Fiscal Consequences of Higher Spending on K-12 Public Schools in Canada

Summary

• Spending decisions by governments have consequences beyond just the direct effects of the new or expanded spending. Additional spending today requires either higher taxes today or, when financed by deficits (i.e., borrowing), higher taxes in the future. At the provincial level, a lack of spending restraint on elementary and secondary (K-12) education has a disproportionate effect on the government’s finances due to the size of education spending compared to most other spending.
• For Canada as a whole, the increase in per-student spending in K-12 public schools after accounting for the effects of inflation (price changes) was 25.8% between 2004/05 and 2013/14. Over the same period, the province with the highest per-student spending increase in K-12 public schools was Saskatchewan (39.0%) while British Columbia recorded the lowest increase (18.3%).
• Had spending been restrained so that per-student public school spending had been held constant from 2004/05 to 2013/14, education spending on K-12 public schools in Canada would have been 20.3% lower—$49.8 billion instead of the $62.6 billion that was actually spent.
• Constant per-student public school spending would also have meant that, in 2013/14, Alberta and Prince Edward Island would have recorded budget surpluses instead of deficits, Quebec would have essentially balanced its budget two years earlier, and the deficits or surpluses of other provinces would have been substantially reduced or increased respectively.