Executive Summary

Investigation Report to the Minister of Education, Province of Ontario regarding the Hamilton-Wentworth District School Board

August 15, 2002

I have been retained by the Minister of Education to undertake an investigation of the finances of the Hamilton-Wentworth District School Board “HWDSB”. I have worked with a team of professionals during the investigation.

In undertaking this investigation we worked closely with those members of HWDSB’s staff (“staff”) who made themselves available to us. We also met with most of the Board of Trustees (“Trustees”) during our investigation. We relied upon certain data that was made available to us by staff.

Our investigation focused on the Board’s 2002-2003 budget.

Under the Education Act, Boards of Education in Ontario are required to submit balanced budgets for each fiscal year. Taxpayers and all stakeholders in the education system would expect that the budgeting process in any publicly funded organization, particularly an organization that annually spends $360 million would include the following reasonable steps:

• Board staff would prepare a balanced (“compliance”) budget which would take account of their best reasonable estimate of Provincial funding, historical spending trends, economic and local factors and include reasonable assumptions to project costs for the coming school year.
  
  
• Given Board staff’s knowledge, experience and expertise, the Compliance Budget should provide an excellent foundation for the Trustees’ deliberations on the spending plans for the coming year as well as a useful benchmark for the Board’s long term fiscal planning process.
  
  
• The Trustees may either approve the staff recommendations or modify these plans to address local policy priorities. Under a balanced budget scenario, the modifications would need to be balanced – that is, spending increases would need to be offset by allocations from other programs and cost centres.

Our investigation into the current deficit budget at the HWDSB revealed that the budget setting and approval process is fundamentally flawed. Staff prepared and recommended a “compliance” budget to the Board of Trustees. The Trustees rejected the staff budget. Instead, the Trustees approved a deficit budget of $16 million for 2002-2003. The $16 million deficit includes an operating deficit of $5 million that was carried over from 2001-2002 as well as net spending increases of $11 million in a variety of areas. Over the past three years, the Board’s operations have consistently produced deficits totalling almost $9 million. It is decisions by both the Board’s staff and Trustees that have resulted in the deficit budget.

The annual budgeting process must be integrated into the longer term planning cycle. Long-term plans directly influence annual financial plans. Our investigation determined that neither the HWDSB staff nor the Trustees have assigned the necessary priority to first setting and then committing to a long range pla n that ensures that taxpayers’ dollars are spent to deliver excellent education on a financially effective and efficient basis. For example, the Board has not made the necessary adjustments to the number of schools it operates, to its transportation policies or to its staff complement on a timely basis to achieve a balanced budget.

In our opinion, HWDSB’s deficit is a direct result of the Trustees’ unwillingness to close and consolidate schools. The staff-recommended plan to close schools and build newer schools was not adopted by the Trustees. The failure to close schools impacts upon HWDSB’s ability to maximize efficiencies in areas such as maintenance, utilities and school staff. Due to the excess number of schools and pupil places, much of HWDSB’s funds have been used to pay for high maintenance and utility costs, rather than on classroom expenditures, which would directly benefit HWDSB’s students.

The closure of excess schools would enable the Board to obtain new pupil grants to build new schools. Newer schools will be more strategically located, require little in the way of repairs and maintenance and be more energy efficient, allowing funds that are currently being used to maintain older schools to be targeted for other education priorities.

In 1998 HWDSB was given $6.1 million in transition funding by the Ministry to aid in the Board’s amalgamation and the adoption of the Student Focused Funding Model. Due to the Trustees’ delay in making decisions related to the consolidation of schools and redeployment of staff, HWDSB has missed the deadline to use $300,000 of the transition funds that were provided for severance costs.

Other inefficiencies also exist at HWDSB in the areas of transportation, educational assistants and other matters stated in our report. As our report is being submitted days prior to schools commencing in September, limited funding and cost savings are available immediately. Certain cost savings, such as the consolidation of schools, will have be implemented part way thr ough the year. Based on the results of our investigation and the recommendations in this report, we are convinced that a balanced budget is attainable for 2002-2003.

The Trustees’ inability to make decisions to streamline the Board’s operations and capture the available efficiencies has caused the current deficit budget. A firm commitment to a long range plan in 1998 and following that plan consistently would have enabled the changes to take place in an orderly fashion so as to minimize the impact on students while promoting the quality of education that they are entitled to. The Board’s lack of action has produced a situation where significant change will have to be implemented immediately to streamline its operations. Based on our investigation, we have concluded that the changes we are now recommending should have been implemented over the past number of years but for the lack of commitment and action by the Trustees.

We have not gained the necessary assurances that the Board staff and Trustees will implement the required recommendations in order to increase HWDSB’s efficient use of funds. In our opinion, the Trustees’ lack of action with respect to school closures and the staff’s deficient budgeting processes have led to HWDSB’s current-year deficit and limited potential improvements for the HWDSB’s students.

Based on our review, the HWDSB will fail to balance its budget for 2002-2003 and will operate at a deficit for the forthcoming year. Therefore we recommend that the Minister vest in itself the power of the Board of Trustees and HWDSB staff in accordance with Division D of Part IX, Subsection 257.30(6) of the Education Act.