Minister Ceci should look at education spending to address Alberta’s fiscal woes

Last month, Alberta suffered another credit downgrade from Standard & Poor’s. Following the downgrade, Alberta Finance Minister Joe Ceci (pictured above) made several startling claims about deep cuts to core public services that he suggested would have been necessary to satisfy the ratings agency and avoid a downgrade.

Specifically, Minister Ceci raised the spectre of cutting the education budget in half.

Fortunately, the actual recommendations from Standard and Poor’s were much more manageable than Minister Ceci implied. Specifically, the ratings agency is reported to have stated that without further tax hikes, the government would need to reduce program spending by $3.5 billion from current levels to help get its finances back on track.

For context, this would mean reducing program spending by approximately 6.5 per cent in nominal terms.

Although Minister Ceci sought to sensationalize the impact of this type of spending reduction by imagining that all the cuts were made to one important department, the less dramatic but happier reality is that there are ways to make progress towards this goal by finding different sources of savings throughout the budget.

In other words, while the S+P downgrade doesn’t demand the type of draconian cuts suggested by Minister Ceci, it does underscore the need for Alberta to rein in program spending across a range of spending areas. And while cutting the education budget in half is obviously not practical or desirable, Minister Ceci has inadvertently stumbled upon a good place to start.

Education spending has been rising quickly in recent years and is significantly higher on a per student basis than the national average. Consider a recent study showing that between 2004/05 and 2013/14, spending on public schools in Alberta significantly outstripped what would have been necessary to offset the effects of cost pressure. In fact after adjusting for inflation, per student spending increased 25 per cent during this period.

This spending growth is one reason Alberta’s education spending levels are much higher than in other provinces. Consider, for example, neighbouring British Columbia, which spends far less money per student in its public school system than Alberta. In fact, in 2013/14, per student spending was $1,581 higher in Alberta than in B.C.—that’s a gap of 14 per cent.

Perhaps Alberta’s higher spending level could be justified if it were necessary for excellent student performance. But B.C., with its lower level of spending per student, boasts some of the best results in Canada for student performance on international standardized tests.

Alberta’s high level of per student spending relative to B.C. has important implications for provincial finances. If, in the years ahead, Alberta’s government can begin to close the per student spending gap with B.C. through a disciplined approach to wage negotiations and frugal management of education dollars, it stands to save hundreds of millions of dollars.

These savings on their own won’t be enough to address Alberta’s fiscal problems, but they will be a significant start, which is all the government can reasonably hope for in any single area of public management.

Despite Minister Ceci’s dire warnings to the contrary, implementing Standard & Poor’s reported suggestion that the government must trim spending by approximately 6.5 per cent needn’t mean rapid, devastating cuts to any core area of public services. It will, however, require the government to look for savings in all of major areas of spending—including education.

Minister Ceci was doing no more than fear-mongering in raising the spectre of massive, disruptive cuts to education, which no serious person has suggested. However, in mentioning Alberta’s education spending, he may have stumbled upon a useful place to start, if the government launches a responsible comprehensive effort to address Alberta’s spending problem and repair the province’s finances.