PART A: LEGISLATIVE CONTEXT AND EDUCATION FUNDING

The accountability framework for school boards is established by the Ministry of Education in law (the Education Act and related regulations), through policies (Policy Program Memoranda [PPM]) and financial direction memos (B and SB Memos). Trustees should understand this framework to ensure effective stewardship of the board’s resources, as required under the Education Act.

The key legislative requirements and context include the balanced budget requirement and need for financial recovery plans under certain circumstances. The authority for the allocation and distribution of funds to school boards is set out in the Education Act, which gives the Minister of Education the power to make regulations governing the allocation of funds to school boards in a fair and transparent manner. The Act contains a legislative commitment to provide “fair and non-discriminatory funding” for education for all four school systems in Ontario – English Public, English Catholic, French Public and French Catholic. Funding must also operate to respect the rights given by Section 23 – Minority Language Educational Rights of the Canadian Charter of Rights and Freedoms.

Financial Recovery Plans

If a school board falls into deficit or is at high risk of falling into deficit, the Minister of Education may order the board to adopt a financial recovery plan. This plan outlines the steps the board will take to return to a balanced budget and ensure financial stability. The minister may approve the plan or reject it and require a new plan. Boards must comply with the approved financial recovery plan until such time as the board is out of deficit.

Investigation and Supervision

The Minister of Education has the authority to engage in the investigation and supervision of school boards. This process is designed to ensure that school boards operate effectively, adhere to regulations, and address any issues that may arise. The minister may direct an investigation into the financial affairs of a board if:

• the financial statements indicate that the board has a deficit
• the board fails to submit or comply with a financial recovery plan
• the board fails to make a debenture or interest payment or is defaulting on debts or other financial liabilities
• the minister has concerns about the board’s ability to meet its financial obligations

The minister can also order an investigation into a school board based on non-financial concerns and issues.

The investigation process typically includes the following steps:

1. Initiation: The Ministry of Education identifies concerns or receives complaints about a school board’s operations.
2. Review: An investigation team is appointed to review the board’s practices, policies, and compliance with regulations.
3. Report: The investigation team submits a report with findings and recommendations to the Minister of Education.
4. Supervision: If necessary, the minister appoints a supervisor to oversee the board’s operations and ensure compliance with the recommendations.
5. Implementation: The supervisor works with the board to implement the necessary changes and improvements.

This process ensures that school boards are held accountable and operate in the best interests of students and the community.

On receiving the report of the investigator, the minister may issue any orders or directions to the board. If the board does not comply, control of the board can be transferred to the minister. Control of the board can also be transferred directly to the minister if that action is recommended in the investigator’s report.

The supervision ends when the board demonstrates that it has made sufficient progress in addressing concerns.

The process generally includes:

1. Assessment and Review: The Ministry of Education conducts a thorough review to ensure that the board has implemented the necessary changes and improvements.
2. Final Report: A final report is prepared, detailing the progress made by the board and the steps taken to address the issues.
3. Restoration of Powers: Once the ministry is satisfied with the progress, the governing powers are restored to the elected board of trustees.

Financial Reporting and Compliance

School boards report their financial results in accordance with the Financial Administration Act supplemented by the requirements defined by the Ministry of Education. Adherence to these financial standards impacts areas such as:

• reporting of financial results and use of reserve funds
• depreciation of capital assets
• timing of reporting of capital funding
• recognition of existing outstanding long-term debt

Other Legislative Provisions

The Education Act defines the fiscal year for school boards as September 1 to August 31. The Act creates the framework for budgeting, borrowing and investing, financial reporting, and auditing. It also provides statutory authority for education development charges and maintains provisions for designation of tax support.

Education Development Charges

An education development charge (EDC) is a levy on new construction in a municipality. EDCs are a revenue source for eligible school boards that need to purchase land for new schools to accommodate students coming from new housing developments. A board may pass a by-law to collect EDCs on new real estate development when its elementary or secondary enrolment exceeds its capacity, or when it has an existing EDC deficit. These charges can also support costs related to site preparation, and as of 2019, lower cost alternatives to site acquisition. However, boards are responsible for the provision of sites.

Audit Committees

Boards are required by legislation to establish an audit committee which is a standing committee of the board. The role of this committee is to review and provide advice on financial matters and risk management activities, as well as to provide oversight for the board’s policies and administrative management as well as its internal and external audit functions. Boards receive funding for the establishment of audit committees and internal audit functions. More information on Audit Committees may be found in Module 19: Internal Audit and the Role of Audit Committees.

PART B: CORE EDUCATION FUNDING MODEL

The Core Education Funding (Core Ed) model aims to provide a fair and transparent allocation of funding for all students, ensuring equitable opportunities for high-quality education across Ontario. Core Ed is a primary mechanism for meeting these goals.

How School Boards are Funded

Ontario school boards are funded through a formula known as Core Education Funding (Core Ed). Funding is allocated to boards through a series of six funds based largely on student enrolment and the needs of students in each board as well as other factors such as the number of and geographic location of schools and school boards. The various funding formulas contained in Core Ed reflect measures that seek to allow boards to operate effectively and provide equitable outcomes for all students. The formulas are adjusted each year by the Ministry of Education based on economic and program factors and provincial priorities. The ministry also actively seeks and considers input from school boards and other sector partners.

Two Funding Sources

The Core Ed model is the ministry’s funding formula intended to cover base operating costs. The funding is established in an annual regulation and the formula establishes a school board funding entitlement. The funds are provided to school boards from two sources:

• Education Property Taxes – The province sets tax rates for residential and business properties. Property taxes are collected by municipalities on behalf of the province and are paid to school boards. This process is the same for all four school systems.
• Provincial Funding – The Ministry of Education reconciles the Core Education Funding allocation to the amount of collected education property taxes by adjusting provincial funding provided to each board. The reconciliation process involves calculating the total allocation for each school board and then subtracting the amount collected through property taxes. The Ministry of Education covers the difference through the School Board Operating Grant (SBOG).

The Ministry of Education provides the majority of operating funds for Ontario’s school boards through SBOG. The percentage of Core Ed covered by education property taxes varies by school board depending on the size of the property tax base of the particular board. However, the school board’s funding entitlement is determined by the funding formula and is not determined by the amount of education property tax collected by the boards, as SBOG covers the difference between the allocation and property taxes collected.

Restrictions on Spending

Core Ed is divided into various funds, each with its own specific purpose. For example, the Classroom Staffing Fund is allocated for hiring teachers and support staff, while the Learning Resources Fund is designated for purchasing learning materials and classroom equipment as well as staffing outside the classroom, including teacher-librarians and guidance-counsellors. The funds are made up of different allocations, and each allocation has its own set of rules on how the money can be spent.

Core Ed allows school boards the flexibility to decide how best to allocate resources within their budgets. At the same time, there are restrictions on how school boards may use some of their funding. For example, funding for Indigenous education, mental health and wellness, student safety and well-being and special education may only be used for those purposes. Additionally, the funding model limits what boards can spend on board administration and governance, ensuring that these expenses do not exceed the expense limit.

The Ministry of Education enforces these restrictions through a combination of audits, financial reporting requirements, and compliance reviews. School boards are required to submit detailed financial reports that demonstrate how the funds have been used in accordance with the guidelines. The ministry conducts regular audits and compliance reviews to ensure that the funds are being used appropriately and to identify any instances of non-compliance. If a school board is found to be in violation of the funding guidelines, the ministry has the authority to take corrective actions, which may include withholding future funding or requiring the school board to repay misused funds.

Structure of the Core Education Funding Model

The Better Schools and Student Outcomes Act received Royal Assent on June 8, 2023. The Act aims to enhance the quality of education and improve student outcomes in Ontario and focuses on promoting student achievement and transparency for parents. It does this by prescribing provincial education priorities on student achievement and ensuring consistency in how these priorities are included and measured in school board multi-year strategic plans (MYSPs). As part of this transition, Core Ed was introduced with the goal of streamlining the funding formula to make it simpler to understand and to strengthen school board accountability.

Core Ed comprises six funding pillars and 28 allocations built within these pillars. The six pillars are:

• Classroom Staffing Fund (CSF)
• Learning Resources Fund (LRF)
• Special Education Fund (SEF)
• School Facilities Fund (SFF)
• Student Transportation Fund (STF)
• School Board Administration Fund (SBAF)

Classroom Staffing Fund (CSF)

The CSF is a key component of the new Core Education Funding Model. This fund supports classroom teachers, early childhood educators (ECEs) and some educational assistants (EAs). It aims to ensure that schools have the necessary staff to provide high-quality education and support to students. The fund covers salaries, benefits, and professional development for these staff members.

The fund is divided into several allocations, each with its own specific purpose:

• Per Pupil Allocation: This allocation is based on the number of students enrolled and is intended to cover general classroom staffing needs.
• Language Classroom Staffing Allocation: This allocation provides additional resources for English- and French-language instruction staff.
• Local Circumstances Staffing Allocation: This allocation provides funding for additional classroom staffing based on unique local needs.
• Indigenous Education Classroom Staffing Allocation: This allocation is specifically for educators to support the academic success and well-being of First Nations, Métis, and Inuit students and to build the knowledge of all students and educators on Indigenous histories, cultures, perspectives and contributions. Funding for this program is protected for Indigenous education priorities. Any unspent funding must be spent on the Board Action Plan in the Indigenous Education Supports Allocation under the Learning Resources Fund.
• Supplemental Staffing Allocation – Literacy, Numeracy, and Other Programs: This allocation supports additional staffing needs through specialized programs to support students facing barriers to success, including in the areas of literacy and numeracy.

Learning Resources Fund (LRF)

The LRF provides funding to cover classroom supplies, textbooks, learning resources, and classroom computers as well as staffing outside the classroom. It ensures that students have access to the necessary programs, materials and technology to support their learning and development. The fund aims to provide equitable access to learning resources for all students across Ontario and is divided into several allocations, each with its own specific purpose. These allocations include:

• Per Pupil Allocation: This allocation is based on the number of students enrolled and is intended to cover general learning materials and classroom equipment as well as staffing outside the classroom such as teacher-librarians, guidance counsellors, principals, and professionals and paraprofessionals.
• Language Supports and Local Circumstances Allocation: This allocation provides additional resources for language learning and addresses unique local needs.
• Indigenous Education Supports Allocation*: This allocation supports programming in keeping with the Board Action Plan on Indigenous Education.
• Mental Health and Wellness Allocation*: This allocation is aimed at supporting student mental health and well-being through various programs and resources.
• Student Safety and Well-being Allocation*: This allocation focuses on ensuring a safe and supportive learning environment for all students.
• Continuing Education and Other Programs Allocation: This allocation supports continuing education programs and other specialized learning initiatives.
• School Management Allocation: This allocation supports school administration, leadership and related costs in schools as well as for remote learning instruction.
• Differentiated Supports Allocation – Demographic, Socioeconomic and Other Indicators: This allocation provides additional funding for program leadership and to support school boards in offering a wide range of programs tailored to the local needs of their students.

* Funding provided through this allocation may only be used for its intended purpose. Any unspent funding must be put aside and spent on its intended purpose in the future.

Special Education Fund (SEF)

The ministry allocates funding to district school boards through the SEF, as part of the Core Ed, to support the additional costs of programs and services provided to students with special education needs. School boards may only use this funding for special education and must set aside any unspent funding to use for special education in a future school year. For the 2024-25 school year, the SEF consists of four allocations as follows:

• The Per Pupil Allocation provides funding to every school board to assist with the costs of providing additional support to students with special education needs. It is allocated to school boards based on the total enrolment of all students, not just students with special education needs.
• The Differentiated Needs Allocation addresses the variation among school boards with respect to their population of students with special education needs and school boards’ ability to support these needs.
• The Complex Supports Allocation provides funding for specialized supports for students with complex special education needs.
• The Specialized Equipment Allocation provides funding to school boards to assist with the costs of equipment essential to support students with special education needs.

It is important to note that, in addition to the SEF, school boards can use other Core Ed allocations to meet their responsibility to support students with special education needs.

School Facilities Fund (SFF)

The SFF is intended to support the costs of operating (such as heating, lighting, and cleaning), maintaining, and renewing (such as repairs and ventilation and accessibility updates) school buildings. This funding is also used to improve education for students from rural and northern communities.

It includes several allocations, each with its own specific purpose:

• School Renewal Allocation (SRA): This allocation allows school boards to revitalize and renew aged building systems and components. Funding through this allocation is intended to maintain, renew and modernize schools.
• School Operations Allocation: this allocation is intended to address the costs of operating school facilities (e.g., heating, lighting, maintaining, cleaning) and the additional costs associated with operating schools based on unique geographic considerations (e.g., geographically isolated schools).
• Rural and Northern Education Allocation: this allocation is dedicated funding to further improve education for students from rural and northern communities.

Student Transportation Fund (STF)

This fund supports school boards in delivering safe and reliable transportation to and from school.

School Board Administration Fund (SBAF)

This fund supports the administrative functions of school boards, ensuring efficient and effective management of resources.

The SBAF includes several key components and allocations:

• Trustees and Parent Engagement Allocation: This allocation provides funding for trustees and student trustees. It also supports parent engagement activities.
• Board-Based Staffing Allocation: This allocation supports school board staff and operations, providing funding for board-level leadership, staff, and related supplies and services.
• Central Employer Bargaining Agency Fees Allocation: This allocation provides funding for the fees payable by school boards to their respective trustees’ association to support labour relations activities, including participating in the central bargaining process.
• Data Management and Audit Allocation: This allocation provides funding to support a number of school board data management and audit-related activities.
• Declining Enrolment Adjustment Allocation: This allocation provides funding to help school boards while they adjust their cost structures to reflect declines in student enrolment.

Enrolment as a Driver for Education Funding

Student enrolment is a fundamental factor in determining education funding in Ontario. Core Ed relies heavily on enrolment numbers to allocate resources to school boards. The funding is calculated based on the average daily enrolment (ADE), which is the average number of students enrolled on two key dates: October 31 and March 31 of the school year. The enrolment for each count date is weighed at 0.5.

Provincial Agreements Impact on Core Education Funding

Ontario provincial agreements have a significant impact on education funding in the province. This includes collective bargaining agreements with teachers’ federations and education worker unions and transfer payment funding agreements with the Ministry of Education, which shape the allocation and distribution of Core Ed funds to school boards.

Unique Needs of School Boards

The Core Ed funding model is designed to address and impact the unique needs of school boards by providing equitable and transparent funding based on various factors, including student enrolment, demographic data, and specific needs of school boards.

For example, the Classroom Staffing Fund ensures that school boards have adequate staffing to meet the needs of their students, including teachers and early childhood educators.

Core Education Funding Consultations with Boards and Stakeholders

The Ministry of Education conducts annual formal consultations on Core Ed with stakeholders, including school board/trustee associations. This process allows stakeholders and partners, including school boards, to provide the benefit of their expertise, experience, and ideas.

Building, Expanding and Renewing Schools

In addition to Core Education Funding, capital funding programs play a crucial role in supporting education in Ontario. These programs provide the financial resources for the construction, renovation, and maintenance of school buildings, which directly impacts the quality of education students receive.

School boards are responsible for determining student accommodation arrangements as they are closest to the communities they serve and are in the best position to assess local needs. This includes deciding which new school and expansion projects to put forward to the ministry for funding consideration through the Capital Priorities Program.

School boards are also provided with annual renewal funding and are responsible for determining how to allocate this funding to their schools based on local needs.

Boards rely on the following capital funding programs:

Capital Priorities Program

The Capital Priorities Program is an application-based funding program provided by the Ministry of Education to support the construction, renovation, and expansion of school facilities. Each year, school boards can submit capital project requests to the ministry through the Capital Priorities Program to address their highest priority capital needs.

Funding for Capital Priorities projects is allocated on a business case basis for new schools, retrofits, and additions to support a demonstrated need, either to meet an accommodation pressure, replace a school due to its condition, or provide access to French-language rights holders. All submissions are evaluated to determine funding priority, using criteria such as the timing and urgency of projects, current and forecasted enrolment and student capacities at schools within the surrounding area, the school boards’ existing inventory of capital projects, project readiness in quickly progressing from planning to construction, and overall funding available to the ministry.

Land Priorities Grant Program

Where school boards require land purchases to support approved and potential future capital projects, they are able to submit requests for Land Priorities funding. The Land Priorities Grant program provides funding on a case-by-case basis. It is the source of funding to buy land for school boards that are not eligible to collect revenue from EDCs, or for school sites that are required for reasons other than new residential growth. School boards are encouraged to engage with municipal governments before purchasing land and must notify the ministry of any site acquisitions. This funding stream is application-based and not every school board may have access to this funding.

School Condition Improvement (SCI)

School Condition Improvement (SCI) funding from the Ministry of Education is a capital renewal program that allows school boards to revitalize and renew aging building components that have exceeded or will exceed their useful life cycle. This supports school facilities are safe, healthy, and conducive to learning by addressing significant condition needs.

Temporary Accommodation Allocation

This allocation is used to fund temporary accommodations, such as portable classrooms. All school boards are eligible to receive the Temporary Accommodation Allocation to address fluctuating accommodation needs through the use of portables and/or operating lease costs for permanent spaces.

School Utilization

Ontario school boards and trustees make decisions about school utilization by analyzing various factors such as enrolment trends, demographic data, and the condition of school facilities. These decisions are guided by policies and regulations set by the Ministry of Education and are aimed at ensuring that resources are used efficiently and effectively to provide the best possible learning environments for students.

Tools such as attendance area or school boundary reviews, program delivery reviews, grade structure reviews, and school site reviews are available to assist school boards and trustees in school utilization planning.

School Authorities

Isolate School Authorities

The Core Ed formula that has been described applies to the 72 district school boards in Ontario. Isolate school authorities are school boards that are located in remote areas of Ontario. Funding for isolate school authorities recognizes the unique costs of operating schools in extremely remote areas. Funding is based, to the greatest extent possible, on benchmarks and factors consistent with Core Ed, with provisions for special approvals by the ministry.

Section 68 School Authorities (S. 68 SAs)

S. 68 SAs are school authorities that are located on tax exempt land. They are in hospitals or children’s treatment centres. Funding for S. 68 SAs is based on approved cost basis. S. 68 SAs submit their budgets to the ministry based on their students’ needs and ministry staff review these budget submissions and recommend for the minister to approve or reject the submitted budgets.

PART C: BOARD BUDGETING  

Financial planning is a vital and integral part of the overall planning responsibilities that school boards undertake to ensure effective stewardship of the board’s resources.  

The annual approval of a board’s budget is a significant step in its fiscal management. It must align with provincial legislation and regulations and support the board’s MYSP.  

The budget reflects how effectively the board manages the board’s financial resources.  

Budget Development and Oversight  

The division of responsibility for the budget requires that the board of trustees sets the priorities and parameters for developing the budget. The director of education must work with senior administration and staff to develop a budget within these parameters for the board’s approval. A board’s MYSP allows for a long-term focus. The board of trustees is responsible for monitoring the budget throughout the year to ensure compliance, while the director of education is responsible for managing the budget and reporting regularly to the board.  

Budget Operating Principles  

The budget must be consistent with the board’s strategic plan and resource allocation must align with all collective agreements and focus on both student well-being and on improved student learning. Budget plans must consider supporting safe, inclusive, and accepting school environments. They must also meet the requirements of ministry legislation, regulations, policies and priorities. Budget decisions and plans must be sustainable.  

Budget operating principles should ensure that every program and support area is examined to consider contract obligations and funding benchmarks. Communication and consultation, both internally and externally, should take place as appropriate. Effective budget planning will minimize any negative impacts on students, families, and staff. It is important to take the necessary time to get the job done properly. Finally, it is critical to be clear about accountability. Budget tasks must be assigned, measured, and reported on appropriately.  

Budget Considerations

There is a broad range of issues for boards to consider when they are making decisions about the effective allocation of funds across the system. Trustees must use a whole-system view of the budget to ensure decisions support effective delivery of the MYSP for every student in the board, regardless of where they live. Some key issues include:  

1. which programs and services to maintain  
2. which programs and services to enhance
3. where available funds can be redirected to other areas  
4. defining the service levels and policies for transportation
5. where to locate new schools
6. how to set school boundaries
7. whether to close or consolidate schools and, if so, which ones, when permitted by the Ministry of Education

Decisions in these areas are critical and have profound effects on students, staff, and the community.  

Building a Budget  

Building a budget is essentially a balancing act between revenues and expenses. As the board conducts this balancing act, it is important to keep in mind the board’s MYSP and student achievement plan. This must be done in the context of considering ownership, accountability, and transparency for all stakeholders. This is a challenging task that requires both knowledge and dedication.  

Budget Challenges  

As noted earlier, arriving at a balanced budget involves intentional decision-making to both overcome potential financial challenges and ensure obligations and key priorities can be met within the resources available to the board.  

Conclusion  

Congratulations on completing this module on Education Finance. This will have given you a basic understanding of the Core Education Funding Model, the legislative context, and board budgeting. For more information, particularly as it applies to your board, you should consult with your board’s chief financial officer or superintendent of business.