As the provinces gear up to introduce their budgets, you can bet your last tax dollar that many finance ministers will justify ramped-up spending in education as an investment in the future. A good education system is vital, of course, but in fact provincial governments now have an opportunity to slow down growth in education spending without compromising quality. The reason: Canada’s low fertility rate.
Thanks to demographic changes, governments face increasing pressure to spend money on health care, pensions, long-term care facilities and other support for the elderly. To keep taxes from exploding in the future, we will need to keep the lid on fiscal spending on programs that governments can save money on. Education is especially important in this regard, since our low fertility rate is leading to declining school enrolment. Canada’s elementary and secondary student population fell by 1.6% from 1996-97 to 2004-05, but the decline has been quite sharp in some provinces: 25.7% in Newfoundland, 11.4% in Nova Scotia and 3.8% in Quebec.
An even sharper decline in elementary and secondary school enrolments is on the horizon. In a paper published by the C. D. Howe Institute, Yvan Guillemette projects school populations will decline in the next eight years by more than 8%. In all provinces, student enrolment will decline–the smallest decrease in Alberta (3.4%) and the largest in Prince Edward Island and Newfoundland (more than 20%).
Those declining enrolments mean that provinces could maintain inflation-adjusted per-student spending while allowing total spending to grow at about half the rate of growth in the economy. That, however, is not the way provinces like to do things–provincial spending has been rising rapidly since 1996-97. Guillemette shows that per student spending (in 2004 dollars) has risen from $7,221 in 1996-97 to $8,165 per student in 2004-05–an increase of 13.1% for Canada as a whole. Spending has surged in Prince Edward Island from $5,608 per student in 1996-97 to $8,212 by 2004-05. By contrast, Ontario’s per student spending on an inflation-adjusted basis has virtually been flat.
If student enrolments are declining, why do governments feel they must ramp up total spending on education? One reason is that governments are reluctant to close neighbourhood schools as families with children move away. Without school closures, governments face rising per-student costs. Further, education often gets snarled in union talks. Seeing a more expansive budget, teachers would be quick to press for salary increases. This would not be so bad if teachers were rewarded for good performance. But salary negotiations result in pay raises according to seniority and degree qualifications, and have little to do with merit. Striking teachers, as Ontario now faces, will not be pushing for greater accountability and performance-pay packages.
The most obvious reason for rapid per-student spending growth is that governments mistakenly believe that more per-student spending on education will improve results. Yet, Guillemette argues, more spending does not translate into better school performance. The province that has shown the most improvement in math, science and literacy scores has been Ontario, even though spending has risen less quickly there than in all other provinces. Prince Edward Island, despite dramatic increases in spending, has seen small improvement in test scores..
Money given to schools is an input, not a guarantee of a good outcome. Alberta has had one of the most successful education systems in the world (as shown by OECD test scores) because it encouraged school choice and school-based budgeting, which allows principals more flexibility in running their schools. The success of such reforms does not imply that more money needs to be thrown at education, as opposed to a better allocation of resources to encourage stronger school performance.
So the next time you hear a provincial finance minister proudly state that investments in education are to rise rapidly, send a letter to tell him that he would be better off looking for real educational reforms that keep the lid on per-student spending.
