Presentation to VISTA February 27, 2010

1. Presentation to VISTAFebruary 27, 2010 Public Education Funding-Learning from the Past

2. Overview of Presentation • Roles and Responsibilities to Establish Budget • Provincial Budget for Education Over Time • History of Funding and Policy Changes • 1983 to 1989/90 • Royal Commission • Spangelo Review and Resulting Consultations • 2002 Funding Allocation System • Current Picture • Summary

3. Roles and Responsibilities Cabinet and Treasury Board establish the overall budget and Individual Ministry Amounts Ministry of Education sets priorities within the set overall amount Ministry of Education allocates dollars to school boards Boards of Education establish budgets and sets spending priorities allocate funding to schools and programs Schools allocate funding to classrooms/programs 9/30/2014 3

4. Provincial Budget for K-12 Education Over Time

5. History of Financial and Policy Changes 1981-2010-Public Education Funding • 1981/82-Non Residential property tax to provincial revenues • 1982/83-Fiscal Restraint program-no supplementary residential taxation • 1983/84-Fiscal Framework Introduced • 1986/87-Supplementary residential taxation returned • 1988/89-Royal Commission Report (Legacy for Learners) • 1990/91-Block Funding Introduced and residential property tax becomes provincial

6. History of Financial and Policy Changes 1981-2010-Public Education Funding • 1992/93-Spangelo Review of public education funding • 1993/94-Follow up Committees on Accountability, Education Finance and Technical Review of Allocation system and targeted funding for aboriginal and special needs and administration cap • 1994/95-Funding Allocation System introduced • 1996/97-School District Amalgamation • 2002/03-Funding Allocation System moves to focus on per pupil allocations

7. 1983 to 1989 School Financing

8. 1983/84 Fiscal Framework • “Under a system called the “fiscal framework”, the province calculates the shareable budget amount for each school district. The shareable amount is based on provincially acceptable service levels and cost factors….and amounts for provincially accepted but locally diverse requirements for special education programs and transportation.” • In addition, a Board may include expenses funded by operating surplus, miscellaneous revenues and taxes levied on residential properties

9. Sources of Funds 1983-1989/90

10. Total School District Budgets 1983-1989/90 • 1983 $1.907 billion • 1984 $1.913 billion • 1985/86 $1.850 billion • 1986/87 $1.950 billion • 1987/88 $2.084 billion • 1988/89 $2.277 billion • 1989/90 $2.589 billion • Increased by 36%; enrolment by 5.9% between 1985 and 1990 • 1980s recession and compensation stabilization program • First Teacher Collective Agreement in 1988 • Two year agreement with 15% salary increases, class size limits, noon hour supervision costs, preparation time costs

11. Royal Commission • Block Funding was introduced in 1990 in response to the 1988 Royal Commission for Public Education • It was recommended as a way to determine the amount of provincial funding needed for educational services • It was recommended that the distribution of the funding be done by a stable, predictable, supportable allocation system

12. Royal Commission • The Royal Commission recommendation was that the block be increased annually by an education price index which recognized the unique costs of public education • The allocation system of the day, a resource cost model, was supported by the system and recommended for retention • The resource cost model was very detailed and provided a service level for each specific function such as class size, library and counseling services, etc.

13. Establishment of the Block • Relief to the homeowner as residential taxation authority removed from Boards • 1989/90 Block was comprised of actual school board expenditures including those funded by local capital and taxation • The new system covers all public education programs and is to be adjusted annually to reflect economic indicators, growth in enrolments and changes in mandate

14. Published Advantages of Block Funding • Recognizes all 1989/90 spending plus economic adjustment of $305 per student or 6.17% • Adequate increases through the annual adjustment to the block • Automatically increases with enrolment • Block will include funding for mandate changes • The education system was to be more predictable, stable and easier to understand

15. History of Referendum • Introduced with Block Funding in 1990 • Two held in 1990 by Vancouver and Richmond with Vancouver being successful • Legislation changed to make more restrictive • Quesnel and North Vancouver later held unsuccessful referendums for equipment needs

16. 1990/91 Fiscal Framework • Described as a system representing a sound basic education program suitable to meet the educational needs of students throughout the province • A series of provincially acceptable service levels or standards set out along with cost factors indicating the acceptable costs in which the province is willing to share • Service levels X Cost Factors = Program Allocation • Recognizing the different needs of districts such as geographic, special needs, transportation, etc • Fully Supported by Boards in Royal Commission consultation but later criticized as being too complicated

17. History of Block Funding 1990 to 2010 • 1990/91 $2.668 billion • 2001/02 $3.794 billion • 2005/06 $3.860 billion • 2006/07 $4.243 billion • 2007/08 $4.345 billion • 2008/09 $4.467 billion • 2009/10 $4.551 billion • Increased by 67% since 1990/91 with 20% since 2001/02 • Enrolment increased between 1990/01 and 2009/10 by 7% with a decline of 7% between 2001 and 2009

18. Early Years of Block Funding followed the Principles of the Royal Commission • 1990/91 6.17% economic • 1991/92 3.75% economic • Plus $28 per pupil for ESL and Sp. Needs student growth, and • Plus $15 per pupil for learning resources and primary transportation • 1992/93 2.40% economic • Plus $18 per pupil for technology and • Plus $11 per pupil for Facility planning • Economic adjustments, mandate adjustments and enrolment adjustments

19. Education Funding Review Panel (Spangelo Report) • When NDP elected in 1991, a funding review was promised • Cindy Spangelo was appointed to head up a public consultation in 1992 entitled the Education Funding Review Panel

20. Education Funding Review Panel (Spangelo Report) • The Education Funding Review Panel believed that the implementation of their recommendations would make the education finance system easier to understand for a number of reasons: • The division of responsibilities between the Province and school boards would be clearer. The role of the province would be to define and fund a common level of service throughout the province and the role of school boards would be to manage schools and deliver programs

21. Education Funding Review Panel (Spangelo Report) - continued • The block of funds would be linked to a resource costing model based on defined services, required resources and actual costs. This means it would be easier to understand how the block of funds was determined. • The resource costing model would also establish a clear connection between the block of funds and the distribution of funds between districts

22. Education Funding Review Panel (Spangelo Report) - continued • The distribution formula would be easier to understand. The formula would be divided into four broad categories: common costs, special resource costs, exceptional costs and local programming • The distribution of funds would be on current costs. Each district would be able to compare its allocation with that of other districts-where costs are different, allocations are different

23. 1992/93 Spangelo Review and Followup • In 1993 the Minister of Education established three committees to build on the process: • An Education Finance Advisory Committee made up of all partners of education to provide advice on the allocation of resources available for public education • A Technical Distribution Group to conduct a detailed analytical review of the funding distribution system • A Financial Reporting and Accountability Committee to address the issues of accountability raised in the Panel’s report

24. Report of the Education Finance Advisory Committee-December 1993 • Desirable Attributes of an Education Funding System: • Equitable system that enables delivery of the provincial education program in all districts –horizontal and vertical equity • Understandable system that is easily obtainable, clear, and one that Boards have confidence in

25. Report of the Education Finance Advisory Committee-December 1993 • Desirable Attributes of an Education Funding System: • Balanced system that should allow provincial uniformity and local creativity • Efficient system that should maximize the use of available resources to meet educational goals • Effective system that should be supportive of educational outcomes and neutral to Board decisions

26. Report of the Education Finance Advisory Committee-December 1993 • Other Policy Issues addressed: • Costs should be recognized at a current level • Funding for special programs should be incremental with all students funded the same for regular programs • Targeting should be kept to a minimum and the funding system should be neutral to Board decisions • The Province should not influence fund raising efforts at a local level-concern that local funding raising should be for special initiatives and for on-going programs

27. Report of the Education Finance Advisory Committee-December 1993 • Other Policy Issues addressed: • Governance-clarification of the role of the Province and school boards in the funding and spending decisions • No consensus on local taxation • Multi year funding for planning • Better relationship between funding and spending for greater accountability • Retain a resource cost model as it provides an accountability mechanism for provincial funding

28. Funding Allocation System • Introduced in 1995/96 • Three main areas of funding • General Operating includes core grants –same per pupil, school and district amounts • Specific grants to recognize the differences in costs between districts • Targeted grants-special education, aboriginal education, learning resources and the maximum amount that could be spent on administration • Developmental grants-staff training for program implementation, amalgamation support • A translation of all the factors in the fiscal framework to something more understandable

29. March 1, 2002 – New Formula Announced • Introduced by Minister Christy Clark as providing Boards more flexibility, autonomy and control over educational services • Funding Allocation System had 60 different funding categories (translated from the fiscal framework)-people interpreted those categories as indicating how much boards were to spend on each program area

30. March 1, 2002 – New Formula Announced • Move to 82% on a student allocation and five broad supplementary grants: • Unique student needs, including special needs, English as a Second Language, Aboriginal Education, and Adult Education programs; • Enrolment Decline, where enrolments decrease by more than one per cent in a year; • Salary Differentials, for districts with higher average teacher salaries; • Transportation and Housing; and • Unique Geographic Factors. • Only aboriginal education is targeted

31. Recent Changes to the Block-Million $ • Block 2001 to 2004 $3,794 • Salary Increases $516 • Literacy, arts, special ed $202 • Distributed Learning $7.7 • GAAP $35.0 • Reduction in 2001/02 ($3.5 ) • Total Increase $757 million • Block 2009/10 $4.551 billion 9/30/2014 31

32. Provincial Funding Shortfall

33. Provincial Funding Shortfall • It is understood that some of this shortfall can be offset by cost savings from enrolment decline. In 2009/10 it is estimated we can save about $3,000 per pupil in associated costs as enrolment declines, so for a projected provincial enrolment decline of 45,000 pupils this would reduce the shortfall by $135 million and leave an actual overall shortfall in funding to maintain services of $157 million.

34. Effect of Enrolment Decline on Per Pupil Block 9/30/2014 34

35. Provincial Funding/Student

36. Provincial Education Funding $ per school aged and adult student

37. Comparison of Per Pupil funding

38. Enrolment Decline Grants • Only provided for one year • Fluctuate as enrolment decline changes • Cannot depend for ongoing services

39. Effect of Enrolment Decline Funding allocation 70% funding allocation = 5,851 per student If enrolment declines 200 students= $1,170,200 Teachers for 200 FTE @ 30:1 @ $85,500 = 570,000 Clerical support + supplies, est. @ 30,000 _______ Funding reduction (after year 1) $280,200 9/30/2014 39

40. Predictability of Current Allocation System • Formula Changes • Salary Differential • Factors that Depend on other Districts • Allocations provided too Late in Budget Process • No longer an Estimator

42. Ministry of Education Budget 9/30/2014 42

43. Ministry Budget in Provincial Context In 2001/02 the Operating Budget of the Ministry of Education Budget was $4.779 billion or 19.6% of the total Provincial Budget In 2009/10 the Operating Budget of the Ministry of Education Budget is $5.042 billion or 15.3% of the total Provincial Budget 43 9/30/2014

44. Source of Funds for School District Budgets-2000 to 2010

45. Cost Pressures for 2010/11 • HST Implementation • Medical Service Plan Increases • Teacher Salary • Teacher Pension Costs • Carbon Offsets and Smart Tool • BC Hydro Rate Changes • CUPE trades rate adjustment • Loss of Reserves • Full Day Kindergarten • Estimated by the BC School Business Officials to be $282 million across the province

46. BCPSEA Presentation April 1999 • “…currently we have systems that are not harmonized. The allocation system is based primarily on the premise of full local autonomy, the amount of dollars to fund public education is calculated without consultation with Boards about the needs and realities, the centralized bargaining system is not adequately reflected in either the allocation system or the amount of funding available and there is a lack of trust of the financial information between parties” • Are we still there today?

47. Summary • The Select Standing Committee on the Budget recommended a review of Public Education funding • Should it address the following: • Rationalization of amount of funding and service expectations • Relationship of overall block amount and allocation system • Role of special grants and accounting requirements • Effect of enrolment decline and recognition in the allocation system

48. Summary • How should public education be resourced in the future? • What should be the relationship between the total amount of funding and service/mandate expectations? • What is the appropriate % provincial contribution to school district budgets? • How should individual district choices and costs be recognized? • How should public education be held accountable for its funding and spending?