Last Updated: Friday - 09/24/2010
Week of January 30, 2006
Ripley pledges deficite won't hurt students
Upset trustee seeks independent investigation
By RAMON GONZALEZ
WCR Staff Writer
Layoffs and reduced services may result from accounting errors that plunged Edmonton Catholic Schools into a $10-million deficit.
Superintendent Dale Ripley said the layoffs will affect the central services department but he doesn't know how many people will be affected.
"The bulk of this debt will be repaid by a reduction in Catholic education services," he said in a Jan. 24 interview.
"All departments, including the board of trustees have been directed to decrease their budgets by 10 per cent. There will be less operational dollars, less professional development and in some cases services that are being provided will not be provided."
"Our plan is that there is no impact on students in the classroom," said board chair Debbie Cavaliere. "We are there for the children and this won't impact classroom instruction."
Ripley says the district can account for every dollar. "We did not lose track of $10 million whatsoever. I know exactly where the $10 million was spent." More than $4 million of the deficit came from overspending in the capital construction budget, which funds major modernizations and new school construction.
The remaining $6 million came from higher than anticipated costs in the instruction budget, which pays for teachers' and support staff salaries.
While the extent of the debt was surprising, Ripley says some of it was planned.
During the past seven years, Edmonton Catholic has completed $60 million worth of capital projects, including construction of five new schools and major modernizations on three facilities, including St. Catherine School and St. Joseph's High School.
On a few of the projects the district allowed cost overruns as unforeseen circumstances cropped up, like finding asbestos in St. Catherine School.
"So for example we run into a huge asbestos problem at St. Catherine and so we had to spend over $400,000 additional dollars on that to get the asbestos out and we all knew that," Ripley said. "You can't stop that kind of project in the middle when you run into this type of problem. We applied to Alberta Infrastructure, outlined the problem to them, showed how we spent the additional dollars, requested funding and we were refused."
Cost overruns were also allowed in the construction of the new schools and the modernization of St. Joseph High.
"No dollars were lost," Ripley stressed. "We know exactly where all those dollars went; we have five new schools and three major modernizations to show for that. But they cost us more than we originally estimated and so we will pay that back over the course of the next three years."
Underestimated salary costs
The $6-million deficit on the instructional side is the result of underestimated cost of teachers and support staff over the past three years.
"What happened is that in the course of the last three years we had underestimated how much our teachers and support staff salary cost would be," Ripley explained. "In other words, we paid out $6 million more in salaries than we had budgeted for."
How can you underestimate that?
"Well, it's very easy to underestimate it," Ripley said, noting the budget is created based on estimates of how many teachers will be hired, what contracts may cost and how much money will be granted to the district by the province.
"And when we do that estimate we don't know what they actually are until about 18 months after we build in the projection," he explained. "We don't know what collective agreements are going to come in. We don't know what our teachers and secretarial and librarian salaries will be because contract negotiations are ongoing.
"We don't know what our benefit costs are going to be at that time because our benefit providers raise rates at different times. Nor do we know at that time what our government grants are going to be. So we take a best guess based on a certain set of assumptions."
No one has been dismissed for the accounting errors because "as a Catholic organization we believe very firmly and strongly in figuring out what happened, making sure the mistake doesn't happen again and giving people a second chance," Ripley said. "There were honest mistakes made by honest people; there was nobody who did anything dishonest in this regard at all, therefore there is no reason for us to dismiss them."
The district is doing a number of things to prevent occurrences like this from happening again, according to the superintendent. "We changed our monitoring procedures in terms of our financial services department. They are required to report more often to the board and we are in the process of hiring an internal auditor who will report to me and the board of trustees," he said.
"His job will be to monitor all of the procedures and processes in financial services to make sure that all of the things, all of the mistakes that were made in the past are actually corrected."
Moreover, the district will begin placing future new school construction funds into separate accounts for each project; previously the district placed money for all the projects into one big account, which made it more difficult to track spending on individual projects.
Education Minister Gene Zwozdesky said he has met with district officials and asked them to provide a complete explanation of how the $10 million shortfall resulted and what they will do to ensure it doesn't happen again.
"I have to see it (the plan) first of all because I have to feel comfortable that there won't be any negative impact on the classroom for students or for teachers," Zwozdesky said Jan. 24.
"They have done some good thinking on this but it is a very serious situation. I'm not considering anything until I receive their written plan and then I will look at it very thoroughly, very carefully and make an opinion on whether or not I will approve its implementation or not."
Zwozdesky expects to receive the plan within days.
"School boards are not allowed to run a deficit without approval of the minister and the fact is approval is based on reviewing a very detailed plan that would show exactly and how they plan to recover those monies over a specified period of time."
To pay back the debt the district will use money from the sale of properties to the city worth approximately $2.5 million, use infrastructure grants and cut central office's budget by 10 per cent.
It amounts to one per cent of the division's $252 million budget in each of the next three years.
Central office layoffs
The cutbacks will likely result in layoffs in the central office but will not affect class sizes, teachers or custodians, Ripley said.
Ward 2 trustee Janice Sarich introduced two notices of motion at the board's Jan. 16 meeting, one asking for an independent investigation of the deficit.
"The deficit of approximately $10 million is enormous; it is a very serious situation and its impact on the system is huge," she said, repeating statements she made at the board's meeting. "I'm outraged at the situation and I'm having difficulty suppressing my anger over the issue and I feel compromised as a trustee."
Sarich has also questioned why it took Cavaliere until Jan. 6 to tell other board members about the deficit when Cavaliere first learned about it Dec. 1.
"I could have shared with all of the trustees that we had a deficit but (at that moment) we didn't have all of the information that was necessary," Cavaliere explained. "I wanted all the numbers to be straightened out before I told anyone. I wasn't hiding anything."