N.S. school board in process of recovering $403,000 from P3 schools developer

The Canadian Press ~ The News
Published on February 9, 2010

SYDNEY, N.S. The school board in Cape Breton-Victoria is in the process of recovering $403,000 from the developer of public-private partnership schools in its jurisdiction, but the funding shortfall that led to a $21,000 deficit over the last two years could continue.
George Boudreau, the school board's director of finance, said Monday the $403,000 should be recovered by the end of the fiscal year in March. He also said senior staff will recommend the board try to collect interest on the outstanding money.
The shortfall resulted from what Boudreau called weak contract wording that school board officials caught earlier and were working on when the provincial auditor general highlighted the problem in his report last week.
Under the P3 arrangement with 39 schools in Nova Scotia, the developers of P3 schools charge the Education Department for the cost of staffing, maintenance, cleaning and supplies, among other things. The 20-year contracts have another eight years to run.
In some cases, including the P3 schools in Cape Breton, school boards subcontract some services to the developer using board employees.
Boudreau said the Cape Breton-Victoria board's shortfall resulted from staff not realizing an escalator clause in the subcontract allows school boards to recover cost-of-living increases in various categories, including salaries and electricity costs.
However, he said, the subcontracts negotiated in 1998 between school boards and the developer don't include escalator clauses for some items such as snow clearing, garbage removal, insurance on buildings, and maintenance and cleaning supplies. The increased cost of those items is roughly equal to the deficit incurred in the last two years, Boudreau added.
Staff are awaiting further clarification from the Education Department, he said, and although it's possible the board will continue to incur unrecoverable costs during the remainder of the contracts, he added it will be some time before the full details become clear.
Boudreau said there are a couple of things the board will have to consider, including interest on the $403,000 and cost-of-living increases in various categories, said Boudreau.
"But obviously we need to fully digest this report and discuss it with the board before we can take a stance on it."