Assemblée législative de l'Ontario

ANNUAL REPORT OFFICE OF THE PROVINCIAL AUDITOR, 1990

LAKEHEAD BOARD OF EDUCATION

CONTENTS

Wednesday 27 February 1991

Annual Report, Office of the Provincial Auditor, 1990

Lakehead Board of Education

Adjournment

STANDING COMMITTEE ON PUBLIC ACCOUNTS

Chair: Callahan, Robert V. (Brampton South L)

Vice-Chair: Poole, Dianne (Eglinton L)

Bradley, James J. (St. Catharines L)

Charlton, Brian A. (Hamilton Mountain NDP)

Conway, Sean G. (Renfrew North L)

Cooper, Mike (Kitchener-Wilmot NDP)

Cousens, W. Donald (Markham PC)

Hayes, Pat (Essex-Kent NDP)

Johnson, Paul R. (Prince Edward-Lennox-South Hastings NDP)

MacKinnon, Ellen (Lambton NDP)

O'Connor, Larry (Durham-York NDP)

Tilson, David (Dufferin-Peel PC)

Substitutions:

Haeck, Christel (St. Catharines-Brock NDP) for Mr Cooper

Hope, Randy R. (Chatham-Kent NDP) for Mr Hayes

Jackson, Cameron (Burlington South PC) for Mr Tilson

Lessard, Wayne (Windsor-Walkerville NDP) for Mrs MacKinnon

Miclash, Frank (Kenora L) for Mr Conway

Ruprecht, Tony (Parkdale L) for Ms Poole

Clerk pro tem: Carrozza, Franco

Staff: McLellan, Ray, Research Officer, Legislative Research Service

The committee met at 1007 in committee room 1.

ANNUAL REPORT OFFICE OF THE PROVINCIAL AUDITOR, 1990

Resuming consideration of the 1990 annual report of the Provincial Auditor.

LAKEHEAD BOARD OF EDUCATION

The Chair: We will get started if we can. I understand, Ms Remus, you are going to deliver a -- I am sorry, is it Remus? Which is the last name?

Mrs Remus Joseph: Sorry. I do that to confuse everybody. Remus Joseph, if you do not mind.

The Chair: Right.

Mrs Remus Joseph: My first name is Margo.

The Chair: Okay. Would you introduce, for purposes of Hansard, the two gentlemen on your right and left? Then proceed with your statement, which has been distributed to the members, and then there will be questions from the members.

Mrs Remus Joseph: Thank you very kindly. An apology: Having just been on a flight, I am not sure I am going to hear absolutely everything until I sneeze a few times. Immediately to my left is our director, Jim McCuaig, and to my right, Bob Allison, who is the superintendent of business with the Lakehead Board of Education. I certainly appreciate the opportunity of being here this morning and speaking with you.

Ladies and gentlemen, we would like to thank this committee for the opportunity to respond to the inspection and audit of the Lakehead Board of Education and to share with you our assessment of the value of this process. It is the opinion of the majority of the board of trustees and the management group that the provincial audit was a useful exercise that confirmed that most aspects of financial control were adequate.

The Lakehead board is committed to continuous improvements, and the audit has assisted in highlighting areas of control where improvements were required. We also believe that, as the first school board to experience an audit by the Provincial Auditor, our comments may be helpful in improving future audits of school boards in Ontario.

The audit's general findings indicate that most aspects of financial controls are adequate, or would be found adequate once our ongoing planned improvements were fully implemented. It is difficult for trustees who may not be familiar with audit procedures and financial control systems to judge how serious the deficiencies are, in relation to the total framework of internal control. Therefore, trustees must rely on the independent professional judgement of the Provincial Auditor to assess the overall weight they placed on individually identified deficiencies versus our organization's overall internal control procedures and practices.

Deficiencies in any organization, when taken out of context, can be blown out of proportion. Therefore, we believe that a wide-ranging audit covering the key areas of an organization is important.

We are pleased that Lakehead's audit covered such a wide area as payroll, purchasing, and transportation which represents 91% of our $98-million expenditures in 1988.

The audit, which took place over a nine-week period and involved five professional auditors, would have to be considered a comprehensive audit by anyone's standards.

I believe it is quite easy for people to focus only on the areas of deficiency. However, I believe we also have to give equal focus to the areas where no deficiencies were found, yet do not appear in the report before this committee.

The board's planning and management of capital projects followed the procedures established under the ministry's capital grant plan and our board's Management of Major Capital Projects Manual. This section of the auditor's detailed report was titled "Good Capital Project Planning and Management."

Enrolment-reporting procedures were found to be in accordance with Ministry of Education guidelines which accounts for $46 million in revenue to our board.

Several other areas were also covered in the detailed audit report which are not covered in the report before the board. These areas include the audit of the director's discretionary expenditures of $17,000 which covers communication and miscellaneous expenditures, which were found to be in order, but lacked full documentation. Policy and procedures on movable asset management which were found to be inconsistent and decentralized will be reviewed, formalized and implemented in late 1991.

It was also noted that our financial reporting software is dated and cumbersome. This is a province-wide issue as most school boards are using the same software that was developed in the 1970s by the Ministry of Education. The Lakehead board is trying to initiate a review of their software by the ministry.

The audit also concluded that the directors and superintendents were paid in accordance with their respective agreements and that their performance had been formally assessed.

The audit also reviewed our board's long-term planning process, our goal-setting and performance review system, but no mention of these areas was made in the report. We believe that audits should cover more than financial controls and should cover all the key management functions of planning, organization and control.

We would now like to share with you our reactions, concerns and plans to deal with some of the specific issues identified in the audit report.

In purchasing, the area of concern expressed was the lack of documentation to demonstrate compliance with board policy, or to demonstrate effective control over purchases. We have put staffing in place to ensure fuller documentation of transactions to comply with existing policies. A full review of purchasing policy, procedures and internal controls will be undertaken in 1991.

We are investigating contract buying and central warehousing to increase purchasing effectiveness and efficiencies. Purchasing and quotation limits, which have not been increased since 1977, will be reviewed for relevancy in today's environment.

The auditor noted that we do not tender our transportation contracts as a matter of policy. There are several reasons for this practice, the foremost being that although tendering may obtain the lowest bid, the board may also obtain the poorest operator who will cut corners on driver training, mechanical and safety maintenance, and service levels to our students. This may cost the board more in the long run as it may result in creating a ten-year monopoly for a single operator.

As stated in the audit, our costs are comparable to other boards" which is interesting because vehicles' operating costs in northern Ontario are higher than average. If the board, through its membership in the Ontario Association of School Business Officials transportation committee, discovers our costs are no longer comparable, we have retained the option to tender.

In 1987, transportation policy was changed to provide a service comparable to the Lakehead Catholic school board. This action increased our management of bus routes by 32 buses, a 20% increase. Additional staff was requested at that time to administer the increased load, but it was a board decision not to increase staffing at that time.

Physical audits of route lengths were discontinued from 1987 and 1989. However, route lengths were continuously estimated using detailed maps, and actuals are compared to estimates for reasonableness. Subsequent to the audit, staffing increases were approved, a thorough review of policy and procedures has been completed, and a computerized transportation management system of routing has been tentatively approved. Twelve route audits were also undertaken in 1990. The audit of 6% of our total routes, which covered 2,086 kilometres per day, discovered the board was undercharged by 19 kilometres or 0.9%.

In late 1987, a major reorganization of our business and plant department took place. At that time our budget process was identified as being weak.

As recognized in the commentary, significant improvements were made in 1989 and continued to be made in 1990 and 1991 to improve this process. We still need to tighten our budget variance and transfer approval methods. However, formal policies and procedures are now in place.

One-time infusions have always been identified year over year as part of our standard budget documentation program. The item that generated this comment was a permanent increase of $130,000 to our supplies budget, as our past budgets were inadequate and this size of increase was needed to bring our annual budget in line with current needs. Planning and budgeting is an area where continuous improvement will always be a priority.

The under-utilization of schools continues to be a significant and, at times, emotional issue with all stakeholders in the system. From 1979 to 1990, the Lakehead board has closed eight elementary and two secondary schools. In 1991, another high school will be closed, which we hope will be the last secondary closure for the next decade, as enrolment appears to be stabilizing. Our elementary system has stabilized as well and we will shortly be undertaking a facilities requirement that will identify the long-term needs of the system.

In the area of payroll transactions, the area identified as a weakness was the control of payments for overtime and supply teachers. The area represents approximately 2% of our instructional salaries and wages, or $1.3 million in total. The average transaction in this area represents one day's supply teacher costs of approximately $130, which translates to 10,000 transactions per year.

Based on an audit of 1988 information, the areas of weakness identified were mainly of ensuring authorized signatures were documented, and that all time sheets were properly authorized and valid. In 1989, prior to the audit, procedures were put in place to address this issue, including auditing 25% of the transactions.

The other main area of concern was matching supply teacher payments to teacher absenteeism rates, or records. This is a province-wide issue, which we believe will be addressed with the Ministry of Education's newly developed integrated payroll and personnel system, which we hope to have fully installed by the end of this year.

In conclusion, we believe the audit has been a valuable process that has proven our system to be adequate, but has helped push the organization towards tighter control. It is very easy for the public to become overzealous, in fact, almost vindictive, when a real or perceived wrong occurs. Only through independent, impartial, professional audits can the system be judged fairly. We believe that fairness and reasonableness must prevail. We cannot allow our institution to be audited into inaction. If the audit results were satisfactory, and if weaknesses and deficiencies are corrected over a reasonable time, all stakeholders must learn to accept the reality of the situation and not clamour for more audits until something is found to be deficient. The wording of the audit report does not appear to consider local sensitivity to the board. The word "adequate" does not convey a positive tone. Areas that were found to meet every policy and practice criterion were described as being adequate, while areas that had documentation problems were described as weak. These words can easily be given undue weight by the general public who are not familiar with an auditor's terminology, or by special-interest parties for their own purposes.

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The role of the board's independent auditor and the provincial audit is only part of the total internal control system of an organization. For an internal control system to operate effectively, it is essential that the organization's objectives, structure, and policies be clearly understood by all members. We believe this is the case at the Lakehead Board of Education. The internal control system is management's tool to ensure that factors which it can control, including the organization's employees, operate to achieve the organization's objectives.

We also recognize that there must be balance between the cost of implementing the control and the potential benefit derived. As all major manufacturers know, you cannot inspect quality into a product. The proper process control must be in place at the first step of the operation to ensure optimal conformance.

It is management's intent to provide for a periodic evaluation of internal controls to ensure that: (a) the internal controls are operating as intended; (b) the controls are still relevant to current operation; (c) areas and scope of responsibility are in accord with the position to which they are designated; (d) employees are operating within their scope of authority, and that authority has not been shifted without approval; (e) operating reports are still relevant; (f) all internal controls are cost-effective; (g) operating objectives and activities are consistent with the overall board's objectives.

I must also note that as chair of the board I have no more authority than any other trustee. I can only represent the majority decision of the board, which I must assume to be the will of the electorate. I am pleased to say that my personal opinions are the same as the board's in having accepted the Provincial Auditor's report.

Mr Cousens: I appreciate your being here, and I do not like your conclusions. Maybe I have the wrong sense that is coming from it, but what I hear coming through is almost a feeling that you were -- at the very beginning you said you were pleased to be part of the audit process and all this stuff, and at the ending, "We believe that fairness and reasonableness must prevail. We cannot allow our institution to be audited into inaction." Then there is a general sense that things are perfect and would have been okay if you had not had an audit. I have a feeling that there have been enough things brought up through the auditor's review of your board of education, that he has done a favour to the taxpayers of Ontario to have a look at it, plus every other board he can look at. Can you just maybe take away that, what I call, hook to your sentence, "be audited into inaction," and the sense that the audit seems to be almost a waste of time? I resent that. If that is what you are trying to say, this line of questioning will take an angle you are not going to like at all.

Mrs Remus Joseph: I certainly would like both Mr McCuaig and Mr Allison to comment to that, if I could. Certainly I believe that participating in this audit has provided us with an opportunity, in fact, to improve our system, and I am pleased with the results; I am pleased with the information that we have received. My perspective is that we will be a decidedly better board because of the process. So that really is my general intent. If either of the comments suggested otherwise, that is certainly not my belief, and not what I would like to convey.

Mr Cousens: What did you mean then by "audited into inaction"? The York Region Roman Catholic Separate School Board was in yesterday and they spent 3,500 hours with the auditor. I know the director really felt that it was a lot of time but he did not have anything that would come along and indicate that they were audited into inaction. Maybe your director would like to comment on that, because what you are really saying is that the auditor is getting in your way and you are trying to do other things. I just think that if that is the attitude in the system, and I think the chairman of the board -- I appreciate your direction. I was a chairman of a board for a time and I think there has to be a tremendous sense of co-operation with this process.

Mr McCuaig: If I may respond to that, I think I said when the audit was initiated that we found it a valuable process and we are pleased that it was done. As the chief executive officer of the board, what I found the most valuable about this audit was it confirmed what I already knew about the organization. It confirmed what the board knew about the organization. I think that is very positive. It would have been a little bit devastating had you not known your organization. So we saw it as very valuable. There is no question that the timing of the audit was not the best for us, being between business superintendents and having staff issues internally. So that was not easiest on staff, but I felt we had full co-operation from the Provincial Auditor's office and I personally found it a very positive experience.

I think the issue, though, and I think it is alluded to in the chairman's remarks, is that if you understand that political situation in Thunder Bay -- it became a public debate. We feel that when you are dealing with the local political level, how it is approached and how it is reported is very important because it can be used differently, and it has been used by some people to see that we should be audited more and more and more. I think it is not a reflection on what the audit report said; it is a reflection on what could be a direction pushed into the future. Those are, I believe, the comments.

Mr Cousens: That gives me a perspective to it and I appreciate that. I think that when I looked at the auditor's report -- I am sorry.

Mr Allison: I have a bit of a different perspective in that I just joined the organization six weeks ago.

Mr Cousens: That is a good perspective.

Mr Allison: I come from the private sector, from the automotive sector, so I had very little to do with education before coming to this organization. One of the major concerns in moving to this organization was the reputation that it had. I talked to some people in the Ministry of Education and some other boards and the audit perception was that it was a really inadequate board; it was really in trouble. So before I accepted employment, I asked for a copy of the audit and I talked to internal auditors. From the audit report there were definitely areas identified, but it was not a huge mess, and since arriving in Thunder Bay six weeks ago, what I found is that the organization is still defending itself against audit reports.

They are spending too much time in dealing with audits. There is a huge clamour for more audits and I do not believe right now that they are useful. I believe we have to get on with resolving the issues that were identified in that audit and improving our control and making the organization a better place. And I will be frank: Those words are my words.

Mr Cousens: Mr Allison and Mr McCuaig are bringing a perspective that is part of a community and I guess that is helpful to us. I had a reaction and you have helped calm me down a bit. But I have to say that the process that we are following through this standing committee on public accounts, and I have been on this committee intermittently for 10 years, does a great deal of good for the public purse and it is one place where we share a common interest to get value for our dollar as best we can out of the system. Our committee members are very astute in going through the purchasing and the tendering process and some of these things which will come up in discussions.

I have one more generic question that comes out of a statement that was made and I asked this question yesterday of the York Region Board of Education and I want to ask it of you. It has to do with a statement made by Mark Larratt-Smith, assistant deputy minister of the ministry, when he said, "All school boards in Ontario must have equitable financial resources to provide a base level of education programs and services." That is one of the two underlying principles of the ministry.

Yesterday when I asked the York board, they made it clear that that is not their view. They have got a deficit of $18 million and they do not think that there is an equitable financial resource across the province to provide a base level of service. What is your view as a board on that statement from the Ministry of Education? The next thing that happened is that the York board almost admitted that they went and cooked the books at certain times in order to help make certain things happen, and we had bigger dollars than were involved in this one. Could you comment on that statement from the ministry?

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Mr McCuaig: If you want to raise the ire of directors of education in the province, talk about equitable funding and enough funding at local levels when you look at double-digit tax increases over the last several years. We could throw arrows all over the place but I will not. Certainly one of the basics of financing education in Ontario, the mechanism is for equitable financing and it is, I think, better than not having a local tax base, although when you talk equity between public and separate, there are some differences. From a theoretical basis, if we are all playing on the same playing field, the funding should be similar. We are not all playing on the same playing field. Our contention is that the separate schools have different rules than the public schools.

First of all, as a public school system, we must take anyone who wishes to come from anywhere. So that is a very big difference. We do not hear many public debates about religious education in the separate school system. The time and money that this board has put on it in the last four years has been pretty phenomenal. So there are some very big differences. There are also differences in deficits. We cannot run a deficit by law without prior approval of the Ontario Municipal Board. Separate schools can. So there are some real differences.

The Chair: Is that right?

Mr Jackson: Yes. It was established yesterday in the record, Mr Chairman. I raised that with the staff and they confirmed it.

Mr McCuaig: So I guess the point is that coterminous boards are not fully coterminous. Our area covers a much broader area of unorganized townships and other communities than the separate schools. So it is not quite a level playing field, although conceptually I cannot disagree that there should be equitable financing.

Mr Ruprecht: I want to follow up on Mr Cousens's line of questioning. This is supposed to be a reasonable process of checks and balances and I think we just talked yesterday about a sort of balanced approach to the whole issue.

I am wondering about two things. One: When you in your conclusion describe the audit using words such as "adequate" and "weak," my first question would be, what would you like to see substituted? Is there another way that you can describe to this committee that would change the perception of the public that really there is nothing wrong or there is little wrong or not much needs changing?

Mr McCuaig: I am sure the chairman may wish to comment on this also, but from my position in working with the board that has some interesting political splits, which is not abnormal in the province, the words get used in public in various ways. I have to say to you as the chief executive officer that I am very proud of our organization and proud of this audit. But it is really a little frustrating when you look at enrolment, for example, which is $46 million of our revenue and there was not one error in any of the samples, and the comment is "adequate," not "excellent." Adequate, to the public, does not mean excellent. It does to an auditor, I expect, and I think that was the comment that this is a different type of audit from your normal audits which are of internal government agencies. This is an audit on a local political level, and I think the comment is that the way you report it is important. That was our frustration.

Mrs Remus Joseph: If I might briefly comment too, from my perspective. Because the complete audit was made public in Thunder Bay, when you use a term such as "adequate," to my ear and the public ear that means barely 50%, 51%. We, in our society, seem to use superlatives all the time. Language, you know, is interpreted so differently, and auditors' language seems to be decidedly different than public language.

I guess the other thing is that I readily receive the information received in our audit, but to explain it to the public I somehow need to put it in perspective and not only comment on the things that were, in auditor's terms, adequate or weak, but things that maybe we are doing well. I am not suggesting particular terms, I am not suggesting superlatives, but just terms that are better understood by the public.

Mr Ruprecht: Mr Allison, do you want to add to this?

Mr Allison: I guess I have the different perspective. When I saw "adequate," I was happy with that, being a financial person.

The Chair: It was adequate.

Mr Allison: Right. Did the job.

Mr Ruprecht: My second question seeks more clarification from your statement when you seemingly are telling this committee that this audit or audits began to get in the way of your normal processes of operating. I am wondering whether you have any suggestions of how differently the province should do the audits so that it would not get in the way of your normal procedure.

Mr Allison: If I gave you the impression that I am talking about this audit in particular, I am sorry. What we have is a lot of people clamouring for more audits within the Thunder Bay community, such as another audit within the next year. That is a problem I am having: that I want to make sure that what we do right is deal with the issues that were identified, get the procedures in place, and then build. But what we are having is requests for another audit next year, within our group, and that is why we are talking about "audited into inaction." If we are going to have a significant provincial audit every year or every two years, I think that is inappropriate. I think what we have to do is be held accountable for the action plans that we put in place in responding to the audit. But I do not think that we can continually spend, every year, time on the provincial audit. We have other control systems in place. I think we would like to share with other boards the experience of having a provincial audit. I do not think we should hog it. And that is a genuine concern. I have been there six weeks, and I would say I spent about four of those weeks dealing with audit-type issues. I think I can do a better job to the taxpayer by dealing with some real cost issues. So it is a balance.

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Mr Johnson: Continuing along the same sort of questions, I guess, not unlike what Mr Cousens has already asked and Mr Ruprecht, it was interesting to hear Mr McCuaig say that it confirmed what was already known, because I think it is certainly indicative of being knowledgeable about your own organization when you can make a statement like that. But it is unfortunate, maybe, that the information that was already known by the board became public.

I have taken some exception to the tone of your presentation, I guess, because I feel it is unnecessary. As a committee of public accounts we have to ensure that public funds are used in the best possible way when they are allocated for whatever purpose around the province. I would suggest maybe that you might want to blame the press and not the auditor for how it was perceived by the public. The press tends to want to sensationalize anything that they can get their hands on that has to do with governments, boards, or agencies of government.

Maybe it is not up to the auditor to point out those places that your board is doing what you would perceive, and possibly we would perceive, to be those things that were done well. But certainly it is his job, in his all-encompassing audit, to find those areas that are, unfortunately I have to say this, less than adequate. So I think he has done that. But would you not agree that this is -- and you have indicated already that it is -- a very valuable exercise? I am not so sure that it is necessary that you again are audited year after year after year to ensure that any shortcomings that have been identified are in fact better managed or looked after.

The other thing too is, I think when we look at areas that are less than adequate or might be identified as shortcomings, you have an opportunity today to tell us why you did what you did with regard to some of these things, especially in the areas of transportation and tendering out, for example. I just would like you to comment on that.

Mr McCuaig: May I correct any impression that we have any concern with the auditor's department on this? I think what we are trying to put into perspective and which would be valuable to this committee, since politicians, I think, understand the public arena very well, is that this is an audit in a local political context. If we can help you at all it is to say that when you are in a local political context, be sensitive to the local political context. It is a little different from auditing a ministry. This was new to us and new to you. And I think the auditors handled it extremely well. I have no issue. I also say that we are very pleased with the results. I am pleased as the chief executive, for the reasons I said earlier, but also because it did initiate, through the budget, staff where we have said we needed it for years.

As you are probably aware, in the political level when we have to set the tax rate next month or so, the places that get cut most are places that do not show. Classrooms get cut last. That is not a bad idea, but when the infrastructure starts to create problems, it is harder to get a staff member to work in the purchasing department than to add a teacher. That is the local politics and that is the reality of school board politics in this province.

So I think what we are saying to you is that we are very pleased with the audit. We are very pleased that it identified some areas that we were able to get staff for. I am personally very pleased because there were not any surprises. However, understand the context, and recognize that we are pointing out to you some of the internal issues around audit, audit, audit, rather than produce, produce, produce. So that is really the context. We were not hopefully taking any shots at the opposition party.

Mr Johnson: The expectation is the school board will do its very best always, I would think. I think that is an expectation that the public has, and it is a perception they have that you will do your best. So all the audit does is point out areas where it could be improved.

Mr McCuaig: Sure. But I guess to put it into context, when we have come in with double-digit tax increases and an inflation rate of 5%, for many reasons that we can discuss at other times it is very difficult to say, "I need a purchasing person." Obviously those are the types of things that do not get as high priority. So you have to, I think, understand the local politicians. The audit was helpful because it identified that area and we now have that person. But it all costs money and does not increase what happens at schools. So I just want to balance the local context; that is really my point.

Mr Jackson: Let me just state for the record how very, very pleased I am to hear how very, very pleased the director is with his report card on his audit. I think I have heard you say "pleased" about 20 times up to this point.

But let me ask a couple of questions. First of all, as a director of education you carry two hats. You carry the hat as a chief financial officer for the board, and you carry the hat as the chief education official. How do you reconcile those two hats that you wear under the Education Act? It is unique to this transfer agency, unique to all other transfer agencies in this province.

Mr McCuaig: I am not -- the treasurer of the board, who reports direct to the board, is the business official.

Mr Jackson: That is correct, but in your written mandate as executive director, you have a responsibility to your corporate board. Your financial officer does not sit on equal footing with you. Your mandate is to be responsible for taxpayers' dollars and educating children. How do you reconcile? Do you approach that in equal measure, in disproportionate measure? How do you reconcile that?

Mr McCuaig: I guess I reconcile very simply. My personal belief is that my job, or our job, is to provide the best possible education under the financial limitations, recognizing very clearly that in an education institution you will never have enough. So how do you balance that with the local tax rate and what we have to expect from the public?

Mr Jackson: You have described a siege mentality as opposed to, say, more of a proactive statement which might include, as I have heard one or two directors share with me, that we want to enhance educational opportunities by maximizing all those dollars that were given to us from all our varying sources. That definition is somewhat different from a definition which has, as its basis, a siege mentality.

I want to shift to Mr Allison, who fascinates me with a private-sector experience coming to the board and suggesting a couple of things, one about how pleased you were, as well, with the report card from the auditor, but also that somehow, in your six short weeks, this was rather positive by relation to other boards.

It is unfortunate that you were unable to be with us for the two days preceding, where we discussed this point at length about the relationship with the district offices, but I am reminded of the phrase that in the land of the blind, the one-eyed woman is queen. You very much give me a sense that, relative to all the other boards, we are not doing all that bad.

So let me ask you this question: Are you aware that the auditor had a rather limited audit of your board and that there is potential for a far more extensive forensic audit; that option is available and this committee might be able to recommend that a more intimate and detailed audit might be taken of a board? What are your views on that?

Mr Allison: If the auditor believes it is in -- I guess if this committee believes it is warranted, it is going to happen and we will deal with it as it happens. When I said that I was reasonably pleased with the report, I had been led to believe by some people that it was a completely negative report, and when I was looking at employment with the organization, I read the report. I read that it was not a completely negative report, that the board had some basis to grow with.

We think, in the organization, we are not going to rest on our laurels and my view is to put that organization as being the best, not to be adequate compared to other boards. I want the business department to be the best in the province.

Mr Jackson: That gives me more comfort than your previous statement which had more to do with defining yourself relative to other boards and the opinions of a district office. I am quite concerned.

Mr Allison: Can I ask a question? I do not think I used the words "district office."

Mr Jackson: You were referring to "within the area" and comparabilities and discussing with other boards. I think there was a brief reference in Hansard to that. However, if that is not our understanding, then let us proceed with another area.

I am quite familiar with the controversies in the Lakehead board with respect to Bill 30 complications. I am familiar with the almost wholesale change in trustees and with the public debate on accountabilities. I would be interested -- from the director's point of view, what message do you think the community gave to you with that election, with respect to financial accountabilities?

The Chair: I am glad I am not sitting there and Mr Jackson is asking that question.

Mr McCuaig: Well, I do not --

Mr Jackson: It is a question the media asked him on the night of the election. I do not think I am asking him something he has not been asked publicly.

Mr McCuaig: I think the context of an election is a little broader than you are saying. When you say wholesale turnover of the board --

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Mr Jackson: Yes. It was greater than 50%, was my understanding.

Mr McCuaig: But I think you have to look at the issues that were at hand, and the issues at hand were not, up front, all financial accountability.

Mr Jackson: Was it, then, the most predominant theme that was discussed in that election?

Mr McCuaig: I do not believe so. Three trustees were elected from one high school area to stop the high school from being closed.

Mr Jackson: I am aware of the problems that were associated with that issue, but ultimately it had to do with the issue of accountability. Certain trustees were not shared information --

Mr McCuaig: Let me try to put something in context here. Unfortunately, you may be referring to a report to the standing committee on finance. When comments are made, I think it is important that the bureaucrats have an opportunity, as I have today, to respond.

First of all, I think one of the issues -- whether it is correct or not correct -- is that as chief executive officer I have to uphold the laws of this province, and there is no question that there were some trustees who wanted information from the board which the board did not feel they should have.

Mr Jackson: Did the law protect you in not sharing that information between the executive committee and your full board?

Mr McCuaig: Let me say to you that the issue as I see it is individual trustee versus corporate situation.

Mr Jackson: My question was, does the law say that the executive committee can share information, and does the law say you do not have to share that with other elected trustees who are not members of the executive committee? That was my question.

Mr McCuaig: No, it does not.

Mr Jackson: Yet that is what was going on.

Mr McCuaig: I do not believe that was going on and I do not know where that information comes from.

Mr Jackson: The freedom of information report that I received from the Lakehead board clearly demonstrated that.

Mr McCuaig: I would like to talk to you about that because I do not believe any information -- my policy is any information shared with one trustee is shared with all.

Mr Jackson: I am pleased that is now on the record. I appreciate that.

Mr McCuaig: But I think, in the broader context, certainly the message to all of us in this province, whether it be Lakehead board or otherwise, and all politicians, is financial accountability. I do not know how boards can continue to have double-digit increases in taxes without having some great difficulty. But that problem is a lot broader than a local issue, and I recognize that and it concerns me greatly. I do not know the solution to it, but I do say to you that it concerns me greatly. So I think that is part of it. Certainly the school-closure issue, the Bill 30 issue, was directly represented by three trustees on the board, so I think it is a lot broader than you are suggesting.

Mr Jackson: I will not get into the Bill 30 discussions of your board. They were mired in controversy and that is unfortunate, but that is a matter of public record and it did stimulate a lot of greater activity at election time. But that is a major dollar-and-cent issue. You would not agree that capital is a major dollar-and-cent issue?

Mr McCuaig: Sure, but I guess it is an opposite issue to what I think you are implying, that our administration has recommended many school closures as a financial accountability. The closing of the school that created the controversy was a major financial accountability issue and caused three trustees to be elected against that. That is why I say the politics is a little more complex.

Mr Jackson: You have an audit committee now for your board. How long has that been in operation?

Mr McCuaig: Since 1979. We have a formal audit committee. I think, in fairness, the executive committee operated as the audit committee in the past.

Mr Jackson: That is correct.

Mr McCuaig: We now have a formal audit committee.

Mr Jackson: And when did you adjust this definition?

Mr McCuaig: That was in 1979 with the change of the board.

Mr Jackson: Okay. And is your membership with trustees, staff and members of the public, or just staff and trustees?

Mr McCuaig: It is members of the board and the public.

Mr Jackson: Not since 1979.

Mr McCuaig: Specific public, auditors. I am sorry, 1989. My apologies, 1989.

Mr Jackson: So the change comes after the last election and at the time of the audit.

Mr McCuaig: Yes.

Mr Jackson: I just want to establish that. And the members of the public, how are they chosen?

Mr McCuaig: It is advertised and chosen by the board.

Mr Jackson: Can you just share with the committee the rough numbers? You have three trustees, four --

Mr McCuaig: Three trustees, three external.

Mr Jackson: Three external. Very good. Can you give us a sense of the kinds of things that this committee has been identifying? They have now operated through fiscal year 1990, almost completed. Did they begin part year 1989-90?

Mr McCuaig: The committee has identified many areas and, unfortunately, off the top of my head, I cannot remember a lot of them, but certainly they look at some policies. It has initiated a study of transportation routes for auditing, not the length of routes, but who gets on the bus and who does not. That study is under way at the moment. It has initiated the formalization of the variance policy; it does the review of the financial statements as always. Bob, if you could add to that.

Mr Allison: Specifically, they have looked at the variance system. They do review some of the financial procedures and policy reviews before they go to the resources committee that eventually goes to the board. They have also reviewed computerization plans and procedures. Right now they have initiated an audit of a specific segment of transportation, which would be our children being picked up within a half-mile limit.

Mr Jackson: Do you find this body helpful to the board?

Mr Allison: Yes, it is. It is very important to have the three external members. One is a banker, one is chief financial officer of a company and the other one is with an independent accounting firm.

Mr Jackson: Has there been an effort to merge the concerns raised by the auditor with the functions of this audit committee in terms of utilizing them as part of the solution?

Mr Allison: We use them as sounding boards, but also we have talked about it recently. They are going to initiate a review of the audit in June to see that items which we have identified we were going to do are, in fact, being done, so there is a follow-up internal audit of the provincial audit to make sure that we are complying with the recommendations that we put forth.

The issue that we are dealing with right now, and it is a major issue, is a motion for an internal auditor/inspector, who reports directly to the trustees, and that recommendation is being looked at by the internal audit committee.

Mr Jackson: Could I ask the director if that motion is now a public motion. If it is on the record, could we have a copy of that sent to us, or the chair of the board, I am sorry?

Mr Allison: Yes, sir.

Mr Jackson: We would appreciate receiving that.

Mr McCuaig: I wanted to say on the record that I think the audit committee is a very positive committee for the board. I think the best example I can use is a major report on changing the central computer system. It is very complex and in all the business of the board it can get lost, whether it is valuable or not, but with that committee looking at it, it was very positive that they were able to look at it deeper and from a different perspective than the trustees, and I think it is very helpful.

Mr Jackson: I very much appreciate you putting that on the record. Honestly, I do, and I am stating the obvious to suggest that your auditing committees are proceeding further in a fashion that the auditor of this province is not able to proceed; but your local effort involving members of the public in concert and support with personnel at the board assists us with our mandate of accountability with transfer agencies because you are able to proceed further with these kinds of program audits. The auditor's mandate does not permit him to proceed to that detail. So I am stating the obvious, but I wanted to put it all back into context because I happen to believe very strongly in these audit committees when we work in a co-operative mode with them. If you feel threatened by them, then you are going to have difficulty with them. If there is nothing to feel threatened about, then they can be very much a co-operative venture.

The Chair: I think we will move on, Mr Jackson, to Mr Bradley, and if we have more time and we have more questions, we will come back to Mr Bradley.

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Mr Bradley: My question deals first of all with the issue of transportation and from that, some other issues related to what will emerge, I hope, from the transportation issue. They talked about the issue of tendering and yesterday we had a submission from the York Region Roman Catholic Separate School Board that, in fact, tendering was not practical for a variety of reasons. I am not going to necessarily go back into that, other than to say that they were looking for some ministry guidelines which would be helpful if they did embark upon tendering.

What activities have you undertaken to synchronize your routes with the Roman Catholic school board in the area, and what sharing of transportation services does take place, either with the Roman Catholic school board or with any private schools that might be in the area with a view to affecting economies for both parties?

Mr McCuaig: I will give some general comments. Mr Allison may be able to give more specifics than I can.

Certainly I have as much problem driving to work and seeing buses all over the place as anyone else in this country, and it is a major issue. Since we have been able to co-ordinate our policies on transportation, although there are some issues around that, we have recently been able to work with the separate school system. The director and I have set up a formal sharing of contracts for economies of contracting. We are attempting to look at the urban routes, specifically, to see if there are ways that we can use similar buses. There is a difficulty, and I think it is probably province-wide, in the policies of different boards. We had very strict limits, the separate school did not, and so you had to get together on your policies. The separate school picks up door to door, we pick up at designated spots, so there are some issues that have to be dealt with, but we both recognize the frustration of it as well as the cost, and we are attempting to do some sharing in that area.

Mr Bradley: I recognize this is off the top of your head and sometimes you want to be able to think about the consequences of what a question is and it is difficult in a committee, but let me throw the question at you, nevertheless. Would you appreciate, or want, or find useful and desirable, a province-wide transportation policy which would affect all boards of education funded by the province, and let me break that down a bit to say or a regional policy, because a policy in remote areas of the province, or rural areas, might be different than an urban area and north may be different from south, and things of that nature? Would you find that useful or would you prefer to have boards left with the freedom to have their own policy?

Mr McCuaig: Let me say to you, and I am speaking from the management perspective and not the political perspective, obviously, on this, I believe that the grants have been too open-ended, so they encourage transportation rather than encourage people looking carefully at transportation. I believe that boards have been forced to compete with each other for students, based on transportation. I think that is very false economy, to be very frank, so one thing that needs to be done is that the grant structure should encourage prudence, rather than encourage more transportation. I am not sure, from the political level, whether the horse is not out of the barn. The public these days want their kids transported for many other reasons, including safety, so it is a very difficult issue. It is very difficult to pull back, but I think it has gone too far, personally, and stronger provincial direction would be helpful from the management perspective.

Mr Bradley: Let me look at a couple of other areas because I want, as I did with the board yesterday, to explore this. One is co-operation between boards of education. Right across Ontario there appear to be a number of groups that are forming to keep a check on education spending or the spending of a city or a region or a county; in other words, the spending at the municipal level. They have various names they would use to describe themselves and those who are under scrutiny have various names to describe them, and they do not coincide. The member for Chatham and district, right down to Wallaceburg, Chatham-Kent, it would be, suggests that I give those. I will not.

The question I want to get into is: How much co-operation do you have in the area, for instance, of maintenance? How much do you have in the area of purchasing? You have answered transportation, which you are looking for there, and also something that sounds rather radical when two directors of education have to get together, both of whom are involved in a competition for students, and that is the sharing of actual properties in schools. In Lincoln county -- I represent part of that in my constituency of St Catharines -- I have two schools which are located on the same property, in the same building. One is called Michael J. Brennan, a Roman Catholic school, and the other is Pine Grove. The two principals find it fine, the staff find it a good experiment, the students seem to get along, the parents do not seem to object. That is as far as I will go without getting into trouble with the opinion of others of this setup. Are you contemplating or embarking upon any of those instances where you could utilize the same building and the same property? This is at the elementary level and they are in the same building. Of course, there is a separate wall, a separate staff room and so on, but it is the same building for heating purposes and electrical purposes and water purposes, and the same property out there. I do not think it is the Catholics against the rest, battles in the school yard or anything like that. In the areas that I have mentioned, what efforts are you taking, as a board, along with your Roman Catholic board in the area, to bring about those savings to the taxpayer by having that kind of co-operation? Since the province says it is going to pay 60% of the cost of education, my guess would be that if they are going to pay it, you are going to pay a big price, a justifiable price, perhaps, at the local level to effect the economies.

Mr McCuaig: First of all, let me say that it is our belief in the north that there must be co-operation, not only with the local board but, being the largest board in the area, we co-operate very effectively with all school boards in the north. We are presently providing computer expertise to North of Superior separate school board and Nipigon public school board on a no-cost basis, and that is because we believe we have that commitment as the largest board; those resources are very difficult for small boards. We do that with curriculum materials, we do that with a variety of areas. You talk about the Christian school; we are just setting up an agreement with the Christian school to share some of our resources with them, our media resources, etc.

The separate school director and I and the business people are meeting -- I mentioned earlier I do not want to get specific because this is on the record -- looking at bus contracts and we see significant ways. We are working together on putting the contracts together. There will be major savings for both boards in bus contracting. We have a consortium of all public agencies for purchasing in the north, so it is not only involving us, it involves the city and the hospitals and the separate school board and us. We have had, as much as the controversy in the last election, very great success in the Bill 30 area of turning over two high schools. Certainly it caused some difficulties but it has caused difficulties everywhere. We never would have gotten to the first stage without a war without that co-operation, so it is something we believe very much in.

I believe, and I may be incorrect here, that provincially, separate schools have a policy, written or unwritten, that they do not share resources, will not share schools. We discussed that under Bill 30 and that is basically a position that certainly is not open for much discussion when it is sharing the same building. So we are not doing that, but we do share, we have had no problem turning over facilities. I think Mr Allison may comment on a recent one.

Mr Allison: We called in all the bus operators to get their input how they felt about us starting to share routes and they were quite positive about it. I see some big advantages. Let us say for transportation, we would, between the two boards, purchase all the fuel and really start to drive prices down. One would be able to really understand our fuel costs and we could administer it a lot better and we would get some significant economies. We also share our computer services with the Catholic school board, we do provide computer services. Being in northern Ontario, I think there is a lot of room for improvement in consortium-type buying, and possibly what we are looking at is maybe a central warehouse for five or six boards in the north because our transportation costs are quite prohibitive. We would bring in bulk and we could do a much better job of reducing costs with a warehouse purchasing consortium among several boards and other institutions. That is an area that I have currently under investigation. So on bus transportation I think there is a big area for improvement, and it is not reducing profits for the bus operators. It is getting costs out of the system, and that is an approach that we have to take because we have to get costs right out of the system, and I think we can do that by extending that co-operation, so that is now ongoing. It is high priority with our transportation group.

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Mr McCuaig: One area that we have been co-operating on for years, which is mutually beneficial, is the film tape library in our media centre. We run it for both systems, so it increases the number of resources available to all teachers in Thunder Bay. We have more films because we are co-operating.

Mr Bradley: What about the field of maintenance? I am not talking about the individual caretakers and individuals who work within a school and are assigned to a specific school, l am talking about general maintenance where you have a staff that goes around to do the work that is not in the category that the caretaker would do, more extensive repairs and so on. Is there co-operation in that area or could there be co-operation in that area to effect some economies?

Mr McCuaig: I am not sure we are unique in this one, but we never have enough maintenance in the schools, so I do not know what you share. Second, we have two very different philosophies on how we manage it. We have a staff. The separate school custodians do minor maintenance and, I believe, contract the rest of it. It is an interesting concept I had not thought about, though.

Mr Allison: I think it is a very good concept. How do you take that organization outside and handle the accounting and handle the contracts? That is going to be the difficult issue. But even if you have two boards with maintenance staff, if you could trade expertise, if one has an expert boiler-maker and the other one has an expert electrician, if we could start moving the trades to handle the needs, I think we could get some big advantages. It is going to be down the road, but I think it is a good idea.

The Chair: We will have to move on, Mr Bradley.

Mr Bradley: There was a supplementary Don Cousens had in terms of municipal co-operation, and maybe if he could get that in now, he would be hot off the fire, the one on municipal co-operation.

Mr Cousens: Jim was asking the question about transportation. Just to tie it in, the use of municipal transport, does that help you at a]l in your busing? Separate, public and municipal, we are all together; it is the same taxes.

Mr McCuaig: Except that the Lincoln school division is much broader than the municipal, so our transportation department is significantly larger than the municipal; and municipal -- it is a little bit hard to get them to worry about school bus routes when they are looking at major routes of pickup. We do use it extensively for secondary schools. We use the bus pass concept, so we do use high schools extensively. If they are beyond two miles we provide bus passes for city transportation.

Mr Cousens: Okay, thank you, Mr Chairman.

The Chair: You have asked the question I was going to ask too, but I will take you off the list now.

Mr Cousens: Oh no, that wasn't my intention.

The Chair: I thought you were back on the list. Okay, Mr O'Connor.

Mr O'Connor: Thank you, Mr Chair.

The Chair: I thought Mr Bradley was just trying to use an end run to get you off the list.

Mr O'Connor: It did not work anyway. I want to thank you for coming down here today. I think you brought the cold snap with you. We are feeling some of that.

Mr McCuaig: We thought it was warm.

Mr O'Connor: You thought it was warm, for us it is a little chilly. One area that I was going to ask about was the audit committee and you have answered that. Another area that you might want to share some discussion around the audit committee, perhaps, is with the separate board and maybe they want us to share some discussion with audit committees. Economies of scale might be one area. One area that came to my mind, and I imagine it refers back to Bill 30, was the underutilization of schools, and it appears there was a tremendous amount of underutilization of schools. The auditor's report had spelled out quite a bit about the underutilization of schools and I was looking for the response on your side of the auditor's report and I have not seen it. You have mentioned it to us in your submission today and I think that in one area alone, it would be a substantial amount of money. So when we talk about the auditor's report saying the control that you have under the auditing process is adequate, I think it points to the fact that it is not terrific when you spell such underutilization that -- it has been adequate, you know. You are moving much faster now in transferring the schools and everything else. Perhaps you could share some of that because, as I said, Bill 30 and the under-utilization of schools -- maybe you could share some of that with us.

Mr McCuaig: I think the auditor erred slightly in the comment. It showed up in two different places. I believe it commented that the administration was slow in underutilization and recommending school closures. I believe the Chairman would agree that it is the trustees who slowed it up and not the administration in that area; and I understand that. School closure, for those of you who have been on school boards involved with it, is a very, very emotional issue. We have closed many schools, something like 17 or more in the last 15 years or so. It is basically, in my mind, the way you make real dollar savings; if you have the same students and fewer facilities, there are major savings. We have been very aggressive in closing schools in the past.

It was prior to the last election that, I believe, the auditor was referring to, where there were two reports on the books to close a high school and to amalgamate six rural schools into two. That in fact became the election campaign. The board turned over. Those two major projects were put on hold. We were even taken to court over one of them, so it is easy to say we were not quick on it, but it is a very difficult political issue.

Mrs Remus Joseph: I was part of the previous board and I certainly think at that point the direction of the board was that we needed to study very seriously the utilization of schools; and so previous to this board we did initiate that. However, with the election, the suggestion was that part of the changeover really was due to financial accountability. It was also significantly due to the potential closure of a high school and some small rural schools so I do think that the previous board, and certainly administration, have worked very hard in that area. But this board at this time perhaps has not moved quite as quickly in that area.

You also, I am sure, appreciate that a study of a school necessitates a great deal of energy and, as you know, we deal with many more issues than potential school closure. One of the problems with the previous board is that we tried to be much more assertive in that area and we found that it perhaps was too much to cope with because there are extensive opportunities to try and dialogue with the community. That is very time-consuming but it is very -- I cannot think of another term other than really "energy-sapping." It has to come from somewhere, and it may take away from other program issues or financial issues that you might have.

The Chair: Mr O'Connor, I wonder if you would yield for a supplementary that I am told Mr Jackson has. We will determine whether it is a supplementary.

Mr O'Connor: Okay, we will allow that. Sure.

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Mr Jackson: Thank you very much. I am fascinated by your response because this committee has already had some insights and heard that the process for transferring schools under Bill 30 has gone through a four-phase evolution. The third phase was the private meetings between Frank Clifford and directors of coterminous boards. Since the committee is aware of that, and the ministry acknowledged that in its presence here before us, part of the controversy, as I understand it, is that such a meeting was undertaken at the Lakehead board and the results of those negotiations, which were perfectly legal within Bill 30, were not shared with all the trustees.

Now the director has provided a further clarification, but the point here is that the information was garnered from a freedom-of-information inquiry. This was reported extensively in the media and, as such, created much of the controversy. We also know that four or five other boards had similar types of arrangements that were not necessarily given full public scrutiny. I want to give you the benefit of the doubt because this was going on in all boards across Ontario to some degree. We have four identified areas in this province where those arrangements have blown up, fallen apart, become unattached, but to suggest that there was a procedure that had some difficulty falls short of this committee's understanding of a procedure that was done very much legally behind closed doors, that some trustees in this province found objection to.

Mr McCuaig: I appreciate the opportunity to respond to this.

Mr Jackson: Very good. That was my supplementary.

Mr McCuaig: Let me say to you that, prior to any negotiations with the separate school board and the Ministry of Education, the entire board, in camera, agreed to it. They also agreed to it knowing the pros and cons of it. It was entering into an election year. At every step along the way, the board of education in an informal meeting -- and there is where the difficulty arose and I would do it differently in retrospect -- every member of the board was apprised of every step of the way. That is not what came out in the election campaign and that is not what has been publicly stated by some people, but I can assure you that every member of the board was involved every step of the way.

There were a couple of points where a couple of trustees chose to leave a meeting. The difficulty was because of the process that the ministry was using. It was not allowed to be a formal meeting; we were not allowed to keep minutes. And I can tell you, in retrospect, I would not do that again. It was at the ministry's insistence that it had to be done this way; but contrary to what you have read and what you saw in the paper, they were not secret meetings. The trustees knew exactly what was going on at all stages of that development.

Mr Jackson: If my colleague, Mr Johnson, will permit, I just want to thank you for putting on --

The Chair: Mr O'Connor.

Mr Jackson: Mr O'Connor, sorry. I want to thank you for putting on the record that it was the ministry that suggested the manner in which these meetings were conducted. The other element that was reported in the media was that, once established that an arrangement had been made with the separate and public systems and shared with the trustees, the board then proceeded to spend some dollars on an assessments-needs base -- you know the wording I am looking for -- an assessment of potential closure that post-dated the decision to consider the transfer, and that created a further controversy because public funds were being spent in the Lakehead to look at a potential closure when it would appear that the decision had already been made to effect a transfer.

Mr McCuaig: That is also not correct.

Mr Jackson: Thank you. Mr O'Connor.

Mr McCuaig: If I may put on the record also that at no time during any discussions was a school decision made to transfer. Our policies, as do policies across this province, require a board to study a school. That is by law. That is by the regulations. The Lakehead board identified which school was to be studied. The Lakehead board trustees knew which school was to be studied. To follow the legal process -- and I have to say to you, it may have been a farce, but the fact of the matter is we followed the legal process of studying the school, which was a study, always was a study. The board had a right until the end to say no, it was not going to transfer that school; so it was not a predetermined decision; it was not a deal with the separate school or public school to turn over a particular high school, it was a deal with the ministry to transfer facilities, the decision of which facility was always the Lakehead board's.

The Chair: Mr O'Connor, would you like to continue?

Mr O'Connor: Maybe to sum that up then, it would seem that because there seemed an apparent lack of political will among the board to react and close schools, for obvious reasons, perhaps the new board should have embraced what the auditor had said as far as underutilization and perhaps stated that that was the past.

Mr McCuaig: I think, in fact, the new board has embraced it. It is now the third year into a term. I think the Bill 30 issues are off the table. That is some history we might change slightly if we were to do it again. However, we will be closing another high school within the next few months. Three high schools out of 10 in the city in a matter of a few years is a pretty good record. So this board has done that.

We have initiated a study of all the elementary schools in the system. One of the difficulties with school underutilization today is government change in policy; for example the change in the 20:1 in grades 1, 2, and 3, and the day care issues. So I think we have to be a little careful that we do not just close schools and find ourselves in need of space. That has kind of changed things, but we are looking very clearly at all schools in the system. So I think the board has embraced that very well.

Mr Charlton: This whole discussion this morning has been quite interesting. I had a couple of calls over the course of the last week and a half, somewhat concerned about what was going to happen at these hearings, and I read through the audit and could not for the life of me figure out what the concern was, because I could not see anything exceptional or outstanding in the audit. You have obviously expressed in your presentation today concerns not about the fact of the audit and not about what the auditor found, but about the public reaction you have had to that audit.

Obviously this is a reaction that is very specific to the political circumstances around your board that happened to be in place at the time that the audit was done and released. I guess, in other words, there was a fire there that was still smoldering and the provincial audit became a new piece of fuel on that fire. You have identified in your presentation the use of words like "adequate" versus other words that might mean somewhat different things to the public, and I think to some extent there may be some legitimate thought that we could pursue in that respect.

On the other hand, it may just be the existence of an exceptional audit, ie, "Why is the Provincial Auditor auditing our board all of a sudden? This has never happened before." Just in the context of the political side of what has happened in this case, what did you do and how have you approached trying to deal with the public demands around the performance they perceived out of the audit and the use of words like "adequate," and how have you tried to address this whole question of renewed public concern about the operation of the board?

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Mrs Remus Joseph: I am not sure, really, how to answer your question, and so my response may not be at all appropriate. But I think that a lot of the concerns, legitimate or not, have been articulated repetitively and so very, very strongly in the media that I sometimes wonder, when you take a look at the Lakehead board and all of the issues that we have to deal with, whether some things are kept in what at least I consider to be appropriate perspective.

There are many issues that we have, and certainly our financial accountability, etc, is something that we have to get better and better and better at for everybody's concern, but I guess I am concerned at repeated critical comments, just because of the extent of their exposure and the repetitiveness, and I --

Mr Charlton: I understand that. I understood, from everything I have heard this morning, that likely the perceived mood out there, both in terms of media and in terms of some public comment, is much more critical than the auditor's report reflects in any way, shape or form. I guess what I was trying to get at is, it seems to me, that as politicians -- and that is what the trustees are, at least the trustee portion of the board operation -- they would be desirous to try and put an end to, as quickly as possible, incorrect perceptions of what it is the Provincial Auditor said.

Just as an example, did you perhaps consider, when all of this erupted, having a public meeting, asking the Provincial Auditor if he would provide staff to answer public questions about the audit, and just attempting to end the whole controversy once and for all?

Mrs Remus Joseph: The short answer is no, we did not do that, although certainly the report was made public, as you know. But no, we did not have the auditor there at a meeting with the public.

Mr Charlton: It seems to me that is the kind of public exposure that could deal with questions like what "adequate" means to an auditor, and very quickly overturn some of the -- and we have all seen them in political life -- very emotional and very exaggerated claims that get made. I think it is incumbent on the board that although you have said clearly, and I am not unhappy with that, that you found the audit useful, I do not think we can ever let the public political response to things like an audit determine how we should approach our auditing future. We have to deal with that public response when it happens, rather than to try and use it as a reason why we might not want to do this more than once a decade or whatever.

Mr Allison: I think your comments are valuable and I think that is why we said that, being one of the first in the process, it would be helpful to get open discussions on how future audits should proceed. I talked to staff the first week I was there. People on staff were, through this period of time -- and it is not just the audit, but through this whole political period of time -- actually embarrassed to admit that they were employees of the board, because there was such a negative feedback from it, which stunned me.

I guess my reaction to the audit has been: It was a solid audit, it really identified where we had to tighten up, and do not worry about the public. What we have to do as administrators is get on with the job and tighten up controls and really start to do things effectively, because one thing in the public sector versus the private sector is that there are a lot more controls in the public sector than in the private sector. We spend a lot more money protecting a dollar than they do in the private sector, and I think Mr Archer would agree with that.

My view is, we have got to start getting costs out of the system, not increasing costs. What we are doing is increasing costs as a result of this audit, and what I believe I have to get at is getting costs out of the system, and that is what the taxpayer really wants.

The Chair: There may be taxpayers who will disagree with your last statement.

Mr Charlton: I think, just as a last comment, that I do not disagree with what you have said in principle we have to accomplish. The risk you run in ignoring the public response, though, is that if the question of the accountability and the competence of the board in the public mind grows too great, eventually you reach a point where those trustees are under so much pressure that they start making bad decisions in order to get people off their backs. It perhaps has not happened in the Lakehead board yet, but I have seen a couple of other occasions in this province where it has. That is why we always have to be concerned about not only what the audit really said and how you best run the business of a board of education, but how you make the public understand what it is that is really going on.

Mr Cousens: One of the things that the director said in follow-up to one of the earlier questions was the unwritten policy of the separate school board on sharing of facilities, an unwritten policy that could mitigate against the whole possibility of there being more sharing of facilities, services and other things, and I know he said it specifically to do with school buildings. Is there any evidence of that? I find that a very, very serious allegation.

Mr McCuaig: First of all, and I think I said it, it is my belief that during the Bill 30 discussions, and I have not been involved with it lately, when we looked at having to provide space for separate schools before we turned over our first high school, we recommended sharing. Sharing was immediately turned down, and my understanding was that was the message across the province: that sharing was not suitable. I would have to say to you, sharing is very difficult. But I believe that to be pretty general. I said unwritten, and I think it is probably close to truth.

That is a belief. I do not have signed evidence.

Mr Cousens: No, it has a lot of credibility when it comes from the director of one of our boards of education. Mr Chairman, if there is any way in which we as a committee can come back to this when we are reviewing this issue, I certainly would hope we can come back to this as one of those things, because it comes through in so many of the things that Mr Bradley and other members were saying of the importance of sharing between the public and the separate systems. If in fact one system of education has such an unwritten policy that may be permeating the entire relationship, then we in this Legislature may well want to raise it as a question for action.

I wanted to specifically ask about your method of tendering. I do not want to get into transportation; someone else can have some fun with that one. But just as a point of interest, every public body to come before our committee within the post-secondary school system, and now with the public boards and separate boards, has examples where it did not have a clear-cut, followed tendering process. If there is anything that I think is wrong in the province of Ontario it is the failure of public bodies to have an open and accessible system to get business with public money.

What I see in your situation is one of those things that is not adequate. So I have four questions which I would like to ask you, and the first is, if you can outline steps that have been taken to ensure compliance with purchasing policies and procedures by your board.

Mr Allison: That is an area of concern for me as well.

Can I look through my file?

Mr Cousens: I have four questions; I may as well put them all on and you can work on it. Could the board elaborate on the procedures adopted to ensure the proper documentation of quotes; could you elaborate on the improvements? The amount of detail required to the tender logbook: what level of detail is required to ensure that the problems as noted are not replicated? Finally, does the logbook now contain sufficient information to demonstrate proper tendering and that contracts are being monitored properly once awarded?

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Mr Allison: As far as the steps that we have taken in the area, one, we were significantly understaffed, and we have added a buyer to the system to ensure that procedures will be followed. What we have set up are a documentation system and control procedures to, I guess, ensure compliance with the facility. On tendering, basically, we set a $25,000 limit. If it is over $25,000 we tender it. One of the problems we have is that being in Thunder Bay we do not have a huge supply base, and that is something we would really like to develop more of. So we go through Fraser's, we go through known providers of those services and ensure that they are called to tender. If there is an exception, and the exception would be that we are replacing an original piece of equipment with an original piece of equipment -- let's say it is a major repair -- then those have to come to me to be pre-authorized, all the rationale has to come to me to be pre-authorized, and we would not tender that.

What we also do is, all the tenders that go out, we have a tender log now that has all the appropriate headings, who was asked to tender, who actually did tender, and then a summary is made up of all the results of the tendering including all the prices and who the recommended successful bidder is. That is signed off first by the requester of the service, second by the purchasing agent, third by the purchasing manager, then fourth by me. If there are any exceptions then I deal with that. Often we will have an exception when somebody does not tender all the items. So we have to deal with those issues. I believe in most cases where we failed in the past was not centralizing the documentation. We had some documentation here or there and then it would disappear into the files. And what the tender log and the tender process has done is, it has taken all the information and placed it in one area on a tender and we can now deal with it. And it is really useful for us when we tender again the next year that we find out who tendered last time to make sure that we do have a good tender list.

On that area, one thing we are seriously looking at is the relevancy of our limits. Getting three quotes on $1,000 may not be relevant. That was established in 1977. Today just with inflation that would be up around $2,500, and I believe the auditor has recommended that. One thing we are trying to do is to actually tender more, and what we are looking at is contract buying: determining what our annual requirements would be and putting out bigger tenders and more tenders, so we think we can attract more suppliers to the area. A good example would be that we do not get competitive banking from offshore banks because it is a $600 trip to Thunder Bay from Toronto for the salesmen. So one of our problems is trying to build up a supplier base. One of the things we are going to do is go into more contract buying and more tendering so they are more attractive pieces of business to attract more suppliers. That is one of the plans we have in place.

On the purchasing system: if there is any item, say, between a $500 and $1,000 level on which we did not receive three quotes, it has to come to me for pre-authorization and approval, and if I am not around I still have to sign off after the fact. I have one here. It was just in my briefcase. A good example would be that we had all the electrical wiring on our school go. I had to pre-authorize the purchase of all the wiring and the equipment or we would end up closing the school, so we did not go out for competitive quotes of pricing. Our biggest concern was availability.

So there are items that will not follow the process properly, but they have to be justified: emergency cases, single suppliers, if we request a specific textbook. One of the issues is how we buy, and what we have to do is start challenging why we want to buy that specific piece of equipment that is requested by the user, and to open up the tender process. So I agree it is a valid concern, and we have had one case where recently only one supplier was identified. It came back, we challenged it, opened it up, and we found out there were two suppliers. We got a competitive tender and we think we have cut our costs by about $8,000 on a $200,000 project. So we think the tendering process is a valid process. What we could do is develop the system so that we can use it more.

Ms Haeck: I am very interested in the comments that you made to Mr Bradley's original question around sharing and co-operation. Could you please expand for me the sharing relationship and co-operation you have with the Christian schools in your area?

Mr McCuaig: We have one large Christian school in the area, and our practice is, and this has been informal in the past and it has been formalized in the last few months, that we will provide service to them at no cost to us. It is a problem with transportation because they have one school and we have the whole school division. We have allowed their students to get on our buses informally. That creates some liability in other issues, but we have done that with that. Formal sharing of busing is much more difficult. An example that just passed our council on Monday is that we buy licensing rights to videotapes. So we let them become one of our users at the same cost as to our schools. We have a very good instructional media centre. We will be allowing their teachers to use our media centre at the same cost we charge our schools. All of our curricular materials that we make available to everyone else we make available to them at the same cost. So that is the kind of things we are attempting to do with the Christian schools.

Ms Haeck: I appreciate your remarks, because I know there are some other areas where there is some interest being expressed in collaboration.

Mr Allison: Also, in the area of purchasing, being the one school, they have a tough time in having a formal purchasing department. So we are, where we have common materials, now purchasing including their requirements in ours, and in some cases warehousing and then distributing to them. We have a 10% surcharge for the cost of handling, but that seems to help them get through their system.

Ms Haeck: That is great. How about buying of, say, library materials? Do you get involved in bulk buying? Obviously you get a better purchase price on books for libraries or curriculum if you buy in quantity. Do you share that around the various boards as well as using the Christian school?

Mr Allison: We were just starting with the Christian board, but a concept that I am promoting right now is to try and establish a central warehouse for all the boards west of us. It would be a good deal for us to buy in bulk, warehouse and then break the shipment and ship out to them in a smaller unit. We hope to be meeting with other board officials to start promoting this. Hopefully it is going to generate some savings.

Mr McCuaig: Anything can work under our system, but we have done it with computers for smaller boards and large products. Our belief is, as the largest board in the north it is part of our responsibility to provide service, whether that is in-service training -- and some of our professional staff go out and do workshops. For our major professional activity day in the fall we invite all the boards in. And so it is just a belief we have that we will share anything, recognizing it cannot be a major financial burden on our own taxpayers.

Ms Haeck: Exactly.

Mr Allison: We also share a superintendent.

Mr McCuaig: I think a concept we introduced, and an example of the co-operation we have with other agencies that we work very hard at and is mutually beneficial, is that we have a lot of qualified staff that will not make promotions internally for many years, people on the way up. We are presently sharing some of our staff to provide supervisory officer services to smaller boards. The win for them is they get a very, very competent supervisory officer. The win for us is we get someone who is better trained for the future. So that is a concept we work under.

Ms Haeck: Sounds most interesting. I do have one additional question which I asked the York board yesterday as well, relating to whether or not it had a planning department, partly to deal with school utilization. I am wondering to what degree you have such a department or maybe all of one person. Do you have such a department in place?

Mr McCuaig: Yes, and I say that cautiously. We do; it is not as effective as it needs to be. We have had planners in place. We use it for a lot of the baseline data in school closure, but in fact we are in an era where we need more engineering-architectural support than we have at this time. We are looking at it. So we do have planning but we do not have the backup to it at the moment.

Ms Haeck: Okay, so this person is receiving statistics about the demographics in the area and helps you deal with your current situations or possibly extrapolating into future situations, but you do not have the engineering staff to deal with some of the statistics at this time.

Mr McCuaig: For example, we can look at a school and say school X or school Y can be closed and we can look at demographics and we can look at general facilities, but we do not have the experience to look at what the architectural soundness or engineering soundness is of this building versus this building, that type of thing.

Ms Haeck: So within your maintenance department you do not have someone with those kinds of credentials, or could you in your collaborative arrangements, say, with the city, make use of someone from within their department?

Mr McCuaig: With some property deals that are going on now they have been co-operative in using their planning and engineering department to provide us data. It is a little embarrassing when they provide better data on our property than we have, but it is a reality.

Mr Allison: I think one of the big issues is that for us to put a school in place is at least a minimum three-year process. When we talk about planning I think planning has been in terms of three- and four-year horizons, and really we are going to have to go up into the five-, six-, seven-year horizons on demographics. I think that is where you get nervous, because you start making some decisions that are on a shifting population and then you have legislative changes, like on grades 1 and 2, which may hurt you.

The Chair: We were going to have you this afternoon, but it would appear that questions of the committee members have all been asked and so we wish you a safe trip back to Thunder Bay. We appreciate your coming that distance to share the information with us.

Committee, we stand adjourned, but before we do that I would like to advise you that your agenda shows us in room 1 tomorrow. We are actually going to be in room 230 all day, so maybe you would make that note. Having said that, we stand adjourned until 10 o'clock tomorrow morning.

The committee adjourned at 1154.