Reading between the lines

What the Ministry of Education doesn’t tell us about education funding

By Margaret White

On March 3, 2009, Minister of Education Shirley Bond stated in a letter to the editor of the Castlegar News, “Over the next three years, the education budget will increase another $114 million bringing the total education budget to $5.23 billion at the end of 2011–12.”

What the minister doesn’t say is that the year-to-year increase in funding for education programs fell from $173.7 million in 2008–09 to $73 million in 2009–10, with plans to cut funding increases in half for each of the following two years. The ministry’s three-year plan shows year-to-year funding increases for education programs dropping to $16.3 million by 2011–12.

What does the future hold for K–12 funding?

The three-year plan in the 2009–10 Operating Grants Estimates manual reveals the ministry’s plan to freeze operating grants in 2010–11 and 2011–12. This means none of the minimal funding increases planned for education programs in these years will go to K–12 operating grants.

Chart 2 shows the percent change in operating grants since 2006–07 is decreasing steadily to zero by 2010–11. This will leave districts with no additional funds to cover cost pressures such as inflation, negotiated salary increases, and other downloaded costs. For example, in 2010–11 negotiated salary increases will total at least $50 million. With no increase in the district operating grants, many boards of education will face severe shortfalls.

How much did the 2009–10 operating grant increase since 2008–09?

The Ministry of Education announced an increase of $84.4 million in total operating grants for 2009–10. But the amount allocated to districts in the 2009–10 operating grant estimates increases by $66.2 million since 2008–09, after accounting for the $12.6 million Summer Learning allocation in the 2008-09 recalculated operating grants. The remainder of the $84.4 million increase reported in the media is in the $71 million holdback for 2009–10.

Districts will receive some of the holdback funds after the September 30 enrolment count. In 2008–09, about $47.5 of the $84.5 million holdback was released to districts after the September 30 enrolment recalculation. But boards must plan in April and submit a balanced budget by June 30, based on the $53.6 million increase in the 2009–10 operating grants estimates.

No funding increase for 34 school districts in 2009–10

Over half of BC school districts, mostly in rural areas, will receive no increase to their 2009–10 operating grants. Many of these districts faced budget challenges or shortfalls in 2008–09 due to inadequate funding. For example, in a recent Columbia Institute study, the Kootenay-Columbia district reported a $2.18 million shortfall for 2008–09, resulting in a $1.9 million reduction in education services.

Not enough to cover labour settlement costs

Labour settlement costs make up a key component of the operating grants. These are costs that the provincial government has negotiated and is committed to fund. A recent report by the Columbia Institute showed that in 2008–09 all but two school districts faced a decrease in discretionary funding because the $122 million increase in the 2008–09 operating grant was not sufficient to cover the $137 million increase in labour settlement funding. Some secretary-treasurers reported that their district used up surpluses to cover the shortfall while some reduced services and/or other expenditures.

For a copy of the report, go to: http://tinyurl.com/da2c7z 

The same situation will arise in 2009–10. The $84.4 million increase in the operating grant is not enough to cover the $100 million increase in labour settlement costs. This amount falls at least $16 million short. The amount of the shortfall depends on how much of the holdback is released during the school year and whether the funds can be applied to increased labour settlement costs.

Boards of education that used existing surpluses to deal with a shortfall in 2008–09 will not have those funds to fall back on in 2009–10. Districts that reduced educational services to make up for a shortfall in 2008–09 will face more drastic cuts in 2009–10 and subsequent years.

Inflation erodes education funding

The minister of education has also stated in the media that education funding has increased by almost one billion dollars since 2001. While it is true that funding in current dollars increased by about this amount, it is inflation-adjusted dollars that really count. Boards of education make decisions based on the real purchasing power of their budget allocations.

Using the Bank of Canada inflation calculator, $4.40 billion is needed in February 2009 to purchase goods and services that cost $3.79 billion (the amount of the 2001–02 operating grant) in February 2002. In constant (inflation-adjusted) dollars, the $4.47 billion in the 2008–09 operating grant represents an increase of about $70 million dollars since 2002. This falls well short of what is needed to cover negotiated salary increases that the government is committed to fund and the cost of new initiatives and other downloaded costs.

The enrolment decline supplement does not solve the problem

The Minister of Education conveys the message that funding is especially generous, considering the decline in student enrolment over the past several years. For example, student enrolment is expected to decline by about 7,000 students in 2009–10. This is an average of about 115 students per district, and about 5 students per school. Districts say schools have fixed costs that are not easily adjusted in the short-run, when enrolment declines from year-to-year. For this reason, the ministry provides an enrolment decline supplement to some districts. But is it enough?

The basic enrolment-based funding decreases by $37.5 million in 2009–10, based on projections for a decrease of 7,000 students. While the enrolment decline supplement is supposed to cushion districts from reduced funding due to lower enrolment, the total enrolment decline supplement for 2009–10 is $12.5 million dollars.

Many districts do not qualify for the full supplement because the allocation is based on the percent decline in the student population, not the decrease in the actual number of students. Vancouver and Abbotsford, for example, are projected to lose a significant number of students yet receive no enrolment decline supplement in 2009–10. Only 5 of 60 districts receive the higher supplement for an enrolment decline greater than 4%, even though some districts lose more students than the districts receiving the supplement.

The ministry also allocates $14.5 million for funding protection in 2009–10. However, this grant combined with the enrolment decline supplement is not always enough to make up for shortfalls due to an enrolment decline and other cost pressures.

Provincial block funding not enough to cover cost pressures

According to a background document prepared by the Saanich Board of Education, provincial block funding increased by $673 million since 2001–02. This was $250 million short of covering formula-cost pressures such as distributed learning, GAAP funding, targeted literacy, arts and special needs, summer school, course challenges, special needs increases, and labour settlements. After accounting for savings resulting from the enrolment decline since 2001–02, the report estimates a shortfall in funding to maintain services of $132 million. (Available at: http://tinyurl.com/cn7d7x)

The future does not look good for public education

The enrolment decline in recent years provided an opportunity for the government to address unmet needs in the education system. For example, they could have ensured all classes met legislated limits for class size and composition, and met more fully the needs of special education students. Instead, funding increases over the past decade barely kept pace with inflation. Little was left to cover increased labour settlement costs, new education initiatives, or to adequately address the needs of vulnerable students. This leaves public education in a precarious financial position as the Ministry of Education plans to freeze operating grants after 2009–10, leaving school districts to deal with the unfortunate consequences.

Margaret White, researcher, BCTF Research and Technology Division.

References available upon request.