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The municipality is withholding $14.5 million in education funding in the wake of its COVID-19 budget crunch, arguing it shouldn’t have to pay for a service that wasn’t provided in the last few months of the 2019-2020 school year.
Along with its property taxes, Halifax Regional Municipality collects education funding on behalf of the provincial government. There are two different education charges on property tax bills: mandatory education funding and supplementary education funding.
The mandatory education funding totals $149.6 million this year. That payment, required under the provincial Education Act for all municipalities, is spent on everything from teachers’ salaries to buses for the Halifax Regional Centre for Education (HRCE).
The supplementary education funding is “unique to HRM,” according to a staff report by chief financial officer Jane Fraser headed to Halifax regional council on Tuesday, and totals $14.5 million this year. That money ostensibly pays for fine arts programming for students in the municipality. “HRM views its relationship with HRCE in the provision of supplementary education as one of purchasing a service,” Fraser wrote in the report, but the city isn’t convinced that students received that programming since schools closed due to the pandemic:
With schools closed since mid-March HRM has asked HRCE to provide details as to how they provided fine arts programming to students during the months of April, May and June as well as how they intend to deliver the programming in the beginning of the school year. The purpose of the request was to determine if HRM students have been receiving the programming that HRM is purchasing. If they have not been receiving programming HRM is of the opinion that we should not have to pay for a service that has not been provided.
As of Aug. 6, Fraser wrote that the municipality had not received a response to those questions:
The CAO explained that HRM would not be paying any supplementary funding for fine arts programming until such time HRM received both the description of program delivery for the last quarter of the school year and the go forward plan. The Executive Director of Education committed to supply HRM with a letter in advance of this report going to Council. At the time of writing this report HRM has not received the letter and plan from HRCE.
City wants more control over education funding generally
But the dispute over supplementary funding is just part of a larger rift between the province and its largest municipality over the way education is funded and how the money is used. The report notes that Halifax pays more than its share of education funding:
HRM’s annual payment currently accounts for 55.7% of total mandatory education contributions across the province. By comparison, students in the Halifax Region (in HRCE and CSAP schools) account for 44.9% of Nova Scotia’s PrePrimary -12 enrolment. As a result of this the cost per student in HRM is significantly higher than in the rest of the Province. HRM pays $2,839 per student vs. $1,838 per student in the rest of the Province.
Of the $617.1 million annual budget for the Halifax Regional Centre for Education, HRM contributes $149.6 million, nearly one-quarter of the operating budget. The HRCE operating budget includes salaries for teachers, administrators and support personnel, as well as costs for supplies and materials, building operations and maintenance, program funding and student transportation (busing). Some of these costs may be fixed, but others are variable (lower) when schools are not in use.
The crux of Halifax’s beef is this: “Municipalities have not been consulted on education funding formulas. It is the Province’s view that municipalities simply collect the tax on behalf of the Province and do not have a say in what the level of taxation should be.”
Multiple provincial governments over the years have committed to changing the funding formula — in 2004, 2013 and 2018. The actual rate has been the same since 2013 ($0.3048 per $100 of assessment). The report said it’s not really based on a formula at all, and “there is also no accountability to municipalities on where the funds are directed.”
For this fiscal year, Halifax had to cut millions from its budget and planned to pay only 75% of its mandatory education funding.
The expectation was, much like HRM, HRCE would be going through a similar exercise to reduce costs and to identify savings. That did not appear to be the case. HRCE has not carried out an exercise to identify savings for a number of reasons. HRCE’s view, supported by the Department of Education and Early Childhood Development, is that municipalities pay an amount based on the mandatory education rate times uniform assessment. The contribution is not linked to specific programs or budget amounts. HRM’s position is since we contribute 25% of the school board’s budget, we should share in savings that are accruing rather than have them pass to the Province.
Fraser, chief administrative officer Jacques Dubé, and a municipal lawyer met with provincial deputy ministers and HRCE’s executive director in mid-July “to clarify HRM’s position on the outstanding payments,” and inquire about the use of the supplementary funding.
There was a philosophical difference of option between the parties on taxpayer accountability and the Province’s need to be transparent about how the funds were being spent. HRCE was concerned that HRM would want to be involved in programming and saying what we would fund or would not fund. HRCE’s view is HRM is required by legislation to pay the full amount of the mandatory education contribution and that is the level of municipal involvement.
The recommendation before council on Tuesday is basically to direct Dubé to leverage the supplementary funding to start a bigger conversation around the mandatory funding:
It is recommended that Halifax Regional Council authorize the Chief Administrative Officer:
1. to engage in conversations with the Provincial Departments of Education and Early Childhood Development, Municipal Affairs and Housing with the objective of having the mandatory education contribution policy reviewed, and
2. to only begin to pay 100% of supplementary education funding upon HRCE’s provision of a plan, satisfactory to the CAO, of how they intend to deliver the fine arts program that is paid for by HRM during COVID pandemic.
But there is a risk noted in the report “that HRCE will bring legal action against HRM for withholding a portion of supplementary funding payment.”
The Halifax Examiner has asked HRCE to respond to the report. This article will be updated when we receive a response.
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