Board seeks help from auditor general
New Westminster's school board is asking the provincial auditor-general to monitor its handling of resolving the debt of a $2.8 million deficit from the 2011-12 budget just as it found out it is on track for an additional $2.2 million deficit for 2012-13.
Board chair James Janzen said the district has a good relationship with the auditor general's office when it looked into the governance of the business company last year as well as providing some monitoring this past summer so why not take advantage of that.
The request comes on the heels of a motion of non-confidence in the handling of the deficit by the board and senior administration that was originated by the New Westminster secondary's parent advisory council (PAC). The group also called for the auditor-general and the Ministry of Education to intervene.
PAC chair Mary Ann McKenzie said she was pleasantly surprised by the board's decision.
"At least it's something and not 'we don't need any help, let us handle this.' " said McKenzie. "We're deeply concerned and we're going to be watching very closely to see what happens, what matters are taken in hand. How is it going to affect programs, and how are we going to get this under control?"
Wendy Harris, the interim district PAC chair, is hopeful the move will provide the district and the board with more direction.
"It's a step. The parents would like more, but it is a step. The board should be seeking as much help and knowledge as possible," said Harris.
Although she voted for it at Tuesday's board meeting, trustee MaryAnn Mortensen would have preferred more involvement from the auditor-general
"The oversight doesn't include the same level of scrutiny that a full examination does," said Mortensen on Wednesday. "It's just to provide an extra measure of assurance to the public that the board is taking the deficit seriously, and repayment of the deficit seriously."
When the 2011-12 school year closed in June trustees were told by district staff there would be a small surplus for the year. But by the time the summer was over they were informed the district actually had a $2.8 million deficit.
The board also heard a report from Joan Axford, the consultant the trustees hired to figure out how that deficit, the third in 11 years for New Westminster, came about and to make recommendations on how to recover it and on how the district could improve its financial procedures.
"I was really impressed with not only the comprehensiveness of the report and the speed with which she has been able to do it. She's only been with us a month," said Janzen. "We really need to make sure everything is done in a timely way, that we're making sure we're tracking out expenditures in a timely way and that we're getting information back to our managers."
Axford told the board if the district keeps on operating the way it is it will have a $2.2 million deficit for the 2012-13 school year.
"We have quite a bit of work to do," said Mortensen. "The big thing out of this is we need to create policies. What was clear in the report is our board of education does not have near the number of policies in the financial management area that we should have, and we do not have enough procedures. We need to flow from a strategic direction plan. Without that we are a rudderless ship."
McKenzie was surprised at the depth of the structural problems outlined by Axford.
"The bleeding isn't stopping," said McKenzie. "It was a good to see she at least did delve into there are deep rooted problems in the way money is handled in the district. It is not a funding issue."
The board asked superintendent John Woudzia to prepare a list of expenditure reduction options to cover the projected $2.2 million deficit for its Dec. 11 meeting.
Mortensen suggested the board get a tutorial on how budgets are written and why they are written that way so the trustees can be financially literate enough to make informed decisions and ask questions. The motion passed but the special meeting won't be held until Jan. 8.
In her report Axford pointed out New Westminster: spends 89.52 per cent of its budget on instruction which is six per cent higher than the provincial average; spends one per cent of its budget less than similar sized districts for central office administration; spends 1.27 per cent of its budget less than neighbouring districts on operating and maintaining its schools; and salaries and benefits are 1.89 per cent of its budget greater than the provincial average.
Large contributors to the budget include revenue $168,000 less than budgeted with overspending on salaries ($887,000), benefits ($585,000) and supplies and services ($1.6 million).
"It's not huge in any one area, but it accumulates up into a lot of money," said Janzen.
She said the financial reporting system needs to better match the spending and managers held accountable throughout the system.
She said the overruns are structural in nature. The budget is not well understood throughout the district. The staff is conscientious about controlling spending, she said, but were not given the proper tools and information to understand their budget target an its relationship to the district budget. She noted, many departments don't use district reporting to manage their budgets but create their own spreadsheets.
"The danger here is that actual general ledger expenditures are not managed. As well, there is workload pressure on the entire system which should be handled by the financial system software," she wrote.
She also recommended secretary-treasurer Brian Sommerfeldt devote 70 per cent of his time to his financial responsibilities, reducing some of his other responsibilities such as facilities, IT, governance, media relations and stakeholder engagement and delegating them to others.
"This means that current expectations must change and with no additional staffing, this change would need to be long term."