The provincial budget is starting to chip away at Parkland School Division’s reserve funding.
The Parkland School Division board of trustees approved the 2021-22 budget with a $2 million deficit to be covered by reserves, during their May 25 meeting. Total revenue will be $131,880,835 with expenses slated to cost $133,880,835. This will drop division reserves to $6,054,698 as of August 31, 2022.
Revenues in comparison to last tears budget increased $190,044 or 0.1%, while operating expenses increased by $2,190,044 or 1.7%. Revenue totals from this year also include $5.8 million in bridge funding which is expected to disappear in 2022-23.
“With our $2 million deficit we’re going to ask the minister to approve the use of reserve funds. The calculation the government uses for enrolment based on the Weighted Moving Average could be impacted by lower enrolment due to Covid-19,” said board chairperson Lorraine Stewart.
Rising enrolment numbers will also exacerbate the problem due to the province’s funding model. The model uses the three-year weighted moving average (WMA)enrolment to allocate funding grants. The WMA formula is based on 20% of the actual enrolments for the 2019-20 school year, 30% of estimated enrolments for the 2020-2021 school year and 50% of the projected enrolments for the 2021-2022 school year. The problem is lowered enrolment numbers during Covid years and expected growth next year means under the WMA formula, the division could be losing out on further funding. If enrolments are higher than previously projected, funding for the additional growth will not be adjusted during the year.
“One of the risks to the Division is that funding is based on the WMA enrolments and is no longer adjusted in the fall based on actual student enrolments. The allocation model has some risk as the Division is still allocating resources to schools based on actual enrolments at September 30 and therefore has to project and fund September 30 enrolments when funding from the province does not change,” said Associate Superintendent Scott McFayden.
Further muddying the waters, ongoing collective agreement talks by the Alberta Teachers Association could cause insurance costs to rise drastically.
It all adds up to a major shortfall going forward. Right now the division’s reserves are sitting at 4.52 per cent. The provincial goal is to have one and five per cent of operating expenses saved. The division is currently at the high end of the acceptable benchmark.
If projections hold and bridge funding is not replaced, PSD will have to look at emptying their reserves further to come close to balancing the budget. The $2 million take from reserves is with the bridge funding included. With less than $5 million in reserves, one or two more years along this trajectory will lead to complete depletion of reserves and ultimately the further lowering of service levels. Already, the budget report indicates class sizes will need to increase and staffing levels will have to be reduced. When asked what the division needs to see happen to avoid the depletion of reserves going forward, Steward said the division does not currently have an answer.
“We recognize the bridge funding was one time (for this year), and we recognize we’re asking the minister to use reserves (for next year) but it’s unknown after that. We know the government has frozen funding, it’s flatlined. I don’t really have that answer right now,” Stewart said.
The board of trustees voted unanimously in favour of passing the 2021-22 budget.