5 310 072 4a Finance

EADM© 2005

W. R. Dolmage

Education FinanceEducation Finance

Elements and

Key Concepts

Elements and

Key Concepts

EADM© 2005

W. R. Dolmage

The Ed Finance Paradox

Everyone thinks it’s important, but few people understand it!

The Ed Finance Paradox

Everyone thinks it’s important, but few people understand it!

Education Finance SCARESSCARES people because of its reputation for being technical and complex

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Money Is Important Money Is Important (almost everyone agrees)

EADM© 2005

W. R. Dolmage

Why Is Money Important?

Why Is Money Important?

Because a lot of money is spent on educationBecause a lot of money is spent on education

Because the level of resources made available Because the level of resources made available to education has a lot of practical to education has a lot of practical implicationsimplications

Because “dollars” are an easily understood Because “dollars” are an easily understood “proxy” for abstract concepts like “proxy” for abstract concepts like “educational effort” and “educational equity”“educational effort” and “educational equity”

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EADM© 2005

W. R. Dolmage

How Much Is “A Lot”?How Much Is “A Lot”?In 2001, governments as a whole in Canada spent 15% of their total expenditure on education compared to 17% for health. Between 1997-1998 and 2001-2002, public expenditure on education grew 2% at the elementary-secondary level and 9% at the postsecondary level.

EADM© 2005

W. R. Dolmage

HOW MUCH in 2001-2002???HOW MUCH in 2001-2002???

In case you didn’t notice, that was:

$68,600,000,000.00In case you didn’t notice, that was:

$68,600,000,000.00

EADM© 2005

W. R. Dolmage

Educational “Effort” in Canada

Educational “Effort” in Canada

EADM© 2005

W. R. Dolmage

HOW MUCH in 2001-2002???HOW MUCH in 2001-2002???

Saskatchewan spent:

$2,555,000,000.00Saskatchewan spent:

$2,555,000,000.00

EADM© 2005

W. R. Dolmage

K –12 Education: 2001-02K –12 Education: 2001-02

Canada $41,008,000,000 of $68,607,000,000

Saskatchewan $1,442,000,000 of $2,555,000,000

Canada $41,008,000,000 of $68,607,000,000

Saskatchewan $1,442,000,000 of $2,555,000,000

EADM© 2005

W. R. Dolmage

ExpendituresK to 12 & TotalExpenditures

K to 12 & Total

$41,008,000,000 $68,607,000,000

$1,442,000,000 $2,555,000,000

EADM© 2005

W. R. Dolmage

School Board ExpendituresSchool Board Expenditures

EADM© 2005

W. R. Dolmage

Where Does K - 12 Education Funding Come From?

Where Does K - 12 Education Funding Come From?

Federal GovernmentFederal Government

Provincial GovernmentProvincial Government

Local GovernmentLocal Government

Private SourcesPrivate Sources

$1,115,500,000$1,115,500,000

$385,100,000$385,100,000

$600,200,000$600,200,000

$263,600,000$263,600,000

Saskatchewan: 2000 - 2001$2,364,300,000

Saskatchewan: 2000 - 2001$2,364,300,000

EADM© 2005

W. R. Dolmage

Expenditure on K-12 Education 1989 - 2000Canada and Saskatchewan (x 1000)

Expenditure on K-12 Education 1989 - 2000Canada and Saskatchewan (x 1000)

EADM© 2005

W. R. Dolmage

Provincial Spending PerK – 12 Pupil, 1999 – 2000Provincial Spending PerK – 12 Pupil, 1999 – 2000

7,905

7,4017,293

8,432

8,130

7,333 7,2397,072

6,239

6,503

7,758

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

B.C. Alta. Sask. Man. Ont. Que. N.B. N.S. P.E.I. Nfld./Lab. Canada

Provinces

Dollars per Pupil

$7,293 $7,758

EADM© 2005

W. R. Dolmage

Per Pupil Spending1985, 1990, 1995, 2001Per Pupil Spending

1985, 1990, 1995, 2001

EADM© 2005

W. R. Dolmage

Education FinanceEducation FinanceAll of our children have All of our children have equality of educational equality of educational opportunityopportunity, and everyone pays , and everyone pays their their fairfair share of the costs share of the costs of education.of education.

So, is there a problem?So, is there a problem?

EADM© 2005

W. R. Dolmage

How Do We MeasureEquality of Educational

Opportunity

How Do We MeasureEquality of Educational

Opportunity

Equality of AccessEquality of Access

Equality of TreatmentEquality of Treatment

Equality of OutcomeEquality of Outcome

EADM© 2005

W. R. Dolmage

Horizontal Equity

Horizontal Equity

Equal Treatment of Presumed EqualsEqual Treatment of Presumed Equals

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EADM© 2005

W. R. Dolmage

Vertical EquityVertical EquityUnequal Treatment of Presumed Unequals Unequal Treatment of Presumed Unequals

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EADM© 2005

W. R. Dolmage

Provincial BudgetProvincial BudgetTaxes (Income, Sales, etc.)

ProvincialPot

Profits (Crown Corps., LBS, etc.)

Transfers from Feds

Borrowing

BBUUDGDGEETT

Costs and Programs of the Department of Education

Costs and Programs of All Other Government Departments

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Education

EADM© 2005

W. R. Dolmage

Provincial BudgetingProvincial Budgeting

Assess revenues

Determine policy priorities

Decide on size of the provincial expenditure

Allocate resources among competing priorities, most of which are not related to education.

Assess revenues

Determine policy priorities

Decide on size of the provincial expenditure

Allocate resources among competing priorities, most of which are not related to education.

EADM© 2005

W. R. Dolmage

How the “Pot” is DividedHow the “Pot” is Divided

In 2001 – 2002, the Saskatchewan Provincial Government spent 17.8% of it’s budget on “education.” 9.8% was spent on K to 12 education.

EADM© 2005

W. R. Dolmage

Debt10%

K – 12 Education10%

Post-Secondary Education

8%

Finance3%

Health34%

Highways5%

Justice4%

Municipal Government

3%

Other8%

Social Services9%

Agriculture6%

Saskatchewan’s 01-02“Pot Pie” Chart

Saskatchewan’s 01-02“Pot Pie” Chart

EADM© 2005

W. R. Dolmage

Local Property TaxLocal Property TaxSchool Boards in Saskatchewan raise revenue locally by levying a tax on all eligible property in the school district’s jurisdiction

Residential Commercial

Farm

Grants in lieu Not ChurchProperty

EADM© 2005

W. R. Dolmage

Horizontal Equity:Recognized Enrolment-based Expenditure

Horizontal Equity:Recognized Enrolment-based Expenditure

The Provincial Government insures that every school every school division has at least a set division has at least a set minimum number of dollars to minimum number of dollars to spend for each pupil spend for each pupil enrolled in its schools. Thus every pupil in the province is being treated “equally.”This minimum is called the “Recognized Enrolment-based “Recognized Enrolment-based Expenditure.”Expenditure.”$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

$ $ $ $ $$ $ $ $ $

EADM© 2005

W. R. Dolmage

Adding an Element of Vertical Equity to the Foundation Grant (2003-04)

Adding an Element of Vertical Equity to the Foundation Grant (2003-04)

Other

Type of School

Pupil Regina, Saskatoon Divisions

Kindergarten $2,196 $2,305

Elementary 4,280 4,473

Middle Level 4,514 4,723

Secondary 5,045 5,271

Note that, in 2003-2004, we actually spent more like $7,000 per full-time-equivalent student in Saskatchewan! Now how did that happen?

EADM© 2005

W. R. Dolmage

Vertical Equity: Saskatchewan’s Response to Inequalities

Vertical Equity: Saskatchewan’s Response to Inequalities

Special Needs Grants, e.g.,Special Needs Grants, e.g.,High-cost disabled pupils

Comprehensive schools factor

Northern/Northern Communities factor

Special needs programs

Transportation

Room and board

Second language programs

Small schools factor

Sparsity factor

etc.

Capital Grants, e.g.,Capital Grants, e.g.,Building

Technical aids, equipment

EADM© 2005

W. R. Dolmage

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Horizontal v. Vertical Equity

Horizontal v. Vertical Equity

It is important to understand that It is important to understand that horizontal and vertical equity are horizontal and vertical equity are mutually exclusive; i.e., you can’t mutually exclusive; i.e., you can’t have more of one without having have more of one without having less of the other.less of the other.

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Treat Individualsthe Same

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