Nova Scotia P3 School Failure

From 1994 to 2000, More than 30 P3 schools built in Nova Scotia

The P3 program was cancelled in June, 2000, the Nova Scotia government bowed to intense public and political pressure and
scrapped all future P3 school construction.

By then more than 30 P3 schools had already been built,,and the public (you & ) will be on the hook for these
schools for decades to come.

In scrapping P3s, Nova Scotia Conservative Education Minister Jane Purves said "P3 schools grew too elaborate and too costly." Neil Leblanc, Conservative Finance Minister of Nova Scotia said, "The former government tried to use accounting to push the costs of the new schools off-book, but they didn't fool our lenders or taxpayers. Debt is debt is debt, and we must account for it."

John Hamm was the premier at the time the P3 schools were canceled. The program was cancelled because of the High costs, the loss of public control, the poorly negotiated deal and the public scandal.

The consortia involved were Ashford Investments Inc., Nova Learning Inc, and TR3LCNova Inc.

Overview; In 1994 the Nova Scotia government of the day committed itself to the most extensive experiment in P3 schools anywhere in Canada. The schools were financed, designed, built, owned and operated by private sector consortia )groups of private for-profit companies). The project was ultimately deemed a failure and was cancelled due to high costs, widely-publicized problems and public scandal.

The P3 Privatization Model: Design, Build, Finance, Own & Operate: For-profit companies built the schools under contract with the school boards and the government. The school and the use of its properties are leased to the school board and the support services were privatized and sold back to the school board for 20 to 30 year contracts paid by public funds, our tax-dollars. The deals were structured so that the service privatization was bundled into the real estate deal and extended for the duration of the 20 to 30 year leases. While all the support services (CUPE Workers) were privatized and run by the for-profit consortia, along with the building and property management, the teachers remained publicly
managed and governed.

In these P3s, the management and operation of the schools was split down the middle. The teachers were run as a non-profit, public service. The lands, the management of the facilities and the support services were run by the private consortia for their own profit. Large 20 to 30 year contracts negotiated with the for-profit consortium overruled the traditional powers of the school board. The contracts covered potential issues that might arise over the 30 years, costs, revenue-sharing, and control. In the Nova Scotia P3 schools, the contracts left the school boards at risk for increased costs, lost revenues, and liability.

Public Costs, Privatizing the Profits; The private owners were a consortia (groups of companies) of investors, land developers and public pension fund managers, they argued that the exact terms of the leases shouldn’t be disclosed because the details were "proprietary corporate information." But political pressure on the government ended up forcing disclosure of the lease terms. These proved to be
incredibly advantageous to the schools' private owners.

P3 Schools are just a bad deal for Tax-payers.

The public (tax-payers you & I) were responsible for each school's operating costs, the cost of ongoing facility improvements and repairs, technology upgrading costs while the private owners were guaranteed that they would recover 89 per cent of their costs through leasing charges alone.

The contracts allowed the consortia to make additional money through user fees and other charges. The ownership of the school was to remain in private hands throughout the period of the lease. However, at its expiry the province was obliged to buy the schools, whether it needed the school or not. Not only were the P3 developers assured a terrific deal on the lease payments,, the private pot was further sweetened by exempting the owners and the builders from any legal or financial liability for shoddy school construction, or even faulty wiring or plumbing.

Higher Costs; The Nova Scotia auditor found that the P3 schools cost $32 million more than if they had been built publicly. The audit found that the P3 consortia were not responsible for operating costs, capital improvements (including repairs), nor technology upgrades. 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.

Scandals, Legal Wrangling, Loss of Public Control, over the schools became clearer, the public became angry. A litany of problems emerged. Schools were located to benefit the for-profit companies, not communities. User fees for school rentals were hiked. Maintenance was left undone, and ended in legal wrangling. School boards ended up in arbitration to try to protect their revenues, limit user fees, and get maintenance done.

Schools were moved out of urban centres to maximize the for-profit companies' land sale and development opportunities on the centre-of-town school properties. Students had to be bused - at public expense –- to the new schools located on cheaper land. In 1998 the first Halifax P3 school was
presented with first prize in the “ 'nfrastructure 'category by the Canadian Council for Public-Private Partnerships (the pro-P3 industry lobby group). In 2001 students and staff in that school were still drinking bottled water twelve months after arsenic was found in the school’s well water. A waterfiltration
system had been installed, but it wasn't being used because the school board and the school's corporate owner were in legal wrangling over who was responsible for the cost of providing students with clean water.

The P3 consortium hiked fees for renting school property by community groups, creating a hornet's nest of controversy. In September 2001, community groups learned P3 school owner Scotia Learning Centres had raised most of its rental rates for gymnasiums and other facilities such as audiovisual
rooms. In some cases, gym rental fees went from %20 to %50 an hour. The Bedford minor basketball association’s hourly fees more than doubled from $20 an hour to $50 an hour in 2001. Association officials said the new fees were "a shock," and wondered where they would find the extra $30,000 to fund gym space for practices and games. Rates at another area P3 school went from $40 an hour to $75, according to the Fall River basketball association. In comparison, the Halifax regional school board charged $7.50/hour for a single gym used for youth programs and $30/hour for adult groups.

In November 2001, Recreation Nova Scotia wrote to the provincial government, warning that "accessibility to affordable recreation options will be greatly reduced as groups hike their program fees to offset rising facility costs, exacerbating an already bad situation for low income families." Recreation
Nova Scotia President Rick Gilbert noted that 72 per cent of children and youth living in families earning less than $20,000 "do not participate in sport and recreation because they cannot afford the costs." He said limiting access to "essential community facilities" will hurt the health of Nova Scotia children.

The Ridgecliffe Middle School's athletic field sat uncompleted and unusable after the school opened. NDP MLA Bill Estabrooks raised the issue with Education Minister Jane Purves, saying the field "isn’t usable, in fact, because it wasn’t properly made in the first place, and that shoddy work is keeping kids off their school field."

A secret arbitrator’s ruling in 2003 favoured the P3 corporations leading to lost revenues, higher user fees and increased liabilities for the school boards. The ruling was leaked to the public, causing a swirl media and public criticism. The arbitrator sided with Scotia Learning Centres Inc.,,awarding them 35% of money raised from cafeteria and vending machine sales which Halifax school board used towards under-funded supplies and field trips. The arbitrator also dismissed provincial calls for the corporation to carry $50 million in comprehensive liability insurance in case of staff or student injury, or other accidents. Instead, the corporation is free to carry only $10 million of coverage.

In the end, the province had to pay-out the P3 consortium to restore technology upgrades and regain control of concession revenues. In 2005, the province announced that it had negotiated a $3.8 million deal to get the P3 consortium to upgrade technology and install computers in new classrooms. In addition, the province paid out the consortium $250,000 in order to obtain the ability for the schools to retain profits from concessions including vending machines and rentals. (NS Dept. of Education Press Release April 7, 2005.)

What you need to do.

We would encourage that you use this information in writing a letters to the editor, write the premier and you MLA as well so we can show solidarity in our fight on why P#3’s are just a bad deal for citizens.

The provincial government has received a report on 10 possible P3 projects and will be announcing those in the coming weeks. We say its time Nova Scotians got the facts about so-called public-private-partnerships. Your union has serious concerns about the impartiality of Partnerships BC, the agency that the MacDonald government hired to 'evaluate' the projects.

We're urging that you, your’er co workers and others to get informed and halt this needless waste of tax dollars. One of the ways they can do this is by visiting our new P3 website www.P3Facts.ca  and signing our petition to Rodney MacDonald. Visit the CUPE Nova Scotia web site and take a look http://novascotia.cupe.ca/  or the CUPE National site http://cupe.ca/

You can find out a lot more about Partnerships BC and learn about the many failed P3 projects like this one. There are some real disasters out there. P3's are essentially a gift to the private sector, a gift that has the potential to drain the province's finances down the road, while the private companies continue to profit.

In addition, 'partnering' with the private sector compromises democratic accountability and transparency. There are no guarantees that the province will have a say in important future decisions, placing the residents of Nova Scotia at risk of being the victims of corporate shenanigans.

"

The P3 Privatization Model: Design, Build, Finance, Own & Operate: Private companies built the schools
under contract with the school boards and the government. The school and its properties are leased to the school
board while support services are provided through private contracts paid by public funds. Privatization of services
was bundled into the real estate deal and extended for the duration of the 2030 year leases. Only the teachers
remain publicly managed and governed.

The management and operation of the schools is split down the middle. The teachers are managed as a nonprofit,
public service. The lands, management of the facilities and support services are run by the private
consortia for their own profit. The contracts negotiated with the forprofit consortia overrule the traditional powers
of the school board. In Nova Scotia P3 schools, these contracts leave the school boards at risk for increased
costs, lost revenues, and liability.

Secret terms: The private owners were a consortium of investors, land developers and public pension fund
managers. They argued that the terms of the leases shouldn't be disclosed because the details were "proprietary
corporate information." But public pressure forced the government to eventually disclose the lease terms, which
proved to be incredibly advantageous to the schools' private owners.

P3 schools are just a bad deal for taxpayers
Taxpayers (you and I) are responsible for each school's operating costs, facility improvements and repairs, and
technology upgrades, while the private owners are guaranteed to recover 89 per cent of their costs through
leasing charges. The private owners are exempt from any legal or financial liability for shoddy school
construction, or even faulty wiring or plumbing.

In addition, the contracts allow the consortia to make money through user fees and other charges. The
ownership of the schools remains in private hands throughout the period of the leases. However, on expiry the
province is obliged to buy the schools, whether it needs them or not.

Higher costs: Nova Scotia's auditor general found that the P3 schools cost $32 million more than if they had
been built publicly. NDP MLA Eileen O'Connell revealed that one of the private companies, Scotia Learning, was
borrowing at a rate of 6.22% compared to the government's preferred borrowing rate of 5.6% resulting in
about $3.5 million more in interest costs alone!

 

Scandals, legal wrangling, loss of public control: Once the terms of the P3 school contracts became clearer, the public got angry. A litany of problems emerged: school locations were chosen to benefit the forprofit companies, not communities; user fees for school rentals were hiked; maintenance was neglected; and legal
wrangling ensued. School boards ended up in arbitration to try to protect their revenues, limit user fees, and get
maintenance work done.

Schools were moved out of urban centres to maximize the private companies" land development opportunities.
Students have to be bused at public expense to the new schools located on cheaper land. In 1998 the first
Halifax P3 school was presented with first prize in the ""nfrastructure" category by the Canadian Council for
Public Private Partnerships (a proP3 lobby group). In 2001 students and staff in that school were still drinking
bottled water twelve months after arsenic was found in the school's well water. A waterfiltration system had
been installed, but it wasn't being used because the school board and the school's corporate owner were in legal
wrangling over who was responsible for the cost of providing students with clean water.

The P3 consortium hiked fees for the use of school property by community groups, creating a hornet's nest of
controversy. In September 2001, community groups learned that Scotia Learning had raised most of its rental
rates for gymnasiums and other facilities such as audiovisual rooms. In some cases, gym rental fees went from
$20 to $50 an hour. Bedford Minor Basketball Association officials said the new fees were "a shock," and
wondered where they would find the extra $30,000 to fund practices and games. Rates at another P3 school
went from $40 an hour to $75. In comparison, the Halifax Regional School Board charged $7.50 an hour for a
single gym for youth programs and $30 an hour for adult groups.

In November 2001, Recreation Nova Scotia wrote to the provincial government, warning that "accessibility to
affordable recreation options will be greatly reduced as groups hike their program fees to offset rising facility
costs, exacerbating an already bad situation for low income families."Recreation Nova Scotia President Rick
Gilbert noted that 72 per cent of children and youth living in families earning less than $20,000 "do not participate
in sport and recreation because they cannot afford the costs."He said limiting access to essential community
facilities will hurt the health of our children.

The Ridgecliffe Middle School’s athletic field sat uncompleted and unusable after the school opened. NDP MLA
Bill Estabrooks raised the issue with Education Minister Jane Purves, saying the field "isn’t usable, in fact,
because it wasn't properly made in the first place, and that shoddy work is keeping kids off their school field."

Secret ruling: A secret arbitrator's ruling in 2003 favoured the P3 corporations, leading to lost revenues, higher
user fees and increased liabilities for school boards. The ruling was leaked to the public, causing a media swirl
and public criticism. The arbitrator sided with Scotia Learning Centres Inc., awarding them 35% of the monies
raised from cafeteria and vending machine sales, monies that the Halifax School Board had been putting
towards underfunded supplies and field trips. The arbitrator also dismissed calls for the corporation to carry %50
million in comprehensive liability insurance. Instead, the corporation is free to carry only %10 million worth of
coverage.

In the end, the province had to pay the P3 corporations over $4 million to get technology upgrades and regain
control of concession revenues.

What you can do

We encourage you to use this information to write a letter to the
editor of your local paper, and write the premier and your MLA as well.
This will demonstrate solidarity in our effort to show why P3s are just a
bad deal for citizens.

The provincial government has hired a consulting agency,
Partnerships BC, to review 10 possible P3 projects and will be
announcing goforward plans in the coming months. We say it’s time
Nova Scotians got the facts about publicprivatepartnerships. Our
union has serious concerns about the impartiality of Partnerships BC,
and its track record of P3 fiascos in British Columbia.
We're urging Nova Scotians to get informed and halt this needless
waste of tax dollars. One of the ways you can do this is by visiting our
P3 website: www.P3Facts.ca and signing our petition to Rodney MacDonald.

You will find out more about Partnerships BC and other failed P3 projects - and there
are some real disasters out there. P3s are essentially a gift to the private sector -  a gift
that has the potential to drain the province's finances, while private companies profit.

In addition, "partnering" with the private sector compromises democratic accountability and transparency.
There are no guarantees that the province will have a say in important future decisions, placing the residents of
Nova Scotia at risk of being the victims of corporate shenanigans.