Island municipalities may need to open pocketbooks for Manor, mayor says

Tom Sasvari with files by

Robin Burridge

The Recorder

MANITOULIN—A local municipal leader says Manitoulin municipalities should brace themselves to come up with more funds because of the current financial situation the Manitoulin Centennial Manor is facing.

“I’d like to speak to a major misconception that has been perpetrated on this group and municipalities,” stated Joe Chapman, mayor of the Northeast Town, at a Manitoulin Municipal Association (MMA) meeting last week. Reading from the Manor’s auditor’s report, Mr. Chapman quoted, in part, “the net operating deficit for the year December, 2011, is $194,819, while the accumulated debt is $811,906,” and, “states significant uncertainty of the status of the operation continuing.”

“These are the strongest comments that I have ever heard from an auditor,” Mr. Chapman told the meeting. “It means the organization is in huge trouble.”

Mr. Chapman said, “this group should be well aware of what the auditors-accountants have said, and the MMA on our part had better be prepared for what might be coming.” The Ministry of Health and Long Term Care (MOHLTC) is requesting the repayment of over $600,000 based on claims of overpayment in ministry funding for the years through 2009. He explained, “if the ministry continues to clawback, and the organization is operating in debt, it may mean municipalities will have to pay more of a share of the operations of the Manor. This is a big ugly issue that we have to confront.”

“The other concern is there is still a $200,000 deficit each year,” said Gore Bay councillor Wes Bentley. “Even if the accumulated debt is forgiven, there is still that rolling deficit every year.”

As reported in last week’s Expositor, years of claims that the Manor is in financial trouble were validated with an announcement at a Northeast Town council meeting earlier this month that the Manor is operating at a deficit totalling almost $1.2 million, according to the Manor’s 2011 statement of finance.

Council had been informed by its Manor board representative, Councillor Al MacNevin, that the MOHLTC was requesting the repayment of over $600,000 based on claims of overpayment in ministry funding for the years 2006 through 2009. Mr. MacNevin had originally shared with council a notice from the MOHLTC requesting the repayment (the clawing back) of overfunding from 2008 amounting to $190,000 earlier this year, but notices pertaining to the repayment of funding from 2006, 2007 and 2009 were just received earlier this month.

In April, Mr. MacNevin had told council the Manor board felt that not all of the 2008 money owing ($190,000) would have to be paid back to the ministry, explaining that the Manor’s auditor was working with the MOHLTC to resolve discrepancies with the allocation of the funding.

Mr. MacNevin added that the Manor board had only been informed of the 2008 clawback (the imputed overpayment) in February by the Manor’s management company, Extendicare, during the board’s budget process and, in fact, the MOHLTC had already begun the clawback process, collecting payments in the amount of roughly $9,000 a month since December of 2011, and would continue to do so for 20 months until the ministry had recouped the $190,000 in funds owed.

As for the MOHLTC’s financial claims for 2006 and 2007, both the board and members of the public were aware of the amounts owed to the ministry as they appeared in the Manor’s annual financial reports. The board, however, insisted in the past that the amounts did not have to be repaid, explaining they had been told this at the time, verbally, by representatives from the MOHLTC.

“Members of the present board, who had sat on the Manor board during 2006 and 2007, insisted they had been told the amount would not have to be paid back since the money had been spent under provincial direction during a two-year period when the Manor had been run by the government for the purpose of bringing the facility up to standards,” Councillor MacNevin told The Expositor. “Our auditor said that the amounts had to show as a payable on financial reports until the Manor received written confirmation that the 2006 and 2007 amounts did not need to be repaid. The ironic part is that those past/present board members have been saying not to worry and ignoring the problem, but now it’s here and the MOHLTC has requested that the funding be paid back.”

MMA Chair Ken Noland pointed out the chair of the Manor board wanted all Manitoulin municipalities in attendance at a meeting being held Wednesday May 30 in Little Current.

“It is has been hard to get information out of the board,” said Mr. Chapman. “When I saw the financial statement last week I was quite upset. Many people rely on the Manor. Patients, relatives and the Manor has created many well paying jobs on the Island, which in turn benefits the economy. To have this information thrown at us as a council was very disturbing.”

Mr. Chapman pointed out the Manor is a public institution with public monies being spent in it. “The municipalities are all shareholders, and one of the things I am most upset about is that the board has not been not telling the truth or the true nature of the problem there is, especially when the board has been saying all along ‘don’t worry, the deficit will be paid by the ministry.’ And we didn’t know anything about the clawback of funds until our council meeting.”

“And this has been sprung on is at the 11th hour and 59th minute. We have no ability to plan or assist,” exclaimed Mr. Chapman. “If there is a problem, which there is, the board should have admitted it, not throw this under a rug…especially at the 11th hour. We had been given no advance notice and in fact had been given a completely different story.”

Mr. Chapman stated, “we need to see a real plan of action, how they plan to get this all under control. The statements made by the auditors about the Manor make it clear it is in big trouble. What will save the Manor? One way is if the ministry steps up and takes over and up covers the $200,000 a year. If not, who will they be looking for this money? Us as municipalities? I think everyone at this table should be aware of what is going on, and I hope everyone will come out to the meeting on Wednesday and ask the tough questions. As municipalities, the only way of survival is for the government to bail out the Manor.”

Lee Hayden, a Gordon-Barrie Island councillor, asked what percentage the $200,000 deficit each year would be of the Manor budget. It was pointed out this would work out to be about 10 percent.

“And that’s not looking at the debt that has been accumulated,” said Mr. Hayden.

Paul Skippen, a Northeast Town councillor said, “we’ve already done our budget for this year, and this is something none of us will want to hear as municipalities, but looking at the deficit each year, I guess you could say we didn’t pay enough last year––or in other years.”

Mr. Noland pointed out that two or three years ago the municipalities had been told by the ministry, “that while the Manor was under provincial jurisdiction, everything was going to be frozen. My understanding was the province would look after additional costs until the Manor got back on its feet and meanwhile the municipalities would pay the same percentage as they have in the past. The Manor has been under Extendicare’s management for the past few years and the province has said the municipalities would only need to continue to pay the same percentage they had in the past and the province would take care of the rest.”

“But we didn’t have this in writing,” stated Jack McQuarrie, a Cockburn Island councillor.

Mr. Skippen said the Manor has been operating under the control of Extendicare for the past three years. “Someone should have said something was wrong at least two years ago.”

“This is a real eye-opener for our municipalities,” said Mr. Noland.

The Manor board has called for a meeting with all Island mayors, reeves and councillors to discuss the impact of recent actions taken by the MOHLTC regarding the financial reconciliations for prior years, and to help strategize a solution, Mr. MacNevin told The Expositor. He explained, “as of now, our auditor and Extendicare are working with the MOHLTC trying to clarify the amount owing and come to a resolution, but the ministry is taking forever to respond, as Extendicare has been working on resolving the 2008 funding clawback since last September, and that is the issue. The 2008 clawbacks will continue until September 2013 while the 2009 clawback will begin this month and will continue until August of this year. The MOHLTC will begin taking back the funding from the 2006 claim in August 2012, continuing until May 2014, and the 2007 clawback for overpayment will start by October 13, 2013, ending in December of 2014. It is our worry that due to the delay in response, the MOHLTC will continue to recoup funding before the situation has been clarified, leaving us in a vulnerable financial situation without any cash flow or any operation capital.”

“I don’t think we are in a unique situation here,” said Mr. Noland. “Homes for the Aged across the province are struggling.”

“Not to the point of the crisis there is here,” countered Mr. Chapman, who reiterated, “I hope everyone shows up for the meeting on Wednesday.”

The special meeting of the Manitoulin Centennial Manor board and councils took place on Wednesday, May 30 in at the Manor chapel.