AG Slams Education Department’s Capital Planning

Nova Scotia Auditor General Michael Pickup released his Fall 2016 report today (November 30), focusing on childcare centers, capital planning for schools, critical infrastructure resiliency and the AMANDA software used to manage licenses and permits.Public-Private-Partnership School

(Interestingly, the day the AG’s report dropped found Premier Stephen McNeil on his way to the Boston States to light the Christmas tree and “enhance business.”)

Each item in the report is worth a story, but I’m going to focus on capital planning for Nova Scotia’s 388 schools housing 118,000 students because it touches on the question of P3 schools, which the Spectator has considered before.

Pickup’s overall conclusion is that Nova Scotia’s school capital planning processes are inadequate and hampered by a lack of coordination between regional school boards — which make decisions about school closures — and the Provincial Department of Education — which makes decisions about new construction and renovations. Pickup says the lack of coordination is so marked, boards sometimes have to make closure decisions without knowing what the Department has decided regarding new builds and renos.

The AG also found the Education Department had no staff dedicated to the capital planning process and that many of the decisions made were “ad hoc and unsupported by committee analysis.”

Pickup then provided three examples of “poor process and decisions” from the Department’s 2014-2015 capital plan.


Eastern Passage High School

First was the approval of the $21 million Eastern Passage High School (EPHS). Said Pickup:

Government was unable to provide any support or analysis which would demonstrate the need for this school and, in fact, when this new school is built the other two high schools in the area will operate at less than 50% capacity.

Pickup said EPHS was green-lighted even though the local school board had not listed it as a priority. (The capital planning process begins with school boards submitting business cases for their priority capital requests to the School Capital Construction Committee, which scores them and submits them to the Tangible Capital Asset Committee, which reviews them and submits them to Executive Council for final decisions. This last step, the AG adds, was outside their “audit scope,” i.e. what happens at the Executive Council level stays at the Executive Council level).

In the case of the EPHS, the Department has no plan to address the “underutilization” of the other high schools in the area, Auburn Drive and Cole Harbour, one of which (Cole Harbour) recently underwent renovations worth $12 million.

Pickup has recommended the government revisit the EPHS decision. The ever-gracious McNeil government says it will not do so. More precisely:

The department does not agree with this recommendation. The current government is honoring the school capital construction commitments made by the previous government. The Halifax Regional School Board has begun a school review process for the Cole Harbour and Auburn families of schools. The process will encourage dialogue with the school communities to ensure the best outcomes are achieved for students in these areas.

The idea that a provincial government can’t possibly revisit a construction commitment made by its predecessor is an interesting argument as is the suggestion that launching a review of existing schools after you decide to build a new school is just as good as launching a review prior to making that decision. Really, the Department could have pasted the lyrics to Me and Julio Down by the Schoolyard here and it would have made about as much sense.


Unsupported Approvals

The AG’s second example is the Education Department’s decision to spend $62.5 million on new schools in Bridgetown and Tatamagouche (the districts of Premier Stephen McNeil and Education Minister Karen Casey, respectively) and renovations to schools in Wolfville and Truro, even though these projects scored lower than others submitted by school boards.

The Department approved the top 10 projects — as ranked by the committees in the process outlined above — but then approved these four projects which ranked between 19 and 28. It would be like awarding medals to the first, second and third-place finishers in the decathlon and then randomly passing out medals to the 19th, 21st, 26th and 28th-place finishers as well. Said the AG:

The committees had concerns about these projects, including inadequate investigation of alternative options and less expensive options which had been ignored. In the cases of the new school construction projects in Bridgetown and Tatamagouche, assessments by the committees concluded that more consideration of possible renovations, or other options within the region, was needed. The Wolfville school evaluation included discussion of a less expensive alternative that should have been considered. Instead, government selected the more expensive option requested by the school board.

Pickup’s recommendation is that the Department follow “a clear and open process to evaluate all submissions.” The Department “agrees that improvements can be made to the capital planning process and documentation to increase accountability and transparency.”


P3 Schools

In case you were worried our public-private partnership schools had solved their problems and become models of efficiency and transparency, worry no more — the schools are still a hot educational mess.

Pickup points out that, as the original leases on these schools were signed in 1998 and 1999, the Department of Education has had 17 years to prepare for their expiration and yet, like me writing my Grade 7 paper on the respiratory system, the Department has left those preparations to the night before. The province of Nova Scotia has spent $700 million on P3 lease payments to date and now must decide what to do when the leases expire.

Those decisions have “two components,” according to the AG. First, school boards must decide if they need the schools; if the answer is “yes,” the Department must decide whether to buy them or continue to lease them. But Pickup says boards have been given insufficient time to conduct provincially mandated review processes and, as a result, some are failing to meet their deadlines for decisions, leaving the Department “unable to provide notification to the developers” which “requires negotiation of extensions.” (And those developers are good negotiators, something previous AG’s have noted.)

The AG found the government’s plan for P3 schools to be both “late and disjointed” and recommends P3 decisions be managed in a “more timely and comprehensive manner.” In response, the Department of Education said:

The department agrees with this recommendation; a process is in place to assess P3 decisions.

The Department also stated:

Extensions cost $1.5 million, 0.0065 per cent of the $230 million P3 budget. Financial analysis could not begin until developers provided base lease rates. Based on the service agreements, developers are not required to provide these rates until a timeframe (12 or 18 months, depending on the agreement) prior to the notification dates.

I like the dismissal of the $1.5 million cost of extending a lease as “0.0065 per cent” of the overall P3 budget — does it really not occur to the Department that that could mean not that the lease extension is cheap but that the P3 budget is bloated?

Also, remember what I said about developers being good negotiators? They negotiated that clause about the provision of base lease rates that delayed the Department’s financial analysis.

This is not the first time a Nova Scotia Auditor General has criticized the P3 program, as you can see from my story on the subject (which was based on a Canadian Centre for Policy Alternatives report on the subject) and I’m guessing it won’t be the last.


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