Chi­nook School Di­vi­sion us­ing re­serve funds to cover short­fall in 2020-21 bud­get

Prairie Post (East Edition) - - NEWS - By Matthew Lieben­berg


The bud­getary chal­lenges for the Chi­nook School Di­vi­sion is set to con­tinue in 2020-21 and it will again have to use re­serve funds to make up for a short­fall in fund­ing re­ceived from the Min­istry of Ed­u­ca­tion.

The bud­get for the 2020-21 school year was pre­sented dur­ing a reg­u­lar Chi­nook School Di­vi­sion board meet­ing, June 8.

The board autho­rized the sub­mis­sion of the bud­get es­ti­mates to the Min­istry of Ed­u­ca­tion for fi­nal ap­proval.

Chi­nook School Di­vi­sion Chief Fi­nan­cial Of­fi­cer Rod Quintin pro­vided de­tails about the bud­get dur­ing a tele­phone in­ter­view with the Prairie Post, June 11. The 2020-21 bud­get will al­low the school di­vi­sion to fo­cus on key pri­or­i­ties of stu­dent en­gage­ment, grad­u­a­tion rates, and writ­ing strate­gies.

“The chal­lenge for us is that we con­tinue to have to draw on our re­serves in or­der to do that,” he said. “So we’re go­ing to be look­ing at about $1.7 mil­lion draw of re­serves to bal­ance the cash bud­get.”

The use of re­serves to bal­ance the bud­get is a sim­i­lar ap­proach to the one fol­lowed by the school di­vi­sion in re­cent years.

“It’s fairly con­sis­tent with our prior years bud­get­ing,” he said. “Prob­a­bly the one thing that stands out is that we didn’t un­der­take any sig­nif­i­cant cost cut­ting mea­sures, be­cause we’re prob­a­bly at a place now where we’re op­er­at­ing as ef­fi­ciently as we can.”

The school di­vi­sion took steps dur­ing the past five years to re­duce ex­pen­di­ture wher­ever pos­si­ble through reviews of pro­grams, cen­tral of­fice, per­son­nel and sup­ports.

The board has con­tin­ued to em­pha­size the need to avoid a re­duc­tion in teach­ing staff in schools. Ac­cord­ing to Quintin this bud­get will not re­sult in any in­ten­tional staff re­duc­tions.

“There may be the odd case where en­rol­ment changes in a school and the for­mula would in­di­cate that would be a re­duc­tion in staff, but other than that, there’s noth­ing in­ten­tional in terms of re­duc­tion of staff,” he said.

The op­er­a­tional fund­ing al­lo­ca­tion from the Min­istry of Ed­u­ca­tion to the Chi­nook School Di­vi­sion for 2020-21 in­creased by 0.4 per cent over the pre­vi­ous year. The to­tal pro­jected ex­pen­di­ture in the school di­vi­sion’s bud­get will in­crease by 0.8 per cent or around $636,000.

“Our op­er­at­ing fund­ing is still ba­si­cally flat­lined,” he said. “It’s just the way the fund­ing mech­a­nism works. If our en­rol­ment doesn’t in­crease, the op­er­at­ing fund­ing tends not to in­crease ei­ther. There’s a lit­tle bit of money in there for in­fla­tion­ary costs, but the in­fla­tion­ary costs are usu­ally more than the money that we get to cover them.”

The school di­vi­sion’s pro­jected bud­get deficit will be $4.6 mil­lion and re­serve funds will be used to bal­ance the cash bud­get. This on­go­ing draw on re­serves will have an im­pact on the in­vest­ment rev­enue gen­er­ated for the re­serve fund in fu­ture years.

“It’s not fea­si­ble and at some point that will have to change,” he said about the use of re­serve funds. “We’ve got a few years worth of avail­able funds to draw on, but it is ul­ti­mately go­ing to need to be ad­dressed. So I think it de­pends a lot on the avail­able re­sources in the prov­ince to do that, but as of now, we can’t find any sig­nif­i­cant ways to re­duce our cost to get to bal­ance with­out re­ally im­pair­ing the ed­u­ca­tion op­por­tu­ni­ties for the stu­dents.”

Staff salaries will be the most sig­nif­i­cant cost driver in this bud­get. The in­struc­tion bud­get will in­crease by 1.2 per cent in 202021 com­pared to 0.9 per cent in the 2019-20 bud­get due to the in­crease in staff salaries. The in­struc­tional ex­pen­di­tures in­clude the cost of the an­tic­i­pated teacher salary in­crease, which is ex­pected to be $683,000.

“We haven’t ac­tu­ally had salary in­creases for sup­port staff and teach­ers for a year or two,” he said. “So those salary in­creases are over­due. The teacher agree­ment is still not rat­i­fied that we know of, but we do have it in­cluded in the bud­get based on the ten­ta­tive agree­ment. The sup­port staff salaries have all been de­ter­mined through var­i­ous col­lec­tive bar­gain­ing agree­ments that we have with unions and then we have made an ad­just­ment for our non-union sup­port staff some­what in line with in­fla­tion.”

The bud­get in­cludes $250,000 for bus re­place­ment pur­chases, but the school di­vi­sion will ben­e­fit from a re­duced use of ve­hi­cles dur­ing the COVID-19 pan­demic.

“The buses didn’t op­er­ate ba­si­cally from the mid­dle of March on,” he said. “We don’t have to spend as much money on bus re­place­ment, be­cause we haven’t had the wear and tear. So the al­lo­ca­tion for bus re­place­ment is sig­nif­i­cantly less this year than it has been in the past, sim­ply be­cause we don’t need to re­place as many buses.”

The ad­min­is­tra­tion bud­get was re­duced by 5.2 per cent in the 2019-20 bud­get, but it will in­crease by 4.2 per cent or $132,000 in the 2020-21 bud­get. The main rea­son for this in­crease is a re­clas­si­fi­ca­tion of salaries from in­struc­tional to ad­min­is­tra­tive cost.

“We had a few ad­min­is­tra­tive as­sis­tant po­si­tions that were re­clas­si­fied from in­struc­tional bud­get to ad­min­is­tra­tive bud­get,” he said. “About $110,000 of that were pre­vi­ously recorded in the in­struc­tional bud­get. That has been moved, and then we had a small salary in­crease. It’s con­sis­tent with all of the other scope peo­ple of 1.7 per cent and then a slight in­crease in travel, be­cause of the ac­tual cost of travel.”

The gov­er­nance bud­get was re­duced by 2.5 per cent in 2019-20, but it will re­ceive an in­creased al­lo­ca­tion of 20.9 per cent in the 2020-21 bud­get. This is nec­es­sary to cover the ex­pected costs for the up­com­ing board election in Novem­ber 2020.

“We set aside $40,000 of cash for that, an­tic­i­pat­ing that would be roughly the cost,” he said. “It be­comes a fairly high per­cent­age in a small bud­get, but that’s the num­ber we’ve set aside for the last cou­ple of elec­tions. It may be slightly more than that, it may be slightly less. … We don’t re­ally know what the cost is go­ing to be un­til the ac­tual election, be­cause the real money starts to flow when there are votes. If there are no votes, it doesn’t cost as much.”

The Chi­nook School Di­vi­sion will be fac­ing an on­go­ing bud­getary chal­lenge ev­ery year due to the Min­istry of Ed­u­ca­tion’s cur­rent fund­ing for­mula, which con­sid­ers en­rol­ment as the main fac­tor in op­er­a­tional fund­ing al­lo­ca­tions.

The ru­ral na­ture of this school di­vi­sion means that it is fac­ing high fixed costs, even if en­rol­ment re­mains sim­i­lar or de­creases slightly from year to year.

“It’s very spe­cific to the ru­ral school di­vi­sions,” he said. “We can’t do a lot to re­duce our foot­print around the num­ber of schools we op­er­ate and the num­ber of bus routes we op­er­ate, just be­cause of our dis­per­sion. We have stu­dents all over the place.”

Quintin pro­vided ex­am­ples of what this means in prac­tice for the Chi­nook School Di­vi­sion with re­gard to the op­er­a­tion of bus routes and school fa­cil­i­ties.

“A bus route costs the same amount of money re­gard­less of the num­ber of stu­dents on it,” he said. “So if you have one or two stu­dents, you get less fund­ing to op­er­ate the bus route, but the cost is the same. A build­ing costs the same amount to heat and clean, re­gard­less of the num­ber of stu­dents in it. So if you have less stu­dents in a build­ing, your fixed costs is rel­a­tively the same or even in­creas­ing a bit, but your rev­enue to pay for it is not.”

As a re­sult of this sit­u­a­tion, the Chi­nook School Di­vi­sion will have no choice but to con­tinue with the stop gap mea­sure of an­nual re­serve with­drawals un­til there is a suf­fi­cient in­crease in pro­vin­cial fund­ing. The al­ter­na­tive will be bud­getary cuts that can have an im­pact on stu­dent learn­ing.

“It’s just a mat­ter of when, and that’s re­ally been a dis­cus­sion for a num­ber of years,” he said. “How long will the re­serves last. We still have a few years, for sure, but ev­ery time you draw from re­serves you also draw the abil­ity to gen­er­ate rev­enue from re­serves, whether it would be in­ter­est or in­vest­ments or some­thing like that. So it does have a com­pound ef­fect.”

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