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School capital costs announcement sets dangerous precedent
Copy of a letter to Education Minister Peter Fassbender:
On behalf of the Board of Education (Richmond) - School District 38, I am writing this open letter to you to express our extreme dismay at the recent directive that school districts across the province will be required to share up to 50 per cent of the costs of major capital projects. This announcement sets a dangerous new precedent as the Ministry of Education has always been responsible for capital project costs in the past. It also abdicates responsibility for the continued safety of our school children. While cost sharing is an excellent political platform and sound bite, in this case it hides a multitude of faults, not the least of which is a misunderstanding of how the budget process works.
Firstly, we take great exception to the methodology used to determine the amount of “surplus cash” that is available to contribute to the cost sharing of capital projects. We have been informed by Ministry staff that Richmond has $26 million in surplus funds. The $26 million is made of three general sources, each of which we would like to address below:
•Local Capital Reserve - $11 million: The Local Capital Reserve is used to fund capital items that the Ministry does not provide funding for. In Richmond, we have made decisions over the years to actively plan for the capital requirements that we are responsible for. As a result, we have committed our Local Capital Reserve to fund technology (computers, iPads, network infrastructure, etc.) for both students and staff, facility improvements targeted for students with special needs and end of life replacement of our maintenance fleet. In fact, several million dollars are already tied up in lease agreements. These requirements are not going away and the savings that we have set aside to fund our areas of responsibility should not be considered “surplus”.
•Employee Future Benefits Liability - $9 million: A liability is an amount that is owed now and that will be paid out in the future. The employee future benefits liability is accumulated as employees work at the school district, accruing pension benefits that will need to be paid out when they retire. These are very real amounts that will need to be compensated for in the future. How they can be classified as “surplus” defies all logic and prudent financial practice!
•Accumulated Operating Surplus - $6 million: Accumulated operating surplus is the only margin for error that districts have to ensure that they do not end up in an operating deficit. Funding levels have not increased as our cost base has increased, and this has resulted in all school districts walking a financial tightrope each year. $6 million is 3 per cent of Richmond’s annual operating budget which is barely sufficient to ensure that we are able to comply with the requirements of the School Act and not run an operating deficit. It cannot be considered surplus to district needs.
Secondly, there is no recognition of school districts like Richmond who have proactively entered into discussions with Ministry staff in regards to cost sharing of major projects. We have been consistent in our discussions with you and previous Ministers of Education, as well as with staff at the Ministry of Education and the public that we serve in Richmond. We have publicly expressed our intention to allocate the $41 million in proceeds from the sale of the former Steveston Secondary School site to help offset the high costs of future land acquisition, in particular the site required for a school in Richmond City Centre. As co-governors of the provincial education system, we chose to partner with the Ministry to help fund the facilities that are needed for the students we serve. Our foresight and willingness to be team players is now being discarded in favour of compulsory participation in a program that discounts school board priorities.
Thirdly, the imposition of the cost sharing requirement on school districts has ignored the Trustee role in co-governance. The letter to our Superintendent from the Deputy Minister lays out an expectation that district priorities will need to be changed to accommodate the new directive. District priorities as determined by Boards of Education cannot be disregarded if the co-governance model is truly in place and respected by the government. Additionally, the Ministry has always had the responsibility to fund major capital projects, including seismic remediation. For that mandate to be changed, we would expect the Ministry to engage extensively with Trustees as well as the public, especially since Boards of Education have no real ability to raise money. Changes of such immense magnitude should not be made unilaterally.
Minister, we appreciate that you took the time to speak directly to us after the new directive was announced. We understand that the Ministry does not have sufficient money to meet their responsibility to fund major capital projects but the solution cannot be to raid the funds that we have set aside to meet our responsibilities. We are pleased to make the $41 million from the sale of Steveston available for cost sharing of major projects in Richmond but we urge you to ensure that the sacrifices that we have made are not in vain.
Donna Sargent, Chairperson
On Behalf of the Board of Education (Richmond)