Ensuring Financial Stability Report

7/28/2019 Ensuring Financial Stability Report

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EngagingOurFuturePart 5

Ensuring Financial Stability

Norbert Hartmann


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TableofContentsPreface .. Introduction... 1Financial Stability ... 2

Capital Deficit .... 2Accumulated Deficit .. 3Structural Deficit ..... 4

ContractualIssues... 5Policy

Related

Issues

...... 6Post Retirement Benefits ... 8

Moving Forward . 9Ensuring Continued Success 12Public Confidence ... 13Conclusion .. 13

Table1: Boards Accumulated Deficit. 3Table2: Spending Over Allocation 5Table3: Post Retirement Benefits 9Table4: Future inyear Surpluses 10Appendix1: Overview of Concerns Raised by Constituent Groups and

Stakeholders . 14Appendix2: Operating Spending and Ministry Allocation Comparison 17Appendix3: VicePrincipal Model Analysis . 18Appendix4: Ministry of Education Letter re: Post Retirement Benefits .......... 23Appendix5: Per Pupil Impact on Post Retirement Benefits 25Appendix6: Financial Projections 26Appendix7: Budget Challenges and Pressures 27Appendix8: Status of Previous Recommendations to Improve Financial

Practices, Procedures, and Systems 34


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Preface

On September 4, 2012, I was appointed by the Minister of Education as the

Supervisor of the WindsorEssex Catholic District School Board. My mandate istwofold: to ensure the Boards future financial stability and to restore publicconfidence in the Board.

This report addresses the issues related to financial stability. This is not to suggestrecommendations pertaining to public confidence are less important. In fact, theopposite is more likely the case. A lack of confidence in the Board is a prevailing

concern among some members of our community, a portion of our employee groupsand elements of the broader public. Financial stability must be addressed first sothat we may begin the public consultation that is critical for budget development.

I also recognize that this report will be disappointing for some and controversial formany.

Disappointing, because it offers no magic bullet, no simple solutions. The financialissues faced by the Board are the result of a history of organizational and financialdecisions implemented since the amalgamation of the city and county boards andchanging demographics. Addressing such issues will require sacrifices from allgroups as the profile of the Board continues to evolve.

Controversial, because the ultimate question that must be answered is who shouldbear the burden of the changes that must be implemented for the long term healthof the organization. Regardless of how that question is answered, the interests ofone or another group will be affected more profoundly than others.

I would be remiss if I did not thank all parties that assisted in making this reportpossible: the many groups in our community who took the time to submit theirconcerns and suggestions1; the administration who worked diligently to ensurereliable and comprehensive data were available; the staff at the Ministry ofEducation that played a critical support role; and the Trustees of the Board whohonestly and frankly shared their observations.

While I am appreciative of the assistance from those named above, the content,conclusions, and suggested directions rest with me. I trust that the forthcomingpublic consultations will help to refine the directions we must ultimately choose.


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Introduction

WindsorEssex Catholic District School Board was formed in 1998 through the

amalgamation of the Windsor Roman Catholic Separate School Board and the EssexCounty Roman Catholic Separate School Board. Today it educates 22,701 studentsin 38 elementary and 9 secondary schools throughout greater Essex County.

The primary mandate of the Board is fostering the academic and faith formation ofthe students entrusted to its care. It is a mission at which it is highly successful. Inthe words of Reverend Thomas Rosica, President and ViceChancellor ofAssumption University:

the WindsorEssex Catholic District School Board is at the top of my listfor excellence in academics, excellence in the development of faith andCatholic values, excellence in the mature approach of teachers andadministrators who are not merely functionaries but real partners in Catholiceducation and mentors on the journey of faith.

The evidence of how well the Board achieves its mandate is found throughout the

organization.2

Over 50% of our 4 and 5 year olds are now enrolled in full day kindergartenprograms. Nearly 70% of all our elementary schools have before and after schoolprograms. Our senior kindergarten students outperform the provincial baseline inall areas of readiness to learn in a formal school setting.

At the elementary level, our students continue to make gains in reading and writing

over time. The percentage of students who reach the highest level of achievementhas increased an average of 2% in the Primary division and an average of 3% in theJunior division since 2006. Our students match or exceed the provincial average inmost areas. Ever more students are rising to the provincial standard as they movefrom grade 3 to grade 6. The percentage of English Language Learners and studentswith special education needs achieving levels 3 and 4 continues to rise.

At the secondary level, the percentage of students achieving levels 3 and 4 in the

Ontario Secondary School Literacy Test exceeds the provincial average, as does thenumber of students achieving maximum credits in grade 9 and 10. OurInternational Baccalaureate students consistently outperform the world average inall subject areas.

The number of students partaking in the Focus on Youth program has risen nearly


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In the area of faith formation, the Board has implemented a Faith DevelopmentReview Committee composed of clergy, administrative staff, and trustees. Theannual Catholic Education Forum provides the opportunity for members of theWindsor and Essex Deanery to provide advice on issues of curriculum and faith

integration in the Boards schools. All schools now complete an annual FaithAssessment. Staff participation in our Advent and Lenten Retreats has increasedsignificantly during the last 4 years. Nearly 40% of our teaching staff hold specialistqualifications in Religious Education, and our students actively participate inDiocesan conferences, workshops, schoolbased retreats, and social justice forums.

If the Board is to continue with its past success and improve performance in allareas, it must meet the challenges posed by its fiscal environment and its public

reputation.

FinancialStability

Longterm financial sustainability at the WindsorEssex Catholic District School

Board is threatened by three separate, but interrelated factors. On the onehand,the Board has an accumulated capital deficit of slightly over $14.5M for costoverruns on buildings and $1.045M on lands acquired for parking and schoolexpansion. On the other hand, the Board also had an accumulated operating deficitof $2.3M at the start of this fiscal year. Finally, since revenues do not supportprojected expenditures, in this, or future fiscal years, it must also deal with anongoing structural deficit.

CapitalDeficit

The major portion of the capital deficit results from an ambitious schoolconstruction program approved by the Board between 2000 and 2004. Thirteenschools were closed and 7 facilities were rebuilt. In addition, the Boards formerhead office was sold and incorporated into the renovated Assumption College HighSchool.

The deficits produced by this building program result from:

the portion of the Assumption College High School renovation housing thenew head office that was not eligible for new pupil place grants The $3 1M


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properties to provide parking for Catholic Central High School in Windsor, propertyadjacent to St. Louis Elementary school in Leamington for future expansion, and forexpansion at the St. Anne French Immersion Elementary School in Windsor.

Under current provincial regulations, this capital deficit can be reduced by applyingproceeds from the sale of surplus properties or amortizing the debt over theremaining life of the facilities. Unfortunately, surplus buildings currently on handhave a combined appraised value of just slightly over $2M. Therefore, the Board hasno option but to service this debt from the monies received in the school renewalgrant. Approximately $0.702M of the $3.265Mreceived for facility renewal isallocated for this purpose annually. This has a significant impact on the ability tomaintain and improve infrastructure and meet annual budget projections.

AccumulatedDeficit

The Boards accumulated deficit results from a history of its inability to meetfinancial targets. As the following table demonstrates, at times it exceededexpectations and produced a surplus. At other times, it expended far more thanplanned and produced an inyearoperating deficit.

Table1:BoardsAccumulatedDeficit

Budget YearInYear

Anticipated ResultInYear

Actual Result200102 Surplus $1.23M Deficit $0.18M200203 Surplus $3.02M Surplus $3.47M

200304 Balance Balance200405 Balance Deficit $0.09M

200506 Surplus $0.36M Deficit $0.17M200607 Balance Deficit $4.55M

200708 Balance Surplus $2.05M200809 Surplus $2.38M Surplus $4.14M200910 Surplus $2.39M Deficit $1.23M

201011 Balance Deficit $3.45M201112 Surplus $1.74M Surplus $0.19M

Deficits from the previous year become the first charge against the following yearsbudget, limiting the Boards ability to meet its fiscal pressures without significantprogram and service cuts. The accumulated deficit at the start of 201213 budget


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are two underlying factors that contribute to this variability that must be addressedas we move forward.

In order to develop a sound fiscal plan, the Board must have the organizational

capacity, systems and processes to predict, track, and control revenues andexpenditures. The entire organization must be engaged, in and accountable for,results. Due to a relatively wholesale turnover of staff, which inherited poorlydocumented practices and a centralized approach to budgeting and expendituremanagement, there was room for significant improvement in these areas. Over thepast few years, Ministry and private sector consultants have made 132recommendations to enhance Boardwide management capacity and operationaleffectiveness across departments. Certain recommendations involvedimprovements tofinancial practices and controls that will assist in budgetingcorrectly, detecting material variances at an early stage, and taking correctiveaction. As noted in my November 2012 report on the matter, significant progresshas been made (see Appendix 8). Work must continue in this area.

A system must also have the flexibility to react to variances in expenditures overwhich it has no control. Incorporating an operating contingency into the annual

budget is the way some organizations provide for this event. Others draw on anoperating reserve established for this purpose. WindsorEssex Catholic DSB hasneither. Therefore, the Board must either trim other inyear expenditures, anoption which may not be available, or incur a deficit to manage unforeseencircumstances. Changes to bylaws which require the Board to build such fundinginto its annual budget must be made.

StructuralDeficit

The sources of the structural deficit are subject to far more debate. To a largeextent, what is identified as a root cause depends on the methodology used for theanalysis.

The most common way to identify where structural deficits originate is to compareexpenditures with grants received for that purpose. The results for the 20122013Revised Estimates are provided in Appendix 2. As the following table indicates,WindsorEssex Catholic DSB overspends its allocation in 7 major areas:


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Table2: SpendingOverAllocationArea SpendingOver

AllocationClassroom teachers $1.776M

Supply Teachers

$1.985M

Educational Assistants $0.395M

Professionals/Technical $0.419M

Department Heads $0.170M

School Office $0.894M

School Operations andMaintenance $0.995M

These overexpenditures are funded through underspending in the following areas:library and guidance; textbooks; computers; principals/viceprincipals; continuingeducation; transportation; and Board administration.

Not all of these overexpenditures represent structural pressures. Some areconscious policy choices. For example, the changes to the delivery model in libraryservices was a conscious choice, not only to move toward a more distributed anddigitally based approach, but also a method to fund classroom teachers, educational

assistants, and early childhood education workers. Underspending in Boardadministration and the teaching vice principal model were partially designed topermit more funds to be directed to frontline services.

ContractualIssuesThe overexpenditure analysis does, however, allow one to pinpoint areas of fixedcosts without corresponding funding. For example:

The Board is obligated by its collective agreements with the three OntarioEnglish Catholic Teachers Association (OECTA) locals to pay 50% of thesalary, as well as its proportional share of benefits, for each local unionpresident or designate. The cost to the Board is approximately $183,590annually.

The elementarycollective agreement requires the Board to appoint aTeacherincharge, who receives a stipend of $1,000 at each of its elementaryschools even though 22 schools would not require a Teacherincharge dueto the presence of a vice principal. The annual cost to the Board is $22,000.

All secondary schools are required by their collective agreement to have 12


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The agreement with the CAW assigns workload to custodians based on thenumber of rooms cleaned rather than the square footage formula used bymost boards. As a result, it is estimated that the Board is overstaffed by 15fulltime custodians at an annual salary and benefit cost of $975,000.

These provisions have formed part of our collective agreements for many years andare retained in force until August 31, 2014 by the terms of the Memorandum ofUnderstanding between the Government of Ontario and the Ontario English CatholicTeachers Association and Bill 115, Putting Students First Act 2012. With the recentrevocation of the Putting Students First Act such provisions in the local collectiveagreements could be amended by mutual consent.

If a school board is to avoid the pitfall of structural deficits, it must be able torespond to changing patterns of enrolment and funding conditions in a timelymanner. There are a number of provisions in both the elementary and secondaryagreements that limit the Boards ability to respond to such changes in a costeffective manner. A number of clauses set minimum staffing complements,irrespective of enrolment.3 Other provisions require 1.5 Assessment andEvaluation days in excess of the number provided through the Memorandum of

Understanding.4

PolicyRelatedIssuesSome may prefer to take a more policy oriented approach to determine the sourcesof the structural deficit. It has been expressed that three policy driven sourcescreate pressures affecting the Boards financial stability.

First, is the special education model operated by the Board. WindsorEssex CatholicDSB is an inclusionary Board. The Board embraces the philosophy that all studentsbelong in their neighbourhood school with their siblings, friends, and neighbours.Every child/youth has a right to access an education in their community. There areno congregated classes in the elementary panel. At the secondary level, a Life Skillsprogram is provided for students who require alternative programming. However,they remain in their neighbourhood schools and are integrated into classes asspecified in their Individual Education Plan. Students are supported andencouraged to participate to the best of their abilities and are an integral part of theschool community and culture. The model is both highly successful and reflective ofthe Catholic values of the system. It is, however, more expensive to operate than the$27M received for special education purposes from the Ministry. In the last fiscalyear, the Board overspent its allocation by nearly $400,000.


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Second, is the issue of the administrative structure of our schools. WindsorEssexCatholic DSB has adopted a teaching vice principal model. Vice principals inelementary schools teach 60% of the instructional day and in secondary schoolsthey teach 50% of the instructional day. The administration maintains:

the benefits of such a model include increased supervision in the schools,greater visibility of vice principals in the classroom, consistency in thedelivery of the PeerAssisted Learning Strategy program by the viceprincipals, and enhanced communication on key learning strategies betweenvice principals and teachers.

The Windsor Essex Principals and Vice Principals Association (WEPVPA) believe:

The Vice Principals model at both the Secondary and Elementary levelsneeds to be addressed. It includes the preparing of classes, delivery ofprograms, assessment and follow up with parents. This is time that VicePrincipals simply dont have. There is very little time remaining to develop astrue school leaders and consequently, the safety of our schools is beingcompromised. There is a feeling of disconnect within schools and with Boardinitiatives. Communication between administrators is difficult with everyonehaving different schedules. There is also resentment among the teaching staffbecause Vice Principals are taking teaching jobs. There is also a reluctance tocall in sick, take personal days or do committee work due to the download onthe remainder of the admin team at each respective school. Our customerservice is compromised due to the fragmentation of school leadership.

The Principals and Vice Principals Association maintains that the Board could

address these concerns and reduce its administrative expenditures by $1.25M over3 years by:

decreasing the number of secondary vice principals from 27 to 18 andchanging their teaching load from 3 sections per year to filling in for absentcolleagues 60 times per year in the first two years and 25 thereafter; and

replacing elementary vice principals requirement to teach the Peer Assisted

Learning Strategies (PALS) program with 78 days of oncall coverage forabsent teachers either at their own or neighbouring schools.

Unfortunately, their proposal does not take into account the additional financialbenefits that accrue by having vice principals, rather than regular teachers,responsible for actual courses in both the elementary and secondary panel In the


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practices regarding central administrative staffing. Many groups and individualshave noted that WindsorEssex Catholic DSB is topheavy with administration andthat a reduction in these levels would reduce the deficit faced by the Board. While areduction in administrative complement is possible, and will need to occur as

enrolment continues to decline, the current level of administrative spending doesnot contribute to the structural deficit. As Appendix 2 indicates, the WindsorEssexCatholic DSB underspends its administrative allocation by slightly over $120,000 or1.5% of its allocation for these purposes. Only two Catholic boards with enrolmentsbetween 20,000 30,000 students underspend their allocation more than WindsorEssex Catholic DSB.5 Our performance related to administration and governancegrants is also significantly better than our coterminous board.6 Available data alsosuggests that the Boards administrative complement is in the same range as other

Catholic boards with similar enrolment.

Finally, there is the policy related to facility utilization. Of the 38 elementaryfacilities operated by the Board, only 20 utilize at least 85% of their rated capacity.At the secondary level, only 6 of our 10 schools achieve this utilization rate. Sinceschools which are below the 85% utilization threshold do not generate full schooloperations and renewal funding, this is an important contributor to the structural

deficit. Although the Board has closed or consolidated many schools over the pastdecade, it will need to continue to rationalize the use of space by attracting newenrolment through innovative programming, revisiting school organizationalmodels, and further consolidating schools.

PostRetirementBenefitsOne factor that has received little attention in assessing the sources of financial

instability is the post retirement obligations of the Board. They fall into two majorcategories:

health, dental & life insurance benefits to age 65 for active andretired CUPEmembers, current and retired Principals and Vice Princpals; and

health, dental & life insurance benefitsfor life for active and retired CAWmembers and certain nonunion management personnel.

Eligibility for these benefits extends to 557 current and former employees. They aredistributed as follows:


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Table3: PostRetirementBenefitsGroup Subgroup ToAge65 ForLife

CAW Retired 215Current Employees 109

CUPE Retired 28Current Employees 42

Principals/Vice Principals

Retired 51

Current Employees 49Non Union Retired 43

Current employees 20Total 170 387

The total liability for these benefits is close to $41.4M,7 which under currentlegislation must be phased in over a maximum of 10 years.8 This represents anannual cost to the Board of approximately $4.14M.

Post retirement benefits paid or due past age 65 are a significant contributor to theBoards structural deficit. Since Section 177(3) of the Education Act only permits aBoard to pay post retirement benefits until a person reaches age 65, the portion

beyond age 65 is not eligible for grant purposes.

More importantly, the Board does not have, nor has it ever had, the legal power topay post retirement benefits beyond age 65. Although, collective agreements andpersonal service contracts have had clauses requiring the Board to pay postretirement benefits beyond age 65 for decades, they have been ultra vires fornearly 40 years.

MovingForward

On April 3, 2013 the Ministry of Education advised those boards in noncompliancewith the benefits provisions of the Education Act to comply with the requirementsin the Act by August 31, 2014. Specifically, the letter states:

I am writing to provide your board with notification to comply withthe requirements in the Education Act by August 31, 2014werecommend that you notify employee groups affected by theserequired changes as soon as possible. We also recommend that youmake available to these affected employees a continued insurance


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The Ministry also indicated that for the phasein period, the Boards liability for post65 benefits would be treated as if it were in compliance with the provisions of theAct. After the two year period the Board will be required to amortize the remainingliability within the statutory period. The full text of the Ministrys letter is provided

in Appendix 4.

This directive will have a significant impact on the Boards structural deficit. Postretirement health, dental and life insurance benefits currently cost the Board$189.08 per pupil, rising to $198.38 in 201314. With the elimination of post 65retirement benefits the cost per pupil will drop to $13.78 in 201213 and $14.46 inthe next year. Over $3.8M will be able to be redirected in each year. (Appendix 5)

With all else being equal, the Board would end the current fiscal year with an inyear surplus of nearly $1.5M instead of a projected inyeardeficit of $2.3M. Futureinyear surpluses would be as follows:

Table4:Futurein-yearSurplusesFiscalYear Surplus

20132014 $1.8M

20142015 $2.9M20152016 $3.0M

20162017 $3.0M

Under this scenario, the accumulated deficit would be eliminated by 201314 and anaccumulated surplus of $10M would be accrued by 20162017. Combined with theannual payment from the school renewal grant, the surpluses could largely retirethe accumulated capital deficit by 2017. Detailed financial projections are contained

in Appendix 6.

But of course things will not remain the same over the coming years. As noted in theDirector of Educations report on the 20132014 Budget Challenges and Pressurestabled on March 26, 2013 (Appendix 7), the Board will continue to face significantchallenges. Enrolment could decline by as much as 1,027 pupils in 2013, causing arevenue decline of $7.6M. As the Board continues to graduate more pupils from itssecondary schools than are enrolled in its primary division, enrolment will declinefurther. Technology for the classroom requires significant upgrades. The Board hasexcess capacity equivalent to 9 averagesized elementary schools. The demand forspecial education services continues to grow. There is no direct funding source forthe Boards faith formation initiatives.


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additional efficiencies that could be implemented in Board operations;

administrative restructuring at both the school and central office level;

differentiated models of school organization including, but not limited to,JK12 facilities and specialized schools;

alternative models for program delivery at the secondary level; and

possible areas for school consolidation.

These reports should be brought forward over the next few months to providesufficient time for full public consultation prior to the start of the 201415 budgetcycle. I have also asked the Director to provide a report by April 30, 2013 outliningadditional measures that would need to be taken to completely eliminate theaccumulated deficit that is projected to remain at the end of 201213 and be carriedforward to 201314 ($791,000 after the elimination of post 65 retirement benefits).

Since there is a plan in place:

to produce an operating surplus in the current fiscal year;

to eliminate the accumulated operating deficit by next year;

to pay down the capital deficit by 2017; and

significant progress has been made on the recommendations to improvemanagement capacity, systems, and controls (Appendix 8), I am recommending thatthe Minister change the form of supervision to allow trustees to sit as a Board, make

decisions within their statutory power, reserving the right for the Province tomonitor decisions and veto any that are inconsistent with this reports directions orthreaten future financial stability.

The changes to post retirement benefits mandated by ministerial direction will bedifficult for those affected. People have planned their lives around the promisesmade. Few knew that the Board did not have the legal power to enact the provisions

incorporated in the collective agreements. For some it will be a hardship. For most,it will be seen as a betrayal of trust and Catholic values of integrity and good faith.

In order to mitigate the impact to the extent permitted by law, I have asked theDirector to work with the unions affected, as well as his counterpart at GreaterEssex County District School Board which must implement the same directive, to


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EnsuringContinuedSuccess

While balancing the operating budget and eliminating accumulated deficits are

important steps in ensuring financial stability, they are not sufficient conditions forensuring successful fiscal management in the long term. Equally important are thepolicies and processes that determine the manner in which the staff and trusteesoperate with regard tofinancialmatters. The way in which the Board approachessuch issues is defined in the bylaws and policies of the Board.

To ensure that the conditions for continued success are in place, the Bylaw of theBoard will be revised to:

1. Establish an annual budget process, commencing no later than February 1stofeach year that:

a. ensures all community partners have opportunities for meaningfulparticipation; and

b. requires a balanced budget be approved no later than June 30th of eachyear.

2. Provide for a money bill requiring trustees and staff wishing to implement newprograms or services, or alter existing ones, to identify the source of funding forthe specific proposal. Four funding sources will be specified in the bylaw:additional grants that are being provided by the Province; new revenues raisedby the Board; savings generated through reductions in other areas; and budgetsurpluses once the accumulated operating and capital deficit have beeneliminated.

3. Require the Director of Education to present a plan for a balanced budget as partof the annual budget process.

4. Require the budget plan to include an annual contingency amount to be set at noless than 0.5% of operating revenues for the budget year being approved.

5. Include a provision for the quarterly reporting of budget variances.

6. Require the Director of Education to present the Board with an inyearexpenditure constraint plan whenquarterly budget forecastsproject a yearendoperating deficit.


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PublicConfidence

Despite exemplary academic performance, success at the classroom and school level

has not translated into vocal public support for either the professional staff thatadministers and guides the system or the trustees elected to govern it. Quite theopposite. TheWindsorStar, local Members of Provincial Parliament, the heads ofthe local teachers unions, the Parent Involvement Committee, numerous parentsand bloggers, as well as many of those who preparedsubmissions, raised thisconcern (see Appendix 1).

While perceptions and reality are not necessarily synonymous, trust is a fragilecommodity. It is based on the belief that others will act in your best interest, evenwhen it may not be in theirs to do so. Trust once lost is difficult to regain.Addressing it will be one of the most difficult challenges faced by the Board. But itmust do so. Trust plays a critical role and has a significant impact on continuedsuccess. Because of its vital importance, strategies to restore that trust must bedeveloped and will be brought forward in the near future.

Conclusion

WindsorEssex Catholic District School Board is an exemplary educationalinstitution. Its schools serve Catholic families and their children well. It fosters highlevels of achievement, is inclusive in its practices, and promotes faith formation

among all its students. Its teachers are skilled and dedicated educators; its supportstaff caring and committed practitioners; and its administrators and trusteesstaunch and faithful servants of their communities. The changes recommended inthis report, while difficult, will set the stage where it is no longer necessary to lurchfrom crisis to crisis. They will allow us to make good on our promise to provide thebest education for this and future generations of students.


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Appendix1OverviewofConcernsRaised

byConstituentGroupsandStakeholders

Group

Suggestionor

Concern

System SchoolorGroupSpecific

A New funding model for ruralschools.

B Initiatives to retain more grade 8pupils.

C New funding formula for innercityschools;Funding for school excursions;Hiring practices;Reinstate Parent Council UmbrellaGroup;Trustee conflict of interest.

School location;Condition of school facilities andprograms.

D Consolidate schools. End contracting out for memberswork;Increase school clerical staffing;Establish central warehouse staffedby members.

E Improve administrative hiring

process;Increase transparency;Better communication with parentsand communities.

F Improved lunchtime supervision;Improved policies on bullying andinappropriate behavior;Open honest communication;Limit administrative turnover;Policies to encourage more extracurricular activities;Better distribution of level


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Group SuggestionorConcernSystem SchoolorGroupSpecific

H Improved stakeholder input;Better attendance monitoring and

employee assistance;Increased visibility of Director andTrustees

Less restriction on transfer ofemployees;

Coverage for members on first dayof absence;Better job security for members

I Greater consistency in schooladministrator practices;Better communication betweenboard, school and parents;

More faith commitment;More opportunities for parentalinvolvement;Greater visibility of trustees.

J Hiring practices;Improved board leadership;Teaching Vice Principal model;Better grievance managementprocesses.

More reliance on seniority for hiringfrom members.

K Undue emphasis on testing;Size of administrative complement;Better administrative leadership &visibility.

L Strategic initiatives to increaseenrolment;Obsession with EQAO scores;Topheavy administration;Poor labour relations;Low staff morale;Vice Principal model.

Downloading from large staffsupport cuts.

M Vice Principal model;Staffing reductions and reallocationof duties at school level;Lack of meaningful communicationbetween board and school


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Group SuggestionorConcernSystem SchoolorGroupSpecific

O Lack of organizational structure;Limited confidence in the Board;

More faith commitment;Review hiring practices;Increased parental involvement;Increase training for teachers;Accountability of trustees.

P Lack of transparency;Hiring and promotion practices;

Financial accountability.

Q Greater trustee involvement;More focus on financial andeducation priorities;Improve interaction with teacherfederation.

Specific strategic planning for eachschool.

R Maintain a balanced budget.


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EngagingOurFuturePart5:EnsuringFinancialStability Page17

Appendix 2

17761985

395

(815)

(238)

419

(2350)

(2)

170

(111)

894

(2) (120)

995

(182)

(740)

Operating Spending and Ministry A llocation Comparison2012-13 Revised Estimates

Estimated Spending (Under) / Over Allocation ($ thousands)

Spending

OverAllocation

SpendingUnder

Allocation

ALLOCATION

A di 3


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WINDSOR-ESSEX CATHOLIC DISTRICT SCHOOL BOARDVICE-PRINCIPAL MODEL

COST ANALYSIS OF PROPOSAL SUBMITTED BYWINDSOR-ESSEX PRINCIPALS/VICE-PRINCIPALS ASSOCIATION (WEPVPA)

Adjustments to WEPVPA Analysis IncrementalCost/Savings(Year 1)

1. Cost of Occasional Teacher used in Secondary VicePrincipal model was$267 per day. Actual cost is $255.50 per day (including statutory benefits).

$ 16,560

2. Savings of 3 Secondary VicePrincipal salaries was estimated at $310,000.

Actual cost using lowest VicePrincipal salary is $345,006.$ (35,006)

3. Salary for 12 Secondary Teachers was estimated at $75,000 each. Actual costusing Board average salary is $89,072 plus 11.4% benefits. $ 290,714

4. Severance for 3 Secondary VicePrincipals, if required. not quantified

5. Costs of additional Elementary Teachers to replace 24 ElementaryVicePrincipals teaching time at 60% that was not considered in the

proposal (24 budgeted Vice Principals for 201314 x 0.6 =14.4 FTE): with lowest cost teachers: $ 43,129 plus 11.4% benefits at average teachers cost: $ 86,591 plus 11.4% benefits

with highest cost teachers: $ 94,614 plus 11.4% benefits

$ 691,858$ 1,389,058

$ 1,517,7606. Cost of preparation (i.e. prep.) time for Elementary Teachers in #5 above (24

VPs x 0.6 =14.4 FTE/6 FTE per 1 prep. FTE): with lowest cost teachers: $ 43,129 plus 11.4% benefits at average teachers cost: $ 86,591 plus 11.4% benefits

with highest cost teachers: $ 94,614 plus 11.4% benefits

$ 115,310$ 231,510$ 252,960

7. Cost of Occasional Teacher used in Elementary VicePrincipal model was $267per day. Actual cost is $255.50 per day (including statutory benefits).

$ 24,219

Total Year 1 Cost of Implementing WEPVPA Proposal with lowest cost teachers at average teachers cost with highest cost teachers

$ 1,103,655$ 1,917,055$ 2,067,207

Comments

Items 1, 2, 3 and 7 reflect adjustments due to inaccurate numerical values used by WEPVPA in thepreparation of its proposal.

Item 4 has not been quantified, in that, it is unknown if 3 Vice-Principals to be permanently laid off underWEPVPA's proposal will require severance or, alternatively, if they will access positions that may come opendue to yet to be announced retirements of other Vice-Principals.

Item 5 addresses an omission in WEPVPA's proposal, in that, the proposal did not account for the cost ofreplacing the Vice-Principals' current teaching time with Elementary Teachers.

Item 6adjusts for an omission in WEPVPA's proposal in that the proposal did notaccount for the cost of

Appendix3


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ELEMENTARY VICE-PRINCIPAL TEACHING MODEL ANALYSIS

1. ELEMENTARY TEACHER & VICE-PRINCIPAL SALARIES

Position

Occasional TeacherRegular Teacher

Low point of salary gridBoard average salaryHigh point of salary grid

Vice-PrincipaILow point of salary gridSimple averageHigh point of salary grid

2. COMPARISON OF FUNDING SAVINGS VS. VICE-PRINCIPAL TEACH ING COSTS

Elementary Vice-Principal Administration FundingNo. of Elementary Vice-Principals funded inSchool Foundation Grant (FTE)RateTotalSavings (Funding of $1,503 ,132- Cost of $1, 128,542)VP compensation (average)Teacher compensation (Board average)DifferenceNo. of VPs n establishmentPortion of VP time attributable to teach ingVP teaching FTEHigher VP compensation compa red o ave rage teacher compensation)Incremental cost of VP compensationover Teacher compensation

Annual DailyCompensation Compensation

(salary+ benefits)n/a $ 255.50

$ 48,046 $ 247.66$ 96,462 $ 497.23$ 105,400 $ 543.30

$ 112,679 $ 580.82$ 113,595 $ 585.54$ 114,511 $ 590.26

Mnistry BoardFunding Cost

12 .58 10.20$ 119,486$ 1503,132 1128,542$ 374,591$ 113,595$ 96,462$ 17,133

24.0060%14.40$ 17,133$ 246,710Funded by savmgsinSchool Found ation

Allocation

Actual ElementaryVP Adm in.Saary&Bene fits for 24 VPs


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3. VICE-PRINCIPAL COST NOT FUNDED THROUGH SCHOOL FOUNDATION GRANTElementary VPs funded through School Foundation GrantElementary VPs- actual FTEs in establishmentDifferenceCompensation (low point of grid)Vice-Principal cost not funded through School Foundation Grant

4. NO. OF VICE-PRINCIPAL TEACHING DAYS TO RECOVER FUNDING SHORTFALL

If above shortfall was to be recovered by VP's teaching and therefore avoidingoccasional teacher costs, the following would result:Total costs to be recoveredOccasional daily rateNo. of days needed to avoid the occasional cost to recover unfunded costNumber of Elementary VPsNo. of required VP teaching days to offset unfunded cost(out of 194 available instructional days)

5. WEPVPA PROPOSAL COSTS NOT RECOVEREDNo. of days of On Call coverage proposed by ElementaryVPsOccasional daily rateSavings in Occasional costs per VPNumber of Elementary VPsTotal Occasional costs savedTotal costs to be recoveredCosts not recovered (i.e. shortfall)

6. WEPVPA PROPOSAL COST TO THE BOARDWEPVA Proposal"VPs teach 40% of their time or 78 full days of occasional coverage."Currently VPs teach 60% of their time or the equivalent of 116.4 instructional days

(194 instructional days x 60% = 116.4 days teaching)Average teacher compensation per dayTotal teaching cost per VPNo. of Elementary VPsAdditional teaching costLess: Savings from not having to hire Occasional teachers for 78 daysNet cost to the Board

12.5824.00

(11 .42)$ 11 2,679$ ,286,794l

$ 1,286,794$ 255.50 per day

5,036.38 days24.00 VPs

209.85 days

78 days$ 255.50 per day$ 19,929

24.00 VPs$ 478,296$ 1,286,794$ (808,498)

116.4 days$ 497.23 per day$ 57,877.42 per VP

24 VPs~ - - : - = ~ ~$ 1,389,058$ (478,296)$ 910,762


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SECONDARY VICE-PRINCIPAL TEACHING MODEL ANALYSIS1. SECONDARY TEACHER &VICE-PRINCIPAL SALARIES

Position

Occasional TeacherRegular Teacher

Low point of gridBoard average salaryHigh point of grid

Vice-PrincipalLow point of gridSimple averageHigh point of grid

2. COMPARISON OF FUNDING SAVINGS VS.VICE-PRINCIPAL TEACHING COSTS

Secondary Vice-Principal Administration FundingNo. of Secondary Vice-Principals funded in School Foundabon Grant (FT E)RateTotalSavings (Funding of$1,958,905- Cost of$1654,796)VP compensation (average)Teacher compensabon (Board average)DifferenceNo. of VP s in establishmentPortion of VP attributable to teachingVP teaching FTEHigher VP compensation (compared to average teacher compensation)Incremental cost of VP compensation over Teacher compensation

Annual DailyCompensation Compensation

(salary+benefits)

n/a $ 255.50

$ 50,077 $ 258.13$ 99,226 $ 511.48$ 105,400 $ 543.30

$ 11 5,002 $ 592.79$ 118,348 $ 610.04$ 121,694 $ 627 .29

Ministry BoardFundin9 Cost

15.54 13.80$ 126 1056$ 1,958,905 1,654,796$ 304,109$$$

26 .0053%

13.84$ 19,122$ 264,646 Fnded ysv1 ngsnSchoolFondationAJiocation

ActuaSecondaryVPAdmn alary&Bnef!s for24VPs


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3. VICE-PRINCIPAL COST NOT FUNDED THROUGH SCHOOL FOUNDATION GRANT

Secondary VPs funded through School Foundation Grant 15.54Secondary VPs actual FTEs in establishment 26.00Difference (10.46)Compensation (low point of grid) $ 115,002Vice-Principal cost not funded through School Foundation Grant $ (1,202,921)

4. NO. OF VICE-PRINCIPAL TEACHING DAYS TO RECOVER FUNDING SHORTFALL

If above shortfall was to be recovered by VP's teaching and therefore avoidingoccasional teacher costs, the following would result:Total costs to be recovered $ 1,202,921Occasional daily rate $ 255.50 per day#of days you need to avoid the occasional cost to recover unfunded cost 4,708.11 daysNumber of Secondary VPs 26.00 VPsNo. of required VP teaching days to offset unfunded cost 181.08 days(out of 194 available instructional days)

5. WEPVPA PROPOSAL COSTS NOT RECOVERED

No. of days of On Call coverage proposed by Secondary VPs 60 daysOccasional daily rate $ 255.50 per daySavings in Occasional costs per VP $ 15,330Number of Secondary VPs 26.00 VPsTotal Occasional costs saved $ 398,580Total costs to be recovered $ 1,202,921Costs not recovered (i.e. shortfall) $ (804,341)


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Appendix4Ministry of EduGationAssistant Deputy MinisterBusiness & Finance Division20th Floor, Mowat Block900 Bay StreetToronto DN M7A 1 L2

April 03, 2013Paul PicardDirector of Education

Ministere de I'EduGationBureau du sous-ministre adjointDivision des operations et des finances20" etage, Edifice Mowat900, rue BayToronto ON M7 A 1L2

Windsor Essex Catholic District School Board1325 California AvenueWindsor. ON N9B 3Y6

D c r ' P ~

r ' ~t?ontario

I am writing to you today to provide direction regarding the board's non-compliance withthe Education Act regarding benefits, more specifically the board's cunent health anddental benefits plan coverage.Section 177 (3) of the Education Act states: "If a person retires from employment with aboard before he or she reaches 65 years of age, the board may retain the person in a groupestablished for the purpose of a contract referred to in clause (1) (a) until the personrc::ache;:s 65 years of age."In prior discussions with board staff, we have noted that since the early 70's theEducation Act allows boards to provide health benefits to retired employees up to age 65.It has been recently brought to our attention that the agreements between Windsor EssexCatholic District School Board and some employee groups provide benefits for life,which is not in compliance with the Act. This has also resulted in a liability that,compared to other school boards, is the highest in the province.Currently your board is facing a significant pressure because the retirees grand fatheredunder the existing plan are covered for life. This is reflected in the remaining $41 Mliability which, under the new compliance requirement, the board must address in thenext l 0 years. ln light of your board's financial situation, this is not sustainable.Based on information on the 2001 arbitration that your board has provided to theministry, our legal department has noted that the arbitrator declined to change the currentlevel ofbeneti:ts on the understanding that the issue would be addressed during the nexl


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prepare for the next bargaining cycle and we recommend that you notify employeegroups affected by these required changes as soon as possible. We also recommend thatyou make available to these affected employees a continued insurance plan, but thepremiwns must be paid for by the individual, not the board.Under this proposal , the ministry will seek approval for making necessary amendments toOnt. Reg. 488110, Determination ofboards' Surpluses and Deficits so that for the twoyear restraint period, your board will address into compliance the amortization (over 10years) of the liability that would have resulted if your plan was compliant with theEducation Act. The remaining portion of the liability will remain out of compliance untilthe plan changes are made in September 2014. Starting in 2014-15, the board will phaseinto compliance the full remaining liability over the remaining amortization period. Theplan changes, once renegotiated in 2014-15, would result in a one-time reduction inexpense which will be out of compliance.To determine the new amount which your board will be required to phase intocompliance, your board will need to immediately seek an actuarial evaluation to assessthe amount of the liability with the plan changes and forward this information to us.

If you have any questions regarding the above please do not hesitate to contact me at(416) 325-6127 or email at Gabriel.Sekaly(ci{ontario.ca.

Sincerely,

' /.abriel SekalyAssistant Deputy MinisterMinistry ofEducation

CcAndrew DavisMario Iatonna


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Appendix5

PerPupilImpactofPostRetirementBenefitLiabilityPhase-In

CurrentSituation

2012-13RevisedEstimates

2013-14

PostRetirement Benefit Liability used for PhaseIn in 201213 &201314

$41,430,850

Health, Dental & Life Insurance EFB liability phase in over 10 years $4,143,085 $4,143,085Enrolment (Pupils of the Board FTE ADE) 21,912 20,885Cost per Pupil $189.08 $198.38

CurrentSituation 2012-13 2013-14

PostRetirement Benefit Liability used for PhaseIn in 201213 &

201314

$3,020,255

Health, Dental & Life Insurance EFB liability phase in over 10 years $302,026 $302,026

Enrolment (Pupils of the Board FTE ADE) 21,912 20,885Cost per Pupil $13.78 $14.46

CostperPupildifferencebetweencurrentsituationandeliminationscenario

$175.30 $183.92

Pupils 21,912 20,885

FundingredirectedtopupilswitheliminationofPost65RetirementBenefits

$3,841,060 $3,841,060


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Appendix6Windsor-Essex Catholic District School Board

Financial ProjectionsPursuant to PSAB Compliance Changes -Elimination of Benefits Post Age 65

2012-13 2012-13 2013-14 2014-15 2015-16 2016-17Revised Elimination of Eliminationof Elimination of Elimination of Elimination ofSURPLUSI(DEFICID DETERMINATION1: Estimates2 Post 65 Benefits Post 65 Benefits Post 65 Benef its Post 65 Benefits Post 65 Benefits

In-year revenues $ 253,236,212 $ 253,236,212 $ 253,236,212 $ 253,236,212 $ 253,236,212 $ 253,236,212Less: In-year revenues for land- New St. Bernard Elementary School (450'000) (450,000) (450,000) (450,000) (450,000) (450,000)Less: In-year expenses for compliance purposes (255,129,071) (255,129,071) (255,129,071) (255,129,071) (255,129,071) (255,129,071)PSAB Adjustment to Expense 3,841 ,060 4,160,624 5,339,504 5,362,332 5,380,026

In-year surplus/(deficit) for compliance purposes $ (2,342,859) $ 1,498,201 $ 1,817,765 $ 2,996,645 $ 3,019,473 $ 3,037,167

Total Accumulated Surplus/(Deficit) Available for Compliance- Opening (2,289,848) (2,289,848) (791 ,647) 1,026,118 4,022,763 7,042,236In-year surplus/(deficit) for compliance purposes (above) (2,342,859) 1,498,201 1,817,765 2,996,645 3,019,473 3,037,167Total Accumulated Surplu s/(Deficit) Available for Compliance Closing $ (4,632,707) $ (791 ,647) $ 1 026,118 $ 4,022, 763 $ 7,042,236 $ 10,079,403

Notes: 1. Surplus/(Deficit) determination reflects financial positionassuming nothing else changes except for annual PSAB related expenses.2. 2012-13 Revised Estimates are as prepared by Board administration.


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SupervisedMeeting Date:March 26, 2013

Appendix7

1325 California AvenueWinds or, ON N9B 3Y6

CHAIRPERSON: Barbara HollandDIRECTOR OF EDUCATION: Paul A. Picard

HANDOUTB O A R D R E P O RT

Public In-Camera

PRESENTED FOR: Information Approval

PRESENTED BY: Senior Administration

SUBMITTED BY: Paul A. Picard, Director of EducationMario Iatonna, Executive Superintendent of Business

SUBJECT: 2013-14 BUDGET PRESSURES AND CHALLENGES

RECOMMENDATION:

That the report on 2013-14 Budget Challenges and Pressures be received asinformation.

SYNOPSIS:In order to enhance communication and consultation with the community with respect to theBoards progress in budget development and in order to bring budget parameters to the attentionof the Board early in the budget process, this report identifies the Provincial and local contexts inwhich the 2013-14 budget is being developed and outlines the pressures and challenges that mustbe considered in bringing a balanced budget to the Board.

BACKGROUND COMMENTS:The Boards strategic plan is key to its sustainability. J ust as important to the Boards long-term

sustainability is its budget. In fact, the development of the Boards annual budget is one of themost strategic, but also the most time consuming and labour intensive functions undertaken byAdministration.

The budget is the Boards fiscal plan that supports the delivery of educational programs andi d i th B d t t i l f th i d i It l id th

PROVINCIAL CONTEXT


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PROVINCIAL CONTEXT:

The Provincial context must be considered by WECDSB as it proceeds through budgetdevelopment. Some of the key considerations are as follows:

The challenging Provincial fiscal outlook that impacted the development of the 2012-13 budget will continue into the 2013-14 budget development process.

While the focus of the 2012-13 budget discussions centered on the DrummondCommission recommendations, the focus of the 2013-14 budget discussions willcentre around the impacts of the on-going implementation of Bill 115 - The PuttingStudents First Act.

The Province has three core priorities for Education in Ontario, which need to beconsidered by WECDSB when developing its budget. These priorities are asfollows:

o High levels of student achievemento Reduced gaps in student achievemento Increased public confidence in publicly funded education

Historically, the Ministry of Educations grant announcement has been made in late

March following the release of the provincial budget. This year it is expected that theprovincial budget will be presented in mid to late April. It is not certain how (if at all)this will impact budget development timelines. In addition, while it is unknown whatspecific increases or reductions will be announced in 2013-14, it is expected thatfunding from the Province will not increase significantly in 2013-14.

Special Education Funding Reform While the Ministry of Education has beenconsidering a comprehensive review of special education funding for quite some

time, the funding model has been revised only slightly in the past.

Administration and Governance Grant Advisory Group The Ministry of Educationdeveloped a workgroup in the fall of 2010 to undertake a comprehensive review ofadministrative funding and spending. The goal of the group was to develop areplacement funding model that better reflects key administrative cost drivers andstructures. The Ministry was considering introducing a new funding model for schoolboard administration in 2013-14. The Ministry has reduced this funding by 2% in

each of the last three years.

Capital projects are funded through an application and approvals process. Therefore it is uncertainwhen approval will be received for specific projects.

LOCAL CONTEXT


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LOCAL CONTEXT:

Declining EnrolmentA preliminary enrolment forecast has been developed for 2013-14. Enrolment projections wereestablished based on historical data, updated for current developments. The projections are

conservative in nature, and have been reviewed and approved by Executive Council for use in2013-14 budget development. The projected full-time equivalent (FTE) enrolment for 2013-14,with a comparison to 2012-13 is as follows:

2012-13Revised

Estimates(FTE)

2013-14Estimates

(FTE)Decline inEnrolment

Elementary Day School (ADE) - funded fromGSN

13,123.50 12,469.00 (654.50)

FDK Pilot Schools (ADE) funded from EPOgrant

630.50 755.50 125.00

TOTAL ELEMENTARY PUPILS 13,754.00 13,224.50 (529.50)

Secondary Day School (ADE) < 21 yrs 7903.43 7,450.00 (453.43)

Secondary Day School (ADE) > 21 yrs 254.46 210.00 (44.46)

TOTAL SECONDARY PUPILS 8,157.89 7,660.00 (497.89)

TOTAL ENROLMENT (Pupils of the Board) 21,911.89 20,884.50 (1,027.39)

Other Elementary Pupils (Visa) 7.00 6.00 (1.00)

Other Secondary Pupils (Visa) 21.00 18.00 (3.00)

TOTAL OTHER PUPILS 28.00 24.00 (4.00)(Note: ADE Average Daily Enrolment GSN Grants for Student Needs

EPO Educational Program, Other FDK Full Day Kindergarten)

For the purposes of the 2013-14 budget estimates, a decline of 1,027 pupils from the Boards2012-13 Revised Estimates (or 4.7%) is being projected for overall WECDSB enrolment, bringingtotal FTE enrolment down to 20,885 pupils from 21,912. It is emphasized that the enrolmentdecline would have been larger if not for the impact of full day kindergarten (FDK) classes beingadded in 2013-14, thereby increasing the overall FTE numbers.

Based on the enrolment identified above, Finance has prepared a preliminary funding forecast. Asthe final Grant for Student Needs (GSN) announcement is not traditionally made until late March,the funding forecast is based on applying the projected enrolment to the current years (i.e. 2012-13) funding formulas, adjusted for any 2013-14 grant changes known at this time. When the finalGSN announcement is made following the release of the provincial budget, Finance will revise thefunding forecast and communicate any changes to impacted departments and ultimately to the

The FDK EPO grant is increasing with the addition of10 schools thatwill beginto offer the full day


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The FDK EPO grant is increasing with the addition of 10 schools that will begin to offer the full daykindergarten program in 2013-14.

The declining enrolment trend is expected to continue to place significant pressure on the Boards

budget in future years. Looking at very preliminary nominal (i.e. head count) enrolment projectionsin the chart on the following page gives an indication of the magnitude of the dilemma facing theBoard.

Grade2013-14 ProjectedNominal Enrolment(i.e. Head Count)

J unior Kindergarten 841

Senior Kindergarten 1,137

1 1,171

2 1,309

3 1,391

4 1,387

5 1,456

6 1,5287 1,601

8 1,637

9 1,582

10 1,850

11 1,910

12 2,351

NOMINAL ENROLMENT 21,151Note: Table does not include Secondary Day School >21 yrs of age.

The Board is projected to graduate 1,510 more students at the end of 2013-14 than the number ofstudents projected to be enrolled in J K during the year. It is evident from the data that thedownward trend in enrolment is projected to continue year-over-year. If the projected J uniorKindergarten enrolment for 2013-14 stays fixed for each year into the future and no other factorschange, the Board would decline to a nominal enrolment of 11,774 in 2026-27, a drop of 9,377 or

44%.

However, the local economy is still at the earliest stages of a potential recovery. The tenuousnature of world, Ontario and local economies make forecasting the strength and timing of a fullrecovery very difficult to predict. The Ministry of Education had previously projected that thedo n ard trend in J unior Kindergarten enrolments ould bottomout in appro imatel 2014 15

decline in enrolment and other pressures facing the Board (described further below) it is


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decline in enrolment and other pressures facing the Board (described further below) it isexpected that balancing the 2013-14 budget will present a challenge which will requirenecessary restraint measures and a solid financial recovery plan to put the Board on a strongfinancial footing for the future. Further updates will be provided as new information becomesavailable.

Pressures:

Technology: Technologies have become tools of learning and necessities to functioneffectively and efficiently on both the administrative and academic operations of the Board.For the past three years, funding provided through the Classroom Computers per-pupilallocation has been reduced by $25M, and starting in 2012-13, this constraint was madepermanent. Reductions in Ministry funding to support technology continue to add pressureto the Boards operating budget as computer hardware and software quickly becomeobsolete and must be refreshed to operate properly and maintain overall effectiveness. Theend of support for Windows XP in April 2014 necessitates the need for a hardware refreshof academic desktops. In addition, core network infrastructure challenges that requireupgrades to servers and switches will place further strain on the budget. Many of theseinformation technology infrastructure costs are fixed in nature and are increasingly difficultto manage in a declining enrolment environment where the majority of funding is generatedon a per-pupil basis.

34 Credit Cap: Last spring the Ministry announced funding changes beginning in the 2013-14 school year for pupils who have crossed the 34 credit threshold. Effective September2013, when students exceed a limit of 34 successfully earned secondary school credits,those additional credits will no longer be funded at the Day School rate, but rather at thelower, Continuing Education rate. The intent is to encourage students and schools to plancourses appropriately and more effectively use education resources while still allowingstudents to seek additional or upgraded credits. In 2012-13 the secondary per-pupil funding

was $5,747, while the funding for continuing education students was $3,344 per pupil.While the full financial impact will not be determined until student enrolment, courseselections and credit accumulation are verified in October 2013, preliminary estimatesindicate an overall reduction in Ministry funding could be in the range of $350,000 to$500,000.

Capital Deficit: Under prior administrations, the Board undertook the construction ofschool facilities not fully supported by New Pupil Place revenues. As a result, there is

unsupported debt, meaning capital debt that is not supported with grant revenues from theProvince to meet principal and interest payments. This debt affects the Board each year inthe form of unsupported amortization expense, which is projected to be approximately$722K per year. The Ministry of Education has previously recommended that the majorityof this debt, which relates to pupil places, be funded from the School Renewal Grant, which

ld it i t l 215% f thi t ll f ti t d 22 Whil

address this excess capacity By Ministry standards 47%of the schools are underutilized


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address this excess capacity. By Ministry standards, 47% of the schools are underutilized,using less than 85% of the available space. Schools which are below the 85% utilizationthreshold do not generate full School Operations and Renewal grant funding. Therefore,WECDSB is not maximizing the benefit it could be receiving from the allocation, which iscausing a budget pressure. Also, as previously noted, a large portion of school renewal is

being used for the Boards existing capital deficit, which creates a further budget pressure.

Special Education: WECDSBs inclusive model of Special Education service deliveryexpresses its commitment to educate each child to the maximum extent appropriate in theclassroom he or she attends. It involves bringing the support services to the child ratherthan moving the child to the services. This model however causes budget pressures as thenumber of students with special needs continues to increase each year, notwithstandingthat overall student enrolment is decreasing significantly. WECDSBs total annual special

education expenditures since 2002-03 have increased by $11.1M or 60% while the annualgrant allocation has only increased by $5.1M or 20%. While the Province has beenconsidering a comprehensive review of special education funding for quite some time, nosignificant changes are expected for 2013-14. With 97% of the expenses relating to staffing(salaries and benefits), any reduction in this area would require a reduction in staffing.

Full-Day Kindergarten: This program is being funded by the Province outside of the GSNthrough an EPO grant. For the additional 0.5 day funded through the EPO grant, the

Ministry caps the program per pupil funding at a certain level. In 2012-13 this level was1,196 pupils. With a count of 1,261 actual pupils on October 31, 2012, WECDSB has atotal of 65 pupils above the Ministry funding cap, resulting in a funding shortfall ofapproximately $353,000. There is a possibility that a similar funding shortfall could occur in2013-14.

Faith Formation: WECDSBs strategic priorities consist of Faith Formation and StudentAchievement. Integrating faith into the curriculum and promoting faith formation of students

and staff are critical to fulfilling the mission of Catholic Education and preserving theCatholic identity. This is an area however for which there is no direct funding source tosupport the costs, and it remains unlikely that the Board will receive direct funding tosupport this pressure. The Board must carve out funding from other grants or find savingselsewhere to fund this priority.

Other: There have been limited budget increases (if any) over the past few years and eachyear discretionary expenses have been reviewed to identify decreases where necessary.

While Administration continues to review these expenses for further savings, each year itbecomes more and more difficult to identify the deeper reductions that are needed tomaintain last years level of educational programs and services. There is constant pressureto maintain the Boards successes with student achievement while staffing, resources andMinistry funding are all being reduced. Each year presents less and less room to absorbpressures. Additionally, the Board has no workingreserves. Furthermore, approximately

Summary:


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Summary:

All of the above is being provided for the information of the Board at this time. Administration willcontinue to develop the 2013-14 budget with due consideration to the factors that have beenidentified.

FINANCIAL IMPACT:Discussed throughout the report.

TIMELINES:The detailed 2013-14 budget process, including timelines, has previously been submitted to theBoard. A further update report is anticipated to be provided to the Board in late April. The finalbudget is due for submission to the Ministry of Education by J une 30, 2013.

APPENDICES:N/A.

REPORT REVIEWED BY:EXECUTIVE COUNCIL: Review Date: March 26, 2013EXECUTIVE SUPERINTENDENT: Approval Date: March 26, 2013DIRECTOR OF EDUCATION: Approval Date: March 26, 2013


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Appendix8

Status of Previous Recommendations to Improve

Financial Practices, Procedures, and SystemsMinistryofEducationReview-November2006No. Recommendation ActionTaken NextSteps Responsibility

Action Status

CONSTRUCTIONR1. School boards should conduct an extensive

analysis of any proposed construction prior tocommending projects to reduce the possibilityof placing the board into financial constraints.This would include a reasonable estimate of thefull construction costs, the expected Ministryfunding, and the availability of reserves tosupplement Ministry funding. This also allowsfor normal financing guidelines to beforecasted, including orderly repayment. Thiswould also include consultation with theMinistry to clarify any funding assumptions thathave been included in this analysis.

The Ministry has since issued variousmemoranda requiring school boardsto follow a strict process with respectto construction planning andfinancing. WECDSB is following theprescribed Ministry processes for itsprojects.

Completed ExecutiveSuperintendent ofBusiness/SeniorManager ofFacilities &Support Services

R2. Senior Management should prepare for theTrustees an updated cash flow analysis, withappropriately supported assumptions, in orderto establish the relevant action plans to beimplemented in the future to ensure that theBoards financial obligations will be meet. Also,the Trustees should be periodically updatedand review cash flow analysis to ensure that the

appropriate actions are being taken to supportthe financing requirements. Managementshould also bring the finalized financingproposal to the Board as soon as possible andestablish a regular reporting process tofacilitate Board monitoring.

Financial requirements to service debton previously completed projects arereported to the Trustees on, at least,an annual basis. New projects arefollowing the new Ministry prescribedprocess which require financingreports to be considered by theTrustees and the Ministry at specific

points during project planning andconstruction phases.

Completed ExecutiveSuperintendent ofBusiness


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No. Recommendation Action Taken Next Steps Responsibility


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No. Recommendation ActionTaken NextSteps Responsibility

Action Status

qualification of contractors and subcontractorswill allow for a more efficient and timelytendering process as long as it is not overridden

by unnecessary conditions being attached tothe prequalification process.

be retained and to provide costanalyses at various points in planning,including immediately prior to project

tendering, which must be submittedto the Ministry for review andapproval. Prequalification ofcontractors is considered for newschool construction projects as maybe deemed to be appropriate.

R6. School boards should use a stipulated sumcontract where possible. Planning of the

construction should occur early as possible toavoid possible overtime, to allow for efficientacquisition of materials and to have thebuilding enclosed in time to reduce the possibleseasonal effects on construction costs. Also,advanced planning will ensure that all aspectsof the construction, which include planning,design, acquisition, development, andconstruction, are appropriately considered,including possible contingencies, and addressedprior to commencement to reduce thepossibility of cost overruns.

Pursuant to this recommendation,WECDSB is utilizing stipulated sum

contracts for its major constructionprojects. Time is being taken duringthe project planning phase to addresspotential issues that may arise and tocover off contingencies, whereverpossible, prior to tendering.

Completed ExecutiveSuperintendent of

Business/SeniorManager ofFacilities &Support Services

R7. The Board should develop a Construction policyand establish procedures to ensure appropriategovernance of construction of schools, whichwould include all the above recommendations.

With the issuance of the new Ministryproject planning and constructionrequirements for school boards, theestablishment of a separate Boardpolicy to address many of therecommendations in this review may

be redundant. However, the Boardwill be assessing its practicesthroughout the planning andconstruction of the new St. Bernardschool with the intent of compiling aninternal set of procedures to befollowed for future projects.

Completed ExecutiveSuperintendent ofBusiness/SeniorManager ofFacilities &Support Services



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p p y

Action Status

CORPORATECREDITCARDSANDEXPENSES

R8. Appropriate policies are the key to improvedcontrol over expenditures. Separate policies

are not required for each of the items belowand could be combined into one over policy.The Board needs to:

Review its existing expense policies.

Develop a policy regarding cash advances andhospitality expenses.

Clarify the supporting documentationrequired for expenditures. For example,

restaurant meal expenses should include thebill, a list of the diners, and the purpose of themeal.

Develop and clarify the approval and controlsprocess for all levels of Board staff.

Develop an exception process to deal withuncommon transactions.

Expense policies for Trustees and staffwere developed, approved and

implemented in April 2007.


Business/Managerof HumanResources & PolicyDevelopment

R9. Training sessions should be held to educate allBoard staff with respect to the requirements of

the revised policy. Without appropriatecommunication of the revised policy, expensecontrol may not be effective and may be subjectto misinterpretation by both users andapprovers.

Policy requirements werecommunicated at the time of

implementation. Ongoing educationof requirements occurs to improveknowledge, particularly for staff whoincur expenses infrequently.


Business/Managerof HumanResources & PolicyDevelopment

PURCHASINGCARDS

R10. The Board should review and update itspurchase cards policy to:

Clearly define acceptable transactions or typeof transactions.

Clarify the roles and responsibilities of thecardholder and approver.

Clarify the supporting documentationrequired, at a minimum they should includefrequency of review, signoff, etc.

A purchasing card policy wasdeveloped, approved andimplemented in April 2007.

Completed ExecutiveSuperintendent ofBusiness/Managerof HumanResources & PolicyDevelopment


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Action Status

processes to address unusual situations, werecommend that the Board monitor policydevelopment/approval through the Ad Hoc

and Review Committees. As well, the Boardshould request an updated travel/hospitalitypolicy as soon as possible.

MANAGEMENTPROCESSANDBOARDGOVERNANCEALIGNMENT

R15. In our view, there is an opportunity for theBoard to make improvements on future processand communication, but the status quo is notappropriate. As the Chief Executive Officer, the

Director of Education is responsible andaccountable for the leadership necessary toachieve Board objectives. The Board recentlyappointed a new Director of Education with theunanimous support of the Trustees and theapparent support of Board staff. The Director,with the support of the Board, should assessand address the key opportunities to make thechanges deemed necessary. Variousmechanisms which could assist with suchchanges are available to management andTrustees and the choices should be carefullyconsidered by both groups as deemednecessary.

As noted in this report, an improved processshould be developed in order for seniormanagement to best identify key issues,collectively provide input and assess options,

and make recommendations to the Trustees,and for the Trustees to respond to managementand fellow Trustees in a similar manner.

With the efforts of the Trustees andthe two Directors in place since thisrecommendation was first made,substantial progress has been made in

improving processes andcommunication, so that the Trusteesare duly and regularly advised of keyissues and recommendations can beconsidered and direction approved bythe Trustees on a timely basis.

Completed Executive Council(i.e. Director andall departmentheads)

R16. Trustees and Senior Management shouldestablish the information requirements andprotocols, relating to the operations of theBoard, to ensure that appropriate and timely

Processes have been established sothat Senior Managementcommunicates regularly to Trusteeson Board operations and projects in

Completed Executive Council(i.e. Director andall department


i


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Action Status

decisions are made. Also, specific projects mayrequire additional information requirementswhich should be established at the beginning of

the projects.

order to obtain direction and approvalfrom Trustees where and whennecessary.

heads)

R17. A clear and concise summary of information isimportant to ensure that members of theExecutive Council and the Trustees understandthe issue and can make the appropriaterecommendations/decisions. Informationrelevant to the decision should not be buriedin other documents with the expectation that

the Trustees will be able to decipher ordiscover it.

Clear and comprehensive reports arenow provided to the Trustees as amatter of normal practice, typicallyaccompanied by a verbal presentationby Senior Management at Boardmeetings to ensure that all relevantinformation is placed transparently

before the Trustees for consideration.


FORECASTING

R18. Trustees should establish a variance thresholdwhereby Senior Management is required toreport and provide adequate explanation. Thiswill allow the Trustees to make appropriate

decisions to address these variances if deemednecessary. Also, quarterly financial statementsand forecasts should be part of theregular/timely financial reportingrequirements for Senior Management.

While a specific variance thresholdhas not been identified, SeniorManagement brings forward potentialvariances at each Board meeting, as

situations may arise. This is over andabove the regular financial reportingthat is made to the Board.


SPECIALEDUCATIONCOSTS

R19. We recommend that the Board review thespecial education cost components to ensure

that only special education costs are allocatedto this budget area and that the allocation ofnonspecial education costs is appropriate.

Special education costs were reviewedin detail and expenditures allocated to

the appropriate budget area.


Business/AssociateDirector ofEducation

PriceWaterhouseCoopers June 2007


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PriceWaterhouseCoopers June2007No. Recommendation ActionTaken NextSteps Responsibility

Action Status

HighLevelReviewofOrganizationalStructure

R1. We recommend that the Department considerimplementing the new proposed structure.Once the final structure is determined, each jobdescription within the department will need tobe revisited and updated to reflect the changesin the structure and the reallocation of jobdescriptions.

The new structure was approved by theTrustees and implemented through200708. This included creation andfilling of a new Manager of Payrollposition (subsequently merged withManager of Purchasing position),reassignment of Payroll Supervisorduties, deletion of Payroll Receptionistposition, crosstraining of Payroll Clerksand general reallocation of duties across

the Business Department.


HighLevelReviewofPayroll

R1. Develop and communicate a framework ofarticulated objectives.

Both WECDSB, as a whole, and theBusiness Department revised theirstrategic plans and objectives in 200708. The then new Payroll Managersimultaneously developed objectivesfor the payroll area, consistent with

the broader efforts.


R2. Detailed written procedures should bedeveloped and documented.

The development of procedures wascoordinated by the then newlyappointed Supervisor of BusinessServices for the payroll area and therest of the Business Department.


R3. Monitoring of payroll performance. The then new Manager of Payrollimplemented measures and pursued

best practices in documenting andmonitoring timeliness and costefficiency in payroll processing.


Business

R4. Access rights to IPPS (HumanResources/Payroll System).

Edit rights over payroll standing datawere reviewed and adjusted. Arevised procedure was put in place in200708 so that changes to employee


files were documented and approvedbefore changes were processed in the


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before changes were processed in thepayroll system.

R5. Segregation of duties. A review of the segregation of duties

was undertaken in 200708 andchanges made in order to decrease therisk of misappropriation of assets.

Completed Executive

Superintendent ofBusiness

R6. Structure of the Payroll Department andProcesses

The previous split of responsibilitiesbetween the academic and supportstaff payroll sections was addressedwith changes in the organizationalstructure in 200708. Thissuccessfully streamlined processesand improved efficiency.


HighLevelReviewofRevenueandCashReceipts

R1. Some unpredictability should be implementedin the auditing of school funds.

Budget monitoring and followupprocedures were established throughthe Audit Committee with subsequentreporting to the Board.


HighLevelReviewofReportingMechanismtotheBoard

R1. Written policies and procedures should beformally developed and documented.

Budget monitoring and followupprocedures were established throughthe Audit Committee with subsequentreporting to the Board.

Completed ExecutiveSuperintendent ofBusiness/Managerof HumanResources & PolicyDevelopment

R2. Board reports should be consistent and shouldprovide the Trustees with all relevant

information needed to make informeddecisions on a timely basis.

Reports emanating from the BusinessDepartment were enhanced in order

to contain comprehensive backgroundinformation and a detailed discussionof financial implications related to thesubject matter.

Completed Executive Council(i.e. Director and

all departmentheads)

R3. Board reports should be signed off by aresponsible individual within each Departmentinvolved with or affected by the matters

The procedure for Board reports wasrevised to require review by theDirector and all Executive

Completed Executive Council(i.e. Director andall department

included in the report. Superintendents at the weeklyExecutive Council meetings and

heads)


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Executive Council meetings andapproved accordingly before beingadded to the Board meeting agenda.

ControlandProceduresReview- PurchasingandProcurement

R1. Develop and communicate a framework ofarticulated objectives.

Both WECDSB, as a whole, and theBusiness Department revised theirstrategic plans and objectives in 200708. The Purchasing Managersimultaneously developed objectivesfor the purchasing area, consistentwith the broader efforts.


R2. Establish written procedures for the use of

system contracts (blanket purchase orders).

The Superintendent of Business

updated all purchasing andprocurement policies and proceduresin April 2009, which includes the useof system contracts.

Completed Executive

Superintendent ofBusiness

R3. Conduct planning sessions for futurepurchasing requirements including contractperformance measures.

A listing of future purchasingrequirements was developed in 200708 and is being augmented andupdated on a regular basis. Large

scale purchases are being reviewed ingreater detail with increasing advanceconsultation with affectedstakeholders.


R4. Develop a rating system for vendor capabilitiesand vendor performance.

The Board has an establisheddatabase for all vendors. Givenworkload and other priorities, presentlevels of staffing and resources do not

permit the development andimplementation of a rating system atthis time. Vendor capabilities andperformance are currently addressedon a casebycase basis.

InProgress

Develop andimplement avendor ratingsystem contingent

on workload andother priorities.

ExecutiveSuperintendent ofBusiness

R5. Regular reviews of purchasing system Reviews of reports on purchasingmatters, such as staledated purchase


generated reports should be taking place. orders, are being conducted on aregular basis.

Business


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egu a bas s

R6. Regular monitoring to ensure strict adherenceto all purchasing policies.

As noted by the review consultant,there were policies, procedures andcontrols in place in 2007 and thesewere being followed in most cases.Where past exceptions have beennoted with respect to processes, suchas tendering of major work, these arenow reported to Executive Counciland the Board to seek requisiteapproval consistent with thePurchasing Policy adopted by theBoard in April 2009.


R7. Adherence to purchasing policy of obtainingquotes and retaining quotes as evidence thatpolicy is adhered to.

While quotes had been obtained in thepast consistent with the policy, thesequotes were not always retained onfile as historical records. Since thisreview in 2007, retention of all suchrecords was implemented as astandard practice.


R8. The use of purchase cards issued through theWECDSB should be monitored on a regularbasis and staff should be trained with respecttothe policies surrounding the use of these cards.

The policies and procedures withrespect to purchasing cards werereviewed, updated and approved bythe Board. Training is conducted forstaff issued cards.


R9. The criteria for allowing a purchase to be madewithout an approved purchase order should bereviewed and updated. The specific situations

where there is an acceptable practice should becommunicated to all parties involved and thenadherence to the criteria should be strictlyenforced and monitored.

Purchases are now made consistentwith the requirements of the Board'supdated purchasing policy, which was

adopted in April 2009.


R10. The WECDSB should develop a comprehensiveconstruction policy and establish procedures toensure appropriate governance of construction

The Ministry has establishedparameters in this regard bymemorandum SB2 dated January 15,

Completed ExecutiveSuperintendent ofBusiness/Senior

of schools, which would includerecommendations summarized below along

2012. The Board is following theMinistry's direction, as specified, for

Manager ofSupport &


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gwith the more detailed recommendationscontained in the Ministry's report.

y pits projects.

ppFacilities Services/Manager of HumanResources & Policy

Development

R11. The WECDSB should conduct an extensiveanalysis of any proposed construction prior tocommencement of the project.

Processes related to such an analysisare being covered in the directionnoted in no. 10 above.

Completed ExecutiveSuperintendent ofBusiness/SeniorManager ofSupport &Facilities Services

R12. Throughout the construction process,

management should provide the Board ofTrustees with an updated cash flow analysis ofthe project.

Processes related to providing such an

analysis are being covered in thedirection noted in no. 10 above.

Completed Executive

Superintendent ofBusiness/SeniorManager ofSupport &Facilities Services

R13. Compensation structure for contracted servicesshould be acquired through tende

Documents

Ensuring Financial Stability Report