Budget comes in

The Chinook School Division had a smaller deficit than expected at the end of the 2018-19 fiscal year, but it is facing an ongoing structural deficit due to fixed operational costs.

A special meeting of the Chinook School Division Board of Education took place on Nov. 25 to approve the auditor's report and the annual report for the period Sept. 1, 2018 to Aug. 31, 2019.

Rod Quintin, the Chinook School Division's chief financial officer, said after the meeting they expected to end the fiscal year with a deficit of about $4.6 million, but the actual deficit was significantly less at around $2.3 million.

“We had a little more revenue than we expected and our expenses were lower than we expected in some areas,” he noted.

Revenue from interest and dividends were greater than anticipated and the school division received some additional grant money.

“We had some money come in for insurance claims which were essentially offset by expenses,” he said. “A lot of the revenue that we did get extra was offset by expenses. We got some additional grant money in our emergent funding for various projects that had come up through the year on our facilities.”

There were a few unanticipated expenses during the year that helped to complicate their fiscal situation, for example unexpected expenses related to the new MySchoolSask unified student information system, higher utilities expenses in February due to cold weather, and the cost of the new federal carbon levy.

It is difficult to accurately determine the amount paid for the carbon tax, because it is part of the payments for various goods and services, but the school division estimated it was an additional expense of between $250,000 to $300,000 during the past fiscal year.

Staffing is the biggest expense item in the budget, and there is a contingency amount for items such as sick leave, when a substitute must be hired when a staff member is ill.

“We’ve just been incredibly fortunate around our staffing that we haven’t had any significant uptake on the sick leaves,” he said. “We were able to manage that fairly well, but it is a cycle and we do expect at some point we will have that come back, and we will have a heavy draw on our sick leaves, but so far so good.”

The lower than expected deficit meant the school division did not have to draw so much on the reserve fund. In addition, funds that were not spend due to a provincial delay in curriculum implementation were placed in a restricted reserve, where it will remain until it is required.

The 2018-19 fiscal results will be the third year in a row for the Chinook School Division to report a deficit. There was an operating deficit of $3,998,108 at the end of the 2017-18 fiscal year, and the operating deficit at the end of the 2016-17 fiscal year was $965,682.

“Operational deficits are a problem,” Quintin said. “If we have a deficit that’s driven by just our amortization expense, which is the depreciation of our buildings, that’s more of a normal circumstance. We always get concerned about operational deficits, which are cash deficits. We’re fortunate this year to not have the cash deficit that we thought we might have, and so that gives us another year of time for future projected cash deficits, because unless we get some more funding, we’re going to continue on with cash operational deficits as long as we have this level of operation of our facilities and our staff.”

The ability of the Chinook School Division to cope with operational deficits will depend on whether there is any increase in revenue or not in future budgets.

“At the end of the year we probably had about $17 million that we can use going forward to draw on for operation deficits, but it really depends on where does our revenue go next year,” he said. “We can manage our expenditures to the best that we can but there’s things like inflation, whether it’s salary costs or fuel costs or energy costs, that’s pretty difficult to keep a lid on. It’s somewhat beyond our control unless we start to address it through a reduced number of staff, which is really not an option for us anymore.”

Director of Education Kyle McIntyre noted that the school division is currently dealing with a structural deficit.

“It costs us more to operate than we’re funded, and in practice that is not recommended or sustainable, as we’re having to go into our reserves, into that piggy bank, to fund our operations,” he said. “So for us that operational deficit is a concern.”

The Chinook School Division’s dilemma is largely due to being a rural school division that must provide educational services in a very large geographical area of 42,720 square kilometres.

“In southwest Saskatchewan we have high fixed costs,” he explained. “So it costs us a certain amount of money to run a school, whether that school has 300 students or whether it has 100 students. Operating our busses cost us a lot of money. It costs us just as much to run a bus of 15 kids as it does five kids. So we’re very sparsely populated. Our schools are very spread out. We can’t close any schools that we have in the Chinook School Division, but we still get kids to school safely and on time.”

He added that there needs to be a certain number of staff in every school to offer equitable opportunities for students. Staff numbers have already been adjusted over the past five years, and further reductions are not realistic.

“I can’t ask our staff or our kids to do more than they’re doing right now,” McIntyre said. “We’re not looking at reducing any staff, because we still have to have the right number of staff to provide opportunities for kids. So we’re trying to have some conversations with the ministry and with some of our representatives about what is an adequate amount of funding for rural Saskatchewan. The problem is right now that the funding formula doesn’t consider the high cost to deliver education in the rural areas.”

The current funding formula is linked to student enrolment, but student numbers in the Chinook School Division have been declining gradually and has remained stagnant in recent years.

“The challenge right now is that people still have to consider that even though parts of our province are growing and those funds need to follow those students, we still need funds to operate in rural Saskatchewan, because of our high fixed cost that are not necessarily dependent on the enrolment alone,” he said.

The annual report provides details about the school division’s progress with the implementation of education priorities and outcomes related to the provincial education sector strategic plan (ESSP). McIntyre is satisfied with the progress during 2018-19 to achieve various academic goals.

The school division has already exceeded the provincial goal that 80 per cent of students will graduate on time. It has set another goal that 90 per cent of students will graduate with 24 or more credits on time by June 2020.

“Right now, the great news around our graduation is we’re tracking at about 87.8 per cent of our students last year graduated on time,” he said. “We are confident that by June 2020 we are going to meet that benchmark that we have set with our graduation.”

The Chinook School Division is also on schedule to meet or exceed the provincial targets for reading, writing and math.

“So, very happy with the academic stuff that’s going on in our school division,” he said. “Our teachers and our support staff are very dedicated. They’re very committed to student learning. We have very supportive SCC’s that are working to support our learning plans in all our schools. We have parents that advocate for education, which is a huge contributing factor for higher reading rates, higher graduation rates, higher attendance rates.”

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