The District of Sparwood has agreed to loan $48,842 to the Society for Kids’ Care-Elk Valley (SKC). The interest free loan is to cover Treehouse Daycare operational costs remaining from 2012 for a term of no more than five years.
Councillor Joanne Wilton removed herself from the council chambers citing a conflict of interest as she previously sat on the Board as president of the society before she was elected onto Council. Duane Lawrence, director of community and faculty services and newly elected president of SKC was not present at the Council meeting as recommended by Chief Administrative Officer (CAO) Terry Mercer to reduce conflict of interest.
Council decided to support the request after receiving a report and recommendation made by Director of Leisure Services Duane Lawrence and CAO Terry Mercer.
Terry Mercer explained that Duane Lawrence was directed to sit on the Society for Kids’ Care Board of Directors as a District representative. Recently at the last AGM Lawrence was elected president of the Society. The daycare is overseen by Society for Kids’ Care-Elk Valley, which is a seven member board. Lawrence is the new president and Sharon Strom is the vice president.
The Treehouse Daycare has the capacity to house up to 12 children in the infant toddler room; 24 three to five year olds and 24 children in the after school care room.
Sharon Strom made a request for the loan in a letter to CAO Terry Mercer, explaining where the shortfall in funds came from.
“At the end of 2012 the Daycare centre discovered that its current bookkeeper had stopped making payments to the Canadian Revenue Agency (CRA),” wrote Strom.
“Since that discovery the centre has been working with the CRA to determine the exact amount owing from 2012 and to determine the most effective manner in which to repay the outstanding funds. The CRA generally does not provide long-term repayment plans and charges a high rate of interest that is compounded daily. Although the CRA would likely grant a three to six month repayment schedule the daycare is not in a position to be able to pay the outstanding funds in that time frame.”
Upon the conclusion of their annual audit the Board determined that the quarterly payments to the CRA had ceased in May of 2012.
“Upon completing two additional audits, one internal and a second by the CRA, it was determined that no funds were missing and that no fraudulent activities had occurred,” said Lawrence. “The error was in all likelihood the result of an error in judgment and the lack of experience of the bookkeeper at the time.”
With respect to the CRA, the current interest rate is around seven per cent-compounded daily with a repayment term of no longer than 12 months. $7,218 of the $48,842 is interest and penalties. The Society is currently in the process of applying to the Taxpayer Relief Committee for forgiveness of the interest and penalties.
“In order to ensure this error does not occur in the future the Board has instigated by-monthly reporting from our new bookkeeper on all payments to the CRA to our treasurer,” said Lawrence. “In addition, the board has retained the services from a third party financial service for additional support and oversight.”
“In order to ensure the long-term viability of the centre a review of the current fee structure has been completed. With the new fees and registration guidelines, the Board is confident that all costs will be covered including loan payments to the District of Sparwood.”
“We are looking forward to continuing to provide exceptional child care services in Sparwood and are appreciative of the support from the District of Sparwood.”
A repayment schedule of the interest free loan will be determined in consultation with Director of Finance Barbara Nunes. By giving the Director of Finance the ability to discuss with the Society the repayment terms, the monthly payments could be varied to take into consideration varied enrollment in the summer months.
The Nov. 8 report to council stated, “The Daycare is current with respect to their 2013 remittances and all other monetary obligations.”
Regarding Council’s decision Mercer said, “We want parents to know that the daycare has a solid future and that they do not have to be concerned about their child care requirements.”
“The Treehouse Daycare provides an incredible service for our community,” said Mayor Lois Halko.
The daycare opened in the fall of 2011 as an initiative by the District of Sparwood, with support from Columbia Basin Trust and Teck, to address childcare needs. The District leases the daycare building from School District #5, then sub leases it to the daycare. Teck generously donates to the daycare by covering the daycare’s utility costs.