YUFA OCUFA

Part of the Conservative government's 2001 May Budget was the introduction of a Public Sector Accountability Act (Bill 46) which has received first reading. Bill 46 applies to public sector organizations, including universities, and is quite draconian in its legislative provisions. The legislation would allow the government to be highly intrusive in the operations of public sector organizations and in the case of universities, could dramatically limit university autonomy. Organizations failing to comply with government directives could have their funding withheld and penalized through fines.

Attached is an analysis of the Bill 46 prepared by OCUFA. The legislation can be found at:

Notes: Bill 46 -- An Act respecting the accountability of public sector organizations

Bill 46, as drafted, provides the Minister of Finance with extraordinary powers over public sector organizations. The scope of intervention is wide -- even into areas that receive no public funding, but are parts of public sector organizations as defined by the Act. The government is stripping away the independence of boards of governors and requiring that all boards follow the government’s definition of fiscal responsibility and effective operating practices.

Every university in Ontario and every college of applied arts and technology and post-secondary institution in Ontario whether or not affiliated with a university, the enrolments of which are counted for the purposes of calculating annual operating grants entitlements. Sec. 2(5)

Every corporation without share capital, the majority of whose members, directors or officers are members of, or are appointed or chosen by or under the authority of, one or more public sector organizations described in paragraphs 1 to 6, and every wholly-owned subsidiary of such a corporation. Sec. 2(8)

Implication: The government is using a very broad definition of public sector organizations. Corporations affiliated with a university, such as ancillary enterprises, asset management corporations, or spin-off companies, would fall under the auspices of the Act although they may not be in receipt of any public funds.

The business plan must set out the governance and management structures of the organization; its purposes; major activities for the year; goals and objectives associated with those activities; actions to meet those goals and objectives; the human, financial, technological and other resources needed to meet goals and objectives; performance measures to be used; material external forces which might affect achievement of goals and objectives; methods to establish future goals; the budget for the year; and a description of measures that the organization will take to improve its services and its efficiency and the measures it will take to identify alternative methods of delivering its services, including of those services by the private sector. Sec. 4(2)

Implication: The government is requiring that all of the major activities of public sector organizations come under its scrutiny although these activities may not be funded completely or at all by public funds. Moreover, the government is mandating that public sector organizations justify why services are not contracted from the private sector.

The public sector organizations must consider the views of persons and entities outside the organization that may have an interest in its activities while preparing its business plans. Sec. 4(3)

Implication: The government is mandating consultation with persons and entities outside the organization, but there is no requirement to consult within the organization.

The Act requires that every public sector organization shall plan for a balanced budget every year. Sec. 5(1)

If the public sector organization does not plan for a balanced budget, then it must submit business plans for the following two years so that, during those two years together, the organization has a surplus equal to the initial deficit. Sec. 10(6)

Implication: The government is stripping the financial powers away from boards that have always been in place. Boards have had the flexibility to run deficits in the past. It is worth noting that many universities ran deficits when the Harris government introduced its 15% cut to the operating grants in 1996-97. The deficits were used to maintain programs and services during the transition to a lower level of funding.

The Act requires that every public sector organization will prepare an Annual Report, which will describe how well the organization fared in achieving the goals and objectives of its business plan. Sec. 6 (1)

Implication: Most universities prepare annual reports, which are available to the public. These annual reports will be required to be more objective in assessing the organization’s performance against its stated goals and objectives.

The Act permits the Minister of Finance to order, or have the Ministry of Finance undertake, a review of the organization’s financial management, business practices, and operating practices. The Minister does not have to allege any mismanagement by the organization, only to justify the review as being in the “public interest”. Upon completion of the review the Minister of Finance may compel the organization to adopt recommendations made under the review. Sec 9(2-6) Organizations will pay for the cost of these reviews.

Implication: The Minister of Finance is being given unprecedented powers to intervene in the internal affairs of a public sector organization.

Failure to comply with the Act could result in the public sector organization having funds withheld by the Government of Ontario. Sec. 11 (2)

Implication: The Government is requiring complete cooperation by public sector organizations without any recourse being made available without direct financial harm to the organization.

External

Tories' Public Sector Accountability Act (Bill 46) undermines universities' autonomy, says OCUFA