High school value loss could be as much as $40M

| 05/11/2015 | 63 Comments
Cayman News Service

Clifton Hunter High School, Grand Cayman

(CNS): Last week the auditor general said that the value of the Clifton Hunter High School was at least $20 million less than it cost to build it but another report revealed today indicates that that the discrepancy may be double that figure. The latest report from the Office of the Auditor General reviewing the ongoing problems with public accounts has revealed that the education ministry accounts for both the 2012-13 and 2013-14 financial years are reporting surpluses. But the statements will be required to account for the write-down in the valuation of the new high school of as much as $40 million.

“As the result the financial statements for 2012-13 will report a significant deficit when they are finalised,” the auditor stated.

The Clifton Hunter High School in the end cost the public purse $110.1 million — double the original price of the winning bid, which was awarded to Tom Jones International Cayman Ltd. However, the catalogue of problems and numerous alterations, which have been well-documented in other OAG reports, saw the costs spiral out of control during the life of the project.

OAG report – MCP Building Schools, May 2015

OAG Special Analysis of Issues Related to Financing the Building of John Gray High School, 23 September 2009

OAG – Performance Audit Reports Management of Major Capital Projects, 20 June-2012

In the report on government’s entire public sector financial statements, which was unveiled by Acting Auditor General Garnet Harrison last week, the office pointed to an impairment “against the cost of construction” by some $20 million. But the education ministry accounts suggest it could be as much as double.

Although government is unlikely to want to sell the school and realize some kind of profit, the overvaluing of the school is one of a number of properties and assets that are owned by government that have not been properly valued and which continue to cause problems for balancing the government books.

Harrison stated that one of the reasons why he gave the government’s consolidated accounts an adverse opinion was due to this failing.

“The government’s properties in the statutory authorities and government companies valued at approximately $186 million were not properly revalued for the purpose of including a fair value on the financial statements,” he explained noting that the cost and valuation of the road network is also not included in the financial statements.

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Category: Government Finance, Government oversight, Politics

Comments (63)

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  1. Anonymous says:

    The difficulty with mixing politics and education (or healthcare, for example) is what we see unfolding here. Reality becomes something to be interpreted according to one’s political leaning as opposed to unemotional academic scrutiny. The provision for education is and should be a highly debated topic, but based solely on an academic approach. Once politics becomes the main driver it becomes little more than a noisy exchange of totally biased and entrenched viewpoints.

  2. Anonymous says:

    Now just imagine what damage the CIG could do with a dock project…

    • Anonymous says:

      This school , like the dock project will last decades in serving the Cayman people…

      I you want to talk wasted money then ask the man responsible why he paid $800,000 plus for a piece of family land in West Bay (with Govt. money) now valued at $70, 000.
      I know I know, there was no law saying he couldn’t do that right…?

  3. Anonymous says:

    Here’ s a suggestion! Maybe the members of the PPM Gov’t who so aided in the school disaster, especially Alden and Kurt, should give up one year of their salaries to help offset the monthly expenses to run such a school like Clifton Hunter High School. You see people, the PPM Government (Past and Current members) should be ashamed of themselves. The Cayman Islands is in so much debt that could have been avoided if and only if that government had adhered to the suggestions/wishes/interests/desires of one of the main stake holders in education – teachers. Time and time again, throughout the initial discussions about the building of these new high schools, teachers adamantly stated that we did not need these new and elaborate schools. All was needed was to upgrade the old John Gray (now CIFEC) and the now John Gray (Former Middle School) and instead of two new high schools build ONE technical and vocational school that would cater for all students who are more inclined on this side to attend and leave the other two schools as academic schools. No! Alden and his then Chief Officer Angela Martins were hell bound to see that these new schools were to be built regardless of the cost. Many pockets were lined I so imagine and who in turn is paying the high cost of this and many other debts of the PPM Government- WE the people of the Cayman Islands. How arrogant can some people be?

    • Hershey says:

      5.48 you haven’t seen anything. Just imagine what the piers will do to the country’s finance and the destruction to come……time longer than rope and the ppm government not listening to the people.

    • Anonymous says:

      5:48 pm is exactly right — and finally someone has put his or her finger on — the CO for education in the PPM government at time this building was conceived had the responsibility to steer the Minister on the right path. That was her proper role and responsibility. Had she used her considerable powers of persuasion in a feet-on-the-ground rather than pie-in-the-sky, run-away-train way (sorry about all the mixed metaphors, bu you get the drift), it is my firm belief none of this would have happened.

      And that feet on the ground posture would have included listening to teachers, for goodness sake. What a difference it would have made if people like the CO, who had no professional background herself in the field of education, had listened. We barrel ahead with our half baked ideas — and why? Because of the selfish desire to have monuments to our arrogant selves rather than a real commitment to the wellbeing of Cayman.

      It just is so painful. First of all, how could you be so dense as to barrel away into building this radically different school without considering that groundwork needed to have been laid in accordingly reforming teaching approaches. Duh! You don’t need a degree to figure that out — just good old commonsense.

      Civil servants at the top get so overwhelmed with the status they think they have achieved that they have forgotten the fundamental word in their nomenclature — they are here to serve. I hope that the others looking on will learn from this: ultimately when you are motivated by your own selfish, self-importance, your legacy will be exactly what you deserve.

      • Anonymous says:

        To add to 2:17 am — I wonder where the idea for this open classroom disaster originated? I am willing to bet it was not with the Minister himself — but with the CO!

      • Anonymous says:

        I fear that you are wildly off the mark if you imagine that the CO at the time held any sway over the minister. Those of us who were in the system at the time knew all too well what was going on, and it was very much centred on the establishment of some kind of place in history for one individual for having ushered in this new and revolutionary approach to teaching and learning. You are, however, entirely correct as regards the educational professional never being consulted. It was all quite detached from reality, as I recall, and a sure recipe for the unfortunate events that have since unfolded..

        • Anonymous says:

          I hear you, 11:06 pm, but I think that the Minister, with his massive ego issues, and the CO at the time were well matched. Surely the job description of a CO must have dictated some leadership requirements that could have been applied to marshaling the resources across the largest segment of employees in the Civil Service to impress upon the minister what was required to make that monument work for those it served — generations of Caymanian children — and, hello, the Minister himself?

          I don’t recall one iota of effort being made to say, ok, I understand your need, but this is how that legacy will be achieved. That was her job — and today’s mess is to large measure traceable to that failure.

          If we had a CO whose motivations were triggered by the scenario that you described, and knowing the personality involved I believe they were, we still cannot give her a pass. The minister may have a vision but the civil servant makes it happen. There was nothing at all done either on the front end — getting teachers prepared — or on the back end — ensuring that the building project was managed properly.

          As I said, they seemed to have been well matched — unfortunately. And I still can’t believe that she herself had not originally planted this grandiose ego trip in his mind in the first place.

        • Anonymous says:

          11:06 — “detached from reality” — could not have said it better myself. There was definitely some psychosis going on there.

    • Anonymous says:

      I keep hearing horrendous figures on the CUC monthly bill for Clifton Hunter — there is not just smoke here, but rather a blazing fire in these figures. Can someone, someone here not step in and get some solar energy going at Clifton Hunter. What we seem to have here is a black hole that will only continue to swallow up money more and more over time. It must be a better idea to invest in solar energy rather than continue this trend.

    • Anonymous says:

      If the govt could fix the mess of the electricity being gobbled up at Clifton Hunter with an alternative energy source, here is what could be done with Clifton Hunter: give it to UCCI — the open style classrooms just need some risers to enable them to be converted into large lecture rooms suitable for universities.

      Then, the current UCCI campus can be absorbed into John Gray/Cayman Islands High School.

      How about that?

      • Anonymous says:

        Been advocating the same thing anon 2:31am for quite some time. Clifton Hunter should have been a university campus not a secondary school. In addition to having UCCI on campus, St. Matthew’s and the Law School could also reside on the same ground. Furthermore, if we actually utilized urban planning – Frank sound could be transformed into a mini college town, with entrepreneurs pandering to the needs of the students..aka bars, nightclubs, shopping plazas and places for fun.

        I dunno I guess what we suggest makes to much sense to implement…

        Concerned Caymanian

      • Anonymous says:

        But then we have to figure out how to get rid of a few incompetents that are now in charge at UCCI. We wouldn’t want to transfer the current happy go lucky and oblivious lazy managers who’s poor planning and communication always plague UCCI operations at the start of each semester. Their only saving grace has been students and parents with short memories.

        • Anonymous says:

          Not fair at all 5:34 pm — there are issues at UCCI but epithets such as “happy go lucky” and “oblivious” are just plain off the mark. I think there may be some need for better structuring and utilization of resources at registration if that is what you are referring to, but the core issue at UCCI goes right back to ONE office — right at the very top. Essentially that office has core disabilities in leadership, job suitability, and depth that reach down and across the entire system.

          Unfortunately, you can well applyyour descriptions — indeed, “oblivious,” at best — to those in authority who have allowed this state of affairs to continue for so long.

      • Anonymous says:

        You obviously have not been to the school have you?

  4. Anonymous says:

    I read this article and just shake my head at the pathetic lack of leadership this country suffers from. Talk about stupidity, open classrooms???
    This current bunch can’t get old soon enough to retire as the voters are too dim witted to vote them out.

  5. William Histle Blower says:

    I would like to know the basis of valuation for these schools (and all government assets). I expect that ‘value’ will be based on a depreciated (annually written-down) construction replacement cost, plus the value of the land. However, for the government’s financial statements, the value should be WHAT THE SCHOOLS COULD SELL FOR.

    This can only be ascertained by looking at what other formerly public assets have sold for (traded in the market). In other words, how much will a private party/company pay for a non-profit producing, public asset – a school, a road, a hurricane shelter, a turtle farm, an historic ‘castle’ in the case of Pedro’s?

    I expect there would be practically no buyers for the Clifton Hunter School, or most other government assets, as they have little to no commercial value, as amply demonstrated by the turtle farm, Pedro’s, etc. So….the over-valuation, I expect, is far more massive than US$40. How much would government get if they put a “for sale” sign on Clifton Hunter? That is the true measure of value. US$20 million? US$30 million. Not US$70 (the US$110 less the reported US40 over-valuation). This is our Enron.

    And as for the ‘value’ of the roads. That is nil/nothing/nada/zero/zilch/diddly-squat. They have no value (unless you are going to allow a private buyer to charge a road use ‘toll’. Anyone want that – to pay to use your roads?

    Incompetence repeatedly shows itself to take many forms in the Cayman Islands – possibly the most insidious being never seeing or discussing the real elephants in the rooms (there are whole herds on the island), asking the right questions and looking at the bigger picture. Tough, well-directed questions are infinitely better than general, or ad-hominem (Google it) attacks.

    • Anonymous says:

      Surely by that argument anything that Government builds or spends on the Island’s infrastructure has zero value unless it can be sold to the private sector?

      • Waynt Think-Straight says:

        No 4.04pm, but what the valuation report is tasked with doing is identifying the Market Value/the book value of an asset, for financial reporting purposes. Social value, or the amenity and worth of anything to the public, or to the country is something quite distinct. You need to keep your thinking clear-headed and stay on argument.

        What you so arrogantly positive of and argue for is that government can and should spend whatever it likes and not worry about being solvent and above-water, as long as there is a public need, use, or amenity satisfied by the spending. And what organization are you a financial director of?

    • Anonymous says:

      I’ll buy that for a dollar!

  6. Anonymous says:

    As I see it, the PPM government would have been well advised to employ a project manager so avoiding many of the outrageous examples of overcharging that happened.The expensive, minister-directed changes that were made after the construction work started would have been forcefully advised against. Construction companies start to salivate and go weak at the knees when alterations are made, as that’s when they have a chance to make some real money.

    It was the UDP who finished the project and seized the chance, as they were experts at doing, to support local Caymanian businesses with endless new contracts, along with opportunities to direct benefits to individuals at the expense of the public purse. The money wasted over ten years, and I don’t mean by the the current government, must be somewhere between 75 and 150 million dollars. If you add up the Ritz debts, the aborted cruise pier projects, Gasboy, the Turtle Farm’s annual losses, as well as the paved private driveways, various ‘disadvantageous’ government loans and land bought above market value, you are half-way there.

    • Anonymous says:

      Actually, up until 2006, at which point in time the new minister for education (our present premier) disbanded it, there was an education capital works steering committee, on which sat (along with other experts in the field of education) a project manager for schools and the chief engineer of Public Works.

      Lighthouse School and Prospect Primary are two examples of projects delivered under the supervision of this committee. Precisely why the committee, with its proven track record, was disbanded is anyone’s guess, but certainly thngs don’t seem to have worked out very well since.

      • Cass says:

        Thank you 6:05pm! Please write more so people know the truth; what does Alden know about Education! Please tell me…….

        • Anonymous says:

          Thank you for your comment, Cass. Unfortunately, once politics becomes the basis for anything educational the truth becomes little more than an aspect. A good start would be to establish a professional teaching body capable of imparting perspectives based on academic considerations. In other countries there are teachers unions which (along with other scholarly organizations) fulfill this vital role.

  7. Anonymous says:

    I wouldn’t expect any less from CIG. Now who’s going on to jail? Oh the little insurance guy. If “hell” exist the CIG has a five star suite on the top floor. Next project please!!

  8. Anonymous says:

    Please remember that the schools construction project was under the last PPM administration when Alden McLaughlin was Minister of Education. The succeeding UDP Government inherited the mess and tried to correct it. Seems like they didn’t help either!!

    So fundamentally, the bulk of the waste for this schools was under PPM. Also remember that the architects won some prestigious award for the design – totally unnecessary though it was!

  9. Anonymous says:

    Don’t worry everybody. It also doubles as a hurricane shelter. Zzzzzzz.

  10. Anonymous says:

    Shows that the AG doesn’t know what he’s talking about.

  11. Hot Flash says:

    And in the latest fit of creative thinking they are about to clear 20 acres of land for a solar farm. Why not put solar panels on the acres of flat roofs that make up Clifton Hunter HS and try to get something productive from the place? Ditto for the GOAB.

  12. Anonymous says:

    Other than the raw materials all that money went into people’s pockets.

  13. Caymanian donkey says:

    Forget about the cost to build. What does the school cost to run? I heard CUC bills are in access of $90,000 pm. Plus plus plus….

    Bunch of donkeys the ppm are!

    • Anonymous says:

      Caymanian Donkey you should make a foi request and report the findings. Would be interesting to see what the monthly upkeep is for the Clifton Hunter.

  14. Anonymous says:

    Dear FCO

    How can anybody trust Alden or PPM with any project much less a 300 million dock project after the evidence of its last spending spree is the CHHS and the JGHS both unmitigated disasters?

    • Anonymous says:

      Would you idiots please wake up. It was the udp, after getting re-elected by accusing the PPM of spending too much on the schools, that drove the costs up and left this country with “unmitigated disasters”.

      • Anonymous says:

        Sir/madam, with all due respect, you clearly are in denial. The facts speak for themselves. Kindly stop trying to rewrite history.

        • Anonymous says:

          With all due respect sir/madam, kindly show me the facts.

          • Anonymous says:

            Oh, dear. As I said, the facts speak for themselves. Don’t you recall the recording studio said to be fit for the Beatles to record in? The “Cordon Bleu kitchens”? The “World Class” education system built around the “proven” (anything but) concept of horrendously expensive to build on the same site small schools, the crackpot embracing of one professor from one universities’s “vision” for the future of education based on the life and work of Leonardo da Vinci (necessitating no walls between the classrooms, of course), the breathless “cells and bells” mantra from a minister seemingly intent on making a name for himself ………….yes, this merry dance of utter madness did have a start somewhere, and it wasn’t under the UDP, that is just part of our history, my puzzled friend.

            • Anonymous says:

              My dear puzzled friend. NONE of your ‘FACTS’ PROVE which political party ran the cost of the school up to 100 million, or left them in ‘unmitigated disasters”. They do however properly demonstrate that we indeed have a world class facility that we should be proud of rather than lament, and one that is a fine present to future generations of our children and to the furtherance of proper education in this country. The open classroom design is most certainly not as big an issue as the nay sayers would have everyone believe. My logic tells me that this would actually have REDUCED construction costs of the facility rather than the opposite, and if it is in fact proving to be unworkable the very simple solution is to install partitions as required. .

            • Anonymous says:

              2:01pm, “crackpot” is right! Poor Alden did not have a chance among all the superficiality of those surrounding him at the time. They were supposedly intelligent — but this is where one can draw the line between “intellect” and “intelligence.”

              A little intellect and a little less superficiality would have dictated a little research on the ideas of this visiting professor who was, par for the course, looking for a name for himself and some dough for his pocket.

              From as far back as the late 60s and early 70s the open design classroom as an exclusive, one size fits all approach, was discredited.

              Even if the physical design was the panacea, had the professor an ounce of integrity he would have warned against beginning implementation of the approach with a building.

              For this to have had a ghost of a chance of succeeding, we needed the approach to be sold to teachers, followed by possibly years of initiation into this teaching modality. Then we needed the teaching resources and teacher support systems and services — and the and only then build.

              But even the building they could not get right — more than $40 million in losses and an upkeep bill that makes you want to cry.

              Shame on them all. What a legacy. I hope the crackpots suffer as much discomfort living with regrets as the rest of us having to live with their handiwork.

            • Anonymous says:

              My dear puzzled friend. The “facts” you have presented do absolutely nothing whatsoever to address the subject of the article which clearly indicates that an astounding 40 million dollars was spent but NOT spent on the schools. The question raised in the comment is under which political administration did this atrocity occur. Please try to get your ‘facts’ straight or at least relevant to the subject at hand.

  15. Cass says:

    Wow, speechless. It speaks for itself really.

  16. Anonymous says:

    classic case of civil service incompetence at all levels……
    and they want these guys to handle port re-development?????………….zzzzzzzzzzz

  17. Anonymous says:

    It would be interesting to see which government was responsible for the 40M.

    • N. Webster says:

      Responsible? What’s that!

      • Anonymous says:

        Lol, yeah I am with you on that! What I meant to say was: if we follow the money trail by date from start to finish, I wonder on what dates and which administration(s) the 40M loss occurred. Stop all these people pointing fingers and hold someone accountable.

        Only I imagine dumping and replacing the original contractors didn’t help, or certain subsequent completely unnecessary changes in specs.

  18. Anonymous says:

    And you want to allow them to spend $300m on a dock? If the cost of building doubles and the value is halved is it still a good plan?

  19. dwayne says:

    somebody got paid

  20. Mr. Fixit says:

    Lets build a cruise berthing facility!

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