JULY 13, 2007 1360 On-reserve population 1906 Total population Previous co-management agreement began in December 2005 and was terminated on May 31, 2007. Upon leaving the community the co-manager was fully paid, cashflow was minimal, cash balances minimal, commitments exceeded the band’s ability to meet, no RMP, no budget and no final report. Additionally, there exists no report on activities nor an action plan to address the current plethora of issues facing this community. Of particular note is the fact that co-managers were complicit in a scheme to have 2007-2008 funds advanced to the community in 2006-2007 in addition to a large bridge financing loan. There was no plan in place by the parties to address the impacts of these actions post March 31, 2007. The release of band cashflow by DIAND totaling some 47.3 % of the band’s total annual cashflow has resulted in the band’s inability to meet even the most basic essential programs and services at this point. Current Deficit Ratio: 67.2 % Current Cash Balances: $ 0 Historically the band has received some $13.765 and $11.342 million in fiscal years 2005-2006 and 2006-2007 respectively. Current projected DIAND cashflow for 2007-2008 is some $10.258 million – some 25% less than 2005-2006 and 10% less than 2006-2007. The band is in its final year of its multi-year funding arrangement and does not currently meet the criteria for a further multi-year agreement. This band can not effectively operate post March 31, 2008 under a contribution agreement due to the massive amount of financial obligations it has incurred over the last number of years. TEDCO OPERATIONS: Five Separate Business Enterprises: 1) TEDCO - main office shut down as of today - no financial income for the current calendar year - financially supported by the First Nation - current cumulative debt to the band from overall TEDCO operations is some 2.6 million dollars with no likelihood of recouping these funds. This does not include the inter-company debts. - collective CRA obligations is some 2.1 million dollars with no plans for repayment - every TEDCO operation is currently in a state of financial despair with debt obligations exceeding the operations ability to pay 2) Maliseet Gas Bar: - this represents the only business which, as an incorporated body, is capable of being a profitable business. Management and accounting practices need to be strengthened to ensure this opportunity. - A reported loss of about $20,000 for 2006-2007 - CRA obligations of some $441,000.00 3) Tobique Forestry - loss of about $300,000 for 2006-2007 - CRA obligations of some $700,000 - Commercial harvest agreement was recently signed 4) Maliseet Capital Construction - loss of $56,000 in 2006-2007 - not currently operating - CRA obligations of $83,000 5) Tobique Truck Stop - currently in receivership - CRA obligations of $556,000 - Loss of $732,000 for 2006-2007 - Current operating regime is not conducive to making a profit 6) Ne-GootGook Fisheries - operating loss of $247,000 for 2006-2007 - CRA obligations of 217,000 - Property tax due of about $138,000 - Minimal cash in bank and the non-fishing season is upcoming It is important to note that the accounting for these operations is incomplete and likely will never be fully completed. This has lead to consistently “Qualified” audits for the last two years and will result in a qualified audit for 2006-2007 and 2007-2008. Consolidation requirements will not be met for this fiscal as established by the First Nation reporting guide and not likely for 2007-2008. Additionally, there are TEDCO liabilities which have been linked into band operations and currently impact on band finances with no notice of these until after-the-fact. Band Operations: The political division on council has, and continues, to be an impediment to maximizing the communities growth and financial stability. Information has not been freely provided to decision makers nor the community in general. Recent community and elder meetings has resulted in several observations: 1) the community is generally unaware of the totality and severity of their financial crisis 2) the community understands changes are required but are not cognizant of the magnitude of the changes required 3) the community is demanding nothing short of full accountability and retribution for those who have placed the community in the current situation 4) the false economy which had been created in the past can not be sustained 5) social issues (ie drugs, alcohol, violence and mental health) are on the rise with no matching programs; and 6) the community is extremely open and informative and genuinely interested in community improvement and growth. The current DIAND cashflow is unable to sustain even the most basic of essential programs and services and certainly not the financial burdens currently plaguing the community. The history of poor financial management, cash management practices, bridge financing, debt retirement and business practices has jeopardized the community in a most severe way – they are unable to meet their delivery responsibilities for essential programs and services at this time. Current DIAND cashflow is some $411,000 per month for August to December. Minimal cashflow for January to March. There can be no reliance on own-source revenue for 2007-2008 as major business re-organizations are required. Additionally, legal issues will likely be commonplace as the businesses enter into financial bankruptcy and the band will likely bear some of this honerous reality. In another community the shutting down of one incorporated body cost the band almost $200,000 if legal bills over an eight month period – Tobique can not afford any such actions but they are inevitable. Simply put the situation can be summarized as such. The band’s DIAND cashflow for the next 5 five months is some $411,000 per month. Social on-reserve and payroll totals some $480,000. Current tuition obligations (behind by some $375,000 at present) is $125,000 a month, current power obligations for the band’s buildings is some $31,000 per month for the next few months and about $108,000 a month for social power bills. This does not recognize CRA obligations, insurance, health and safety etc etc…. Budget Requirements for the remainder of fiscal 2007-2008: Social Assistance $3,440,000 O&M $560,000 Post Secondary $1,066,000 Education $1,366,000 Capital $580,000 Housing $1,040,000 Administration $1,492,000 LTS $34,000 Total $9,578,000 Less Current DIAND Cashflow: $2,800,000 (subject to confirmation) Total Cash Shortfall for Programming: $6,778,000 Note: This does not take into consideration the honerous CRA obligations. Additionally, unpaid liabilities from previous years suppliers are requiring considerable attention. Peace Hills Trust has been spoken with regarding the rumour of them having a $2 million line of financing. Pat Connell (PHT) has advised this is not a fact. Off-reserve social is no longer being paid, council receives no pay, staffing has been reviewed and non-essential staff laid-off, financial controls have been implemented and continue to be improved on a daily basis. The history of the band not reporting needs to be addressed. Regular weekly Director/Manager meetings have been initiated to address collectively reporting and financial management issues. Additionally, emphasis on cross-program collaboration has begun and will result in some savings and program efficiencies. The staff salary reduction of 20% has had a minimal financial impact and has resulted in significant employee loss of morale, productivity and general loss of faith by the community in its administration due to the reduction in work being provided to the community. A standard work-week is some 3.5 days and when holidays occur it is 2.5 days. The history of utilizing funding, often with the knowledge of funding partners, for purposes other than that established in the funding arrangement has created an unmanageable situation. The band is in no position to finance these activities at present and demands to have the funds re-imbursed to the funding agent further distress the band’s finances and its already impossible task of providing essential programs and services as well as addressing health and safety demands. The band is in no position to complete the projects or re-imburse the funds due to lack of funding within the band at present. This community is in the worst financial position that we have ever seen for a community in the last 25 years. The existence of a corporate culture of living above the resources available, lack of financial controls and oversight, criminal activities, non-compliance to funding agreement terms and conditions without recourse, poor business planning and management, no long-term community plan, no long-term financial plan and unmanageable debt financing regimes has effectively placed this community in a position of being unable to deliver essential programs and services due to its limited financial ability and resources. Should CRA decide to garnishee DIAND funding to address its outstanding arrears the result would be nothing short of full financial and community collapse. The current audit process will not be complete until late August. The approval by council and drafting of a revised RMP is expected to take place by mid-September and final approval by the end of September. |
Former Tobique Truck Stop owned by
TEDCo now in receivership. Was
approximately a year late in opening.
TEDCo now in receivership. Was
approximately a year late in opening.
Click on image!
Click on image!