The provincial government’s rush to provide COVID-19 financial assistance to thousands of Nova Scotia companies could mean that nearly $ 60 million earmarked for pandemic assistance will remain unused – but will not be returned to the provincial treasury.
That’s one of the key findings in a report issued Tuesday by Nova Scotia’s Auditor General Kim Adair, which examined early COVID-19 relief efforts, including the province’s decision last year to hand over $ 100 million to Dalhousie University.
The school was tasked with distributing the money, including to businesses that were forced to close due to public health measures, support for major tourism operators and some funds for workers who did not qualify for federal programs.
The province, under the former Liberal government, “handed over control” of the money to the university, including interest generated from the fund, according to the auditor general.
“The government’s rapid response to the public health emergency is commendable, but spending $ 100 million before emergency aid programs were developed and priced is worrying,” Adair wrote in its report.
“By spending and committing $ 100 million to Dalhousie University before the relief programs were fully developed and the costs known, the province was no longer able to redirect any potential savings if the funding earmarked for relief programs was not needed.
“We are concerned that this money, spent before the government knew how much it would spend, will never return to the province.”
Of the original $ 100 million, $ 23.9 million had not been spent this summer, and a further $ 34.7 million went to loan guarantees for the tourism sector and “sitting at Dalhousie University” until the end of the program in 2027 or one of operators default on their loans.
Although the original agreement, signed on 31 March 2020, included a clause on “remaining funds”, auditors believed that the wording “created uncertainty as to the outcome of any remaining funds” after the end of the programs. The agreement was amended in September last year and sent the money to Research Nova Scotia in 2027.
In 2020-21, the nonprofit group, which had a mandate to support, organize, and coordinate the funding of research in Nova Scotia, distributed about $ 15 million in research scholarships and awards.
Research Nova Scotia has funded projects to detect the COVID-19 virus in wastewater, grow better grapes and build improved cells for solar panels.
Residues for public health research
Stefan Leslie, Research Nova Scotia’s CEO, said the group was not part of discussions leading to it being named the recipient of the remaining funds. He said he found out about the clause about a year ago, and only just learned how much provincial money is left in Dalhousie’s custody, from the new AG report.
If the full $ 58.6 million is still there by 2027, Research Nova Scotia stands to receive a significant cash flow. Most of its revenue comes from a provincial allotment, which has been around $ 15 million in the last two years.
“If we were talking about funds of the magnitude that people expect, as Auditor General expects as possible, we would look to use those funds sensibly at the appropriate time on research projects of value,” Leslie said in an interview.
The money should go to public health research, but Leslie said it’s pretty broad. In the COVID-19 era, Leslie said public health research funded by Research Nova Scotia has included pandemic preparedness, vaccine development, and impacts on vulnerable populations, to name a few.
The direction of Research Nova Scotia’s spending is dictated by the provinces’ priorities, and what those priorities will be in 2027 is still unknown.
Adair said that by handing over more money than necessary to external groups, the government deprived itself of funds it could use for its own priorities or new ones.
“It’s just, in my opinion, not the best use of public funds,” she said at a news briefing.
She also worried about the level of liability for millions of dollars of taxpayer money.
“By placing significant public funds in the hands of external third parties there [are] limits on the amount of oversight that the government continues to have and cannot have once they do. “
The report found that although there were no indications of “fraud or material error, the absence of a documented program framework leaves the province open to risk.”
During the review of the agreement with Dalhousie University, the auditors noted:
- Risk assessments were not consistently performed.
- The agreement between the university and the province lacked standard contract clauses.
- Goals and goals seemed to be understood, but not all included performance goals.
- Monitoring was not documented by the province.
“The province needs to develop guidance for emergency relief programs, including expectations for emergency funding situations,” according to a key recommendation from the report.
The ruling Liberals also gave the university full control over who it could provide work for subcontracting, a problem for the Auditor General.
“This means that the province accepted a significant level of risk by relinquishing control,” Adair said.
$ 30 million for day care
The Auditor General’s Office also investigated the province’s attempts to keep day care operations afloat and day care providers at home in the business during the first months of the pandemic.
The report noted that auditors found “no documented evidence of comprehensive monitoring” of the province’s $ 30 million day care support programs.
Auditors found that the Department of Education and Early Childhood Development had no documented process for administering emergency childcare grants, nor was there a secondary audit process “to verify the accuracy or appropriateness of grant application decisions.”
In one case, auditors found a daycare facility that received an overpayment of $ 132,000. The error was noted as “a result of overpayment of staff costs for several rounds of the grant.”
In its recommendations, Adair urges the province to “develop guidance on providing emergency assistance,” and urges the Department of Education and Early Childhood Development to “conduct audits to ensure that childcare emergency grants accurately go to eligible recipients.”
The report notes that when it comes to keeping daycare workers viable, it seems the money has done the trick. According to the education department, 96 percent of the approved child care centers active in March 2020 were reopened in August 2020, and 89 percent of child care businesses in the family home returned to operation in September 2020.