By Cole Parkinson
The Horizon School Division board of trustees have approved their 2019/2020 fall budget update, which sees another deficit near $1 million.
While projections in the early summer pegged the deficit to come in just over $400,000, several factors have bumped that number up to $967,458.
“This fall, we are bringing to you a projected deficit of ($967,458) instead, which is quite surprising. What happened is, first of all, school’s have adjusted their budgets.
Those have gone down to under $400,000,” said Phil Johansen, associate superintendent of finance and operations at Horizon’s regular board meeting on Nov. 25.
Due to this shortfall, $567,841 is coming out of board reserves to maintain school staff for the school year, while the remaining $399,617 is due to schools opting to expend reserve dollars to enhance additional instructional supports for students.
“Every year we do a projection of funding and enrollments in the springtime and then update actual enrollments after September 30. This year was a bit of a different year. Most years we have a funding manual and a budget from the province, we didn’t have that this year. So we made some assumptions and then when the province released the budget in October, we found out we were wrong on some things,” explained Johansen. “In the spring, we presented a budget that included the Classroom Improvement Fund but we weren’t really optimistic that it would be given to us. The province’s budget in October didn’t include the Classroom Improvement Fund for us which was worth $481,000. Other funding that was cut in the province’s budget was the Class Size Grant, that cost us almost $1.3 million. They also reduced the Student Fee Replacement Grant. So, a couple of years ago when student fees were a big issue for the government, they basically said ‘you can’t charge all of these different types of fees,’ and in order to compensate for that, they provided funding for some of the fees charged in the past. That was worth $76,000 a year.”
“My understanding is that part of the rationale for the government in cutting those three is that they transferred those funds to cover the cost for normal growth,” added Wilco Tymensen, superintendent of schools.
With the United Conservative budget seeing cuts across a number of areas, school boards across Alberta are experiencing similar issues. While the UCP vowed to keep spending for education the same as last year, the expanded enrollment numbers across divisions has left a shortfall.
“The Conservative government made a commitment that they wouldn’t reduce the amount of money spent on education this year, but the problem is the system as a whole has enrollment growth. At that point, they needed to fund something like an extra 15,000 students in the system so they eliminated those three grants to be able to pay for that. To soften that blow, they brought in a new grant called the Transitional Funding Grant and there is two different rates. There is a rate for urban jurisdictions and a higher rate for rural jurisdictions. We benefit at the higher rate there but it still didn’t offset the amount of funding that we lost,” continued Johansen. “We didn’t really count on getting this $481,000 in our plans but we did not anticipate losing the class size funding and the student fees, we didn’t really anticipate losing that one either. The province has announced they will be reviewing the funding framework. That totals $1,367,000 and the transitional funding gives us just over $1 million so that leaves us with a shortfall of around $350,000.”
He also explained the provided transitional funding would be a one-time thing.
Coming into the school year, Horizon had projected a smaller student population across their schools but the numbers have come in lower than projected, which has left less provincial money in their pocket.
“We projected our enrollments in the spring, we are actually down about 95 students from last year and we are about 30 less than what we projected. In the spring, what the board approved was a deficit of $426,000. That $426,000 was entirely coming from school’s funds that have been carried over year to year,” said Johansen.
Another significant factor for the larger deficit comes in the fact that insurance for school boards in Alberta has seen a larger bump than expected.
“The insurance industry has kind of backed away from school board insurance programs because of the losses that have occurred over the last number of years. Alberta has been kind of labeled as a catastrophic zone by the industry. We were told that 15 per cent of the weather-related losses in the last year in all of Canada came out of Alberta. If you go back through the years, between Fort McMurray, floods in High River and Calgary and the wildfires up north, our insurance as a collective hasn’t done very well. Personally, Horizon’s insurance losses haven’t been very high at all but school boards as a whole have not been very good,” explained Johansen.
Over $500,000 in additional funds for insurance was added to the budget, according to Johansen.
With the need to cover up the financial gap, Johansen also explained how they would suggest doing that for the 2019/2020 school year.
“Our board has a history of using reserves to offset any of those shocks that come our way. Of course, our ability to absorb those shocks is diminishing. We did look at the budget in detail and there are some things we’ve done to try to reduce costs which comes to a savings of about $190,000. The most significant thing that we are doing is we have a central office position where someone is leaving and we are redistributing duties rather than replacing that position. Some other areas we carved out some savings were in technology provided to schools,” he said. “In terms of how we propose the board funds this shortfall this year, again noting the objection would be to minimize the impact on classrooms given we are mid-semester. The board’s operating reserves are just over $2 million, if you separate out the school’s operating reserves, noting that the school’s operating reserves are technically the board’s funds, as it is your decision to give that to them. Our recommendation at this point to maintain programming and staffing at schools would be to approve an overall deficit of $967,458 for this operating year.Of course, we understand with a new funding model coming in the spring, there will likely be more significant shifts for the 2020-2021 operating year.”
The board unanimously approved the 2019/2020 fall budget update.