Scarborough Civic Centre

150 Borough Drive

Scarborough, Ontario Canada M5V 3C6

Fax: 416-396-4301

Phone: 416-396-7088

Novina Wong

City Clerk

City of Toronto

December 21, 1998

To:Budget Committee

From:City Clerk

Re:Referral from the School Tax Sub-Committee

Status Report on School Board Mutual Service Master Agreements

Recommendation:

The School Tax Sub-Committee on December 7, 1998 reports having forwarded to the Budget Committee, the report (October 26, 1998) from the Chief Financial Officer and Treasurer and the Commissioner of Community and Neighbourhood Services regarding the status of the School Board Mutual Service Master Agreements, for its consideration.

Background:

The School Tax Sub-Committee on December 7, 1998, had before it a report (October 26, 1998) from the Chief Financial Officer and Treasurer and the Commissioner of Community and Neighbourhood Services regarding the status on School Board Mutual Service Master Agreements, previously deferred by the School Tax Sub-Committee on October 27, 1998.

Committee Secretary

School Tax Sub-Committee

Betty Bushe

Item No. 7

Attachment

c.Chief Financial Officer and Treasurer

Commissioner of Community and Neighbourhood Services

October 26, 1998

TO:School Tax Sub-Committee

FROM:Wanda A. Liczyk

Chief Financial Officer and Treasurer

Shirley Hoy

Commissioner of Community & Neighbourhood Services

SUBJECT:STATUS REPORT ON SCHOOL BOARD

MUTUAL SERVICE MASTER AGREEMENTS

Purpose:

This report summarizes the progress to date and next steps in establishing a new Service Sharing Master Agreement between the City and the school boards and makes recommendations on payment of preliminary allowances for child care spaces in schools.

Funding Sources, Financial Implications and Impact Statement:

If adopted, the recommendations in this report would result in an allocation of $73 thousand from an amount of $1.66 million included in the 1998 operating budget of Community and Neighbourhood Services, to offset space costs of the Toronto Catholic School Board for child care space used by the City. The annualized impact on the 1999 operating budget of the recommendations is $218 thousand. Further allocation of funds may be required in 1998 pending results of ongoing discussions with the school boards.

Recommendations:

It is recommended that the School Tax Sub-Committee endorse the following recommendations for the consideration of the Budget Committee:

(1)the City make remittances to the Toronto Catholic School Board at a rate of $3.70 per square foot for child care spaces used to provide child care services;

(2)payment to the Toronto Catholic School Board in the amount of $73 thousand for 1998 in respect of Recommendation (1) be made using an appropriate transfer mechanism as determined by the Commissioner of Community and Neighbourhood Services, subject to a satisfactory agreement at the staff level of the basic principles laid out in this report, in particular, the security of tenancy for City programs;

(3)discussions continue with the Toronto District School Board to achieve appropriate square footage and other rates, such as permit hours and with the Toronto Catholic School Board on other rates; and

(4)staff continue to negotiate with the respective school boards to implement Mutual Services Master Agreements with the City to protect child care services and City-run recreational programs in schools, provide mutual services between the City and the boards, based on the principles laid out in this report, and report to the School Tax Sub-Committee and the Budget Committee on the progress of those negotiations.

Council Reference/Background/History:

At its meeting of February 4, 5, and 6, 1998, Council, in considering a report dated January 15, 1998 directed City officials to present, in conjunction with school board officials, an agreement before August 31, 1998, that "addresses the city use of daycare and school facilities for parks and recreation purposes into a new master agreement between the City and the School Boards.".

Subsequently, at its meeting of June 3, 4 and 5, 1998, Council requested that the Chief Financial Officer and Treasurer report to the School Tax Sub-Committee on the status of negotiations with the school boards (Community and Neighbourhood Services Committee Report 5/2).

Comments and/or Discussion and/or Justification:

Legislative changes contained in Bill 160 have changed the funding relationship between municipalities and school boards and between the Province and the boards. As a result, the school boards have started a process to recover the costs of space used by other entities, including municipalities.

Because of the changes, City staff has undertaken discussions with the Toronto District School Board and the Toronto Catholic School Board with respect to reciprocal sharing of services and space between the City and the school boards, for example, school based daycare and community/recreation programs.

Reciprocal Service Agreements:

Representatives of the school boards and the City have been developing inventories of reciprocal services between the City and the Boards, as a first step in establishing costing calculations and formal master agreements to govern the financing of such shared services. The City's staff team consists of representatives of Finance, Children's Services, Public Health, and Parks and Recreation.

Initial inventories of services, existing agreements (in excess of 300), space utilization statistics and preliminary costing methodologies have been developed to guide further discussions and negotiations. Work is underway on a fully detailed inventory of space and time usage within schools and municipal facilities as a foundation for more specific agreements. Some of the services that have been discussed include:

(1)daycare and community centres, swimming pools and other recreational facilities and programs within schools;

(2)seniors and children's' programs coordinated by the City within school facilities;

(3)public health services delivered within school facilities;

(4)school programs and shared facilities within the City's Parks and Recreation facilities; and

(5)grass cutting, snow clearing, garbage collection and tree services provided to certain schools by Parks and Recreation staff.

From a public service standpoint, there is a need to execute appropriate agreements which will recognize the mutual importance of these services and establish appropriate costing arrangements between the City and the school boards.

Progress to Date on Determining Costing of Space:

The Catholic School Board has adopted a square footage rate of $3.70, based on a marginal cost approach, i.e. the actual additional cost to each school facility, in aggregate, based on the space utilized by the municipality. Square footage calculations have been based on the actual space used plus common areas (e.g. hallways, stairwells, etc.), similar to the treatment that would be afforded tenants in a private lease arrangement. For child care centres located in schools, this costing amounts to $218 thousand on an annualized basis, or $73 thousand for the final four months in 1998 coinciding with the Board's fiscal year. Discussions continue, however, on the application of rates for Parks and Recreation programs which are somewhat complicated because they are, in some cases, based on permit hours and not square footage. A reciprocal agreement is still being negotiated.

It is recommended that the City transfer $73 thousand to the Catholic School Board through an appropriate mechanism as determined by the Commissioner of Community and Neighbourhood Services. This recommendation is contingent upon a satisfactory agreement at the staff level of the basic principles laid out below, in particular, the security of tenancy for City programs.

Staff will continue discussions with the Toronto District School Board with the objective of developing an agreement that will help clarify the budgetary implications for both the Board and the City, and to work towards the principles discussed below.

Principles and Objectives for a new Master Agreement:

City staff is currently discussing options for the costing of reciprocal services. Principles and objectives which will guide these discussions from the City's standpoint are:

(1)the City acknowledges the need to appropriately cost space used for municipal programs within schools and school programs within the City's facilities;

(2)the City will not accept the principle of simply offsetting a share of Provincial downloading to school boards;

(3)the agreements must be in the best interest of the taxpayer - from a service standpoint, there is usually a very sound rationale for the sharing of services between the two entities. Child care programs, recreation programs and community activities are naturally linked between municipal and education services. As well, simply transferring one organization's fiscal pressure to the other does not result in net taxpayer savings;

(4)shared facilities need security of tenancy. The establishment of municipal programs within schools and school programs within municipal buildings often requires substantial up-front investments and new facilities require significant lead-time to locate and construct. Where critical operational requirements mean that space must be vacated, adequate notice provisions should be in place to allow an orderly transition to a replacement site. Similar to most private sector lease agreements, there should be no obligation on behalf of the tenant (in most cases, the City) to return the leased space to its original condition, for example, for classroom use;

(5)costs should be established on a mutually agreed to marginal cost basis. For example, the additional cost to a specific school for a daycare centre should be based on the space directly used for that centre plus a reasonable share of joint use areas, and not arbitrarily allocated costs for the balance of the school or for the education system in total. Similarly, costs of community centre space provided to schools by the City should be calculated on a similar basis;

(6)efficiencies and cost reduction strategies should be looked at from the broader City-wide context. There may be significant cost savings by, for example, having the grass at specific schools cut by Parks and Recreation, which is already in that "business" and establishing proper costing and service agreements to govern such services; and

(7)the ultimate overall objective of reciprocal service agreements should be, if possible, a zero sum game for the City and the boards of education, whereby the total cost of services provided in kind by the City to the school boards should equal the space costs for municipal facilities in the schools.

Next Steps:

The City's staff team will continue to meet and negotiate with representatives of the school boards to:

(1)complete the detailed inventory of existing space and reciprocal services and validate the information;

(2)evaluate potential additional City services which could be provided to the school boards to balance the cost to the school boards of services provided to the City and vice-versa;

(3)establish and verify costing methodologies and budgetary implications for space usage and services; and

(4)examine language for a draft master agreement, which would incorporate the objectives, indicated above.

The primary timing factors from both the school boards' and the City's standpoints are the next budget cycles and notices of eviction which have been issued to certain child care centres located in schools. This latter issue is being reported on separately, but clearly indicates one of the most important premises of any new master agreement, which is recognition of the appropriate linkages between schools and municipal facilities and the need for longer term arrangements between the City and the boards.

The schools' new fiscal year began on September 1, 1998 and the City's 1999 budget process will be well underway by this fall. As such, staff will continue to work toward resolving the critical issues as soon as possible. Because of the complexity of the issues, more specific costing and the negotiation of a more comprehensive master service agreement may take longer. The intent is to provide the basis for an agreement in principle to clarify the roles and responsibilities and establish security of tenancy as soon as possible.

Conclusions:

Staff will continue to negotiate master service agreements with representatives of the respective school boards. The City's position will be to attempt to implement an agreement that will be of benefit to both the City and the school boards and will place both parties in a more traditional landlord-tenant relationship.

Contact Name:

Len Brittain, Director, Treasury and Financial Services

Phone: (416) 392-5380; Fax: (416) 392-3649; E-mail: lbrittai@toronto.ca

W.A. LiczykShirley Hoy

Chief Financial Officer and TreasurerCommissioner of Community

& Neighbourhood Services

LB:et

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