The devil in the details: The P3 experience in Nova Scotia schools
When the previous Liberal government came into power in Nova Scotia, one of their mandates was to explore public-private partnerships (P3s), particularly in education. Private companies would finance and build a number of new schools, which would then be leased by the province—in effect, the company would be the landlord and the province the tenant. After the duration of the least the province would buy the school outright from the private contractor.
In 1997 the Liberal government decided that all new schools in Nova Scotia would be built through the P3 initiative and began looking for partners—real estate companies, land developers, huge financial corporations and public sector pension funds—and construction began. By the time the Conservative government came to power in 1999 it became clear that P3 schools were costing much greater sums of money than originally had been anticipated and the project was cancelled. However, the existing P3 schools remain, and by many accounts are plagued with problems that reveal and reinforce the many concerns with this aspect of the privatization of education.
The experience with P3 schools in Nova Scotia has been used as a cautionary tale even before the foundations of these buildings were laid. Public concern with the P3 process, including the additional costs to the taxpayer resulting from the private company’s inability to qualify for lower interest rates available to the province for construction of regular public schools, plagued the project from its outset. It was pointed out that these schools provided a way for the government to falsely claim a better financial position because the P3 arrangement does not show up on the government’s books. Furthermore, at the completion of the lease, the public is left with the prospect of purchasing a facility that they have been leasing for a number of years—a facility that is now 25-35 years old, and with a value that has declined accordingly.
All this results in increased costs for the taxpayer—in spite of the claim that P3s are cheaper and more efficient than public administered and financed school construction projects. Often the additional costs are not discovered until the P3 project is well under way. In June 2000 Nova Scotia cancelled its P3 project—50 schools for $350 million—when it became too expensive. However, the 38 schools that had already been built under this initiative cost Nova Scotia taxpayers $32 million more than had been estimated. When the province reverted to traditional public sector methods for future school construction it did so at an estimated $2 million saving per school.
Since 2000, stories of problems with P3 schools have been circulating—spraying of pesticides on school grounds in spite of health concerns, delayed building repairs, private builders—not local preferences—determining where new schools would be built, and increased fees for community groups wishing to rent school facilities. When Rod MacDonald—remember Rod?—of Youth News Network fame was taking his commercial in-school TV program on the road across Canada he speculated that he would have less difficulty getting YNN into P3 schools in Halifax than he would with public schools, sparking debate about corporate involvement in P3 institutions.
After attending a conference by the Canadian Council for Public-Private Partnerships, Murray Dobbin summarized the “cautionary tale” nature of P3s in education as follows:
“You might think that if you were leasing the school you wouldn’t have to worry about repairs. Think again. The taxpayer is responsible for the operating costs, capital improvements and repairs, and technology upgrading. The private owners were assured of receiving 89 per cent of their costs through leasing charges, and will still own the building and the land when the lease is up. Then the government has to buy the school whether or not it is still needed.…. The contract exempts the owners and the builders from any legal or financial liability for shoddy school construction, or even faulty wiring and plumbing. This was an enormous incentive for using cheap labour and low-quality materials. And, of course, since the corporation owns the schools, it has the right to use them and all their technology for profitable activities after hours, on weekends and during the summer.”
Ironically, as Dobbin indicates, in 1998 the first Halifax P3 school was presented with first prize in the “infrastructure” category by the Canadian Council for Public-Private Partnerships. In 2001 students and staff in that school “were still drinking bottled water…12 months after arsenic was found in the school’s well water. A water-filtration system had been installed, but it wasn’t being used because the school board and the school’s corporate owner couldn’t agree on who was responsible for providing students with clean water.”
Clearly this is not an isolated example. One Nova Scotia resident passed on information about at least two other P3 schools with undrinkable water. She describes one school—the “Taj Mahal”—as the proud owner of a leaky roof that has caused considerable damage each year, with sports fields still unusable four years after the school was opened. Others describe how at one P3 school in New Brunswick students were not allowed to play on the grass or hang artwork or posters on school walls because it was damaging the company’s asset.
Recently, the P3 situation reached a crisis point in Halifax and resulted in an arbitration hearing between Scotia Learning Centres Inc (a consortium led by Halifax developer George Armoyan), and the province of Nova Scotia—and a January 10th ruling which was not at all favourable to the province. This came about after concerns were raised that Scotia learning was charging several times more than public schools to allow community groups to rent their facilities. According to records, the cost of renting a double gym in a P3 school is $75/hour (plus HST). By means of comparison, the Halifax regional school board charges $7.50/hour for a single gym used for youth programs and $30/hour for adult groups. Before the arbitration, the province maintained that community groups should not have to pay extra to rent school facilities because the terms of the lease make the building available to the province 3,500 hours a year, and some schools estimate they use only half of that. However, the ruling determined that Scotia Learning could decide what happened to the building after school hours, and could charge whatever price they wished.
However, concerns have been raised about how the radical increase in rental rates will affect the number of community programs that can now be offered—and to whom. Joan McDonell, regional co-ordinator of the Halifax Regional Municipality’s recreation department, has said the high fees limit the number of youth and adult programs her department can offer in some areas. Ironically, this decision comes shortly after the province revealed its strategy last fall to increase physical activity in youth.
Furthermore, Scotia Learning was claiming it was entitled to a 35 per cent share of the proceeds from cafeteria food and vending machine sales. The Halifax board estimates that the nine Scotia Learning schools in their jurisdiction make approximately $50,000 a year from concessions and use these funds to compensate for inadequate funding to pay for school trips and teaching supplies.
Vandalism—as in, who pays for it—is another contentious issue at P3 schools, and featured prominently in the arbitration hearing. Scotia Learning paid for $20,000 worth of repairs at its P3 schools—and billed the province, which hasn’t yet paid. But who is responsible for making repairs, and paying for them? The decision of the arbitrator was that the province must pay if the vandalism takes place during the school day or extracurricular activities, but Scotia Learning pays for vandalism takes place the rest of the time. As for the disputed $20,000—where neither party is sure when the vandalism actually took place—arbitrator Bruce Outhouse urged both sides to “figure it out,” since he couldn’t.
The arbitrator also decided that while Scotia pays for the cost of fixing computers and providing technicians, it was not responsible for providing computers for new classrooms added to P3 schools. The company is responsible for providing propane for cafeterias, but the province pays for gas used in science labs. Scotia Learning may also carry less liability insurance than school boards—which means that groups renting schools must buy extra insurance. And the province and the company must share the $48,000 cost of removing an unsafe retention pond at one of the P3 schools in Enfield.
The results of the ruling—and the province’s loss—created a storm of controversy, which saw the Liberals, who when they had been in power had negotiated the deal with Scotia Learning, blaming the Conservative government for “trying to make the Grits look bad in an election year.” The Conservatives and the NDP blamed the Liberals for signing a bad deal in the first place. Education Angus MacIsaac said the government had to live with the contract the Liberals had signed, while NDP education critic Bill Estabrooks said the school leases were a rush job. Certainly the ruling—which at the time of writing this article has, at the insistence of both the government and Scotia Learning, not been made public—does indicate that “the Province was in a hurry to conclude negotiations with SLC and other successful bidders so that construction of the P3 schools could begin as soon as possible” (6).
Clearly the province signed a contract that was favourable to Scotia Learning Centres—or, at the very least, vague enough to allow for substantial challenges by the corporation. And certainly the province was the recipient of the short end of the stick when the arbitration ruling came down. But concerns with P3 schools go far beyond the drafting and signing of a bad deal—they speak to the very way the quality and content of an education is determined.
School facilities—and access to them—are integral to the kind and quality of education that students receive and teachers are able to help provide. Should students be able to play outside at recess? Is it more “cost-effective” to combine an assembly hall with a cafeteria? Does the private contractor find it too expensive to have a large space—such as a cafeteria—unused for large parts of the day? What sorts of extra-curricular activities should be accommodated—especially when the corporation stands to benefit from charging community groups substantially higher rental rates for the use of school facilities? What relationship should the school have with the broader community, and who should be able to afford to experience that relationship? Who should decide where the school is to be located? Finally, whose responsibility is it to maintain the safety and security of the students? To whom is the corporation accountable—and what recourse is available to the public?
Schools are more than just buildings—they are communities, places of learning, and a reflection and a response to the neighbourhoods in which they are located. The reputation of P3s in Canada, particularly in the Maritimes and most recently in Halifax, has been disturbing, and in some cases even hazardous. But above all it reinforces the need to ensure that our schools, as part of our system of education, are accountable to the public, and are not driven by cost-benefit analyses or end-of-business-quarter returns on investments.
Endnotes:
- Eileen O’Connell, NDP MLA for Halifax Fairview revealed that Scotia Learning was borrowing at a rate of 6.22% compared to the government’s allowed borrowing rate at 5.6%–resulting in approximately an additional $3.5million in interest costs alone.
Sources:
Arbitration Proceedings Between Scotia Learning Centres Inc. and Her Majesty the Queen in Right of the Province of Nova Scotia. Hearings held in Halifax, NS, April 16, 17, 18, 19; June 24, 25, 26, 27, 28; and July 3, 4, 2003.
CUPE Locals 34, 1948, 2268 & 3730. “Public Risk, Private Profit: Why Lease Back Schools are Bad for K-12 Education.” Brief to the Saskatoon Catholic and Public School Board. 5/30/2001.
Murray Dobbin. “Warning; the P3s are coming!” July 21, 2002. http://www.creativeresistance.ca/awareness/2002-july21-Warning-the-P3‘s-are-coming-murray-dobbin.htm
Eileen O’Connell, MLA, Halifax Fairview. “O’Connell says Scotia learning bond borrowing for P3 schools will cost taxpayers more.” May 14, 1999
JoAnn Sherwood. “P3 opens doors to ads in schools.” Halifax Herald. Feb 27, 1999
JoAnn Sherwood. “P3 vandalism: who pays depends on when it happens.” Halifax Herald. Jan. 25, 2003
David Jackson and JoAnn Sherwood. “P3 arbitration loss stirs hornet’s nest.” Halifax Herald. Thursday, January 23, 2003.
JoAnn Sherwood. “High P3 rental fees upset sports groups.” Halifax Herald. Wednesday, January 22, 2003
