New Funding Model Prioritizes Predictable Funding over Adequate Funding

On Tuesday February 18, 2020, Minister Adriana LaGrange announced a new K-12 funding model. 
The new model made two significant changes: consolidating multiple, targeted grants into fewer, more generalized grants; and changing how and when student enrollment is calculated and how school board budgets subsequently finalized. 
In a news conference notably devoid of specifics, LaGrange was nonetheless undeterred in making three bold claims about this new model:

1. “By driving more funds towards our boards, every School Board in this province will see an increase in funding for the upcoming school year”. (1:47 Press Conference)
2. That it “ gives school boards predictable sustainable funding”. (2:44 Press Conference) 
3. That “it reduces red tape, it gives school boards more flexibility and autonomy”. (1:04 Press Conference)

Despite scant information provided by the Minister, we dived into these claims; what we discovered was that this new model does provide predictability: it will predictably underfund students.

Claim #1: New Funding Model will drive more funds towards school boards

Current Funding Model: In the current model, school boards are required to submit their upcoming budget yearly by June 30. As funding is calculated per student, board budgets must estimate student enrollment, with actual enrollment numbers not known until September 30. Of course, actual enrollment inevitably varies from the estimate, and thus, funding is adjusted in the fall to match actual enrollment. Ultimately, each student was both accounted for and funded. Variances were handled through board reserve funds, which each board independently managed. 

New Funding Model (Weighted Moving Average Model) 
In the new funding model, rather than fund boards based on actual enrollment numbers as measured in the fall, a LaGrange introduced a new “Weighted Moving Average” (WMA) formula to determine enrollment when budgets are submitted in the spring. The budgets are not subsequently adjusted with actual enrollment numbers. This WMA formula, calculates the number of funded students to be the sum of:

• 20% of last year’s enrollment; plus
• 30% of the current year’s enrollment; plus
• 50% of the upcoming year’s forecasted enrollment. ​

There’s one glaring consequence of this formula: any board that grows (currently 75% of Alberta’s boards are), will always be funded for fewer students than they actually have. Given that the population, on the whole, tends to grow, this presents a problem.

SAMPLE CALCULATION:
To see how this formula underfunds a growing school board, let’s assume a 3% year over year population growth for a sample calculation: 

Funding = 0.2a + 0.3b + 0.5c

Where
 a = 2018 enrollment
 b = 2019 enrollment 
 c = 2020 forecasted enrolment

Assuming enrollment increases ( 3% growth year over year)

Then:
    2020 enrollment = 1.03 (2019 enrollment)
    2019 enrollment = 1.03 (2018 enrollment)

Using the variables above this means:
c = 1.03b
b = 1.03a 

then  c = 1.03(1.03) a   
 c=1.032a

OR     a = c/(1.03)2​

This now allows us to use the MWA Funding Formula to simplify terms:
    FF = 0.2a + 0.3b +0.5c
    FF= 0.2a +0.3(1.03)a +0.5(1.03)2a
    FF = 0.2a + 0.309a+0.53a

FF =1.039a

But a represents the first year, we want c the current year.
Recall c=1.032a   so then     a=c1.032
FF= 1.039c1.032
FF = 0.98 c
This means, if the student population increases at 3%, the weighted average funding model will provide funding for only 98% of the enrollment. 
The claim that this new funding formula will allow for MORE dollars will somehow make it to classrooms for any division that sees an increase in population is FALSE.

Claim #2: This model provides school boards with predictable funding

The truth is, this model prioritizes predictability of funding, over adequate funding. LaGrange insists that knowing a firm budget in March is more valuable than funding every single student enrolled and accounted for at the end of September. The new model is predictable, in that for growing boards, the model will predictably underfund students. 
The reality of education funding is that the exact school population (# of students) is always variable and unknown until the year starts, and nothing can make this uncertainty go away. 
Existing Model

• School boards submit a budget for Ministerial approval, with estimates of enrolment.
  
• Boards couldn’t predict the exact number of dollars they would receive from the Ministry.
  
• However, boards were guaranteed funding would match an actual September headcount.
  

Moving Weighted Average Model 

• School districts will know precisely how much money they have in the budget earlier in the year. (March prior to school start in September) 
  
•  The only thing predictable for growing boards is that their growth will be predictably underfunded.
  

Claim #3: Reduction of Red Tape & Greater Autonomy for School Boards

Red Tape Reduction:
While LaGrange introduced a reduction in grants (from 36 -15), as evidence of a reduction in red tape, she also indicated there will be a mechanism for boards to appeal and negotiate budgets if their enrolment forecasts are different than actual numbers. 

This is akin to creating a new grant, but with no defined parameters, criteria, or process transparency, and puts the onus on school boards to approach the ministry for adequate funding. 

Greater Autonomy for School Boards
This claim is a stretch as the new formula actually centralizes the budget process, which used to lie in the hands of school boards. For example, with the existing model:

• School boards created and submitted their own budgets for Ministerial approval.
•  Boards previously used reserves as a buffer against the ebb-and-flow of enrollment each year.
• Boards were accountable for competently forecasting enrollment and being judicious with their reserves.
  
  

However now, under the Moving Weighted Average Model, 

• School Boards have less autonomy with respect to their budget. 
• The budget calculation is centralized by a formula that relies 50% on previous years enrollments.
• This means 50% of the budget is a forecasted variable. How is this forecast calculated? It’s done by the government. So forecasting and buffering variances -- previously responsibility of the boards -- now lies in the government’s hands.
• This formula seems to fund and control boards, rather than fund students and education.

Summary

The three main claims made by this government are demonstrably false.

1. The funding model does not result in an increase in funding for the 75% of Alberta public school boards that are experiencing population growth. And it will never result in more funds for any board experiencing growth.
2. The only predictability provided by this new model is that school boards will be predictably underfunded.
3. Red tape is increased and school board autonomy is decreased using this new model.