ICYMI: Sport North and Lottomax NWT: Winner Takes All

Follow the money: with Sports North’s funding once again in the news, it’s time to take a second look at Jack Danylchuk’s deep dive into the world of territorial sports funding, first published in March, 2012:

If there’s one thing politicians love, it’s basking in the glory of a successful program, and in almost 30 years of overseeing amateur sports in the Northwest Territories, Sport North Federation has written a few success stories.

But headlines trumpeting athletic achievements carry a price tag. Last year, the NWT Sport and Recreation Council (SRC), the body that oversees distribution of profits from the NWT Lottery Authority, passed on $1.683 million to Sport North, its sister NGO.

That wasn’t enough, according to Sport North. But rather than work the problem out in-house – both NGO’s operate from the Don Cooper building in downtown Yellowknife – chagrined Sport North directors took their complaint to the legislature.

On the final day of the final session last August, just before MLAs headed into the October election, Great Slave MLA Glen Abernethy declared an emergency.

“In 30 days Sport North will be out of cash and unable to meet their payroll,” Abernethy warned the legislature, and added: “The life of this important organization is on the line. This is unacceptable. A solution must be found.”

Abernethy blamed Sport North’s nemesis, the SRC. The problem, according to Abernethy, arose when the Council changed its strategic plan after Sport North applied for annual funding.

Sport North sought support in 12 areas but was approved for just six, leaving it $149,000 short – an amount just short of the money it holds in reserve for what appears to be the most generous employee payout scheme in the territory. Sport North appealed the council’s decision, but after four months had heard nothing, and feared that if it accepted the offered cash, it would lose the right to appeal. What was Municipal and Community Affairs Minister Robert C. McLeod going to do to about it, Abernethy demanded to know.

There really wasn’t a problem, McLeod replied. The two sides had been meeting and talking, and a decision on the appeal was imminent. In the meantime, Sport North could use the $1.683 million without fear of jeopardizing its appeal. But there was more.

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Concerns with funding for Sport North and its relationship with the Sport and Recreation Council had been aired before the legislature’s standing committee. According to MLA Jackie Jacobsen, “members see an organizational shift taking place, and suggest that MACA undertake a review of the SRC and consider ways to reduce duplication in the programming.”

The appeal to the legislature through regular MLAs was one more effort by Sport North to rid itself of the SRC, a body the government established in 2005 to make sure that the impact of its multi-million dollar investment in fitness programs is felt across the NWT.

One of many

Sport North, the NGO the government created in 1976 to oversee amateur sports in the Northwest Territories, had built a small empire housed in its own office building in downtown Yellowknife, and an appetite for administration fees that was beginning to rival the amount of money it dispensed.

But Sport North is just one of many sports NGOs in the territory.

Between 1962 and 1992, the government established a half dozen in an effort to increase physical activity. Starting with the GNWT Recreation and Sport Staff, the government added Sport North Federation, NWT Recreation and Parks Association, Beaufort Delta Sahtu Recreation Association, Mackenzie Recreation Association, and finally the Aboriginal Sport Circle.

Contemplating what it had wrought, the GNWT became concerned with the size of the sport and recreation system, the independence of the organizations, apparent inefficiency and the lack of accountability in the use of public funds, according to consultants the government hired in 2010 to develop a monitoring and evaluation system.

“Without being able to accurately determine the extent of the successes and challenges, the Government of the Northwest Territories (GNWT) grew concerned that the breadth of the sport and recreation system, and the independence of the organizations, was leading to inefficiency and a lack of accountability for the use of public funds,” is how Jennifer Young of Whiteworks Consulting and Debbie DeLancey, a senior GNWT bureaucrat, put it in a report that outlines a new system of accountability for the territory’s sport NGOs.

“After consultation with the stakeholders, including workshops with several sport and recreation organizations, the Minister of MACA created the SRC in 2005 to promote system integration and coordination.”

No physical culture

The SRC reports to the government through MACA, has the ear of the minister and the enmity of Sport North. To even things up, the council doesn’t think highly of the achievements of Sport North and its sister organizations.

In the latest SRC annual report, chair Bridget Larocque said despite millions of dollars and years of effort by the various NGOs and sport groups that represent every activity from badminton to volleyball, the territory is “faced with the grave reality that there is not a culture of physical activity for the entire population.

“Eighty-five per cent of children from the NWT do not meet the daily requirements for physical activity of 90 minutes a day and only 41 per cent of NWT residents over age 12 report being moderately active or active, compared to 53 per cent for Canadians.

“Federal/Provincial Ministers have set a target of 1 per cent increase in physical activity levels per year, yet physical activity levels in the NWT decreased by 20 per cent from 2004 to 2009.”

The government’s cure for this sloth is MEA – Monitoring, Evaluation and Accountability – a priority-based funding model developed by Whiteworks Consulting, that McLeod unveiled last September.

Starting now, McLeod said, there will be new rules for funding: NGOs won’t automatically get more than they received the previous year; all programs will be monitored by the SRC and evaluated for effectiveness; and administration costs will be reduced.

The full report, A Guide to Establishing a Monitoring, Evaluation and Accountability System for the NWT Sport and Recreation Council, is 68 pages of bureaucratic prose, bolstered with appendices, definitions, tables and lists of figures – a policy wonk’s delight.

MEA was the SRC’s answer to a process that ended in frustration a year earlier. The six sports NGOs labored mightily for eight months to develop a collaborative delivery model, but the project was stillborn. SRC took over and passed it on to Whiteworks.

The system includes strategic goals and priorities that cement SRC’s position at the top of the sports NGO heap. Programs and services funded by the SRC will give priority to increasing participation in physical activity for youth and adults in all communities in the territory, which would seem to shift the emphasis away from headline-grabbing achievements of a few star athletes.

At least for the short term, the new monitoring and evaluation regime will add to, rather than reduce administration costs. The consultants estimate that the Council will need to create at least two new positions to keep watch over spending by the other sport NGOs.

As for the funding shortfall that caused such excitement in the legislature, it was no real cause for alarm, according to Claudia Richea, spokesperson for the SRC.

“There was no shortfall,” Richea wrote in response to an emailed question.

“When SRC wrote a letter to the investment recipients it was interpreted differently by the investment recipients then (sic) SRC. Sport North after reading this correspondence thought that they were getting an additional $149,000 but in actuality this was a portion of the whole investment that they were going to receive. This issue did take some time to resolve and as a result Sport North did not sign their contribution agreement with SRC until late summer.”

Questioned on the same point and the future of the Sport North Federation under the new Monitoring, Evaluation and Accountability System, Doug Rentmeister, executive director, had this to say:

“We are currently in negotiations for our new funding and therefore do not want to get into a situation that jeopardizes those negotiations. Thank you for your interest in the subject and who knows pending what happens we could be back to where we were in September, last year. Stay tuned!”

Indeed, the fight is far from over.

Weledeh MLA Bob Bromley intends to bring the issue before the legislature in April.

“We need to look at improving the process, efficiency and value of our dispersal of scarce sport funding resources,” Bromley wrote in an email to EDGE.

“The SRC, with 13 appointed board members, appears to be simply yet another layer of process and approval standing between the supplier of funds–MACA–and the community/territorial sport organizations best placed to serve local needs and enlist vital volunteers. We need to look at whether SRC’s function is not a duplication of the funding application and approval processes already in place.”

As for Mcleod’s new MEA system, Bromley is “not encouraged by the almost dictatorial process he proposes, which is simply to meet with SRC and leave the current highly duplicative system un-reviewed and untouched.”

Accounting 101

The three NGO’s at the top of the sports heap in the Northwest Territories take different approaches to accounting for the cost of doing business.

The NWT Lottery Authority shows corporate expenses of $912,300. Included in that total are such items as salaries ($166,200) media and advertising ($101,700), communications ($176,900) and professional fees ($57,500).

In its annual report, the Sport and Recreation Council logged $57,800 in administration costs, but did not include $14,000 for its annual general meeting, $32,850 in board and committee expenses, and $185,350 in staff salaries.

The total also excludes $133,779 transferred to a fund to support Lex Borealis Ltd., the company that owns the Don Cooper Building which houses SRC and Sport North.

According to Sport North Federation’s financial statement for 2011, administration costs for last year were $507,054, up from $403,210 the previous year. Sport North board operations consumed an additional $82,781 in 2011, down from $97,629 in 2010.

Sport North disbursed $710,866 in financial assistance to support base, performance and high performance athletes; it spent $551,706 on programs – $376,822 of that for staff salaries and benefits.

A $1.4 million question

The 2010-2011 fiscal year put more money in the hands of the NWT Lottery Authority than it could give away.

After expenses and dispensing $3.3 million to sports NGOs, it was left with a $1.4 million and no plan for the surplus.

The windfall came from a 31 percent increase in sales that authority officials attributed to the new LottoMax game, two million-dollar winners in the NWT, and new retail outlets.

So what becomes of the windfall? The answer is not a short one, according to Meagan Holsapple, spokesperson for Minister Robert C. McLeod, and erases any hope the arts sector might have had for getting in on the unexpected bonanza.

“The Western Canada Lottery Regulations provide the authority to the Minister of MACA to approve allocation of proceeds from the lottery,” Holsapple wrote in an email.

“The GNWT entered an agreement with the SRC in 2009 to operate the lotteries. The SRC has developed an investment model, which the Minister approved. This investment model is based on the framework provided within the SRC Strategic Plan for 2011-14.

If surpluses occur, it is the Council’s procedure that all surplus funds are directed to reserves to ensure a sustainable sport and recreation sector.”

Prior to the 2010-2011 fiscal year, lottery sales in the NWT/Nunavut showed small margins of growth – averaging approximately nine per cent increase in net sales annually.

“It would be unrealistic to expect a repeat of the 2010-2011 sales performance,” the lottery authority said in its annual report, adding a return to the nine per cent growth number is a reasonable estimate for the next three fiscal years.

Sweet sorrow

Sport North Federation holds $165,818 in reserve to finance what appears to be the sweetest separation deal in Yellowknife.

Employees laid off after one year are entitled to six months salary, according to note 18 in the sport NGO’s financial statement for 2011. That drops to 13 weeks if they leave after four years.

By comparison, GNWT workers get two weeks pay if they lose their jobs after a year. They are entitled to six weeks separation pay after four years.

Doug Rentmeister, Sport North’s executive director, told Weledeh MLA Bob Bromley that the generous separation payout was necessary to attract the best candidates.

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