Chapter 8: Education Funding

Financial planning is a vital and integral part of the overall planning responsibilities in areas of program, capital and facilities, and long-term strategy that school boards undertake to ensure effective stewardship of the board’s resources. School boards are required to develop a balanced budget within the funding allocated to them by the Ministry of Education.

Funding Sources

Since 1998, the provincial government has had full control of education property tax revenues and has assumed the previous authority of school boards to levy local property taxes. At that time as well, the government introduced a funding approach that determines the revenue each board receives; it is based on series of formulae within the various grants. This funding formula, known as the Grants for Student Needs (GSN) has undergone significant adjustments over the past decade.

Property taxes continue to support the education system. Under the present system, the government sets a uniform tax rate, based on a current-value assessment system, for the education portion of property taxes for all residential properties in the province. The Province also sets a rate that varies by municipality for the education portion of business property taxes. Municipalities collect the education portion of property taxes for the school boards in their communities on behalf of the Province. The Ministry of Education, using the funding formula, determines each board’s overall allocation. Property tax revenues form part of the allocation, and the Province provides additional funding up to the level set by the funding formula.

Grants for Student Needs

The Grants for Student Needs funding formula is designed to distribute funds equitably among all school boards across the province. (See Note 6) The purpose of the Grants for Student Needs is to:

  • provide fair and equitable funding for all students, wherever they live in Ontario;
  • provide funding to operate and maintain schools;
  • protect funding for students with special needs;
  • increase accountability of school boards by requiring them to report consistently on how they spend their allocations; and
  • translate the provincial standards and vision for education into financial resources for school boards.

School boards have some flexibility when determining how they use their funding to meet local priorities, but must adhere to certain limitations set out by the government:

  • Achieve balanced budgets (this is a specific legal obligation in the Education Act);
  • Achieve class size targets;
  • Use funding for special education only for special education;
  • Ensure that School Renewal funding is used primarily for capital renewal expenditures;
  • Limit spending on school board administration and governance to what the allocation provides;
  • Ensure New Teacher Induction Program funding is used only to meet eligible expenditures and the program’s requirements;
  • Ensure the Mental Health Leader Allocation is used so that each board has at least one Mental Health Leader;
  • Follow all guidelines for use of capital funding, including those specific to a particular capital allocation

A board’s total GSN allocation is determined by: the formulas in the Pupil Foundation Grant; the School Foundation Grant; twelve special purpose grants and allocations; and, funding for Debt Service Support. These grants are intended to provide a total amount of revenue based on the specific needs of a board and its students.

Pupil Foundation Grant

The Pupil Foundation Grant, projected to be $10.53 billion in 2014-15, supports the components of classroom education that are required by, and generally commonto, all students. The Pupil Foundation Grant makes up almost half of the total Grants for Student Needs allocation to school boards. The grant provides funding, on a per- pupil basis, to cover the basic costs of educating a student related to the following:

  • classroom teachers (including supply teachers, specialist teachers/preparation time (elementary), Student Success teachers/preparation time (secondary), secondary programming teachers, and professional development;
  • early childhood educators in full-day kindergarten (FDK) classrooms;
  • classroom consultants;
  • library and guidance services;
  • educational assistants;
  • professional and paraprofessional supports;
  • elementary supervision;
  • textbooks and learning materials;
  • classroom supplies; and
  • classroom computers.

School Foundation Grant

The School Foundation Grant, projected to be $1.43 billion in 2014-15, supports the costs of salaries and benefits for principals, vice-principals, and office support staff, as well as supplies for school administration purposes.

For every eligible school, the School Foundation Grant provides funding for:

  • One (1.0) full-time equivalent (FTE) principal, where the enrolment of the school is 50 or more. Schools with fewer than 50 students are provided with 0.5 FTE principal;
  • One (1.0) FTE office support staff with more staff added as enrolment at a school increases;
  • Vice-principal support for a school based on school enrolment; and
  • A per-school amount for school office supplies, with additional funding for supplies based on school enrolment.

Special Purpose Grants

Twelve special purpose grants, projected to be $10.0 billion in 2014-15, recognize that the cost of education varies significantly depending upon the needs of the students and where the students live. These grants may change from time to time to reflect government priorities. In the 2014-15 GSN, the special purpose grants are:

  • Special Education Grant – provides funding for students with special needs. It supports the incremental costs of providing the additional programs, services and equipment needed to support the educational requirements of students with special needs;
  • Language Grant – for language instruction, including: French as a First Language, Actualisation linguistique en français, and Programme d'appui pour nouveaux arrivants; English as a Second Language; French as a Second Language
  • First Nation, Métis, and Inuit Education Supplement – for programs designed for First Nation, Métis and Inuit students as outlined in the Ontario First Nation, Métis and Inuit Education Policy Framework, 2007 (see
  • Geographic Circumstances Grant – for the additional costs faced by boards in rural, northern and remote areas, boards operating small schools, and/or serving sparse student populations;
  • Learning Opportunities Grant – for a range of programs that help students who are at greater risk of poor academic achievement;
  • Safe Schools Supplement – for prevention support, for early intervention and discipline programs and services, and opportunities for students to continue their education;
  • Continuing Education and Other Programs Grant – for programs for adults 21 and over including credit courses leading to an Ontario Secondary School Diploma; this also funds high-credit day-school programs, summer school for secondary school students, Prior Learning Assessment and Recognition (PLAR) for mature students, and International Languages instruction for elementary students (often called “Heritage Languages”);
  • Cost Adjustment and Teacher Qualifications and Experience Grant – to match school boards' funding to the benchmark costs of teachers' and early childhood educators' qualifications and experience, based on provincial average salary grids, to match the difference between the salary benchmark and the actual average salary costs of school board personnel, and to fund the New Teacher Induction Program;
  • Student Transportation Grant – for transporting students to and from school;
  • Declining Enrolment Adjustment – to address the gap between revenue loss due to declining enrolment and boards' ability to reduce costs;
  • School Board Administration and Governance Grant – for the cost of trustees, directors and supervisory officers, and the central administration of school boards;
  • School Facility Operations and Renewal Grant – for the operation and maintenance (lights, heating, and cleaning) costs, and repairs and renovations of schools.

Capital Funding

Capital Priorities

In 2009-10, the Ministry of Education introduced a Capital Grant Program designed to address school building and major renovation projects at school boards through a business case approach. As part of the Capital Priorities program, boards are asked to identify major capital projects that are required within the next three years. The Ministry focuses its efforts on helping ensure that school boards are able to meet their project completion timelines, as well as identifying upcoming accommodation issues.

Boards submit their requests for Capital Priority funding through the School Facilities Inventory System (SFIS).

In the 2013 phase of the Capital Priorities program, school boards had the opportunity to identify and give a priority ranking for up to eight projects for consideration for Capital Priorities approval. In this process, boards focussed on their highest and most urgent accommodation priorities dealing with accommodation pressures, facility condition and school consolidations.

Before the Ministry provides funding for a Capital Priorities project, school boards are expected to use their existing building capacity, proceeds of disposition of property, and/or board-designated capital funds to address their Capital Priorities.

Full-Day Kindergarten Capital Funding

Full-day kindergarten capital funding is primarily used to construct new kindergarten classrooms through additions or major renovations at schools without adequate or appropriate space. Over the period 2010-2014, school boards were allocated over $1.45 billion in capital funding to undertake classroom additions and retrofits of existing classrooms. This funding was allocated to address school boards' capital-related pressures resulting from the need to accommodate having an additional 120,000 kindergarten students attend full-time.

School Consolidation Capital

Under the Ministry’s School Board Efficiencies and Modernization (SBEM) initiative, there is $750 million in capital funding available for a School Consolidation Capital (SCC) program for a four-year period starting in 2014-15. The Ministry recognizes that as school boards engage in effectively and efficiently managing their excess capacity, they will, in some instances, need to adjust their facilities capacity. This funding is allocated on a business case basis for new schools, retrofits and additions that support school consolidations.

School Condition Improvement

The School Condition Improvementprogram addresses school renewal needs. This funding focuses on ensuring facilities are in good condition, energy-efficient, accessibleand that they meet modern servicestandards. The funding helps boards address their school consolidation needs in cases where an existing school can accommodate the students through renovations without the need to increase the building footprint.

The 2014-15 GSNs announcement included a provision for additionalfunding of $250 million to supportthe School Condition Improvement program in each of the 2015-2016 and 2016-17 years.

Amount for Temporary Accommodation

In 2010-11, a new allocation was introduced to address the estimated annual cost of temporary accommodation which had been previously included in the boards' New Pupil Places Grant. This approach has continued and the amount allocated in 2014-15 is $40 million; it is based on a combination of expected lease costs reported by boards and a model of portable need activity. The funding can be used for portable moves, leases and purchases, as well as lease costs for permanent instructional space and will flow to boards as they report their expenses through the Ministry’s Education Finance Information System (EFIS). Funding that is not used will not be carried forward for future years.

Education Development Charges

An education development charge is a levy on new construction in a municipality. A school board may pass bylaws to collect education development charges on new real estate developments within the board’s jurisdiction when elementary enrolment exceeds its elementary capacity and secondary enrolment exceeds its secondary capacity, or when a board has an existing education development charge deficit. The revenue is to be used solely to pay for new school sites. The legislative framework for this appears under Part IX, Division E of the Education Act and Ontario Regulation 20/98 (Education Development Charges – General).

Reforms to the Funding Formula

Over the past decade the funding formula has undergone significant reform. Improvements have been shaped and informed by consultations and discussions with education stakeholders, which includes trustees and trustee associations. Consultations take place in advance of the release of the annual regulation that sets out the GSN for the coming school year.

The projected GSN funding level of $22.5 billion in 2014-15 represents an increase of over $8 billion (56%) in operating funding compared to the 2002-03 school year. In terms of student funding this is a per-pupil increase of $4,223 or 59 per cent.

In addition to improving funding adequacy, structural changes to the funding formula have made it more responsive to student and board needs. These structural changes include:

  • introducing measures to support student achievement and to reduce gaps in achievement;
  • moving to a more school-based funding formula;
  • aligning grants and school board costs;
  • updating grants by using the most recent available Census data;
  • providing better support for rural and northern schools; and
  • improving the condition of school buildings.

Budget Development

A board’s budget must be developed based on the educational needs of its students and within the fundingallocation provided by the Ministryof Education. The board will ensure that this balanced budget reflects the board’s vision, is responsive to the needs of the community and supports the goals of the board’s multi-year strategic plan.

The fiscal year for school boards is September 1 to August 31. A financial plan or budget is developed and approved each year by the board.

The process of budget development is one of the most crucial tasks that a school board undertakes and demonstrates its effectiveness and transparency as a democratic institution. Budget development is a consultative process that allows staff, school councils, employee groups, and others in the community to provide advice on priorities and potential budget choices. It is also a public process: boards must be able to demonstrate to their communities that they are accountable in making the best decisions possible for the students in their schools.

While developing a balanced budget, boards must demonstrate that they have allocated the available funds effectively throughout the system. This requires boards to analyze difficult issues, such as:

  • which programs/services to maintain;
  • which programs/services to enhance;
  • which available funds to redirect to other programs/services;
  • what transportation policies and service levels should be;
  • where to locate new schools;
  • whether to close schools and, if so, which ones; and
  • how to align the catchment areas for schools (i.e., how to set school boundaries).

While the Education Act and its regulations set out a number of requirements related to how boards set their budgets, the most significant of them is the requirement that they adopt balanced budgets [s. 231]. The government also sets legislative/regulatory expectations to do with budgets in the following areas:

  • class size;
  • trustee remuneration;
  • board administration and governance;
  • special education (restrictions against spending it elsewhere); and
  • pupil accommodation (restrictions against spending it elsewhere).

The Education Act also gives boardsthe authority to invest and borrow money, but at the same time puts limits on this authority [sections 241 to 249]. School boards are expected to actively manage their cash flow, prudently invest any excess funds, and ensure that any arrangements for short- and long-term financing are made at competitive rates.