Process Errors and the Process Errors and the True Costs of School True Costs of School

ClosuresClosures(Round Two)(Round Two)

Arthur CockfieldArthur Cockfield

June 11, 2012June 11, 2012

OverviewOverview

1.1. Review of building costs and operating Review of building costs and operating gains/losses (from report) gains/losses (from report)

2.2. Serious concerns about process to Serious concerns about process to calculate costs of closure: Public calculate costs of closure: Public statements by Board Director make it statements by Board Director make it appear matter is now closedappear matter is now closed

3.3. Ruling sought from PARC Chair (or Ruling sought from PARC Chair (or trustees) on matters of processtrustees) on matters of process

Main Conclusions of Our ReportMain Conclusions of Our Report

Non-financial factors are very important Non-financial factors are very important and we support keeping all three schools and we support keeping all three schools open, however:open, however:

Limestone Board would save the most Limestone Board would save the most money by closing LCVImoney by closing LCVI

Limestone Board would save less money Limestone Board would save less money by closing KCVI or QECVIby closing KCVI or QECVI

Board Estimate of Building Costs

Only looks at backlog repairs:

LCVI + CP building: $18,094,003 KCVI: $20,080,959 QECVI: $17,329,178

Problem: Ignores ‘all in’ cost estimates by outside firm (Stantec) hired by Ministry and Board

Actual Building CostsActual Building Costs

According to outside expert (Stantec) must According to outside expert (Stantec) must look at (a) backlog of repairs, (b) needed look at (a) backlog of repairs, (b) needed upgrades over next ten years, (c) and upgrades over next ten years, (c) and accessibility costsaccessibility costs

Three high schools require major repairs, Three high schools require major repairs, Calvin Park building in worst shapeCalvin Park building in worst shape

LCVI site ‘all in’ costs are LCVI site ‘all in’ costs are $32,935,226$32,935,226 KCVI costs are KCVI costs are $25,827,751$25,827,751 QECVI costs are QECVI costs are $21,596,305$21,596,305

2010 Operating Gains/Losses2010 Operating Gains/Losses

All figures taken directly from Board All figures taken directly from Board accountant’s financial statements:accountant’s financial statements:

LCVI has an operating loss of LCVI has an operating loss of $919,884$919,884 QECVI has an operating loss of QECVI has an operating loss of $613,599$613,599 KCVI has an operating KCVI has an operating gain gain of of $392,074$392,074

PROCESS ERROR:Three Public Statements by Board

Director with Problems

All quotes taken from Mike Norris, “School Closing Decision Set for Early 2013”, Whig Standard, May 23, 2012, available on Internet

Statement Number 1

Board Director: “Should we need to bring each of the schools to building code standards, the cost will be $20 million for each of the three schools.”

Problems with the First Statement

This ignores Calvin Park building and ‘all in costs’

New Option 4 to close LCVI incorrectly states a long term capital savings of $12,650,330

Board Director’s view that all the same mainly hurts QECVI as it loses big cost advantage over LCVI (when there is really an $11 million difference)

Statement Number 2

Board Director: “It’s not accurate to say Kingston Collegiate makes money. That’s not how schools function.”

Problems With Second Statement

Board’s own accountants use terms ‘operating gains’ and ‘operating losses’

Purpose of these financial statements is to hold Director and Board accountable to taxpayers and trustees

Numbers taken from School Information Profiles – defined by Board as “A set of criteria established by the Board based on Ministry guidelines to determine the value of a school for comparison purposes.”

If irrelevant why does law compel Board to disclose these financial statements?

Also Ignores Financial Costs of Also Ignores Financial Costs of Closing KCVI as a Full SchoolClosing KCVI as a Full School

Hard to measure as has never happened before Hard to measure as has never happened before (as per Dr. Dixon in Appendix D of our report)(as per Dr. Dixon in Appendix D of our report)

Massive transition costs from changing Massive transition costs from changing programs and thwarting interests of students programs and thwarting interests of students and parents at a full schooland parents at a full school

Need realistic revenue projections if KCVI is Need realistic revenue projections if KCVI is closed (lose IB revenues, less than 500 students closed (lose IB revenues, less than 500 students may go to QE or LC each, etc.)may go to QE or LC each, etc.)

Contrary to provincial government orders to only Contrary to provincial government orders to only close ‘under-utilized’ schools (Ont. Budget 2012)close ‘under-utilized’ schools (Ont. Budget 2012)

Statement Number 3

Board Director: “You have to understand that should one of the schools be closed, there’s potential savings of approximately $1 million, regardless of which school is closed.”

(Also from article: “Hunter took issue with Cockfield’s claim that Kingston Collegiate was able to make big gains because the principal and staff have found ways of cutting costs.”)

Problems with Third Statement

Due to different expense flows not all schools are equal

Example: In 2010, Board indicates LCVI spent $1,629,934 for ‘utilities and custodians’; KCVI spent $1,372,051 for same expenses even though it has roughly 400 more students

Board’s own numbers show different operating savings for closing each school and indicate in new Option 4 that greatest ‘annual net operating savings’ of $1,218,000 generated by closing LCVI

Main process errorMain process error

Board Director is boss of PARC Chair, principals Board Director is boss of PARC Chair, principals and teachers on PARC committees (half the and teachers on PARC committees (half the votes)votes)

Board Director should never make public Board Director should never make public statements (even if well-meaning) that appear to statements (even if well-meaning) that appear to pre-judge critical issues pre-judge critical issues

Process undermined:Process undermined: (a) appearance of bias and improper influence;(a) appearance of bias and improper influence; (b) statements inaccurate and misleading; and(b) statements inaccurate and misleading; and (c) Director is ultimate recipient of PARC (c) Director is ultimate recipient of PARC

recommendations.recommendations.

Conclusion

PARC Chair, members of PARC committees, trustees and Board staff appear to be following proper process

Is it ever acceptable for a Board Director to make public statements that appear to pre-judge important issues before PARC committees?

Is this a fatal process error? Due to conflict of interest with PARC Chair,

trustees should provide input May we have a ruling?