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School boards carrying excessive reserves, auditor finds

October 20, 2015 Jonathan Teghtmeyer, ATA News Editor-in-Chief

Surpluses have grown by 45 per cent in past two years

The majority of the province’s school jurisdictions have accumulated surpluses and operating reserves that exceed the reasonable range set out by Alberta Education.

That’s one of the findings of Auditor General Merwan Saher as outlined in a quarterly report released on Oct. 6. The report includes a summary of school boards’ audited financial statements for the fiscal year that ended Aug. 31, 2014, and found that 59 of 74 school jurisdictions (including charter schools) have excessive reserves. The report says the department of education monitors whether school jurisdictions’ reserves and surpluses are within a reasonable range, which is defined as between one and four per cent of operating expenses.

In the two years preceding 2014, unrestricted surpluses and operating reserves for school jurisdictions grew by 45 per cent, from a total of $347 million to a total of $502 million. These accumulated surpluses are equivalent to seven per cent of the total operating expenses for school jurisdictions that year.

Alberta Education staff maintain regular communication with school board officials on the topic of reserves, but do not dictate how reserves should be prioritized, said Education Minister David Eggen.

“I am interested in the overall level of school board operating reserves and this will be something we discuss in the future in the context of the overall education funding framework,” Eggen said in a statement provided by email. “All partners need to work together to ensure stability in our schools and that funds go directly to support classrooms and students.”

The auditor general’s report also says that provincial auditors were unable to identify any analysis from the department on how the funds would be applied in the future or how their future application would improve performance at the jurisdictions.

Eggen said the department has recently implemented a requirement that school boards outline their plans for reserves when they submit their annual budgets.

“We think Albertans should be told what the plans are for using those accumulated surpluses in the future,” said Saher. “The department and Albertans could use such analysis to hold school trustees accountable for achieving desired results in the effective use of accumulated surpluses.”

Alberta Teachers’ Association president Mark Ramsankar said school boards are provided with operational funding each year and should be using that money as much as possible to support current students and in-year programs.

“It becomes difficult to advocate for more funding if school boards simply continue to increase reserves,” said Ramsankar. “We know that students are struggling because of high class sizes and undersupported special needs, so it makes no sense for school boards to hold back any available funding that they have.”

School boards have recently been accumulating reserves to manage unforeseen changes to their budgets, said Helen Clease, president of the Alberta School Boards Association.

“Given the unpredictable nature of government funding for public education, school boards have often dipped into these savings to sustain services for students when government funding is insufficient or dries up,” Clease said.

She said reserves are the result of careful financial stewardship, where boards are earmarking funds for local priorities, such as enhancing programs in specific communities, outfitting new schools, paying for capital projects that are not funded by the province, upgrading technology and equipment, or expanding classroom resources. ❚

 Largest accumulated surpluses
(as a percentage of operating expenses)
   $ %
 Peace River School Division  12.1 million  24.6
 East Central Alberta Catholic  5.3 million
 Horizon School Division  9.9 million
 Livingstone Range School Division  9.2 million
 Southern Francophone Education Region  6.3 million
 Pembina Hills Regional Division  8.9 million
 High Prairie School Division  7.2 million
*Source: School jurisdiction funding profiles released by the Government of Alberta in March 2015.

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