Ernie Eves' short life as a departure from Mike Harris

May 1, 2002

It was quite a let-down from Thursday to Friday of last week, as Thursday's feel-good words from the Ernie Eves Government in the Throne Speech gave way to the Minister of Education's elaborately disguised education funding cuts on Friday.

What has been advertised as an increase in funding of $350 million turns out, on closer examination, to be equivalent to $144 million cut, when actual costs and enrolment growth are taken into account.

On the surface, the carefully crafted announcement makes things look pretty good. Funding for elementary and secondary education for 2002-3 is to be $14.21 billion, up from a 2001-2 level of $13.86 billion.

If one just does the arithmetic, that works out to an increase of 2.5%.

Unfortunately, in the real world of school finance, that's not even close to the whole story.

First, the funding base for 2001-2 isn't really $13.86 billion. That amount doesn't take into account $84 million in one-time-only mitigation money that was spent by the Toronto District and Ottawa-Carleton District School Boards last year. This year, $37 million will be available to the Toronto Board; none to the Ottawa-Carleton Board, for a net reduction of $47 million.

It also does not take into account the $37 million funding deficit in the public school system alone in 2001-2. That amount will not be available for 2002-3. Indeed, the Education Act requires that the deficit be repaid in 2002-3, for a total turn-around of $74 million.

The starting point for the funding comparison is not $13.86 billion; it is $13.98 billion.

Then enrolment growth has to be taken into account. According to the Ministry of Education's own numbers, enrolment growth is expected to be 0.4% in 2002-3 compared with 2001-2. Not a large number. But it still represents students that have to be served by the system.

To be equivalent to 2001-2 funding, on a per student basis, funding for 2002-3 would have to be $14.3 billion - before we account for increases in costs.

Because many school boards negotiated two-year agreements in 2001-2, we already have a good low-end estimate of what will happen to the 82% of school board costs represented by salaries. The average increase in agreements already negotiated for 2002-3 is approximately 2.3%. Assuming that the other 18% of school board costs increase at the rates of inflation in Ontario projected by major banks for 2002 and 2003 (1% in 2002; 2.2% in 2003), school board costs can be expected to increase by approximately 2.1%.

Taking inflation into account, therefore, increases the funding needed to maintain the same level of activity in the system by a further 2.1%, to $14.34 billion.

Finally, the resumption of payments into the Ontario Municipal Employees Retirement System effective January 1, 2003. This represents an increase of 2.1% in the 7% of school board costs represented by non-teacher salaries and increases the cost base by a further $17 million, to a total of $14.35 million.

In fact, when the factors that affect the real world of education finance are taken into account, the Government's $350 million increase turns into a $144 million reduction in funding.

So much for the nice words.

The Government admits it is not funding what school boards need, asserting that the issue is affordability.

It is not about affordability. It is about priorities. And it is about political will.

Let's look first at affordability. According to an analysis by the Federal Department of Finance, the annual loss in revenue in Ontario from tax cuts implemented since the Conservative Government was elected in 1995 will be $12.3 billion in fiscal year 2002-3. The $144 million school boards would need to maintain their 2001-2 level of activity while the Government is reviewing the funding formula amounts to less than 1% of that amount. The entire $1 billion school boards say they have lost as a result of the funding formula could be restored with about 8% of that amount.

Priorities? The Government says it is committed to addressing the problems created in the education and health systems by years of funding cuts. Yet it remains committed to new corporate tax cuts that will cost $2.2 billion over the next couple of years and to the previous Minister of Finance's $400 million-plus commitment to funding for private schools.

Simply suspending the implementation of either of these measures would provide enough money for a stand still budget for 2002-3 pending a funding formula review.

The fact that the Government has announced its intention to proceed with both of these measures speaks volumes about its real priorities.

So it all comes down to political will.

When the new Eves Government put on its consultative face, many of those who have been numbed by years of painful budget cuts took a "wait and see" approach.

If the Government's response on education funding is any indication of how much real change lies behind the positive rhetoric, a lot more Ontarians than parents and students are going to be disappointed.

Hugh Mackenzie is Director of Research at the United Steelworkers of America and a Research Associate of the CCPA.