Ministry Policy Site

Allocation of Proceeds from the Disposition of Capital Assets

Issued February 18, 2004

Current policy

The proceeds from the disposition of a capital asset may be allocated in the proportion of 25 percent to the Board of Education and 75 percent to the minister where contributions to the original capital expenditure by the Board of Education and the Province cannot be determined or where the contribution to the original capital expenditure by the Board of Education is known to be equal to or less than 25 percent.

The setting of a minimum allocation to local capital reserve:

• streamlines the process of determining the allocation of proceeds from the disposal of a capital asset between a Board of Education and the minister
  
• enables Boards of Education to recover any locally generated funds; and
  
• provides an incentive for the disposal of surplus assets.

The established default allocation reflects the provincial average capital-sharing ratio previously used for debt servicing costs related to the funding of capital projects.

Under authority of sections 100 (3) and 100.1 of the School Act; and section 6 Disposal of Land or Improvements Order.

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In accordance with section 100 of the School Act, when a Board of Education receives money from the disposition of a capital asset, the proceeds must be allocated between the minister and the board according to the original contributions made by the Province and the Board of Education, respectively.

The Board of Education must determine the apportionment of property sale proceeds based on its historical records of the capital fund sharing arrangement between the Province and the board for site acquisition and any improvements.

In situations where the original contribution made to a capital expenditure by the Province and a Board of Education cannot be determined, the Minister has the authority, under section 100 (3) of the School Act, to allocate the proceeds between the minister and the Board of Education.

By this authority, the minister has determined that the proceeds of a disposition may be apportioned at 25 percent to the board and 75 percent to the minister in cases where the board cannot determine the original contributions or the board's original contribution is known to be equal to or less than 25 percent.

Notwithstanding this determined default allocation, the minister may exercise the discretion provided under section 100 (3) of the School Act to allocate the money between the minister and the Board of Education in any circumstance where the original contributions cannot be determined or the allocation is determined to be inappropriate.

A Board of Education's allocation of the money received must be used by the board only for capital projects; the minister's allocation of the money must be used by the board only for capital projects with the minister's approval.

Notably, these provisions do not apply to money received in respect of the leasing of Board of Education capital assets where a lease is for a term of not more than five years, and does not provide for an option or right to purchase. In these instances, under section 100.1 of the School Act the board may allocate revenues to either capital expenditures or operating expenditures.

Under the authority of the Disposal of Land or Improvements Order, Boards of Education must notify the Minister regarding the allocation of proceeds received from the disposal of a capital asset, which includes the specific amounts allocated to the minister and to the board.

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If you have any questions regarding this policy, please contact the Capital Planning Unit at: Education.FundingDepartment@gov.bc.ca