, but if you put the Auditor General to doing that, then he really becomes part of the system, because really, that should be part of the system in the Department of Education and the Auditor General should then be in a position to just review that.

That should be done by someone entirely, and I am saying to you that while the office may have the capability of doing it, it should not, in our opinion, be the one who should do it; it should be part of a control system within the Department of Education itself, they should be controlling their own money.

I do not know if you follow what I mean, Mr. Chairman, but that just addresses the two points that came as a result of your opening discussion on deficits and on financial statements.

MR. CHAIRMAN: Mr. Breen.

MR. BREEN: From my own experience before we are given permission to do any capital works we have to have the approval of both the Department and the DECs, the appropriate education council. And there is a number of tests that go into that particular discretion, one of which is adherence to the Public Tendering Act. My own school board had a school construction in the Goulds in 1987, and because one of the sub-trades was not adhering to some little nuance within the Public Tendering Act, that project was put on hold for something like two months until the Department of Development - is it the Department of Development that had the Public Tendering Act?

AN HON. MEMBER: Works, Services and Transportation.

MR. BREEN: Works, Services and Transportation, okay. Until they were satisfied that a particular need was addressed there, we were dead in the water. We did not have the permit from the DEC nor from the Department to go ahead, and the DECs would only pay us on what they call an invoice basis. In other words we have to satisfy them that all of these checks and balances are in place and are being adhered to before any money is dispersed.

Now the second point: what I am hearing this morning is that whatever is set up with the Department to kind of tighten this whole process then I am sure if it were communicated to school boards as part of - here is a new regime that you have to adhere to and you have to fit into and report back to, then fine, but from what I am hearing from the Auditor General's Department is that the reporting is being looked at, but school boards are reporting what they have to report.

MR. CHAIRMAN: According to legislation.

MR. BREEN: According to the legislation. Well now if there is something wrong with that then let's change it and we will report in a different way.

MR. CHAIRMAN: I think this is the whole idea. Mr. Gover, on a point you made you wanted to make a short reference because Mr. Reid is waiting for a line of questioning.

MR. GOVER: On that point just to try to put it in perspective. Yesterday we had the same issue with the DECs on the Public Tender Act, and no one disputes, or at least there is no basis to dispute the fact that the school board system may be perfect, that the DEC system may be perfect to ensure compliance with the Act. But what the Auditor General is saying is that there is no one within the Department of Education who was sent out to independently inspect the contracts and records of the DECs and the school boards to satisfy the Department itself that the Act is being complied with. You say the Act is being complied with, the DEC's say the Act is being complied with, you have an internal system to make sure the Act is complied with, but when it comes right down to it, the only way the Department of Education knows the Act is being complied with is that they have to believe you. And what the Auditor General is saying is that in order to ensure that there is compliance, independently the Department of Education is going to have to send someone in to check that or your external auditor is going to have to say not only that your statements are done in accordance with generally accepted accounting principles, but that you have also complied with the applicable legislation. No one is saying that you are not complying. The only thing from the Department's point of view is they have not sent anyone to check it independently, they have to take your word for it.

MR. BREEN: Mr. Gover, what is the role of the engineer at the Department of Education who looks at the submission which is sent to the DECs, DECs send it to the Department, there are certain tests that are done before the approval. Every piece of school construction in this Province has to be approved by the Department of Education. You cannot do it without it. What determinations are they making before they give you that go ahead?

MR. GOVER: All I can say is in the Auditor General's opinion they are not making those determinations which are required for the Department to - what we are saying here is not that the school boards or the DECs do not have their act in order, what we are saying is the department does not have its act in order because it has no independent verification that the funds it is allocating for school construction are actually (a) being spent for school construction, and (b) are being spent in compliance with the Public Tenders Act.

MR. BREEN: That is a revelation to me.

MR. GOVER: Mr. Drover is that correct?

MR. DROVER: Yes. I think, Mr. Chairman, one thing to add to that in addition to the consultation on the heavy capital issue, I will try not to get into it in too much detail because it comes dangerously close to what we are into our findings in the current year.

The Public Tender Act also applies to items that are of a lesser amount, such as maintenance, such as the purchase of a carpet, such as the purchase of a contract for oil or anything of that nature, and I think these issues must be considered. In other words what we are saying is that there must be a regime, a system in place within each one of these boards to say that everything in excess of $5000, as each department of Government is required to do, everything in excess of $5000 must be referred to, to ensure that the Public Tendering Act has been complied with, there have been either calls for submissions independently or else it has gone right straight to tender. That is the law in the Province and there is no option on that. By having someone at the Department of Works, Services and Transportation look at the document, that does not serve the purpose, that does not complete it. Now, on a capital construction, yes, quite honestly there probably are public tenders called on that. I would say, yes, the visible ones, maybe. But if one were to get into the other areas, I think that Kevin is probably right, maybe someone in the Department of Education has not sat down with all the school boards and educated them to the fact that these are the procedures we have to follow in the Department of Education and these are also the procedures you have to follow on the Public Tender Act issue. That is just one act of many.

MR. GOVER: Let us just move off because that is just one thing and we can get into that, but just to illustrate the point about the independent check. Item 7 in the Auditor General's Report basically states that grants are paid to school boards primarily based on student enrolment, the details of which are supplied by the school boards to the Department of Education, so that if a school board does its enrolment and supplies it to the Department the Department of Education then does a calculation and pays out the grant based upon the information you have supplied. They are taking your word for it as to what the enrolment is. What the Auditor General is saying is that no one goes out and checks to make sure that the enrolment figures you sent in are accurate. Am I correct on that?

MR. DROVER: That is correct, and I can confirm right now that that is still the system. They do some checks relating to population trends and that sort of thing but with regard to checking the exact number: the Department of Education does not go out, inspectors, auditors, or whatever, do not go out to independently confirm that number. That is going to be a problem in the current report as well.

MR. CHAIRMAN: Where you are talking 125,000 students in our schools, the only way to verify it, I suppose, is for somebody to do a head count and hope everyone is in school, and then you hope they are just not sitting there. You have superintendents who are sort of the middle men between the local board and the Department. It is the superintendent, the executive director, the chief executive officer at the board level who collects all the information and who then sends it on to the Department on behalf of the board. He in turn of course gets it from the schools as registration is completed in September when schools open. How would the Department verify the fact that Tom Jones, the Superintendent of Exploits Board, says that we have 1374 kids registered? Would somebody have to go out and go from school to school and count heads? I know what you are saying, verification, we are paying a grant based upon the number of people who are in the school, and that is right, but if some guy sits down and rips off a list saying we have 42,000 students where he only has 22,000, then the people in the Department accept his word unless they are astute enough to know the difference, which they would on any great discrepancy, but if you had fifteen or twenty students I am sure it would not be picked up. How do you verify without going out and doing the actual count? How do you verify it then, even if you do do an actual count?

MR. DROVER: I can try to address your point because I think it is a good point to compare with, and I just feel the independent auditor can certainly get involved in the school board. First of all each one of these little heads out there, and by the way I have four, myself and Sharon have four of those little heads out there somewhere in the system, and each one of these is, I think, $275 per, so you can tie it into dollars. In other words that is $275 per. If the Department of Education were to say to each one of the school boards we want a certificate, or whatever you want to

call it from your auditor indicating that you have a system in place - and by the way I would go out on a limb and say that I think there probably is, because they do have an attendance system in place, that is in place right now and it is a long standing one - I do not think it is a major difficulty to do it because the system exists right now that is coming up to the board level. I think all it would be is for the auditor to turn around, assess the system and see that the information coming up is accurate, and then once a year or whatever the case might be turn around and write the Department of Education and say okay, this school board has 10,000 students. We have tested five schools or whatever the case may be and we have satisfied ourselves that the board does have 10,000 students in attendance there. The department then has something that is independent that it can rely on.

Now, the only other way to do it would be to turn around and have inspectors at the Department level who would have to go out and do it, it would be a more onerous task for them because the auditors are already out there getting this information. So, that is very similar to what we are talking about over in the Department of Health. In other words, there are certain expansions that you can do to the auditor's role but it does give some assurance to the Minister of Education and to the Deputy Minister that I now have independent assurance, if you will, that there are in fact - I do not know how many students there are in the Province but let us say 100,000-odd -

AN HON. MEMBER: One hundred and thirty.

MR. DROVER: - 130,000 students in the Province. I have thirty-five auditor's reports here and I add them all up and when the Minister goes to the House looking for 130,000 times $275 for that grant then he has some assurance himself independent of the others.

MR. CHAIRMAN: Mr. Breen.

MR. BREEN: Mr. Chairman, if you listen to this you could say that the superintendent writes a letter, independent of everyone else, saying that he has 20,000 kids in his district, when really what it is, there is a certification from the classroom teacher, signed by the principal, signed by the assistant superintendent for personnel, gone through the superintendent's office and eventually signed by the board chairman to the department. So, I mean, there is a scrutiny within that particular system. Again, I come back to cost, where is the money going to come from for all of this?

MR. CHAIRMAN: That is a very good question. What is coming out are two things that are very, very clear. We have had this argument on a number of occasions and that is, to do the thing perfectly - I can understand what the auditor is saying, it is his responsibility to make sure that for every dollar spent someone is perfectly accountable. The question is, in the practicality of it how do you be perfectly accountable ?.... the only way I suppose, if you want to carry it far enough, is to go out there and as I say have somebody count heads and then you would have to verify that fellow is really from that community - you know how far do you want to go if you want to get down to the finest point. But from an educator's point of view, coming through the system, what Mr. Breen says is correct. You have your registration in the classroom and it goes from the classroom teacher to the principal to the superintendent's office and through maybe a couple of other people to the board and on in through the Department structures and what have you. Of course, from year to year you have your movements and transfers in and transfers out and everything is balanced and checked and what have you. Certainly the Department has accepted that and it has been a long standing principle.

From the Auditor General's Office I guess what he is saying is that an independent observation on this check would be more objective. I can appreciate that and somewhere maybe there is a mechanism that will give greater protection to Government for this information that is coming up through without having to get into the detailed hassle of the examples that we gave to carry it so far, I can see both your points. But I think as far as the dollars that go out to school boards, based entirely upon the number of teachers and the number of students, that is it. You get your money based upon your teacher population and your student population, except the bus transportation which is based on public tender.

So, consequently all of these can be verified unless somebody wants to manipulate figures at the classroom level and get away from all the checks up through which is practically impossible, consequently, I can see where everybody would be satisfied, except perhaps, the auditor - yes, Mr. Drover.

MR. DROVER: Mr. Chairman, I think that legislative auditors right across the country: this is as fundamental as the audited financial statements, it is that fundamental to it; in other words, one might expand this discussion and say, well, the financial statements came in from the school board and we are going to get the superintendent to sign them and say that everything is great; we are going to get the business manager to sign them and say that he is satisfied with them, so we do not need an audit done on the financial statements of the school board, and just using that as an example, that certainly would not be acceptable to any Minister of Education or otherwise.

I think that there are laws and procedures in place when you are dealing with public money and I think that the way any Auditor General would have to speak on it would be, if the Legislature declares them to be applied to the various hospital, school boards and other agencies in the Province, then there must be some form of check.

Now, yes, an Auditor General can go out and do a test check once every four or five years, but really, there should be a system in place that ensures that that check is in place, and I can emphasize that knowing what is happening with many of the school boards, particularly the larger ones, I do not think that is a large job.

I think that, yes, what Kevin points out, that many of these procedures are being carried out; yes, the superintendent does confirm the number of students who exist in the school board and yes, it is passed on independently there.

I do not think that the independent auditor would have a major task to perform in adding some form of an independent certificate or otherwise to that document, I really do not, I do not think that is a major task.

MR. CHAIRMAN: Really, to see that these checks are in place rather than carry it to, as the example I gave, to the counting of heads -

MR. DROVER: He will give you the independent assurance that, look, these procedures are in place, that is all, and all it does is, as a matter of fact, it adds a lot of credence and support to the superintendent's signature.

MR. CHAIRMAN: That is entirely a sort of a different perspective; really, what we are talking about - and we exaggerated it to point out if you want to get too technical about it - basically, what you are saying is, the independent audit would just verify the checks and balances that are already in place-

MR. DROVER: In place.

MR. CHAIRMAN: -and are now being carried out properly in the report which gives protection to the system.

MR. DROVER: That is all, and I think firms such as Ernst and Young and Peat Marwick are quite capable of expanding that. We are, as I said, working with health on it now and I do not think we have encountered any problem whatsoever and I think that may set the tone for future use of that.

MR. CHAIRMAN: But that will be a department's job really, rather than an individual school board's job.

MR. DROVER: Exactly. This complaint is not related to the school boards, we are not saying that there is anything wrong; we are saying that the system does not exist within the Department of Education.

MR. BREEN: But Mr. Chairman, you know, every recommendation for the department to do something will impinge on school boards. Because you know, I have been around long enough to know now, that the money coming out is getting less and less each year, and it is all coming from the one pie, so the more you build up these internal controls, you have a cost related factor, and it will translate into less money going out into the primary purpose that a school board exists and that is the education of the children.

MR. CHAIRMAN: Unless the checks and balances and the financial advice enables you to save money enough to offset it and have more money for the real things, that is the idea I guess behind it all. The practicality of it.

Mr. Reid, you have been waiting long enough I think.

MR. REID: Yes, I have so, sir.

At that point and just to follow up on what my Chairman is saying then we would have to assume that if there are going to be savings, we will have to assume that some of the things you are doing with regards to checks and balances right now are not correct, and I do not think that we can assume that as a committee.

I also do not believe that the question of checks and balances is one of the schools' trustees or one of school boards; I believe you, Mr. Breen, and what you said, that if Government wishes to introduce these checks and balances, you then, as school boards have no choice but to follow them and I guess Government then has no choice, but provide you the necessary funding in order to carry them out.

MR. BREEN: I wish that were the case, Mr. Reid, but Government in the past has done a lot of innovative things and have created many programmes, but there has never been the funding to go along with them, and I think you can go back to the re-organized high school programme of the 1970s, where the whole thing was taken and turned upside down, but the money was not there to do the job; so I mean, I take no comfort in the fact that if changes are made we are going to get the dollars to do it. That has not been the track record.

MR. REID: That is an argument, I guess, that the Auditor General will have to address with the Department and the Minister himself. Possibly that is where the Department will come in.

I have a couple of questions, Mr. Chairman. I am going to run until break time and then I may need to come after, but I want a couple of minutes. I want to get into something here that I do not know if our two guests can give us some figures on, but I am interested in the accumulated deficits of the boards in the Province. I am assuming that you two gentlemen are speaking on behalf of all the boards.

MR. BREEN: Except the Seven Day Adventist.

MR. REID: Except the Seven Day Adventist. One major problem that I have personally, I suppose, is that for the past number of years we have heard of school boards in Newfoundland having some serious problems and having to approach governments for bailouts, and the media has a tendency to get hold of that for some reason or another and blow it out of proportion more so than what it should be. But can you tell us, Mr. Breen: it says here that in 1988 it showed that eighteen of the thirty-five boards were running accumulative deficits. I have a couple of quick questions for you before I come to my major question. How many boards in 1990 were running deficits?

MR. BREEN: I could not give you that answer because I really do not know.

MR. REID: You do not know. What organization then would be able to tell me that, other than your department?

MR. BREEN: The DECs. There are two things if you run a deficit, you obviously have to get into borrowing, and borrowing has to be approved by the appropriate council. So in order to do that you would have to have the authority of the respective DEC. So the DECs could give you that figure.

MR. REID: Would you make a guess at possibly the board, the one board in Newfoundland that is probably at the present running the highest deficit and what that deficit would be, approximately?

MR. BREEN: I would be guessing. I know my own board has a deficit. In terms of real dollars it is fairly substantial, but probably in terms of the size of other boards it is not that great. I do not think we are really comparing apples to - if you look at our tax base and our ability to generate other sources of revenue, you have to consider all that. I can certainly get the information for you, but I would not have it at the -

MR. REID: So you would not be able to say that approximately boards in the Province are $45 million in the hole or something along that line?

MR. BREEN: No.

MR. REID: You do not want to answer questions for your own board do you?

MR. BREEN: Well, I did not bring the up to date financial information. All I know is that we have had deficits over the years, but we have been able to carry it on our cash flow.

MR. REID: What is your board?

MR. BREEN: St. John's Roman Catholic.

MR. REID: The Roman Catholic is the second largest in the Province is it?

MR. BREEN: It is the largest.

MR. REID: It is the largest in the Province. When you do run a deficit, Mr. Breen, how do you handle the deficit? How do you make your payments?

MR. BREEN: We borrow.

MR. REID: You borrow. How do you make your payments back then? Where does the money come from.

MR. BREEN: Basically, if it wasn't for the school tax authority, we would be bankrupt.

MR. REID: So it comes out of the school tax authority.

MR. BREEN: Yes, that is the only money we have that is not pegged.

MR. REID: And your interest and everything comes from the school tax authority. What do you get from the school tax authority here in St. John's?

MR. BREEN: I guess we probably pick up close to $10 million.

MR. REID: What per cent would go to alleviate the deficit, do you have any idea?

MR. BREEN: No, but we break it down into capital and operating, depending on the situation, because we do not get enough money from Government through the DECs to do the capital works that we need to have done, so traditionally our board has used its own resources. When the 90/10 formula was in we built certain schools at 60/40.

MR. REID: But out of the total debt, or the total (Inaudible) repayment on your debt what percentage of that $10 million, approximately, I am not looking for exact figures, what percentage of that $10 million goes towards that reduction per year?

MR. BREEN: The debt reduction is a very small portion because we are not retiring our debt as quickly as we should. We have to service it first and then if there are monies set aside we reduce it.

MR. REID: Do you have any idea how much?

MR. BREEN: I do not want to go on the record because I did not bring the financial records of my own board with me. I am not chairing the Finance Committee so I am not really -

MR. REID: The point I am trying to make is it seems like every year school boards are going further and further in debt, it seems that way, and I do not think school tax authorities were set up in the beginning to alleviate debt reduction, or debts in the school. I think they were put together, or at least I feel they were put together, to enhance the quality of education. I think that maybe we should as a committee possibly get some information and look at that and just see how some of the boards in the Province are stacking up.

The other question I have, Mr. Chairman - it is eleven o'clock and I am going to stop there - I didn't get very far on that line of thinking with Mr. Breen, I appreciate the fact that he does not have his facts and figures with him. The Auditor General made a comment on Number 8 in his report, the last one: in addition there is no formal reporting to the Department for presentation to the House of Assembly. Now, you are suggesting that the Minister of Education can stand in the House of Assembly with an outline of what has happened to $450 million in the past fiscal year. You must have something in your mind on this or you must be planning to make a suggestion to the Minister or to the Government on it. What exactly would be in that report? Would it be so detailed that we would be able to see how much money was spent in a particular school as related to, say, janitorial services?

MR. DROVER: Probably one might say the smaller the better. I think in our 1990 annual report, 3.6 on Page 66, we went into a review of annual reports of departments and I think some of the information we had anticipated would be to - and I will just go over the four or five points, describe the departments, their agencies, mission, provide a profile on the groups that were there and the areas served, describe the department, their agencies, goals, describe the major activities undertaken by each program, the financial and other resources utilized, in the client groups. This is something that is probably not much bigger than this type of document. Describe the major activities undertaken for each program, describe the effects of the department's or agencies' programmes, forecast the expected future state of the client groups and areas, and describe the significant methods used by the department or agency to ensure compliance with the economy, efficiency and effectiveness and control of its programs, compliance with the legislation and its successes. That just did not originate in our office in Newfoundland. Those are standards that were reached from British Columbia to Newfoundland and are presently being put into a number of provinces and the federal area. So that is just a departmental annual report that, without getting into too much details, for the reader such as the Members of the House of Assembly, if they want more detailed information then they can certainly go back to the House in Question Period and ask for the details.

MR. REID: What purpose does that serve? When you look at it that shows up in the House like all the other reports that show up in the House of Assembly, 90 per cent of them are thrown under your desk somewhere and eventually cleaned out, but a report like that, what benefit does it have other than, I suppose, protect the Minister?

MR. DROVER: I think right now, Mr. Chairman, the House of Assembly gets two documents; after a Minister's speech, the Budget Speech, he gets this document which is the Estimates and I think what that is doing - then at the end of one year he gets this document which is the Public Accounts of the Province, what that is doing then is taking an accountability document. You have given the Minister of Health over here $700 million and the Minister of Education $600 million, you report here on the straight numbers, that is all, these are just number (inaudible). What this type of document would turn around and prove is that the Minister is telling you this is the money you gave me and these are the programmes we offered, these are our successes or failures. The regime supporting that would be this independent group that comes in, you know the thirty-five school boards, I have summarized all of that for you, but I have summarized it to the point where a Member of the House of Assembly can sit down and probably, almost while he is watching the Minister present the document, read it fairly quickly and get an understanding of the $600 million we gave you for education in the Province. You are satisfied, Sir, that this was properly accounted for within the laws of this Legislature. In addition to that - if I have any questions as a result - but it is his accountability document, the whole scheme of accountability rests with that one document there.

MR. REID: You would not be talking about a report on a major amount of money because as Mr. Breen said, if you take out the teacher's salary and you take out what the school tax provides, you are not talking about, I suppose, capital -

MR. BREEN: You are talking $65 million.

MR. REID: You are talking $65 million and I am sure if I wanted to right now - and Mr. Breen you can answer this one - I am sure if I wanted to today, I could go to the Department of Education and find documentation on that $65 million. Could I not?

MR. BREEN: I think you could.

MR. DROVER: The accountability document relates to the whole. You have given the Minister a cheque for $600 million and he must then say to you: we spent $450 million or $400 million relating to teacher's salaries and here is the accountability over teacher's salaries. Here are some of the controls that are in place, there are so many teachers in the Province, he points that out. It would be a document that basically has five, six or a dozen headings depending upon what headings he is using here, but it would not only just include - the $65 million would be a part of it yes - but he would also have to be accountable for the payment of - the Minister of Education would have to be accountable for the $100 million that goes to the university, the X number of millions that go to the Colleges at the present time. So, he would tell the Members of the House of Assembly here are the procedures that I have put in place to guarantee you that there is an accountability over this money. It is a summary, but it is a summary of probably - I would go out on a limb and say fifty, sixty, or seventy reports that he has in his office. He has one from each one of the school boards, thirty-five, one from the university, and one from each of the eight or ten colleges, and I am up to fifty already, and he summarizes, or someone in his office would summarize that and give you a rather small document which basically shows you and demonstrates that he has accountability for the $600 million that he has received. I do not know if that is satisfactory.

MR. REID: Mr. Chairman, it is almost ten after, let's take a break and get a coffee if you do not mind.

MR. CHAIRMAN: We will take a break for ten minutes or so.

MR. CHAIRMAN: Before we get down to our formalities, I am glad to hear you coming up with some new ideas.

MR. REID: May I make my final comments, Mr. Chairman?

MR. CHAIRMAN: Mr. Reid.

MR. REID: Yes. I will direct my comment to the Auditor General. I do not think that any of the school boards, or I suppose the complete education system in the Province outside the Minister's office, has any problems dealing with rules or regulations as it relates to reporting financially to the Department and I guess to the Auditor General.

I do not mean to be nasty here, but I believe that sometimes the Auditor General, in the office he holds, has no other choice but to make comments relating to a better method, or better methods of reporting, and I guess as long as there are auditor generals and new ideas coming forth each year, like every profession I suppose, the Auditor General will continue to insist that things be done in a certain way.

But with that said, I think we as a committee also have to appreciate the fact that in order to satisfy the Auditor General to the extent that he will, in future years be writing good things about Education and Health and other departments, there needs to be a sizable amount of monies found somewhere for departments to carry out the necessary recommendations that the Auditor General's office suggests, and I guess that is true also of providing the Auditor General's office with substantial amounts of money so he can go out and actually do the job that he thinks should be done in a lot of cases; so the bottom line is yes, I agree.

Sitting on this committee now for the past two and a half years, there have been a number of cases where the Auditor General has been critical of reporting, but the bottom line I think boils down to the fact that we are living in Newfoundland and Labrador and we just do not have the Government or nobody else has the finances in order to make the system perfect, so we have to rely on superintendents and school board trustees and people out in the system, whom, I suppose, are honest with us and provide us with a fair and accurate account of what is going on.

I do not necessarily agree that every single dollar that a school board has must be accounted for under the principles of fairness and tendering processes and so on, because I know in my situation in Conception Bay North, there are times when better deals can be arrived at without going to the public tendering process sometimes, because you are closer to the people, you know the type of work that can be done and so on.

I appreciate what the Auditor General is saying and some of the recommendations, but I think it is necessary for us as a committee in Government too, to realize that without the necessary funding in place it is pretty hard to accomplish.

I would be interested, Mr. Chairman, in seeing, and I would like to ask now officially, if there is some way that we could have tabled the deficits of those eighteen school boards in 1988? Maybe there are more now, but I would like to see what the deficits are on some of these boards and maybe if we could get some sort of a spread sheet or something for the past ten years which would indicate how much the deficit has been increasing, and with that maybe we can convince our colleagues in education to probably help in some way down the road if we are lucky enough to get a few extra dollars some year to try to eliminate some of these deficits. Thank you.

MR. CHAIRMAN: Mr. Reid, just to follow up on what you were saying, the Department of Education would have available and can make available, the list of school boards, the deficits and what have you. In fact, if you go back to yesterday when we met with the Denominational Education Councils and we talked about the breakdown of $27 million, $2.5 million of that each year goes towards deficit reduction. Many of the boards are running deficits because of past, not necessarily present, borrowing needs not related to current account necessarily, but most boards, I would suggest, if not all, who have deficits have them because of past borrowing on capital where they had to put in ten per cent of the funding up until a few years ago when some enlightened Minister changed the rules. The boards had to put in ten per cent and government only funded ninety per cent of school construction.

In a lot of cases, as Mr. Breen mentioned, the ninety per cent did not provide for what the board really wanted, and the board had to put in a lot more than ten per cent. In fact, some of the larger boards, like the St. John's boards, under capital needs went well above and beyond what was approved for them and had the wherewithal to do it themselves. Other boards outside did not, so a million dollar school, which is only a small school these days, was approved for a small rural area, that board automatically had to come up with $100,000. Now if that happened to be a $4 million school, which is not huge, all you are talking about here is a school for 400 - 500 students, that was $500,000 the school board had to borrow.

Back six or seven years ago interest rates were at twenty-two and twenty-three per cent. You can picture the amount of money a little school board had to come up with, and that was just on one project. A board in the run of a year might be trying to handle, one, two or three projects. Some boards went very heavily into debt to the point where they could just not fund it. How do you pay your interest, not to say principal, out of your current money or your operating money each year? Where does that come from? Well government allocates funds to boards, and this is where we talk about the fairness being so unfair based upon the number of students. If you have ten students you get ten times $275, whatever the amount is now, and if you have twenty you get twice that, but you get the same amount per student. But to provide for the educational needs of the student in area A compared to area B, the cost is entirely different.

We talked during the break about a rural area where every phone call you must make is a long distance call. If your co-ordinator is going to visit schools he might have to travel over 300 miles of the roughest kind of road, he might have to get a helicopter to fly to the island. In an area like St. John's you can almost walk from school to school and visit all your schools. So it makes an awful lot of difference in the cost of servicing your children, not to say servicing anything else, then when you look at the tax base above and beyond this little bit of government money that you get which though given so equally based on per pupil is entirely unequal because of the amount it costs to service each child. And that is why we introduced a grant called the Tax Equalization Grant which gave more money to areas that could not raise their own. The only thing that keeps many boards afloat is the money they collect from the school tax authorities, or through the school tax authorities, ten million dollars perhaps for the St. John's Boards alone and lesser amounts outside, but what even adds then to the inequity of that is the fact that in St. John's you have all your big malls, companies, businesses and all kinds of commercial tax base and most people work in a high employment area. A lot of money is brought into the system which in turn is given directly to the schools within this authority and that is what, I think, a lot of people do not understand about the school tax authority. The money is collected by them, all these dollars are put right back into the classrooms within this area of collection and the board can call the shots on how they spend it.

But in rural areas where the tax base is so small you might have a fish plant that is not working and that is about it; and with a lot of the high unemployment rate, in some areas extremely high, the tax returns through the school tax authority once again is extremely small.

MR. WALSH: Mr. Chairman, I appreciate the history lesson and I want to ask, where are we going?

MR. CHAIRMAN: Okay, let me get there.

We were talking about the deficits -

MR. REID: Don't interrupt the Chairman, I was finding that quite interesting and I was going to ask the Chairman a question after he was finished. I feel you were rudely interrupted and I think you should continue.

MR. CHAIRMAN: I appreciate your comments and also Mr. Walsh's, there is a limit to it. But what I was zeroing in on was the deficits of boards -

MR. WALSH: (Inaudible) but I would like to deal with it with the people who are here.

MR. GOVER: Exactly. I would like to hear from Mr. Breen.

MR. CHAIRMAN: - the deficits of boards, because of this, and that is one of the reasons why a lot of them are in trouble. Consequently, it is going to be a while. This $2.5 million that was brought up yesterday is helping them to get out -

MR. REID: I understand that but the problem that I have with that is as we continue to spend more and more money on capital to build new schools, more and more of the school tax money that is actually going into the revenues of boards, is going towards debt reduction on capital.

MR. CHAIRMAN: No, no.

MR. REID: That is not right?

MR. CHAIRMAN: Not necessarily because number one, right now as of a few years ago, school construction is funded 100 per cent. So boards do not have to borrow. Really most boards are in trouble because of past borrowing.

MR. REID: Okay.

MR. CHAIRMAN: However -

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Yes, therefore they are past deficits.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Current money, yes, to pay for past borrowing unless the board -

MR. WALSH: Mr. Chairman, again with all due respect to my colleagues at the table, I really appreciate the conversation that we are having, but I think as a Committee we can have this any time we want. I now find that we have witnesses here whose time is as valuable as our own and I now find that we are feeding the answers to the witnesses so they can either agree or contradict with us. Mr. Breen wants to answer some of these but we will not let him.

MR. CHAIRMAN: Okay, Mr. Walsh, I appreciate your comment and Mr. Breen in fact was going to comment on the deficits that boards have at present and the effect of using the school tax money.

So, maybe Mr. Breen if you would, we can discuss this at any time as was mentioned.

MR. BREEN: Mr. Chairman, I will be very brief with this. First of all, when you talk about this grant for debt reduction, and this was not universally accepted because there were certain boards in the Province that felt this rewarded poor stewardship; discriminated against boards that had kept their borrowings in line and who did not do what they considered to be the imprudent things. That is one way of looking at it. But the underpinning for all of this, in my view, and I am sure Mr. Hearn would share it, is that the whole question of educational finance has to be addressed. This whole tagging the dollars to per pupil is off-the-wall. There is no greater form of inequality than the equal treatment of unequals. That is what we are doing here when we peg everything to a per pupil grant, we take into no account the disparities of demographics, of employment, of the commercial tax base, and even the whole matter of cost of goods and services within an area. Contrary to what many people feel, St. John's has a great tax base. It has a lot of employment but the cost of doing business here is a lot higher than in other areas too, but none of this has been weighed. Until we address the whole foundation, or how we ground this, then discussions on school tax authorities and whether we should have an equalization grant for the coast, or whatever, I think really is not getting us anywhere. We really have to look at a different way of funding the schools. We have to look at possibly what they call a budget approach, a block funding approach, where you go in and negotiate your budget, whether you negotiate that with the Department, with Treasury Board, with the DECs, or with whoever, and the determination is made that this board, based on the demographics, based on the number of pupils, or whatever, needs X number of dollars to determine a foundation program and that foundation program should be a program that addresses a basic educational program for every child in the Province, that no matter where he or she lives they should have that type of level of educational opportunity. We have never done that. I see we are kind of spinning our wheels in terms of debating the kind of extraneous things we have here today, but until we really get down and look at the root cause of why we have deficits, why school boards are in trouble, and I do not know too many that are not, then we are just going to exacerbate that problem in the future. If anything were to come out of this today, and I would just like to take this opportunity to you people who are legislators, to really think about the fact that we have to rethink the way we have done things in the past and try to get on with something a little bit more equitable in the future.

MR. CHAIRMAN: Mr. Breen, did not the task force on educational finance address these tactics?

MR. BREEN: Yes, but it is gathering dust somewhere. Here is the report here.

MR. CHAIRMAN: What is the title of the report?

MR. BREEN: Financing Greater Equality and Excellence in the Newfoundland School Systems, June 1989. It was chaired by Cec Roebothan and the committee Members were W. Dixon who resigned in March 1989 and Dr. Warren who resigned in March 1989.

MR. CHAIRMAN: Actually it was chaired by Dr. Warren and submitted by Cec Roebothan because Dr. Warren had resigned at the time.

MR. BREEN: A lot of the work has been done. You do not have to re-invent the wheel with this. The research has been done and the statistics are there. I think it takes probably a little bit of a political will to make some changes that people are a little bit fearful of.

MR. CHAIRMAN: And probably a few political dollars.

MR. BREEN: I do not know if that determination has really been made, of how much it is going to cost, but it is going to radically change the way we have done things in the past. It might cause a lot of uneasiness in that there is change, but one thing we know is the way we are doing it now is not working.

MR. CHAIRMAN: Mr. Drover.

MR. REID: You have just got yourself a piece on the news.

MR. WALSH: Whether or not it is a piece on the news I would like to say it is probably the most forthright statement I have heard towards education and our approach in the two days we have been here and I compliment you for making the stand and making a very valid case. The 60s are maybe here again and it is time, to not just rethink, but to act on good work that has already been done. The way you related to the report it sounds as though there is a lot of very good foundation in that report in your opinion. Am I correct in assuming that?

MR. BREEN: Yes, and that is really built on other investigations that have been done. For example the school trustees authored a report in 1982, which was a multi-disciplinary committee, people from the departments, superintendency, trustees and university got together and really looked at things and this kind of built on that again, but really, it is still hanging.

MR. WALSH: In your opinion, is it time for action?

MR. BREEN: I think it is long overdue, long overdue.

MR. CHAIRMAN: Mr. Drover had indicated he wants to say something.

MR. DROVER: Thank you, Mr. Chairman. I apologise as it is not related to this specific topic, but it relates to Mr. Reid's comments and I think they are very valid.

I will point out that our office goes through a whole process in developing issues for the annual report, and each comment that is in here must meet four criteria and must be relevant to the issue at hand; it must be reasonable, cost-efficient and effective and it must be material in relating to what happens here, so each one here is not a theoretical comment, this is a practical comment in dealing with the situation at hand.

I might point out, as I referred to yesterday and today as well, during the year we get involved in a number of departments, but for the last two years we have been involved heavily in suggestions with the Department of Health. This does not often come out, but from the executive level of the Department of Health, we have had excellent co-operation in trying to implement, and I think I have said that here in the past, Mr. Lemon and Dr. Williams have been very co-operative with the office in expanding some of these methods to the various hospitals in acquiring accountability there.

While our audit of health may be a year ahead of our audit of education, I am not saying that we are not having co-operation at Education at all, I am saying that our work in health is probably about a year ahead, but by bringing it to your attention today, I hope to demonstrate that the practicality of these recommendations, the Department of Health is taking some of these recommendations and attempting to implement many of them in their own accountability of the various hospitals.

That does not say that there are not any problems and that there is nothing that we have to report, it is just saying that they have taken it and started a system whereby they are getting the external auditors of a number of hospitals to report back to them, and I would also say that we have visited in the current year quite a number of hospitals and we have had excellent co-operation; we visited, and the only way to say it is, I guess, we have just recently completed an audit of the largest hospital in the Province and I guess everybody probably knows which one that is, but we have had, without doubt, excellent co-operation, but that does not say we do not have anything to report, that just says we did have excellent co-operation there.

So the topic we are talking about today and our recommendations here, I think are without doubt in our mind, if the willpower rests in the department to implement them, then the only reason we make them is for accountability purposes; that is our role as Mr. Reid quite adequately pointed out, but they do not come off, they are not theoretical, they are practical solutions to it, accountability.

MR. CHAIRMAN: Thank you, Mr. Drover. Mr. Reid.

MR. REID: But with that said, then it is the role of the Auditor General through the Minister's office, to accomplish that; it is not the role of the Auditor General, through the back door, up through the superintendents and the boards, it should come in reverse, and the gentleman said earlier this morning in one of his first comments; he said they have no problem in dealing with any rules and regulations that the department should set down, as it I suppose relates to accounting -

Thank you, Mr. Breen.

MR. CHAIRMAN: Mr. Walsh.

MR. WALSH: One final question, Mr. Drover.

The School Tax Authorities themselves: does your office or has your office in the past done spot checks or audits on these groups? I ask that because they are called School Tax Authorities and an Act of the House of Assembly allows them to do what they do, and the disbursement of funds we are quite satisfied that those funds are disbursed and so on, but has your office done a thorough analysis of the system, for all or any of the school tax authorities?

MR. DROVER: Prior to December 31st, last year, we were the auditor of all the school tax authorities in the Province, all of them. We issued the financial statements similar to the attest audit financial statement for each school board.

As of December 31st, the School Tax Authorities, are not really part of our primary mandate, so we vacated the area and I think all of them, we are not doing a school tax authority right now; that does not say that prohibits us in the future from going into one. Our last audit would have been for December 31, 1990. I think it is 1990 that we would have done the last audit for the school tax authorities. Everyone in the province we would have audited up to approximately that date.

MR. WALSH: So your role from January 1, 1991 forward will be as is with any other agency, would be now to go in and do spot checks either at your own request or on the request of some committee.

MR. DROVER: We would have to take the position that the answer is yes. I owe it to you to point it out that there is some debate by some that sums that are raised, and I think Mr. Gover did a good job in raising this debate when we - and I am just trying to explain it to you. When this Committee had one of the hospitals in, okay, we got into a discussion on the private funds.

MR. WALSH: Yes.

MR. DROVER: All right, there was some debate by their solicitors that private funds do not come under The Financial Administration Act, and therefore they are not accountable to the House of Assembly for their private funds. There is some debate in the minds of some people, but we do not accept it, that the School Tax Authority funds are, in fact, money that is raised by the School Tax Authority, and it does not come under the definition of public money. We would have to address that issue. We have never had a problem with it, but I am just trying to be fair to you to point out the whole gambit of what is there.

Mr. Gover did a good, and I should not speak for him, but he did a good job in summarizing similar to what you just said that if the agency is created by an act of the Legislature then all monies -

MR. WALSH: We have had that discussion and we concur in that sense.

MR. DROVER: Yes, okay. So I think that is just the debate. I wanted to bring it to your attention the debate that might rest in the minds of some people, because I was not present when you were discussing that.

MR. BREEN: Mr. Chairman, I am astounded that that comment could be made, that the school tax monies are not public monies. I find that flabbergasting.

MR. CHAIRMAN: You report to the Minister on how you spend your school tax dollars?

MR. BREEN: Budgets have to be approved by the Minister. The tax levy is approved by the Minister.

MR. WALSH: That is one of the major flaws in the system, Mr. Breen.

MR. DROVER: The clear, concise definition of public money as defined under The Financial Administration Act is money that is held by the Province, okay?

MR. CHAIRMAN: Specially given to you by the Province. You do not get that directly from the Province?

MR. DROVER: Really the School Tax Authority, while it is not a clear, concise Crown corporation as such, it might be defined that way. But I mean we do not accept that. I am just pointing out how some may conceive it.

MR. CHAIRMAN: Mr. Walsh.

MR. WALSH: Mr. Chairman, the point I am leading up to, Mr. Drover, is that I have heard those comments as well and I have a great concern with them. And probably tomorrow's newspaper and tonight's news will elaborate on my thoughts about it, because of that kind of an attitude and that kind of an approach, and that is one of the reasons that this morning I called for the abolition of the School Tax Authorities. If they were created by our Government they should be by the Government, they can be abolished by the Government and then we will in turn be responsible for the funds collected, schools boards and everybody else. I argued yesterday: why did nineteen school boards out of thirty-five not sign their audited statements to your department? To which you corrected and said, look, you know, it did take place, just at that point in time it had not. And I was satisfied with that. But here we are talking in terms of $30 million to $40 million a year and somebody out there believes that they may not be accountable to either the Government, the Auditor General or the people of the Province. My only comment is they are dreaming in technicolour, that is not the way the real world works.

MR. CHAIRMAN: Mr. Drover.

MR. DROVER: That is correct, Mr. Chairman, just to jump in again. We raised the issue of private funding for hospitals, that came before this Committee. The School Tax Authority money is another one, these parallel each other. The other one which is probably the largest one of the lot might be the funds that are raised by Workers' Compensation. The Workers' Compensation Commission does not raise its funding through Government. The Government does not write a cheque for it. But it does raise it by contributions from employers.

Those are the three primary agencies there. Now in our office interpretation we would expect that is really public money and we would treat it as such. But all I am pointing out to Mr. Walsh is that there is in the mind of some individuals, and one must listen to it, you know, as all legal debate.

MR. CHAIRMAN: Actually I think if we go back to when we had the hospital boards, members of the hospital boards or executive directors or, you know, paid personnel, basically told us they felt that the money they collected through their fund raising drives and so on, on behalf of the board, was not public money and they were not accountable to anybody for that.

MR. WALSH: More importantly, Mr. Chairman, it was not just that the employees told us, their legal counsel attempted to tell us, and I can appreciate if someone in a position of employment has an interpretation of what might be because in that case it can be corrected, but when the legal counsel is sitting their challenging, I see that as completely different than an employee with an interpretation.

MR. CHAIRMAN: It is much the same with the school tax authorities. I am sure if they wanted to use the same thing they are saying look Government is not giving us this money so why should we bother telling government how we spend it. Basically, I think, that was the reaction of some hospital boards. That is basically where it came from, not to us from school tax authorities, maybe there were some people in the school tax authority who may feel that and might say it.

Mr. Hearn.

MR. HEARN: Mr. Chairman, I find it difficult to equate private monies with school tax authority money because the school tax is set up by an act of the Legislation, and it is public money. But if you go out say, from a hospital, and get private funds from private individuals then I feel: how can you equate private monies with school tax monies, it is public money. Up until December 1990, I am part of a school tax authority too, we were audited by the Auditor General, we are now audited by an audit firm that has to be approved by the Minister of Education so we are still accountable to the Department of Education for the money we get from the school tax.

MR. CHAIRMAN: And rightly so.

MR. HEARN: Rightly so, I agree with that. We are not talking about private funds here, we are talking about public monies that are collected through the school tax.

MR. GOVER: I think part of the problem too with the hospital's money, it is a discretionary pool of money and to some extent I suppose when the school tax dollars flow to the school board that is a discretionary source of money. The school board decides on what projects the money is going to be spent.

AN HON. MEMBER: So, it is still accountable to the Department of Education for that money.

MR. GOVER: Yes. But what the hospitals were doing, I do not know if the school boards could do the same thing, but let us say that a school board wanted a particular superintendent, they would go out with these discretionary funds, money raised by the school tax, and say we will give you a salary supplement over and above what the average superintend makes; we will give you a car; we will give you a golf club membership; we will give you an entertainment allowance; we will give you administrative overtime; we will give you all these perks, in order to recruit a particular superintendent. The argument is that these dollars are not being put back into education but they are being put into perks for senior management.

So, I suppose, if a school board wanted to recruit a particular superintendent or programme coordinator or assistant superintendent, I mean, would a school board consider expending its funds in that particular way, or has it expended funds in that particular way?

MR. CHAIRMAN: Mr. Breen.

MR. BREEN: Sure they have. There is what they call an augmentation. Again, it goes back to the point that I made. It is not worth the while for some people to aspire to the office of superintendency with the inherent responsibilities for the spread between say a supervisor or a programme coordinator and the salary for a superintendent. Boards have been forced to augment the salary of the superintendent to attract a qualified person. Not that they are trying to - I know nothing of golf club memberships and lavish entertainment accounts but certainly there is a travel allowance and what they call a bonus that they pay over and above what is allocated by the Department.

MR. CHAIRMAN: A signing bonus.

MR. BREEN: Yes, a multi-year contract.

MR. GOVER: I see. Then there is the controversy as to like the hospital boards take their discretionary funds and the board members go off on various conferences and these conferences may very well be beneficial, I do not dispute that, but there are some people who think that maybe that is not an appropriate use of funds.

So what about the school tax money, would that be used to send board members away to conferences?

MR. BREEN: It is hard to know which dollar is spent to do what, whether it pays the light bill or to send someone to a conference but certainly there is a vote in a lot of school board budgets for professional development for both teachers and for trustees. Obviously, it has to be paid for.

MR. GOVER: So, what you are saying is that out and about the Province in order to recruit certain superintendents there is a salary bonus over and above the allocation provided by the Department of Education.

MR. BREEN: Certain boards may have to augment the salary of a superintendent to attract a qualified and suitable candidate.

MR. GOVER: I see.

AN HON. MEMBER: Only superintendents.

MR. CHAIRMAN: A good question.

MR. BREEN: To my knowledge.

AN HON. MEMBER: What about specialists people?

MR. BREEN: There is a specialists bonus from the Department to cover that.

MR. CHAIRMAN: Could boards augment the salary of a teacher if they wanted a particular music teacher?

MR. BREEN: No, because that would be contrary to the collective agreement. You cannot make an individual deal with a teacher.

MR. CHAIRMAN: It is only when dealing with people outside the collective agreement.

MR. BREEN: A superintendent is not constrained by a collective agreement.

MR. CHAIRMAN: Mr. Breen, yesterday when we had the DECs here we got into a discussion on the cost of delivering educational programmes throughout the Province. We, of course, got involved in the cost of Denominational Education, and they talked about co-operation, especially co-operation which is being fostered these days as compared to, maybe, the past or what have you. Do you find that in St. John's where you operate right next to and cross the boundaries of another major board, do you find that you co-operate in any way with specialists. Well, the transportation problem you do not have because Government does not pay for transportation in St. John's, but whatever.

MR. BREEN: Yes, we do. For example, on Bell Island we have a co-operative programme with the Integrated Board and certain specialists are crossing board boundaries to give certain expertise.

MR. CHAIRMAN: Could you see any great saving if, instead of having two major boards in St. John's you only had one?

MR. BREEN: No, personally I cannot and it is really not my mandate to address that. However, you are looking at the Roman Catholic Board serving 20,000 kids and the Integrated Board serving probably 12,000 to 13,000 kids and there probably would be pockets. Now, I am not speaking for the St. John's Board but, for example, the inner city is a problem right now for both school boards and there could probably be an area to be addressed there in terms of housing. We have a fleeting population for both boards. Everyone is moving to the suburbs, and they are expecting the school boards to chase them out there with buildings when we basically empty the enclave. So there may have to be a rethinking of that whole thing and that could possibly mean a co-operative venture with the other board.

There are certain things being talked about now. For example, we need to house some children in the Portugal Cove - St. Phillip's area that the Integrated Board is involved in and, conversely, they have a problem in the Pouch Cove - Flatrock area where we may be doing some construction. So, these things are being talked about.

MR. CHAIRMAN: That follows along the line, I think, of basically what the DECs talked about yesterday.

Mr. Reid.

MR. REID: I should have asked this question yesterday, I guess, but I am going to ask you because you are a superintendent, are you not?

MR. BREEN: No, I am not a superintendent, I am a trustee.

MR. REID: Oh, I am sorry. I do not know if anyone asked this before or not. I am afraid maybe Loyola has asked it. A former member of the Committee approached me this morning and asked this question of me. I want to ask it, but I do not know if the answer has been given or not yet. What is the rationale - maybe you have gone through this already and I have not heard it - of spending, let us say hypothetically, $3.5 million on a school in, well, you just said Pouch Cove, so we will use Pouch cove, for let us say 400 students, and let us go out somewhere in Placentia Bay with 400 students and you only spend, say, $2.5 million? That happens. Do you know what I am getting at?

MR. BREEN: What, the varying cost based on - I really do not know. I mean, I presume the cost of material and the cost of labour would vary in different parts of the Province.

MR. HEWLETT: You do not provide a richer educational environment for one crowd versus another?

MR. BREEN: Well, each school board is autonomous. I mean, they can pretty well add on to the curriculum as they see fit, with the approval of the Department. I presume you are talking about cost per square foot to construct, are you?

MR. REID: Well, not necessarily. I will just give you another example, one that I am closer to. The school that I taught in, the CIC in Carbonear, cost, I think, $3.8 million and it is a pretty modern school with labs and a whole host of the modern things of teaching, work shops and all kinds of thing. A year after they built a high school in Harbour Grace, which was next door, and I am talking about the integrated system, and the high school in Harbour Grace, I know they are serving less kids, but there is nothing in the school. There are no labs in comparison to what is in the high school in Carbonear, the gymnasium is not half as good as the one that is in Carbonear. A lot of kids right now in Harbour Grace are leaving that school and coming down to the other school because the one in Carbonear is offering a better programme, and the reason that they are offering a better programme is because they have better labs and the facilities to offer. What rationale is used in a case like that where one group of kids would be deprived of a level of education that someone two miles away would be able to obtain?

MR. BREEN: I am not trying to duck the question, but it is too bad you did not ask it yesterday when the IEC were here.

MR. REID: It was actually asked and answered.

MR. CHAIRMAN: Mr. Breen is the Chairman of a school board so he has to fight for funding to build whatever schools he is going to build, and undoubtably he will fight to get as much as he can. Now the DECs make that determination, how much they will give you, and I think the question Mr. Reid asked and why it was asked was because I made the statement yesterday. I thought that the boards in St. John's, because they are big and powerful and have good lobbyists and experienced personnel sometimes, you get a much better deal from the DECs than some smaller boards out there, and when we are talking about equal population, you know, if you are asking to build a school in the inner city to service 600 people you will get x number of dollars, if a small rural board comes in to look to build a school for 600 they seem to get a lot less, and the school that is put out there to serve the same number of students is in no way comparable to the one in the inner city. Is it because of the power of the board?

MR. BREEN: But you are talking about two rural schools here.

MR. CHAIRMAN: But here we are talking about two within the one board. That really throws me off.

MR. REID: I wanted to get a personal opinion from you on it because I really -

MR. BREEN: I do not know, really. If I knew I would offer an opinion, but I do not know.

MR. REID: But that is happening, and you know it is happening all over the Province, especially in rural Newfoundland.

MR. BREEN: Well I did not know of the particular incident you just reported, but I do not disbelieve you. But as to why, I really do not know.

MR. HEWLETT: Is that justified in your opinion, Mr. Hearn?

MR. J. HEARN: I would like to ask Mr. Reid a question. What time was the school build, just recently?

MR. REID: Yes, well it was in a matter of two years, the one in - well I will use that as an example. I am going to pick on my colleague now from -

MR. J. HEARN: Can I finish speaking please?

MR. REID: Okay, I am sorry.

MR. J. HEARN: A few years ago, not too many years ago, only a couple of years ago, the school boards had to come up with ten per cent of the funding, and if that was so in Harbour Grace, Carbonear maybe the school board could not afford that ten per cent to go to the $3 million that the good school with all the labs and everything went on in Carbonear. So I just -

MR. CHAIRMAN: What school was built first?

MR. REID: CIC and then St. Paul's was built a year and a half after.

MR. CHAIRMAN: It should be the other way around.

MR. BREEN: The good one was built first though.

MR. CHAIRMAN: The good one was built first, but (inaudible) -

MR. BREEN: Maybe they did not have enough money to build the second one. I would be just guessing. I really do not know.

MR. HEARN: I think now that most of the schools that are funded through the boards are funded on an equity basis because that ten per cent is not involved and if the school board requests $2 million to build a school then they get that $2 million approved by the DECs. So the ten per cent is not a factor, but I just wondered if that ten per cent was a factor with the two schools you are talking about, but apparently it (inaudible) -

MR. REID: Well I think it was in 1984 I moved into CIC and then it must of been around 1987 -

MR. BREEN: In both cases then the ten per cent -

MR. REID: - when the other one was started. And I do not believe, by the way, Mr. Breen, that there is no influence. I am sure there is. And I do not care who sits here and tells me that there is not, but there is a certain amount of influence because certain places get better facilities than others.

MR. BREEN: I did not say there wasn't any influence.

MR. REID: No, someone up here said there was not. I do not believe that there isn't. I remember going to Springdale some years ago when the previous Premier opened a new section on Grant Collegiate down there and I walked through it, after teaching for fifteen years in the outdoor toilet in which I was teaching in Carbonear, it almost made me sick to see the facilities that were in Springdale, compared to what we had and what other places in the Province had.

Do not tell me, and I hope that there is nobody at the table, be it previous Ministers of Education or not, that the Premier of Newfoundland or politicians did not and do not have influence when it comes to buildings, school buildings in this Province, because they do.

Let me finish, I am not finished, I want to get this across to this character, my friend over here; and then two or three years ago, build another monstrosity. I should not call it a monstrosity, I should call it a piece of art, the new Pentecostal High School, which I am sure if you searched this Province, you would not find a better facility, and I do not know but Eastern Canada than what they have down there, so with all that said, there is definitely something going on that some of us so-called new people at this dirty political game which we are at, do not know about and one of these days I am going to get my foot in the door and find out and maybe I might get a new school for Northern Bay in the lower part of my district.

MR. CHAIRMAN: Mr. Walsh.

MR. WALSH: Mr. Chairman, if what Mr. Reid is saying is correct, I have to do everything I can to get my school in Paradise finished off, Father out there has been driving me absolutely berserk because it is not finished and I may take these gentlemen to lunch afterwards, if influence can be used, I would like to have that school finished as well.

MR. CHAIRMAN: I suggest, Mr. Walsh you would be wasting your money.

SOME HON. MEMBERS: Hear, hear!

MR. CHAIRMAN: You should have taken them to lunch yesterday.

I must say I disagree with Mr. Reid, because from many experiences I have had and I think any politician regardless of stripe will tell you, despite the fact that the politician might write a letter to the DECs, Government, through the Department of Education, gives right now, about $22 million for school construction to the DECs.

They determine, independently, now once again, independently, question mark, how that money is spent-

MR. HEWLETT: (Inaudible).

MR. CHAIRMAN: - it is supposed to be spent on priorities and the money is allocated according to needs. I think, if you look at how money is distributed over X number of years, you will find that it is shared fairly equally anyway, which is fair ball to a point as long as priorities are addressed.

Let me ask you a question on this, when you are going after a new school, who determines how much money you get; do you make the request: we need a school and here is the cost, it is going to be $5 million or does the CEC come in and determine how much the school is going (inaudible)?

MR. BREEN: No, you submit to the CEC your request and then they come back and say: sure, but knock 10 feet off the gym and you do not need this lab up here and you do not need this grade of whatever and we are going to give you $4.2, and then you are back into a kind -

MR. CHAIRMAN: Lobbying with them.

MR. BREEN: -of a negotiation with them.

MR. CHAIRMAN: But the more you lobby and the better your lobbyists are, the better chance you have of getting what you want.

MR. BREEN: Well you certainly have meetings with them and you know you try to get your point across.

MR. CHAIRMAN: Because as an example, and one of the reasons I think the one that you were asked about this morning, is one that happened up my way where three schools were being built; two by the St. John's Roman Catholic Board, your own board, and one by an outside rural board, for the same I think, roughly 600 students, each one, give or take a half a dozen, not enough to be significant in any size.

The two in the St. John's Board, the offer was between $4 million and $5 million and the one for outside was $2 million, that is very significant; it ended up to be $4 million after a lot of lobbying, yes and interventions.

You do not tell the CECs basically, I do not think there is anybody who would go in there and say, you better allocate - I do not think that happens, I think they -

MR. BREEN: I have never experienced that.

MR. CHAIRMAN: No, but lobbying helps. The one on the Pentecostal school, just remarking on Springdale, yesterday Pastor Batstone, when he was here said: they pay 31 per cent of capital construction they are contributing directly, which is significant in any school construction.

MR. HEWLETT: And it is kindergarten to Grade XII and a church, all under one roof, cradle to the grave.

MR. CHAIRMAN: Any further questions or comments?

I think once again we have had some open and frank discussions, and getting to the point directly, I think we both see what the other is saying. The Auditor would say there should be a more independent general verification of finances when it involves so much money and the board is saying we are doing what we are required to do but if somebody wants to do it better go ahead and do it and pay for it. That is fair ball. I think the other thing coming out of it all is we are talking about a lot of money and perhaps if it were re-arranged a bit better we would get a better bang for the dollars that are involved. I think your message is loud and clear, Mr. Breen, and hopefully we will get it across, especially since the directions are all set there and it is only a matter of carrying them out.

MR. BREEN: Mr. Chairman, there is one source of funding that has not even been identified here today. I think we are doing more than we should be doing almost if you looked at the amount of money that is raised locally by PTAs.

MR. CHAIRMAN: Or even by kids.

MR. BREEN: Well, through kids with candy bar sales, sweeps, bake sales, card parties, it is astronomical, and they guard that turf rather jealously because you cannot really get a handle on the amount of money that is being raised but I know it is significant.

MR. CHAIRMAN: There are many little pieces of equipment and aids in our schools today that would not be there except for that, many of the trips and so on, the educational jaunts that our kids take. I agree with that 100 per cent.

MR. REID: But the general public are getting to a point where it is almost saturated now, I think. The general public are getting to a point where sooner or later people are going to start saying, no. I do not know what it is like in St. John's but I know there are a lot of areas in the Province where it is just unbelievable, every second day there is somebody knocking on your door looking for something for a school, especially if you are in a fair size place where you have the Pentecostal, you have the United Church, the Integrated system, and the Roman Catholic system. You have three of them coming at you the one time. That is a good point and it would be interesting if there was some way somebody could get a handle on that in the whole Province and see how many millions of dollars, because you are definitely talking millions -

MR. BREEN: Oh, you are talking millions. There is no question about that.

MR. REID: - how much is going into the system like that.

MR. CHAIRMAN: Could we operate alone on Government money if we withdrew that? Where would you be today if you did not have school tax authorities and the PTA funding?

MR. BREEN: Bankrupt.

MR. CHAIRMAN: All boards I would say, or just about.

MR. BREEN: The rich St. John's boards would be bankrupt.

MR HEARN: Mr. Chairman, I think one thing that should be noted, too, is the volunteer work that goes into the school boards from the school trustees. The amount of time that has been put in it has never been accountable to the Auditor General or anybody.

We figured out one afternoon at a school board that if we were paid

for the number of hours and days we put in it would come to twelve and a half cents an hour for the year, the amount of time we put in school boards.

AN HON. MEMBER: Mr. Hearn, welcome to the political world.

MR. HEARN: You do not get paid either?

MR. CHAIRMAN: We get paid more than that.

MR. HEARN: That is what we figured out, Mr. Chairman. We get twelve and a half cents an hour with all the meetings, the committee meetings, you know.

MR. CHAIRMAN: But you are not suppose to be getting paid whereas we are and, of course, we are suppose to be getting highly paid. This is factual. The second year I was elected, when we had all kinds of problems in the district and a lot of meetings, my district is a rural one and covers 250 miles of the roughest kind of roads, an actual breakdown over a four or five month period of the hours that I spent and the pay I was getting, I was getting $2.39 an hour for the actual time that I spent on the job.

AN HON. MEMBER: Some of us are worth more and some of us are worth less you see.

MR. HEARN: I am not complaining about that because we go in as a school trustee and we know there is no pay for it, it is like most of municipal councils here, there is just no pay. You go in and you spend your time.

MR. CHAIRMAN: But if you had to pay and if you did not have the volunteers that we have what would it cost to service (inaudible)?

MR. BREEN: Then you know, Mr. Gover's point that you send a trustee or two to a workshop or two, it is a very small price in terms of the overall expenditure that you are making.

MR. CHAIRMAN: That is right.

AN HON. MEMBER: Motion to adjourn, Sir.

MR. CHAIRMAN: Well, we have not given them a chance for concluding remarks so Mr. Drover if you would like to give your summation.

MR. DROVER: Thank you, Mr. Chairman.

We have summarized earlier today the comments on the transfer payments particularly relating to school boards in the Province. We noted that our comments related to our audit of the Department of Education and that in the current year we have had a number of visits to a number of school boards and they will be reported on in the 1991 Annual Report of the Auditor General.

We also commented today, as a result of some discussion, on the role of the Auditor General and the recommendations that he makes and the criteria that we must go through in developing these recommendations.

We also commented on the fact, that as supported in our annual report, the reports of the various departments and the type of accountability document that they should hold in place.

From our office point of view one highlight that I see from this morning was the discussion on public money. We take some direction from the Committee and having heard the views of the Committee I can certainly assure you that while we have not been into the school tax authorities in the current year, we share your comments. I would anticipate that maybe in the next year we would follow up on some of that. I certainly took a fair bit of clear direction on that from you.

To summarize, most of the comments in the Auditor General's Report page 65, 66, and 67 still stand. By the way what we are saying is not isolated here and it is not off-the-wall. I only have one copy with me, but this is a recent pamphlet put out by the Comptroller General of Canada to all of the agencies of the Federal Government and it deals exactly with the issues - and I read from it yesterday - that we have here and it gives the direction there of how to hold accountability. I will just read one sentence here from it, it says: Deputy heads - being the heads of the Department of Education - should expect their senior managers to provide them with assurance that five conditions for accountability are met, to allow the deputies and their managers to report confidentially on their stewardship - I have given you the topic on the Minister's report - to organizations outside the department or agencies that would be similar to school boards and that, they could require these assurances to be supported by evidence, in which case the staff go out and do it, or by independent review. We have had a lot of discussion on that today and yesterday and I think that is a highlight of the last two days, Mr. Chairman, the independent review aspect or by the Department.

So, I guess to come back to it, we feel that the Department of Education should strengthen its independent review, whether it goes similar to the Department of Health in obtaining that information from independent auditors or whether it goes and increases internal audit or whatever within their own function. That recommendation will be certainly addressed in considerable detail in the

1991 Annual Report as a result of the current year's audits. Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, very much.

Mr. Breen.

MR. BREEN: That is all, Mr. Chairman.

MR. CHAIRMAN: Well, I would like to thank you for coming in. As the Auditor General's Office has mentioned, they are doing audits now on boards which will give us a chance next year to look at any weaknesses in the system. At that time, whoever is here, because, as my colleague, the Member for Green Bay has indicated, both of us, along with Mr. Tobin, I guess, were nominated for the Committee even though it is a House Committee and we are supposed to be here until the end of the term according to precedent and general rules and regulations. We are nominated to the Committee for appointment by our leader who is now, himself, resigning. So consequently the logical thing for all of us to do, before he officially leaves, is to submit our own resignations so that the new leader will have the right to make such appointments to committees. I will be, as Mr. Hewlett has already done, I believe, I think he has indicated publicly, submitting my resignation to Mr. Rideout and the new leader, whoever he will be, will be nominating somebody to Chair -

AN HON. MEMBER: Whoever he will be?

MR. CHAIRMAN: Or she, I am sorry about that. - whoever he or she will be to be the Chair of the Public Accounts.

I would suggest to the members who will still be around that when we get into dealing with boards it might be a very good time for an open, frank hearing on some of the problems that school boards are having. Because one of the biggest problems facing us today, not only in education but generally, because our future depends on it, is in relation to financing education. So hopefully we have started the ball rolling with the Demoninational Education Committees and the Trustees. I think if people understand the problems inherent in education and financing it, it will be more widely accepted and supported, as school tax authorities are today by some people after the work they did last year to make people aware of their real function and how they operate. It is still not liked but perhaps more readily supported. So hopefully our involvement and your contribution has at least created a greater awareness and, if properly reported, there are some very good facts and figures that will come out. But this is just the tip of the iceberg like the many tips we have up the Southern Shore. Hopefully it will follow on from here.

So, thank you very much. It is probably our last session. I do not think we will be meeting again the Summer. It does not look like it. By the time the next hearings are held you probably will have some new faces.

With that, I thank my colleagues for their support, and it has been an interesting couple of years. Thank you.

The Committee now stands adjourned.