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School District #83 budget transfer angers parents

School District #83 is defending its budgeting practices in regards to moving operational surpluses into their capital budget. - Evan Buhler/Observer
School District #83 is defending its budgeting practices in regards to moving operational surpluses into their capital budget.
— image credit: Evan Buhler/Observer

School District #83 is defending its budget practices after questions from parents revealed the school district has used $10.5 million in surplus operating funds over the past five years to fund capital projects – including the new $9 million District Education Support Centre.

The consistent message from the school district during the construction of the new administration building was that capital and operating budgets are kept separate. Capital budgets are used for tangible assets like buildings, computers and furniture. Operating budgets are used to allocate funds for school services, including wages for teachers and support staff as well as programs for students.

Each year for at least the past five years, the school district has been cutting its operational budget – impacting programs for students – citing budget pressures due to declining enrolment, increasing costs and a lack of appropriate funding from the province.

But surplus amounts generated in School District #83 over the past few years have ranged from $700,000 to $2.9 million annually.

So news that every year for at least the past five years, the school district has been  transferring the surplus money into the capital account has outraged parents and members of the Parents Advisory Councils.

In a statement, the District Parent Advisory Council calls the practice deeply disappointing.

“This practice is absolutely disheartening at a time when our district has been facing multiple years of operating fund cuts in the millions of dollars – including the loss of programs, student supports and school closures,” it says. “As it appears the funds transferred to the capital account have been used to finance the new district office, it is a sad irony a portion of that building was built with funds originally directed for the education of our children.”

There is nothing illegal about the school district’s process.

“SD83’s practice of transferring operating funds into local capital is a common practice of school districts. Perhaps more to the point, it is a practice accepted by the Ministry of Education,” says Ian Aaron, director of the school district financial reporting branch of the Ministry of Education.

The school district issued its own statement defending its budget practice, saying it has run surpluses due to conservative budgeting and careful spending.

“It is important to note the board does not budget for surpluses, but the district can not realize a deficit either,” says the statement which was released on the school district’s website.

“The question has been asked about why surpluses were not directed back to support schools and programs. Using surplus funds to support programs and services creates a structural deficit. Surplus funds are ‘one-time’ monies that cannot be relied upon in future years to sustain the system. Using surplus funds only means that those funds will need to be reduced in the following year, thus creating an unsustainable system.”

But this argument is countered by parents who have been reviewing previous school district budgets.

“The structural deficit statement is true, but only if there isn’t a surplus every year. There has been a surplus every year for at least 10 years running. So if every year you have money left over, that means there is money that could be used towards operations,” says Noah Ralston, a member of the Silver Creek Elementary Parent Advisory Council, who is also a teacher for SD #83.

“I think what has really upset people is the reality is so different from the messaging,” says Ralston. “People were asking whether the new building was having an impact on students and we were consistently told by trustees, by staff, that the capital costs were from a separate budget. Now we see that there was $10.5 million transferred into capital and that money is there no longer. It’s been spent.”

 

Capital projects

In the last few years, the school district spent $9 million on the new district education centre, which was approximately $2 million over the initial budget, as well as more than $1 million on a building at the school district works yard.

There are also commitments to $1.1 million in upgrades to Carlin school in the plan for the upcoming year, and a need to upgrade Eagle River Secondary should it become a K-12 school. At the last board meeting, Sicamous trustee Barry Chafe pointed out there is not enough money in the capital fund for those renovations. The school district does have a number of unused school properties for sale, including properties which are no longer needed due to the construction of the district education support centre.

“The school district has $2.6 million in property assets which are either currently for sale or pending sale. Any money generated by the sale of these properties will be put towards future school projects at Carlin and in Sicamous,” says the school district statement.

 

Accountability

Another issue for the parents is transparency of the process.

There does not appear to have been public discussion of a surplus by trustees during public meetings. In previous years, budget committee meetings have been held in private; however, this year, the school district has opened their budget committee discussions up for public view.

The DPAC says that while SD83 has defended the transfers, these surplus funds could have been reserved for student programming and support in future operating budgets – without penalty from the Ministry of Education.

“Further, these transfers were done without the full disclosure expected of our public institutions. Even the district’s financial statements do not clearly show these transfers,” states the DPAC statement.

After Ralston had questions when reviewing the public budget documents available on the school district’s website, he began to try and track the funds that have been transferred from operating to capital budgets. It was an arduous task, as the figures in the budget document are complex and the funds are not always named the same thing year after year.

“It was not simple to follow or clearly explained,” he said. “We needed someone with an accounting background to help us figure this out.”

Ralston is concerned the issue does not appear to have been discussed by the elected trustees in a public forum.

“Why was this surplus not discussed each year? Why did the trustees not debate what would be the best use of the surplus funds? I’m not saying that putting money into capital was the wrong choice, but I’m saying there are other options and we never heard those options.”

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