LETTER: Facilities criteria is questionable

How can school boards make decisions involving millions of dollars with no understanding of the economics of investment valuation?

How can it be that school boards are allowed to make decisions involving millions of dollars with apparently no understanding of the economics of investment valuation? The reflections below were prompted by the news of a school closure in Osoyoos, but in particular by a list of criteria for long range planning at School District 8 (SD8). The highly questionable approach is amply illustrated by SD8’s table of decision criteria with percentage weights for different aspects of the decision. This letter is a critique of that table.

The list of criteria suggests a serious lack of understanding of economic optimization and unfamiliarity with investment valuation on the part of the district. This is perhaps understandable as no one has the required background, but the effect is a convoluted and highly questionable process of decision making that is unlikely to produce rational outcomes.

Society should expect that persons entrusted to make school planning decisions can make them competently. However, the process devised by SD8 is so involved as to be impenetrable by residents affected by the decisions, preventing them from identifying and objecting to the fallacies.

To illustrate, item 2 in the list of criteria states: “Minimize total initial capital expenditure.” That seems completely irrational, as it implies just postponing the initial outlay, ignoring how large the expenditures are in total.

Item 1 states: “Minimize total net capital cost over planning horizon.” Item 3 states: “Minimize total operational costs over planning horizon.” Minimizing both capital and operating costs fails to recognize the typical situation of trade-offs between them, e.g. saving on future energy costs by spending more on insulation.

A proper investment analysis discounts annual expenditures for operation to obtain their present value, which is then compared to the initial expenditure. Analyzing the trade-offs between capital and operating costs is critical in investment valuation. There is no evidence that the board has considered, for instance, how investments in solar cell technology might save on future electricity costs, which would influence facilities design.

The document also contains conflicting criteria. Item 12 states: “Maximize the potential to respond to future change.” That would imply that only portables should be used and no permanent facilities constructed. There is basic logic in maintaining a certain flexibility in building decisions, but item 12 is in direct conflict with item 10, “Improve the safety and quality of educational facilities.”

That the percentages add to 101 is a minor matter, but to imply that percentages measured in such different units as dollars, safety, quality, potential and disruption are additive, is serious. The SD8 criteria table contains multiple fallacies. As it is central to the approach of the school district to its long range planning, it seems important to make the district aware of this before significant decisions are taken based upon an improper foundation.

Christian Janssen, Victoria

 

Just Posted

Nelson’s Maglio hired by Spokane Chiefs

Adam Maglio will serve as an assistant coach with the WHL team

COLUMN: Working together on climate action with our MLAs

Katherine Oldfield writes about the Citizens’ Climate Lobby’s trip to Victoria

Buddhist monument to be dedicated in Slocan cemetery

A new post has been created to mark the site where at least nine Japanese Canadians were cremated

COLUMN: 1919 – Forest fire threatens Rosemont

From the files of the Nelson Daily News

LETTER: A good news story

From reader Lonnie Snyder

VIDEO: Bystander training gains traction as tool to prevent sexual harassment, violence

Julia Gartley was sexually assaulted after an event, and no one stepped in to help

Two brands of ice cream sandwiches recalled due to presence of metal

The Canadian Food Inspection Agency issued a recall on Iceberg and Originale Augustin brands

Sexual assaults, extortion on the rise even as crime rates stay low: Stats Canada

Rates of police-reported sexual assault rose for the fourth year in a row

Vancouver Island teens missing after vehicle found ablaze near Dease Lake, BC

RCMP say a body discovered nearby not one of the missing teens

A year later, ceremony commemorates victims of the Danforth shooting

It’s the one-year anniversary of when a man opened fire along the bustling street before shooting and killing himself

Japanese Canadians call on B.C. to go beyond mere apology for historic racism

The federal government apologized in 1988 for its racism against ‘enemy aliens’

B.C. VIEWS: NDP pushes ahead with Crown forest redistribution

This isn’t the time for a radical Indigenous rights agenda

Two dead in two-vehicle crash between Revelstoke and Golden

RCMP are investigating the cause of the crash

Most Read