Finances Past and Present
o understand today's financial position, one needs to look at expenditures that were made as far back as the early 1990s. In 1992 Mishkeegogamang had a $317,000.00 accumulated surplus , but by 1995 there was an accumulated deficit of $3.4 million. From 1993 - 1998 Chief and Council spent a great deal of money in legal fees to negotiate the hydro settlement. The budget didn't have enough money for those expenditures and during those years they also went into debt in other ways. As a result, the band's bank overdraft at that time was over $3 million. $1.8 million of this was from overdrafts in administration, including the legal fees for negotiating the hydro settlement. But an additional $1.4 million resulted from the building of urgently needed housing (10 log houses were built during this period). Smaller deficits in education, projects and welfare also contributed to the total.
These deficits continued to mount until the first hydro payment was received in 1999. That year there was a small surplus. Again from 2000 to 2003, the deficit increased due to new construction: 12 housing units in 1999, the school construction beginning in 2000 and 18 housing units built in 2003. There were valid reasons for the original debt - negotiations and capital spending on the log houses were the main expenses. But the debt is not just due to administrative spending in the past. Band operated businesses have also contributed to deficits. The two incorporated companies - Asin Construction and the New Oz group - also run deficits and are now in the process of being dissolved. The Housing Program is supposed to break even (revenue from rent is supposed to equal upkeep plus mortgages) but because rent is often not paid or collected, this money has to be taken from general revenues, and thus housing contributes to the deficit.
Mishkeegogamang's accumulated deficit in 2007 was $2,550,737.00. At the end of 2008 that was down to $1,145,421.00. Indian Affairs took some deficits off the books which had been there in error, and some others have been paid off through careful management.
Based on the remedial management plan, the projected surplus for 2009 is $400,000.00, which will bring the accumulated deficit down to around $700,000.00. This is less than the 8 per cent of the total budget at which co-management is necessary. Through this reduction of the accumulated deficit and other required steps, the band is well on the way to working its way out of co-management.
Investment of Hydro Funds
community presentation was done at 10 Houses location and at the Main Reserve in the fall of 1999. This presentation was prepared by Brian Brown. Several options were presented and the discussion of setting up a Trust Committee to administer the Hydro Settlement Dollars was outlined. The Trust Committee was never formed due to the pressures from community membership demanding a payout to members each year.
It was easier to just pay out the funds than to argue what could be done with this funding that would benefit the whole community.
What the presentation shows is, if half the Hydro funds were invested each year and not spent - over 18 years you would have $11,589,620 and you would earn $695,377 interest each year. You could spend the interest each year and that would mean your money would continue making money.
The other way to look at this is to say, if the First Nation spent the $750,000 each year on building houses, you could have built approximately 5 houses each year at a cost of $150,000 each. As of today Mishkeegogamang could have built 45 homes with the interest from invested Hydro Settlement funds.
So, what are we left with after 10 years of receiving the Ontario Hydro Settlement dollars? The following spreadsheets give further financial information.