CBE budget “surpluses”

In the recent preliminary operational review of the Calgary Board of Education, Ministry staff looked at the audited financials for the most recent three years (2013/14, 2014/15 and 2015/16) and made the following observation:

“CBE has budgeted either a deficit or balanced budget in each of the last three fiscal years. Actual results have reported annual surpluses of $9.1, $11.4, and $14.6 million, respectively, over the same period.”

The Education Minister has interpreted this to mean that the CBE is adequately funded, so let me provide a bit of further context.

First, unlike the province, the law requires school boards to submit a balanced budget. We must balance our budgets within the funding provided to us. This causes every school board to build a little conservatism into their budgets in order to deal with unforeseen events (eg. hundreds of refugee students arriving in the middle of the year, whom neither the provincial nor federal government saw fit to fund).

Second, we need to remember that the CBE has an operating budget of over a billion dollars and that these “surplus” amounts represent 0.8%, 0.9%, and 1.1% of the total operating expenses in each of their respective years.

Third, rather than looking only at our operating budget, a better picture of our system can be found by looking at the consolidated budget, which includes capital transactions. Capital expenditures for things like technology, furniture, equipment and vehicles is a small percentage of the overall budget, but is still essentially funded from operational dollars. If the Minister had looked at the consolidated budget, he would have realized that in two of those three years, the CBE did not in fact have a surplus, but used reserves in order to balance a deficit. In 2014/15, the CBE used $3.8 million from reserves and in 2015/16 it was $1.1 million.

Finally, the CBE was making cuts in two of those three years in order to balance the budget. The following are excerpts from each of those budgets:

“The impact of reduced provincial funding, coupled with non-discretionary cost increases will be felt across the system. Increased average class sizes in grades 4 through 12 and reductions in the timeliness and quality of services provided centrally are unavoidable.” (pg. 5 of May 28, 2015, introductory report). ”The operating budget report for 2013-14 directs as much funding as possible to students in classrooms. To accomplish this, central reorganization and severe cuts to administration were required.” “Unfortunately, in the fourth consecutive year of funding reductions, it is impossible to continue to make cuts without negative impacts on students, parents, classrooms, staff, programs and services. The proposed budget may even jeopardize our ability to deliver core service and support functions.” “We have kept students first by making cuts everywhere else first.” (pg. 1 of the “Operating Budget for 2013/2014 and Beyond”)

“2014-15 will mark the fourth year in which Alberta Education funding per student to the CBE has decreased” (pg. 2 of the “Budget Budget 2014-17 Values and Choices”) “With the use of reserves, this budget provides resources to generally maintain service delivery and support to students and schools at 2013-14 levels.” (pg. 4 of the introductory report)

“The increase in provincial funding allows the CBE to maintain service levels in 2015-16 without reliance on reserves for regular operational expenses.” (pg. 3 of the “Operating Budget for 2015-16”)

The CBE was grateful to the newly elected provincial government for fully funding growth and inflation for the 2015-16 school year. However, this came after years of cuts. In 2011-12, the CBE received $9,290/student in funding. In 2015-16, it was $8,816 or 5.1% less than in 2011-12. Here is a graph of per student funding from the 2015-16 audited financials.

And lest anyone think that in 2011-12, the CBE was overfunded, here is an excerpt from page 1 of the CBE’s audited financials for that year.

“When the provincial budget was announced, the CBE faced a $61.7 million shortfall in funding for 2011-12. Input from more than 1,400 parents and community members guided decisions to balance our budget while minimizing the negative impact on students in the classroom. We redesigned central services; planned to use all of our available reserves; and included a provision to underspend Board- funded capital. The goal of these initiatives and others was to reduce the impact of the anticipated budget shortfall on schools.”

I hope that this provides greater clarity around CBE “surpluses” and whether it is an appropriate indicator of the adequacy of education funding. For further information on the current 2017/18 CBE budget (which includes another 3.7% cut to central service units) please see this previous post.

4 thoughts on “CBE budget “surpluses”

  1. Richard Leslie

    Perhaps the provincial government should be reminded of the huge deficit in maintenance costs, essentially our physical schools are falling apart at the seams because the tax dollars we send to Edmonton don’t come back to maintain our school facilities. Trina perhaps you could remind readers how far behind we are in terms of maintenance because the Alberta governments have not adequately funded it, I seem to think it’s in the range of a billion dollars.

  2. Trina Hurdman Post author

    That is a good point, Richard. 57% of CBE schools are over 50 years old and the CBE’s most recent estimate of deferred maintenance is $1 billion when you add the deferred lifecycle replacement costs and the allowance for the aging of facilities. The CBE needs an estimated $46 million per year to fund this maintenance and we are getting less than half of that every year. This information can be found on the advocacy sheets that we share with MLAs at http://www.cbe.ab.ca/about-us/board-of-trustees/Documents/Investing-in-the-Future-Facilities.pdf

  3. Rick Hoff

    In a province wide public authority such as Health, if there is a surplus in one part of the system, that part is required to contribute it to any other part of the system that may not be as well of. Wouldn’t it be fairer year over year for CBE or any other board, to give it’s surplus back to the coffers for redistribution to other boards (as long as there are multiple boards and privates in this province) in order to contribute to the greater needs of every student and child in Alberta. Demographics change and often the largest boards in urban centres have the greatest voice and most opportunity for advantage. I see inequities between very large urban boards and their capacity to set aside assets, as compared to others that struggle or face deficits to keep up. I suppose another question is why are so many boards with separate superintendents, trustees and infrastructure required to oversee each one even needed in today’s society. Couldn’t one public education system provide options and choices to meet multiple demands while overseeing a strong foundational education for all students?

  4. Trina Hurdman Post author

    You are absolutely correct that any surpluses should be reinvested directly back into the system, which is what the CBE does. Audited financials are simply a point in time and the CBE is not increasing its reserves balance year over year by holding on to any surpluses. In fact, as a percentage of operating budget, the CBE has one of the lowest reserves of any school board in the province. I agree that the current provincial funding formula does lead to some inequities, and the CBE has advocated for this to be looked at. However, I do feel that it is important to point out that large metro boards receive less per student than most other boards. http://www.metronews.ca/news/calgary/2015/04/05/questions-raised-about-uneven-school-funding-as-calgary-boards-receive-among-the-least.html The question of whether a single superboard for education (similar to the one for health in Alberta) would be as effective as multiple smaller boards is a good question. There are many pros and many cons, but I will leave that debate for another day. Thank you for sharing your thoughts!

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