LaGrange threatens to fire CBE trustees despite no evidence of 'reckless' spending in audit

Despite an audit of the Calgary Board of Education that found no evidence of "reckless" misspending, Alberta's education minister says she'll fire the current trustees in November if they don't make changes laid out in a ministerial order.

The audit, conducted by Grant Thornton, was ordered after the CBE struggled to absorb a $32 million shortfall brought on by the United Conservative Party's cuts in its provincial budget. The board said it was going to have to eliminate more than 300 teaching positions. 

Education Minister Adriana LaGrange accused it of a "reckless misuse of taxpayer dollars" at the time, saying an organization the size of the CBE should be able to find efficiencies without affecting teachers.

The audit, which was ordered by the UCP about two years after another conducted under the previous NDP government, covers a period up to the end of 2019. 

In a report made public Thursday, the auditors made 25 recommendations as they called for more long-term planning and governance and policy tweaks as opposed to wholesale reform of the CBE. 

In response, LaGrange issued a ministerial order that requires the board to implement 17 new procedures and to consider two additional procedures that all stem from the findings of the audit. It must complete those changes by Nov. 30.

However, when asked at a news conference Thursday, the minister denied the audit was an exercise designed around a pre-determined outcome to dissolve the board. 

She said the board has a "systemic history of questionable decision-making."

"If the CBE fails to get their house in order by November 30, I will have no choice but to dissolve the current board of trustees," said LaGrange.

She said although some of the identified issues stretch back into previous elected boards, the current iteration has had 2½ years to make significant changes.  

Spending 'fully aligned' with other metro school boards: CBE

The CBE released a statement saying it welcomes the findings of the audit. 

"We are pleased that the review confirmed that there are no financial irregularities or improprieties," it reads. 

"The report highlighted that our spending is fully aligned with that of other metro school jurisdictions and that we have strong financial processes and controls."

The audit did find the CBE's costs were comparable other metropolitan school boards in Alberta.

The release of the audit comes as the board deliberates its latest $1.37 billion budget, which it says leaves it short $62 million despite proposed cuts, increased fees and the province offering an additional $20.6 million in funding this year compared to last. 

Focused on single-year budgets

The audit made 25 recommendations in regards to the CBE, including a need for:

• Greater financial risk analysis.
• Longer-term vision.
• More stringent financial controls.
• Improvements to a board culture that it found was mired in secrecy and mistrust. 

The CBE says some of the changes ordered by the minister are already underway, including moving more teachers back into schools, optimizing use of the CBE headquarters and reducing English Language Learning supports in alignment with government funding. 

The audit also says the CBE is too focused on single-year budget outcomes. 

"In general, assessment indicators currently lack key aspects of accountability for financial risk management and overall value for money of program expenditures, and it is currently unclear how the future financial sustainability of program delivery is considered within policy or assessment indicators," reads the report. 

The report notes the elected board lacks financial expertise and, although it employs an audit committee made up of experts, those members lack any significant mandate to ensure financial risks are managed and properly forecast. 

Reserves used up, headquarters expensive

The audit notes a series of events — including costs associated with opening new schools — led the CBE to have reduced reserves. It also said there was an attitude within the organization that fiscal stability should be the responsibility of Alberta Education, rather than the CBE. 

The report says other boards have significantly more reserves, and that the CBE could have made harder decisions earlier on to ensure more fiscal capacity in the face of reduced funding. The audit recommends the CBE develop clear policies moving forward on the "appropriate level of operational reserves" required. 

One area of ongoing financial strain for the board is its headquarters, which it leases at rates well above market pricing. 

The lease agreement was approved in 2006 and compels the board to pay a current rate of $47 per square foot, with rates increasing at 2.5 per cent each year. Current comparable rates are $16 to $20 per square foot, according to the audit. 

There are 11 years left on that lease. 

The audit recommends the board expand the options it is examining to reduce that financial burden of the building beyond buying the space outright. It wants consideration given  to moving some staff to other buildings and subleasing space.

The CBE said it has subleased some space in the past, but given the current economic climate it is unable to find new tenants at this time.

Bus service

In another point of interest, particularly for parents who are now facing increased costs for busing, the audit recommends the CBE consider eliminating half-days and providing service only where it is required. 

It also suggests fees should reflect actual costs, given the bus program is in deficit.

That's something the CBE is proposing in its latest budget, which could mean fees as high as $800 for some students in alternative programs or who live between 1.6 and 2.4 kilometres away from their schools.

The audit says the province will likely have to review the thorny issue of busing for all boards in the province.

The audit could not find the required documentation to prove that Southland Transportation, which was paid "in excess" of $12 million from September to December 2019, was the lowest cost vendor for the job. There was no indication, however, that the appropriate process was not followed.

Mistrust and secrecy

While the audit does not find fault with the government policy framework of the organization, it notes that framework requires a level of trust and co-operation that appears lacking at the CBE and led to the board focusing on processes and policies rather than strategic matters. 

The audit notes "there is a significant focus on ensuring the flow of information is highly controlled and access limited, even among trustees."

One example includes the strict interpretation of a policy determining that the chair of the audit committee could not communicate with external auditors without direct board approval. 

Another is that the board dictated CBE legal counsel had to be present when trustees met with auditors for this report. That was a factor in the resignation of former trustee Lisa Davis in February. 

Additional recommendations in the report include another review of executive salaries — last conducted in 2016. The CBE is also urged to review the allocation of staff to ensure best results for students, and stiffen oversight and record keeping in regard to spending and procurement.

Teacher and board associations respond

Jason Schilling, president of the Alberta Teachers' Association, says parents, students and schools are caught in the middle while the province and the CBE sort out their respective budgetary concerns, adding his focus is on ensuring enough money makes it into classrooms. 

He says the audit shows the CBE shares that focus. 

"One of the biggest problems affecting the CBE, students and staff is that they've been chronically underfunded for years and years," said Schilling. 

The Alberta School Boards Association says it is concerned about the prospect of the elected board being dissolved by the minister. 

"Alberta's 61 democratically elected school boards are in the best position to meet the local needs of our students and have a long history of demonstrating inherent value," said president Lorrie Jess in a release. 

"While we understand that the minister of education has certain powers within the Education Act, she has reiterated the importance of school board autonomy and governance many times — we expect that this will remain the case."

The latest budget

At Tuesday's CBE meeting, the board discussed belt-tightening measures including:

• Increasing class sizes.
• Charging families a school supply fee,.
• Moving some administration staff into teaching roles.
• Closing the locations of some specialized programs. 

The CBE said it relied on one-time funding to make up last year's budget shortfall and that option isn't available this time around. It says per-student funding has fallen even as new schools open and enrolment climbs. 

Colin Aitchison, press secretary for the education minister, tweeted that the CBE is crying wolf with its budget concerns.

"The CBE consistently cries wolf over their funding, claiming significant shortfalls and ending with surpluses. It happened while the NDP formed government, too. In 2018, they claimed a $35-million shortfall and blamed the government of the day," he wrote.

"This is straight out of their playbook. Claim they aren't receiving enough money, blame government, then post surpluses. There is a systemic inability to prioritize long-term financial decision-making by this board."

Sarah Hoffman, the NDP's education critic, said the audit is "all about finding someone else to blame for the generational cuts to education imposed by Jason Kenney and the UCP."