Last Updated: Friday - 09/24/2010
Week of February 20, 2006
Board asks for debt extension
Edmonton Catholic Schools wants another two years to repay its deficit
By RAMON GONZALEZ
WCR Staff Writer
Edmonton Catholic Schools is asking the province for a two-year extension to repay its $9.9-million operating deficit - added on to the three years it originally proposed.
Board chair Debbie Cavaliere made the request in a Jan. 24 letter to Education Minister Gene Zwozdesky.
The letter, which was approved as a public document at the board's Feb. 13 meeting, outlines what led to the deficit and provides an initial plan to recover the $9.9 million.
In addition to selling about $2.5 million worth of property to the city, the board plans to use portions of the provincial grants it receives each year to pay down the deficit. It has also ordered all its central departments to reduce spending by 10 per cent.
Also at the Feb. 13 meeting, the board rejected a motion by trustee Janice Sarich to hold an independent forensic audit of the district finances.
The board decided to ask Zwozdesky for more time out of fear that a three-year plan might force layoffs in the central office. "We ask that there be no job losses and, in order to make that easier, we asked the minister for a five-year recovery plan instead of the three-year plan," Cavaliere said after the meeting.
But she said that even if the minister doesn't approve the extension, "we'll be able to live with it because the departments have managed to make cuts (to their budgets) without job losses. The departments did their cuts assuming a three-year plan, so we will be able to live with it if we have to."
The deficit elimination plan is subject to Zwozdesky's approval. He had asked the board for a detailed plan on how it would wipe out the deficit, as school divisions are required to run balanced budgets.
Time to consider
In a Feb. 14 interview the minister said he might take another two or three weeks to consider the board's plan.
"I'm going to take a little bit of time to go through this very carefully because my main concern is not only that they get themselves out of the deficit in an orderly fashion but also that it doesn't impact the classroom negatively and that it doesn't impact teachers' supply negatively and so on," Zwozdesky said.
"So they've got some ideas on how they think they can do that without hurting the classroom and so we are going to study it through and compare their numbers and see how it works."
The deficit was discovered late last year during an independent audit of financial statements for the 2004-05 school year.
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.
After news of the deficit came last month, Cavaliere said that accounting errors by members of the board's financial services department - over as many as five years - were to blame.
Sarich described the deficit as "enormous" and moved for the board to commission a forensic audit to investigate how the deficit occurred. "Catholic taxpayers won't be satisfied until an independent investigation is done," she said.
"It is a matter of restoring public trust and confidence. A forensic audit is not about pointing the finger at anyone; it's about independently and objectively, without bias, establishing what went wrong."
But the other trustees didn't buy her argument and the motion was defeated. Some trustees argued the investigation would just add more cost to the district's heavy financial burden.
Audit need questioned
Trustee Debbie Engel noted an independent auditor had just laid out the causes of the deficit in great detail and she didn't feel an additional investigation was necessary. The district has already spent $83,000 in audits so far this year and is due for another independent audit at the end of August.
Trustee Mark Razzolini described the deficit as a "blow" to the district's image but said a forensic investigation would only be justified if the district didn't know what happened with the money.
"In this case everybody here knows that an independent auditor investigated in detail over a number of weeks what happened, how it happened and who is responsible," he said.
"The individuals responsible even stood up and accounted for their mistakes. We know what happened and I think an investigation would be required if we did not know what happened."