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British Columbia Ministry of Education DISCUSSION DRAFT – FOR ADVICE OF MINISTER – STRICTLY CONFIDENTIAL British Columbia Ministry of Education Report on the Special Advisor’s Review of the Vancouver Board of Education (District 39) Final report June 8, 2015 ! @ Honourable Peter Fassbender 8 June 2015 Minister of Education Province of British Columbia P.O. Box 9045 Room 310 - Parliament Buildings Victoria, BC V8V 1X4 Re: Review of the Vancouver Board of Education (District 39) Dear Minister Fassbender: I am honoured to present EY’s Report on the Special Advisor’s Review of the Vancouver Board of Education (School District 39). VBE has made significant strides in adopting recommendations made by various parties over the past five years, this report identifies numerous opportunities to further improve fiscal responsibility and capital allocation and to enhance VBE’s governance practices. The Special Advisor would like to thank the Board of Trustees, management and staff of the Vancouver Board of Education, the Ministry of Education, other participating school districts and all other review participants for their assistance and cooperation. Yours sincerely, Doug Campbell, Partner Special Advisor Enclosure A member firm of Ernst & Young Glob al Limited Contents 1. Executive summary .............................................................................................................. 2 2. Background and context ...................................................................................................... 13 2.1 Provincial overview .................................................................................................... 13 2.2 Ministry of Education goals and objectives .................................................................... 13 2.3 Vancouver School District overview ............................................................................. 13 2.4 Financial and budgeting context .................................................................................. 14 2.5 Project objectives and scope ....................................................................................... 15 3. Budget development and forecasting ................................................................................... 17 3.1 Introduction ............................................................................................................... 17 3.2 Scope and approach ................................................................................................... 18 3.3 Summary findings and recommendations by ministry objective ...................................... 20 3.4 Budget process .......................................................................................................... 22 3.5 Multi-year forecasts .................................................................................................... 31 4. Accumulated surpluses and deficits ..................................................................................... 39 4.1 Introduction ............................................................................................................... 39 4.2 Scope and approach ................................................................................................... 40 4.3 Summary findings and recommendations by ministry objective ...................................... 42 4.4 Review of historical budgeted deficits and actual surpluses and the effect on the Accumulated Surplus .................................................................................................. 43 4.5 Use of accumulated surplus ......................................................................................... 54 5. Administrative, support and overhead efficiencies ................................................................ 57 5.1 Introduction ............................................................................................................... 57 5.2 Scope and approach ................................................................................................... 57 5.3 Summary findings and recommendations by ministry objective ...................................... 59 5.4 Revenue opportunities ................................................................................................ 61 5.5 Operating cost efficiencies .......................................................................................... 78 5.6 Summary of efficiency and revenue opportunities ....................................................... 106 5.7 Limitations .............................................................................................................. 107 6. Capital asset management ................................................................................................ 109 6.1 Introduction ............................................................................................................. 109 6.2 Scope and approach ................................................................................................. 111 6.3 Summary findings and recommendations by ministry objective .................................... 112 6.4 Context ................................................................................................................... 114 6.5 Capital asset management planning process ............................................................... 120 6.6 Excess surplus capacity ............................................................................................ 128 6.7 Seismic mitigation program ....................................................................................... 151 6.8 Deferred maintenance .............................................................................................. 158 6.9 Non K-12 real estate................................................................................................. 165 6.10 Summary of potential financial benefits...................................................................... 167 7. Board governance ............................................................................................................. 171 7.1 Introduction ............................................................................................................. 171 7.2 Scope and approach ................................................................................................. 174 Confidential | All Rights Reserved | EY 7.3 Summary findings and recommendations by ministry objective .................................... 177 7.4 Key findings and recommendations ............................................................................ 179 8. Other matters .................................................................................................................. 193 9. Summary of recommendations .......................................................................................... 195 APPENDIX A: Documents and materials reviewed ...................................................................... 206 APPENDIX B: Interviews completed .......................................................................................... 212 APPENDIX C: Budget documents prepared by VBE for SY2015/16 ............................................. 213 APPENDIX D: Comparison between the budgeted deficit and actual surplus ................................ 217 APPENDIX E: Accumulated surplus restricted funds .................................................................. 218 Source: VBE Management and budget documents ..................................................................... 218 APPENDIX F: Progress review of previous findings and recommendations for the governance work stream ............................................................................................................................. 219 Confidential and proprietary - Disclosure of this proposal to third parties is prohibited. It is intended to be used solely for the purpose of evaluating whether or not to engage us to provide you with professional services. This proposal does not constitute an agreement between us or an offer to perform services -- a binding agreement between us shall exist only upon execution of a mutually agreed engagement letter or contract. © 2015 Ernst & Young LLP. All rights reserved. “Ernst & Young” as used in this proposal means the Canadian firm of Ernst & Young LLP or, as the context requires, other member firms of the global Ernst & Young network, each of which is a separate and independent legal entity. Confidential | All Rights Reserved | EY Terms of reference ► EY has relied upon unaudited financial information, Vancouver Board of Education (VBE) books and records, financial information provided by VBE, the Ministry and other school districts. EY has not audited, reviewed or otherwise attempted to verify the accuracy or completeness of such information ► Certain information referred to in this report consists of forecasts and projections. EY has not audited, reviewed or otherwise attempted to verify the accuracy or completeness of such information ► Future oriented financial information referred to in this report was prepared based on management’s estimates and probable and hypothetical assumptions. Readers are cautioned that since projections are based upon assumptions about future events and conditions that are not readily and currently ascertainable, the actual result will vary from the projections, even if the assumptions materialize, and the variations could be material ► Unless otherwise stated all monetary
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