Ontario will either need to boost funding or cut costs in the education sector to cover an estimated "spending gap" of $12.3 billion within the next decade, according to a new report from the province's Financial Accountability Office (FAO). The fiscal watchdog also said it doesn't expect the government to meet its 2019 commitment of creating 30,000 new child-care spaces in five years.

The projected spending gap between the FAO's projections and the government's spending plan is $0.2 billion in 2021-22 and $0.6 billion in 2023-24. It reaches $2.9 billion in 2029-30, with the cumulative amount over the nine years being $12.3 billion. While the FAO projects annual average growth in education spending of 2 per cent during this period, the province's most recent budget puts it at 1.2 per cent.

For 2021-22, most of the discrepancy is due to COVID-19-related funding the government announced earlier this month, the FAO notes.

The government outlined its education funding plan on May 4, including $1.6 billion in "temporary COVID-19 supports" for the 2021-22 school year. For most of the funding, the government asked boards to budget half of their allocation for the first half of the school year, noting that it would "confirm the use of the remaining resources, if needed for the second half of the year, in the fall, pending vaccine distribution across the province and public health advice."

The funding includes $86 million for public health nurses and asymptomatic testing, $383.6 million for staffing to meet local needs and $65.5 million for cleaning and health and safety measures related to transportation.

"The FAO expects that the ministry will be able to fund a portion of this new spending from its existing allocation, leaving a pressure of $0.2 billion that will likely require a spending plan increase during the 2021-22 fiscal year," the report stated.

While the two spending plans line up in 2022-23, there is a projected gap of $o.6 billion in 2023-24. The FAO said there was a difference between its office and the Ministry of Education when it came to the increase in education spending for this year — 2.3 per cent and 0.5 per cent, respectively.

School boards and child care make up 94 per cent of the ministry's spending, the FAO noted, so "given annual projected increases in school enrolment and compensation costs, and the province’s commitment to add up to 30,000 new child-care spaces by 2023-24, it will not be possible to increase education spending in 2023-24 by only 0.5 per cent, unless the province introduces program changes that reduce costs."

Between 2023-24 and 2029-30, the FAO projects spending increases of 2.3 per cent, nearly double the province's average annual rate of 1.2 per cent.

"This means that the province will need to increase funding to the education sector or new spending restraint measures will need to be introduced," the FAO stated in its report.

The FAO noted that a large chunk, or around 82 per cent, of school boards' operating spending goes towards compensation for education workers. The FAO's projections use a one per cent compensation increase up until August 2022 due to the provincial government's public sector salary cap, but assumed an annual increase of two per cent after that, which it said is "consistent with historical growth."

"We do show that after the 1 per cent comes off, the 1 per cent cap, compensation reverts back to two per cent per year annual growth because that is historically what it's been," said Financial Accountability Officer Peter Weltman, acknowledging that the gap would be narrower if compensation increases were less than the estimated two per cent after August 2022.

The Ministry of Education said while it takes enrolment projections into account for its spending forecasts, the government doesn't "speculate" on increases to compensation as this is subject to collective bargaining. It noted that this was the key difference in estimated spending.

Meanwhile, the FAO report also noted the Progressive Conservative government's promise from its 2019 budget to create up to 30,000 new child-care spaces in schools by 2023-24.

At the time of its report, the FAO said 20,807 spaces had been approved or constructed, meaning 9,200 spaces still needed to be allocated.

"Given that it takes an average of three to five years from the date of approval to complete new child-care spaces in schools, the FAO projects that the full 30,000 spaces will not be completed until 2026-27," the FAO said, noting that "progress has been limited" since its last report in 2019 with just 800 additional spaces being approved or constructed.

But the ministry countered this, saying it has approved 1,814 new spaces since 2019 and would be announcing new spaces soon. The government added that it is on track to approve the remaining spaces by 2023-24 and that construction timelines can vary for child-care spaces in schools.

Opposition critics pointed to the FAO's report as evidence of what they describe as underfunding in the education sector.

NDP education critic Marit Stiles accused the government of cutting funding when students and education workers "need more support than ever."

"The FAO report shows that Ford has not budgeted for known increases in costs, and that that’ll leave a $12.3-billion shortfall by the end of the decade," she said. "Even a global pandemic – the impacts of which have left students and families reeling – wasn’t enough to stop his quest for cuts on the back of our kids. These Ford Conservatives just don’t believe in spending the money on public education."

While the federal and provincial governments have announced funding to address COVID-19-related costs in schools through the pandemic, opposition parties and education unions have continuously called on the province to do more to boost asymptomatic testing, increase physical distancing in classrooms and upgrade mask quality.

Green Party Leader Mike Schreiner called on the government to increase funding.

"Since the start of the pandemic, Ford has refused to invest in the necessary measures to make schools safer for children, teachers and staff — despite having the resources to do so," said Schreiner in a statement. "Kids are suffering, but based on Ford’s education cuts, the premier doesn’t understand or care ... we need to invest in children’s health, wellbeing, and learning now and for the future."

Caitlin Clark, spokesperson for Education Minister Stephen Lecce, said the government is "investing more in public education than any government in Ontario history for our third straight year — including a 400 per cent increase in mental health when compared to the former Liberal government."

Clark pointed to the $1.6 billion allocation for COVID-19-related spending, $85.5 million for "learning recovery and reading and math supports" and an increase in Grants for Student Needs funding.

"Ontario’s chief medical officer of health has said that schools have been safe, and with this record investment and continued implementation of the best medical advice, we will keep schools safe. We will continue to spend record amounts in public education to ensure the safety and success of Ontario students.”

Financial Accountability Office estimates education ‘spending gap’ of $12.3 billion by 2030

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