Overview of Student-Focused Funding Grant Regulations for

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1 Ministry of Education Elementary/Secondary Business and Finance Division 22nd Floor, Mowat Block Queen s Park Toronto, ON M7A 1L2 Ministère de l'éducation Division des opérations et des finances de l éducation élémentaire et secondaire 22 e étage, Édifice Mowat Queens Park Toronto On M7A 1L2 Ontario 2002:B11 MEMORANDUM TO: Directors of Education FROM: Norbert J. Hartmann Assistant Deputy Minister Elementary/Secondary Business and Finance Division DATE: May 17, 2002 SUBJECT: Overview of Student-Focused Funding Grant Regulations for On May 10, 2002, the Minister of Education announced that the projected total allocation for school boards in would be over $14.21 billion. This figure represents an increase of 2.5% over , while enrolment is expected to increase by 0.4% over the same period. With the release of the grant regulation and supporting documents today, I am pleased to provide you with additional information to help you with your financial planning for The government has announced some important changes in funding for elementary and secondary education for the coming school year. These changes build on suggestions we have received from parents, teachers, school boards, trustee associations, as well as guidance we have received from stakeholder working groups. In absolute dollars, the funding increase for next year amounts to about $350M, made up of approximately $90M for enrolment growth and other cost drivers, and $261M in strategic investments. These strategic investments for include: more resources to help boards address cost pressures, increased funding for the Learning Opportunities Grant (LOG), targeted funding for boards with declining enrolment, and increased base funding for student transportation. In addition, flexible funding, which was introduced last year, will be retained for , with the total flexible funding envelope increasing to approximately $490M. Overview of Student-Focused Funding Grant Regulations Page 1 of 6

2 Throne Speech Announcements Two announcements in the May 9, 2002, Throne Speech reflect the high priority the government attaches to elementary and secondary education. In response to the need for more stability in education, the government announced that it will introduce three-year base funding for school boards. Over the next year, we hope to work closely with school boards and other stakeholders to develop a model for multiyear base funding that ensures improved accountability, accessibility, and fairness. The introduction of student-focused funding in was designed to ensure that resources were invested where they matter most. The government remains committed to that goal but appreciates that many Ontarians have expressed concerns that the current funding approach may not be achieving that objective. The government has announced that educator, Dr. Mordechai Rozanski, president of the University of Guelph, has agreed to lead a task force to review the current funding approach. That process has already begun and the Education Equality Task Force will report back by November 1, 2002, with recommendations on ways to improve fairness, certainty and stability for our schools and our students. We will provide details, as soon as possible, about the steps that the Task Force will take to include our partners in education in the process. Local Priorities Amount The government recognizes that every year boards face important and often difficult budget decisions. Last year, the government introduced the Local Priorities Amount to give boards increased resources and increased flexibility in making budget decisions. The government has decided to retain the Local Priorities Amount in , and to double its funding level from $100 per-ade to $200 per-ade. This change increases the Local Priorities Amount from $200M to $400M. As was the case in , this funding is flexible, meaning that boards will be able to use this funding without the restrictions of the enveloping provisions to address pressures, such as the cost of teachers, special education, and remediation programs. Learning Opportunities Grant In , the Ministry of Education established a working group with partners in education to review the demographic component of the Learning Opportunities Grant (LOG). The LOG Working Group met from September to December 2001 to examine ways of Overview of Student-Focused Funding Grant Regulations Page 2 of 6

3 improving the current LOG allocation method. A new allocation approach was developed based on recommendations of the Working Group. As an interim step, the government has added $15M to LOG which will be distributed using the new allocation approach. All boards will receive a portion of the $15M increase, as well as the demographic component that they received in Declining Enrolment During the 1990 s, most school boards experienced strong enrolment growth while Ontario s total enrolment increased by almost 192,000 students. By contrast, over the next ten years, enrolment is expected to decline by as much as 78,000 students. The government recognizes that declining enrolment boards often face additional financial pressures. To help better understand the relationship between declining enrolment and board costs, the Ministry of Education established the Declining Enrolment Working Group in August The analysis of the Working Group has found that while funding levels tend to go down quickly in response to decreases in enrolment, many costs do not. Based on the advice of the Working Group, the government will provide declining enrolment boards with a revenue adjustment that limits revenue decline to 58% of the board s enrolment decline. The effect of this funding enhancement is to balance the revenue decline with the expected decline in board costs. In , affected boards will receive the declining enrolment adjustment for that year ( ), and also receive half of the adjustment that will have been provided in This approach will give boards additional time to make the transition to a new cost structure that is in keeping with their reduced enrolment. The grant adjustment in recognition of declining enrolment in is expected to provide 35 boards with an additional $23M. This funding is drawn from two sources: $17M in the newly created Declining Enrolment Adjustment, and $6M in the declining enrolment component of the Transportation Grant (see below). Transportation The ministry has worked with the Transportation Review Committee to develop a new approach to funding based on transportation management technology. To put this new approach into effect and to achieve greater efficiencies in day-to-day transportation services, the ministry has encouraged boards transportation management to implement technology for route optimization. Overview of Student-Focused Funding Grant Regulations Page 3 of 6

4 The ministry has taken a phased approach to implementation. Over the past two years, the government has provided enhanced transportation funding on an interim basis to help boards manage increased costs. For , school boards will receive an additional $23M in permanent funding to help address transportation costs. Boards with declining enrolment since 1997 will also receive an additional $6M in base funding. This increase to the Transportation Grant in is intended to assist boards until a new approach for funding for transportation is introduced. Special Education Current funding for special education will continue to be protected. Boards will continue the comprehensive review of ISA claims (which began in September 2001 and is due to be completed in December 2002) based on clarified eligibility criteria. The objective of the comprehensive review is to establish a new baseline of ISA-eligible files that more accurately reflects each board s demonstrated incidence of high needs students. To protect special education programs during the course of the review, funding for the ISA component of the Special Education Grant will be kept stable for the school year. All boards will receive the same amount of ISA funding that they received in (adjusted for portability). Boards will also be able to use the increased flexible funding to respond to service pressures for special education programs in Once a new baseline of ISA-eligible claims is established, the ministry will develop recommendations, in consultation with the ISA Working Group, for changes to special education funding in that respond to the needs identified in the ISA review. To reduce the annual administrative effort required for the ISA process, boards will only claim files each year for students who are new to the Ontario school system or whose needs have changed. Each board s funding for high need students will be adjusted for new eligible claims and for students who leave the board. Flexible Funding The flexible funding approach, which was introduced in , will continue in The flexible fund for each board will be the greater of: Overview of Student-Focused Funding Grant Regulations Page 4 of 6

5 $ Total Local Priorities Amount [$200 per pupil] plus the board s Declining Enrolment Adjustment (if any), or $ the flexible funding amount. For , approximately $490M in funding is being designated as flexible. Enveloping and Accountability for the Flexibility Fund Boards may use up to the total amount of their flexibility fund outside the enveloping provisions. However, school boards will continue to be accountable for how they use all their revenue, including the amount of revenue included in their flexibility fund for Boards are expected to report, as in past years, on how they have used all their funding and the extent to which their funding has been used for special education, classroom expenditures, new pupil places and school renewal, and administration and governance. Technical Amendment: ISA Portability The Grant Regulation has been revised in order to align the count dates for ISA portability with the relevant cycles of the comprehensive ISA review. The revisions also align the definition of a file that is eligible for portability with the new ISA criteria as set out in the directions for the eligibility for ISA. This change will continue in and future years. Financial Reporting and the Due Date for Submission of Estimates Timely submission of boards Estimates, Revised Estimates, and Financial Statements is critical for calculating boards entitlements to funding and avoiding unplanned adjustments to cash flow. It is also critical to the ministry s capacity to accurately project impacts on the government s fiscal plan, and support decisions about refinement of student-focused funding. Beginning with the cycle, the ministry introduced cash-flow consequences for boards that did not submit reports within the time frames required. This policy will continue in The due date for submission of Estimates is July 2 nd. However, as was the case last year, boards will be given an extension of one month before cash-flow penalties are applied. We will notify boards under separate cover once the Estimates forms are available from the Ministry s file transfer site at: <ftp://ftp.edu.gov.on.ca>. Further Information Overview of Student-Focused Funding Grant Regulations Page 5 of 6

6 The following resources have been made available to school boards to assist in preparing their budgets and planning for the school year: C Student-Focused Funding Technical Paper, Spring, 2002 C Student-Focused Funding: Projections of School Board Funding for the School Year C Student-Focused Funding: Legislative Grants for $ Pupil Accommodation Grants Technical Paper, Spring, 2002 $ Education Development Charges Guidelines, Spring, 2002 C Intensive Support Amount (ISA): Guidelines for School Boards, Spring, 2001 and Addendum, Summer These documents are available on the ministry web site. The ministry has also published a Parents Guide to Student-Focused Funding on its public web site. Boards may find these materials useful in communicating with parents, staff, and interested members of the public. If you require further information about any of these changes, please contact: Pupil Accommodation Grant Drew Nameth (416) Drew.Nameth@edu.gov.on.ca Other changes in the regulations Peter Gooch (416) Peter.Gooch@edu.gov.on.ca We expect that the additional resources for , as well as increased flexibility, will help boards make the decisions necessary to improve the education experience for all Ontario s students. Norbert J. Hartmann Assistant Deputy Minister Business and Finance Division Overview of Student-Focused Funding Grant Regulations Page 6 of 6