Education – Budget 2009 Update
September 22, 2009
Alberta Education is working together with public, separate and francophone school boards, as well as representatives from charter schools, accredited funded private schools, the Alberta Teachers Association, and other stakeholder groups on the current fiscal situation and its potential impact on the education sector in next year’s budget and in the years to come.
Dave Hancock, Minister of Education, has publicly referred to the next few months as an opportunity for transformational change in education. He has committed to listening to the ideas of citizens and stakeholders, and working collaboratively to improve, change, and in some circumstances, to overhaul current practices.
There is a need to continue to be prudent and realistic in government budget planning during a period of recession and reduced government revenues. This year, revenue from natural resources is forecast to be less than half of what it was last year, while personal and corporate income tax revenues are also expected to fall dramatically.
The Government of Alberta has a four-point plan to deal with this recession and return to a balanced budget:
- Control spending.
- Draw from the Sustainability Fund as required protecting programs that Albertans value most.
- Continue to invest in public infrastructure necessary to support long-term growth.
- Promote Alberta as a great place to invest, and work to reduce the costs of doing business in Alberta.
In the face of lower revenues, provincial government ministries are being asked to find a total of $430 million in savings from the 2009/2010 fiscal year budget. Every department has been asked to see what can be done more effectively and efficiently and to find creative solutions that help address our budget challenges.
Education’s portion of the $430 million is $80 million for the 2009/2010 fiscal year. The first thing we did was look internally to manage this adjustment to our budget. The Ministry already reduced its supplies and services budget by $14.6 million through the original Budget 2009 process. An additional $24 million in savings were identified through a freeze on hiring, by minimizing discretionary spending, and by slowing down or delaying initiatives or projects. This will offset the impact of the reductions on school boards, teachers, and students.
Internal departmental expenses account for less than two per cent of the global $5.4 billion Education budget. Most of the funding flows through to school boards, charter schools and accredited funded private schools. Therefore, of the $80 million adjustment, $56 million will come from the education system.
We next updated grants where conditions have changed. These grants include the Relative Cost of Purchasing Goods and Services (RCPA), Social-Economic Status (SES) and the Fuel Price Contingency. The new data available will better reflect comparable costs across the province for RCPA and to better capture the socio-economic conditions in the province for SES. The Fuel Price Contingency grant is supplementary funding that was introduced in September 2005 to address escalating diesel fuel prices. Since the forecast for oil is projected to be much lower in 2010/2011 as compared to September 2005 prices, we decided to discontinue this grant.
Finally, we looked at how to address the remaining balance without impacting students. With this in mind, we looked into the $400 million reserve funds that school authorities have accumulated over the years. We know that funds were set aside for specific purposes by boards through prudent planning. In many cases, jurisdictions and schools have been saving up for major projects that they cannot pay for within one year. Given the current financial situation, we feel school boards can accommodate program adjustments within the current year without significantly impacting services to students. In addition, Student Health Partnerships have reported almost $9.0 million in accumulated operating surpluses at August 31, 2008, which have not been drawn down over the last four years. We also believe that this is the time for partnerships to access these resources.
All school boards that have a reserve were ensured that 3.25% of their operating expenses were for emergencies, boards that had less than 3.25% of their operating expenses in reserves did not contribute to the surplus adjustment. No board will be asked to contribute more than 11 % of its surplus funds, and in many cases less. This approach helps us meet our budget target without having a negative effect on students, teachers and school authorities. School jurisdictions still have the flexibility to allocate funding in the way they believe will best improve student outcomes.
Education stakeholders will be critical participants as the Ministry engages the education community in a consultation to plan for Budget 2010. It will be a collaborative process to identify savings. And it’s fundamentally important that education partners are part of the solution to the difficult circumstances we all face. We will need to work together to come up with solutions and be ready to listen to any ideas that are out there.
There are efficiencies we can find, and programs we can defer. If we’re not working together and working creatively, we’re not going to come up with satisfactory solutions. It is important to have open, meaningful dialogue and work together so everyone can contribute to potential solutions to the difficult circumstances Alberta faces. Difficult fiscal times can provide the impetus and opportunity to review everything we do to ensure that all resources are focused on achieving the outcomes we all want – an excellent educational opportunity for every child, so that every child can find his or her potential and succeed in being full participants in our community and our economy.
Minister Hancock met with all school board chairs and superintendents the second week of September to discuss the challenges. Education staff will be meeting with school superintendents and secretary-treasurers during September and October to work together to develop suggestions to address the fiscal challenges facing Alberta’s education system. School board chairs will meet again with the Minister in November and discuss the outcomes of the administrators meetings.
We encourage teachers, parents and interested parties to contact your local school board regarding discussions on how any changes will be managed within school authorities. The school funding framework is built on the principle of flexibility and local school boards are responsible for making decisions in the best interests of their students and their community.
Information on school boards is available from the Authorities and School Directory at /apps/schoolsdir/.
