A 93 per cent drop in Horizon School Division’s net financial assets over five years appears a frightful situation – if provincial funding changes aren’t taken into account.
At a board of education meeting held Jan. 16, trustees were told why almost $21 million in net financial assets in the 2013-14 school year has been brought down to $1.4 million in the 2017-18 year.
“I think our net financial assets are in a strong position still,” said Kevin Garinger, the division’s director of education. “This position doesn’t put us in a difficult place to continue to do important work. We’ll continue to ensure that we put our our dollars toward supporting the children in the best possible way.”
Because the province has made changes to how it funds the school system, school divisions don’t need to have as many net financial assets as they used to.
For instance, the education ministry will now pay to replace school buildings at the end of their lives, meaning that school divisions no longer have to save up or go into debt to do that work itself.
School divisions also no longer collect education taxes as of the 2017-18 school year. The province collects them directly and gives grants to school divisions. Before, divisions collected the money but the province set education tax rates.
As a result, the division chose to use its most of its net financial assets for improvements.
“It didn’t just disappear,” said Marilyn Flaman, the superintendent of finance. “It was strategically invested in a number of initiatives that were approved by the board over that period of time.”
$5.3 million was spent on roofing repair projects, $1 million on Nokomis School, $4.7 million on St. Brieux School, $4.8 million on the new division office and $1 million to cover an operating deficit for the 2015-16 budget.
The division also had to pay $2.5 million for education tax that was collected by the division before the province took it over.
“That was really unanticipated in a lot of ways,” Garinger said.
Because of that unexpected cost, the division is below what could be an optimal level of net financial assets. Assuming the division wants to have a $500,000 contingency fund, the optimal level is $2.3 million, around $900,000 higher than what the division has.
Jim Hack, the division’s chair, said it could take a few years to get to the optimal level.
“It’s been tough budgets for the last two or three years now,” he said. “We don’t know what this budget is going to bring but we will do our due diligence to spend the money the best way that we can for the students of Horizon School Division.”
“In the future, we will continue to move that dial and move it back to where it needs to be,” Garinger said.
The division has started work on its next budget. If all goes to plan, it will be reviewed by the board before the end of April and passed before the end of May.