Reality of education spending in Canada

As parents settle back into school year routines, it’s inevitable that questions regarding education spending and the performance of our schools will return to the forefront. This is particularly true in provinces like Ontario and Alberta that are struggling with precarious public finances. Despite claims to the contrary, spending on public school education in Canada has not been cut and has in fact increased markedly over the last decade even though student enrolment has declined. The problems observed in our public schools simply cannot be explained by a lack of resources.

Consider that the provinces in total spent $60.7 billion on education in public schools in 2012-13, the most recent year of available comprehensive data. This is $19.1 billion more than was spent 10 years earlier—an increase of 45.9 per cent. When examined individually, every single province increased education spending over the last 10 years without exception.

This substantial increase occurred despite a 4.9 per cent decline in student enrolment in public schools over that same period. The increase in education spending in public schools is actually 53.4 per cent after accounting for the decline in student enrolment. In other words, more money was spent on fewer students.

As is the norm in service-oriented sectors of our economy, the bulk of spending in education is on compensation. Almost three-quarters (73.5 per cent) of all education spending in public schools is consumed by compensation, which includes salaries, benefits and pensions. Indeed, 72.2 per cent of the entire $19.1 billion increase in education spending was allocated to increased compensation costs for both teaching and non-teaching staff in public schools.

Of note is the larger and larger share of compensation costs consumed by pensions. Most Canadians are generally aware of the premium pensions enjoyed by government-sector employees compared to those in the private sector. Teachers and non-teaching staff in public schools are no different in terms of enjoying a generous pension. Pension costs increased by 89.0 per cent, rising from $2.1 billion to $4.0 billion in annual spending between 2003-04 and 2012-13. Ontario, Saskatchewan and Alberta experienced particularly pronounced increases in pension costs—increases above 100 per cent over the decade in all three provinces. Greater diligence in managing these costs through reform will be needed sooner rather than later as pension costs continue to crowd-out other education spending.

Spending on renovations and the building of new facilities is another area of increasing costs, which is surprising given the decline in student enrolment. Specifically, spending on new schools and renovations of existing facilities doubled from $2.4 billion annually in 2003-04 to $4.8 billion in 2012-13. This marked increased occurred at the same time that student enrolment in public schools declined by almost five per cent.

This is not to say that there are not problems in our public schools. The notion, however, that the challenges facing public schools arise from a lack of resources is not supported by this evidence of increased education spending.