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Capital funding changes a positive for school divisions

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A change in the way the Public Schools Finance Board (PSFB) issues payment for approved capital projects will mean substantial savings for Mountain View School Division (MVSD).
Starting immediately, secretary-treasurer Bart Michaleski explained, PSFB will be issuing payments to school divisions of about 95 per cent of the total support to the approved project, provided by the province.
“We’ve always had to expend the necessary resources with our capital projects and then make a claim back for it and that’s been the process forever,” he said.
The benefit to receiving funding up front, Michaleski noted, is MVSD will no longer incur interest costs for capital projects.
For example, he calculated the veneer project at both Winnipegosis schools was valued at approximately $2.17 million.
With the current practice of paying invoices as they come in and claiming reimbursement from PSFB quarterly, Michaleski said, MVSD incurred interest costs of up to $21,500 over the year-long project.
“Under this new process, with PSFB providing the majority of the funding up front, our total borrowing costs will actually be reduced by almost $40,000,” he said.
“The net difference on a project this size is over $61,000 and that is a significant interest saving.”
PSFB did indicate one of the reasons for the change, Michaleski noted, was to reduce the need for a division to borrow during capital projects.
“Their rationale behind this is, it allows them to properly allocate their resources in whatever fiscal period they’re being allocated. And so, it’s beneficial from their standpoint,” he said.
Paying 90 to 95 per cent up front for large projects, such as the current $5 million phase of MacKenzie Middle School (MMS), Michaleski said, would mean MVSD goes from a situation where it is paying interest, to potentially earning interest on those funds, until they are paid out over the period of the project.
Additionally, he said, the change will reduce the number of claims to process, as MVSD was submitting a claim every six-to-eight weeks for some major projects.
Michaleski admitted he was surprised by the change from PSFB.
“You know, we’ve been asking for this on the operating side. We’ve been asking for the province to provide us with our funding advances on our operating budget sooner. Start that in July when our budget starts, not the middle of September,” he said.
At the Feb. 10 board meeting, trustees gave first reading to a bylaw for the borrowing of $1 million, for projects related to the MMS 1959 and 1962 two-storey wing renovation project.
Michaleski explained the current classroom wing project had more than $1 million left in funding from PSFB and will be completed by July.
“So we’re doing that claim, so that they will cut us a check for a million dollars next month,” he said, noting MVSD will then have the resources to cover the remaining cost of the project.

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M. A. Nyquist
REPORTER
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