N.S. auditor general report highlights troubling state of teachers’ pension plan

A report from Nova Scotia’s auditor general is once again highlighting the “troubling” state of the Nova Scotia teachers’ pension plan, which is 78.4 per cent funded and has a $1.4 billion deficit. The province is responsible for half of that figure.

Auditor general Michael Pickup warned there is no formal plan on how to deal with the deficit. “The province of Nova Scotia, in working with the Nova Scotia Teachers’ Union, should present Nova Scotians with a formal plan to address this significant matter which is costing working teachers, retirees, and Nova Scotians,” he said.

The province has paid an extra $57 million into the teachers’ pension plan over the past five years due to its “poor financial position,” according to the report. The auditor general also noted that pensioners retired since Aug. 1, 2006, have not seen an increase in their pension cheques for a decade.

Read: Auditor general says N.S. teachers’ pension plan in ‘worrisome financial shape’

The provincial auditor general also says weaknesses in financial controls remain a problem “year after year” at the Nova Scotia Health Authority, where a lack of guidance led to a bill of more than $8,400 for a staff Christmas party.

In his report, Pickup says the health authority is one of four government organizations with “significant” repeat deficiencies in financial controls. Pickup says a lack of policy direction meant it was “unclear if expenses met health authority expectations” in the case of the party, which was attended by 146 people.

Pickup also singled out Legislative Services for a lack of policy around the legislature Speaker’s annual Christmas reception. He says the $3,580 tab was classified as a meeting expense but “in substance” it was a social event that should have been accounted for as hospitality.

Other government organizations singled out for control deficiencies include Harbourside Commercial Park Inc., Nova Scotia Lands Inc., and Sydney Utilities Ltd. “We noted that many were repeat deficiencies from the previous year that did not get addressed by the organization during the year,” the report states. “To strengthen financial management and controls, the weaknesses need to be addressed in a timely manner.”

Read: N.S. Pension Services Corp.’s plans improve funding in 2017

The report says the health authority is also not reviewing and approving time sheets, while key business processes and policies are not finalized.

Pickup said the province has indicated that guidance on meeting expenses will be issued to senior executives to ensure those expenses are supportable and well documented. He said the Nova Scotia Health Authority has also implemented a more rigorous process for review and approval of internal meeting and employee social expenditures, while developing two new policies to be presented to its board for approval this fall.

“While internal meeting and employee social event expenses are relatively small to the province’s overall expenditures, there is an expectation that these types of expenses are well managed,” Pickup said.

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He added that the health authority has made some progress, having fixed control deficiencies reported in 2017 in procurement, payment processing and payroll processing.

Pickup’s report also looked at the province’s overall finances, noting that the long-term debt has increased by $4.1 billion over the last 10 years. Over that time $7.4 billion was paid in interest on net long-term debt.

“This represents funds that could not be used for other purposes,” Pickup said.

The province’s annual expenses have risen by 32 per cent to $2.9 billion over the last decade to serve a population that has increased by two per cent, said Pickup, while annual revenues are up 29 per cent mainly due to increased personal income tax revenues.

Read: Two universities join Nova Scotia public service pension

“Financial indicators as one measure of the province’s financial condition show that over the past 10 years there has been a significant decline, however, the last five years have seen less increases to total debt than the five years before that,” said Pickup.