Alberta's school boards suffer $33M hit to savings, says auditor's report

Heather Welwood, president of the Alberta School Boards Association

Photograph by: Archive, Calgary Herald

By Sarah McGinnis, Calgary Herald

After years of recording increasing surpluses, Alberta school boards have experienced a $33-million hit to their savings, according to the latest auditor general's report.

While Alberta Education has asked school jurisdictions to raid their savings to help make ends meet for the near future, school districts have faced funding clawbacks, frozen education grants, and rising costs in the eight months since the latest financial figures were recorded.

And many are saying their piggy banks will soon run dry.

"It's very bleak," said Heather Welwood, president of the Alberta School Boards Association. "From descriptions that school boards are giving, their reserves are rapidly depleting."

The report from auditor general Merwan Saher released last week indicates school boards' collective savings have dropped $33 million in a year.

The report tracks the accumulated operating surpluses of Alberta's 62 school boards and 13 charter schools, money generally used to pay for special projects or cover future shortfalls.

On Aug. 31, 2008, the school jurisdictions had a combined $391 million in operating reserves. But 12 months later, those total savings had declined to $358 million.

Part of the problem appears to have been a steep drop in the amount of cash school jurisdictions were able to keep in their bank accounts after paying their bills.

Single-year surpluses fell from a collective $138 million in 2008 to a mere $15.6 million in 2009.

And the financial picture of Alberta school boards is even more dire today than it was eight months ago, said Welwood.

On the first day of the school year, Education Minister Dave Hancock informed school jurisdictions they'd receive $44-million less in funding than promised.

The amount of the cuts to each school board -- which were not included in the auditor general's report -- were based on the amount of savings they had.

Since then, education grants have been frozen, including special-needs funding, which hasn't increased for the past two years. There's been no new money for school infrastructure.

And districts have been told they'll have to fund next year's teacher salary increases themselves.

The Calgary Board of Education has indicated it will need to use $21 million of its approximately $30.5 million in savings to balance the books for the coming school year.

But others, such as the Calgary Catholic School District, are faced with using the last of their savings and either making cuts or running a deficit.

The prospect of spending what remains of the school board's emergency fund concerns Calgary Catholic School District chairwoman Marge Belcourt, who questions what would happen if utility rates and transportation costs increase or schools need unexpected repairs.

"For the last 10 years, the only way we have balanced the budget is cutting down the reserves," said Belcourt. "We've never had to have a deficit budget and it's looking like there's no other choice.

"I don't know what's going to happen," she added.

Having school boards dip into their savings may not be an ideal situation, but it could be the best way to protect the classroom from cuts during the economic downturn, said Alberta Education spokeswoman Kathy Telfer.

"Previous to this we saw substantive increases to their operating surpluses," said Telfer, who indicated that accumulated operating surpluses have more than doubled since Aug. 31, 2005, when they were recorded at $169 million.

"You could say that what we saw was a well-funded system that was meeting the needs of students out there and school boards were putting significant dollars away in accumulated operating surpluses," she said.

The problem with relying on reserves, said Welwood, is that not all school boards have the same amount of savings.

"Many school boards said they could get through this year and maybe part of next year. But the majority said, if there is no more money forthcoming, by the end of next year they won't have any money (in their savings) at all," said Welwood.

While no one wants to be put in a position of having to go into debt or borrow money, Telfer said it's only a temporary measure.

"Certainly the government understands that this is not the ideal situation," she said, "but this is a short term situation we need to work through."

smcginnis@theherald.canwest.com

This article was published in the Calgary Herald on April 19, 2010. Read the full article on the CalgaryHearald.com website.