Bethania and Pembina Place - FINAL Audit ReportFebruary 19, 2013 Page 2
Group, the WRHA or Manitoba Health. The new arrangement for the provision of CEO services did not provide the CEO with any greater pension benefit than that to which he was already entitled. In fact, the April 6, 2012 agreement with the CEO permitted the cessation of employer contributions. This represents a significant annual savings to the Bethania Group, and consequently Manitoba Health. As at July 31, 2012, the expected annual savings for the upcoming year was determined by the Bethania Group to be approximately $14,238. This savings would continue on a yearly basis as long as the CEO remains in Bethania Group's employ. The Board of Bethania has been aware, since the CEO's contract of March 2009, of the CEO's intention to retire under HEPP in or about July 2012. Given the ongoing savings, it made practical business sense to the Board to negotiate the terms of the 2012 contract with the CEO.A directive given under The Regional Health Authorities Act (Act) should only be given in accordance with the direction making authority granted under the Act. It is not clear to the Board whether the WRHA complied with the provisions of Section 29.1 of the Act, and particularly with Section 29.1(5) which requires consultation and accommodation of the position of a health corporation on the matter. Furthermore, a direction given to a health corporation may relate only to certain matters that have a region-wide impact and may not relate to aspects for which the regional health authority does not provide funds.The "wage freeze directive" was provided to the Bethania Group as an attachment to a funding allocation letter addressed to the CEO from the WRHA's CFO. The "wage freeze directive" states that Non-union Executive/Senior Management & Equivalent "are to have their salaries frozen, which means there will be no steps on scale, inflationary adjustments or salary adjustments, unless specifically approved by the WRHA and MH (Manitoba Health). Further MH has instructed the WRHA to use all the mechanisms at its disposal to ensure this directive is followed, including "claw back" of the value of any applied increase to this category of staff." We understand that this "directive" has been in place since April 2009.The Board raises an issue regarding this directive in view of the statement in the WRHA Reply that the CEO was awarded a salary in excess of what is permitted to other PCH senior executives during this time of "salary freeze". We note that the salary freeze is only in regard to executive positions and not in respect of unionized employees, who have continued to receive annual raises since 2009.The Board entered into its March 2009 agreement with the CEO prior to the WRHA wage freeze being imposed in April 2009. The March 2009 agreement provided for minimal annual increases to the CEO. However, the Board has not provided such increases since 2009 because of WRHA's Funding Letters.As a result of the reduction in benefit expenses related to the CEO due to his contract change,the Board provided an increase in pay under the CEO's new 2012 contract equal to 3% or $4,800 per year. This resulted in the compensation given to him, which includes benefits, in actual dollars being less than the amount paid under his 2009 contract. Under the new 2012 CEO contract the amount allocated to WRHA, and consequently Manitoba Health, was approximately $520/month less than that allocated previously; although WRHA auditors indicated that Bethania Group should adjust our current allocation to be the same as it was prior to the contract change. Given there was reduction in total compensation, and no additional amount being paid through public funds (or otherwise), the Board did not consider its 2012 contract to be in violation of WRHA's wage freeze, particularly in view of the limits prescribed by the Act.