Friday, June 26, 2009

Smorgasbord of capital

Just in time to go together with the last-day-of-school coverage, the Ontario Ministry of Education threw a foursome of releases our way about another round of approved capital construction projects. Links to the individual releases:
This list is supplemented by continuing coverage of this round and the ones that preceded it, like this story from Sudbury, mostly focused on reno and retro dollars. A recent comment noted some amazement at where all this money is coming from.
Well, the ministry is financing many of these projects on school boards' behalf. The announcement of millions is actually a commitment from the ministry to debenture the total amount of its commitment on the board's behalf with the province's financing authority. The ministry then forwards the annual payment to boards as part of their budgets (separate from the grants for student needs that fund operations).
This lifecycle-based financing is becoming somewhat more popular in government. Consider it like a mortgage-- many couldn't afford to slap down a full payment when buying or building a house. So you mortgage the full cost over the expected life of the building (or how long you plan to live there). Sure, there are additional financing and carrying costs with a debenture, but you don't shell out everything at the front end. It feeds the perspective that all those who use the building over the expected life span should contribute to its capital costs, not just those who were around when the bricks and mortar were assembled.
Which philosophy is better when it comes to public money?