Extensive problems have been uncovered at St. Peter's College following an external review and forensic audit of administrative and financial practices at both SPC and Carlton Trail Regional College (CTRC), the Saskatchewan government announced last week.
In a media conference held June 30 in Saskatoon, Advanced Education Minister Rob Norris announced that SPC would be placed under probation following the discovery of significant irregularities in the handling of finances at the college.
Reviews by Meyers Norris Penny (MNP) and KPMG show serious problems with the way finances were handled at SPC, which is privately run but also receives significant public funding. As a result, Norris said financial matters pertaining to the college will, for the foreseeable future, be administered by the University of Saskatchewan.
The reviews - which also included a third external review, by Deloitte and Touche - were conducted following the Ministry's rejection in March of a proposed merger between publicly-run CTRC and SPC. The reports found no significant concerns with the way day-to-day finances were handled at CTRC; however, Norris expressed grave concerns over the fact that the two college boards had been operating as a single entity for a year - even before the merger of the two colleges had been formally proposed to the provincial government.
Some of CTRC's financial support toward SPC was also inadequately documented in board minutes, the reports showed.
Since the rejection of the merger proposal, Glen Kobussen, the CEO of both colleges, was fired from CTRC and placed on administrative leave by SPC. The CTRC board of directors was also removed, with Deloitte and Touche managing partner Graham Pearson brought in as interim administrator at CTRC.
No criminal charges have been filed in the case; however, Norris said a fourth report, from MNP, is being forwarded to the Ministry of Justice.
The report findings were a slice of humble pie for Norris himself, who was heavily criticized for ignoring numerous warnings in the months leading up to the cancellation of the merger.
At the time, Norris had dismissed many of those concerns as baseless. Now, he was singing a very different tune.
"Obviously there is a great deal of humility today as I am before you, and as I have in the last few days read these reports," Norris said. "I should have taken these concerns far more seriously at that time.
"I am deeply disturbed by the contents and the findings," he added. "The work reflects and reinforces that there are many lessons to be learned here. And those lessons certainly include some for myself.
"Quite frankly, I was not close enough to this file. I did not pay enough attention, and did not give it the due diligence that (I) ought to have."
Among the findings of the reviews were the following:
From a governance perspective, SPC and CTRC operated as one entity throughout 2010, despite a lack of formal approval from the Ministry.
Funds provided to SPC for capital expenditures were at times used instead for operational purposes. However, the report noted that capital funding provided for the Michael Hall renovations were used appropriately, as were funds allotted to scholarships.
SPC and joint SPC/CTRC board minutes were not always kept, and some SPC financial transactions were poorly documented or not documented at all. For example, plans to transfer $135,000 from CTRC to SPC - "specifically, a $60,000 increase in operating grant money, and $75,000 for a portion of market research," were discussed in-camera with no minutes or documentation of the board's discussion or rationale.
It was represented to the Carlton Trail Regional College board, by St. Peter's College management and the board, that the market research (mentioned above) would be jointly funded. It appears, however, that the $75,000 transferred from Carlton Trail Regional College funded the entire project.
The decision by SPC to purchase a vehicle for use by the president Glen Kobussen was "based on questionable analysis."
Concerns about a missing 52" television set purchased with SPC funds were baseless, as the television set was later accounted for.
MNP further concludes "there were numerous instances where proper tax filings and reporting were not performed by SPC, resulting in potential CRA (Canada Revenue Agency) liability to SPC (and) that liability could extend to SPC board members and a member of its executive management team."
The investigation also indicated "there was a lack of policies and decision-making control"; these findings left MNP to conclude the ability of SPC to sustain itself as a viable college is in doubt.
No deficiencies were found with respect to the staff or the financial procedures at CTRC, and the Knowledge and Infrastructure Program funding at CTRC has been managed within budget. The reports indicate confidence that CTRC will be able to serve its students and stakeholders well in the future, especially once a new board is in place and a new CEO hired.
In addition to placing SPC on probation, the Ministry has ordered the college to submit a detailed and balanced operating budget for the 2011-12 year. That budget will be administered by the University of Saskatchewan, as will all other finances at SPC for the foreseeable future.
Although taking responsibility for his own lack of attention to allegations surrounding the SPC-CTRC merger, Norris also suggested the present government was not entirely at fault for allowing the situation at SPC to effectively fall through the cracks.
Previously, private colleges have not had to provide as much in the way of detailed accounting for public funding as compared to publicly-run colleges, he acknowledged. But he stressed that steps are now being taken to ensure that a more rigorous oversight of private institutions is maintained.
"This is part of a system that we inherited," Norris said. "Obviously what we see today is that is insufficient. What we need to do is make sure that whether an institution is public or private, where there are public funds, there needs to be public accountability. And that's the system that we're constructing now.
"Lessons learned we are already acting on. We're acting on them by effectively taking what has been a 'high trust' environment within the post-secondary education sector, especially within our regional colleges, (and) maintaining that sense of trust, but putting forward a 'trust-but-verify' framework where, as the Ministry, we're going to have far greater access to far greater information far sooner, for the benefit of students and stakeholders and communities.
"I have confidence that denying (this) merger made for the best public policy," Norris added.
