Global Perspectives: School Funding in Canadian Provinces

By Emily Wicken and Jackie Kraemer

On May 14, the Center for American Progress (CAP) hosted an event, “What Can US Schools Learn from Other Countries,” during which Marc Tucker presented his new paper on education governance, and Ben Jensen, the director of the School Education Program at the Grattan Institute in Australia, presented a new paper titled School Turnaround in Shanghai: The Empowered-Management Program Approach to Improving School Performance.  Research on Shanghai and other East Asian education powerhouses is not new to Jensen or the Grattan Institute; last spring, the Grattan Institute published Catching Up: Learning from the best school systems in East Asia, and we interviewed him at that time for the April 2012 edition of Top of the Class as well as for Tucker’s Lens in this issue.

Screen Shot 2013-06-04 at 4.07.04 PMA third paper produced in connection with the CAP event was Juliana Herman’s analysis of school funding in Canadian provinces, titled Canada’s Approach to School Funding: The Adoption of Provincial Control of Education Funding in Three Provinces.  In this paper, Herman, a policy analyst at CAP, examined the funding systems in Alberta, Ontario and British Columbia.  In all of these provinces, the provincial government rather than localities distribute property tax revenue directly to the districts.  Previously, the localities raised their own revenue that was supplemented by funds from the province, resulting in large differences in spending among localities.  The new systems, all put in place in the 1990s, have greatly increased equity in school finance in these provinces, the three largest in Canada.  Herman suggests that the United States can learn a lot from these experiences, as the school funding system in the United States roughly parallels the system in Canada before these reforms were put in place, with local district funding varying greatly depending on the amount of revenue raised by local property taxes.

The three provinces Herman studied took away the power of local districts to levy taxes on property that the district then used to fund education.  Instead the revenue from property tax is now given to the provincial governments and redistributed on a per pupil basis to the districts.  The provincial governments now have the authority to set property tax rates for each province.  The systems are somewhat different in each province studies, however.  The most significant difference is how local property taxes are now used.  In both British Columbia and Alberta, local governments are still allowed to raise local funds for schools but in both provinces this is limited.  In Alberta the total level of local funds is limited to 3 percent of a district budget and in British Columbia the uses are limited to “…new programs, to enhance existing programs, for additional activities for students and for local capital projects”.  Only Ontario completely disallows any local revenue raising for education.

There are other differences in the provincial systems that Herman discusses as well.  In terms of administration of the new funding system, Alberta created a new entity, the Alberta School Foundation Fund (ASFF), to receive property tax revenue and then distribute the funds to the schools.  The creation of ASFF was an attempt at more transparency.  The other two provinces created no such new entities.  Also, each province addresses funding for public religious schools slightly differently.  Alberta again has a somewhat different system, as it allows religious schools to opt-out of the funding system and raise their own fees with a guarantee that they will be supplemented up to the basic per pupil grant amount.  There is also variation among the provinces in the level of authority given to local boards in choosing how to spend the funds they are allocated by the provincial governments.  Ontario, for example, adds an additional level of control over local spending by dividing its basic education grant for districts into a Pupil Foundation Grant (this covers classroom teachers, texts, and educational supplies) and a School Foundation Grant (this covers school administrative and leadership expenses).  Schools have flexibility to spend some of the School Foundation Grant funds on students, but schools do not have the flexibility to spend any portion of the Pupil Foundation Grant on school expenses.  The other two provinces do not divide the basic school grant in this way.

In her paper, Herman points out a number of lessons for the United States based on the experiences of these three Canadian provinces.  The overall lesson, she says, is that province or “state-level” systems can work both in terms of managing school funding and providing more equitable school funding, even in provinces as large as Ontario which has more than 2 million students.  She suggests that it is useful to note that there are different approaches that states can take based on their priorities, such as the differences in how the three provinces in this paper allow local districts to raise their own funds.  And Herman comments that each of the provinces she studied shifted to provincial level funding of schools while maintaining significant local control in how funds are allocated.  Finally, she notes that the shift to provincial funding has had, in addition to increasing equity in funding across districts, the added benefit of increasing stability in funding by introducing multi-year funding cycles.  Though it is clear that the new Canadian system provides much more equity for students over all than was the case previously, Herman ends her report by noting that it is still important to look carefully at the way districts allocate funds within their districts with respect to the consequences for equity.