Public schools in the northern territories are infected with the cost disease

Commentary, Education, Rodney Clifton

Education costs are skyrocketing across the north, and there is little evidence that the increased spending has produced better outcomes for students.  Policy reforms are needed to bring more consumer choice and competition into education.

William Baumol, professor emeritus of economics at Princeton University, coined the term “cost diseas” to describe the exponential increase in the cost of social services, such as health and education, which has increased much faster than most other goods and services.  In his recent book, The Cost Disease: Why Computers get Cheaper and Health Care Doesn’t, Prof. Baumol says that the cost of the social services is “condemned” to increase faster than inflation because the number of people providing and using the services cannot be easily reduced.

Statistics Canada data, reported in the table, clearly shows that northern education has been infected by the cost disease.  From 1999 to 2010, public school spending has increased at a much faster rate than inflation, measured by the consumer price index (CPI), which increased by 25.5 per cent.  In the NWT, the per student spending increased by a whopping 104.4 per cent, and in the Yukon, the cost increased by 68.1 per cent.  In Nunavut, however, the increase was 59 per cent from 2004 to 2010.  In comparison, the lowest increase was in BC at 53.3 per cent over the 11 years. 

The most important reason for the rapid growth in per-student costs is that the public school enrolment has declined while the number of educators has increased.  From 1999 to 2010, public school enrollment decreased in all three territories: 8.6 per cent in the NWT, 7.4 per cent in Nunavut, and 15.9 per cent in the Yukon.  Paradoxically, the number of educators increased: 19.7 per cent in the NWT; 36.1 per cent in Nunavut, and 5.5 per cent in the Yukon over a shorter period. 

Not surprisingly, the cost of educating the average student was very high in 2010.  Specifically, in the NWT, the cost was $22,202, in Nunavut the cost was $21,923, and in the Yukon, the cost was $21,313.  In comparison, the lowest cost in Canada was $11,306 in PEI.  In other words, the cost of educating students in the north was about twice as much as in PEI. 

In the territories more resources continue to flow into less-than-full schools, with fewer students in classrooms, expanded bureaucracies, and higher salaries for administrators and teachers.  If the cost of educating students had been held to the increase in CPI since 1999, the territorial governments would have saved millions of dollars in the last fiscal year alone.

Ministers of education and school administrators often claim that students benefit from lower student-teacher ratios, better facilities, more divisional administrators, and higher-paid teachers. But, there is little evidence to support this claim.

Rethinking the way education is funded and administered is long overdue. There is a pressing need to lower expenditures and improve students’ educational achievement. The most effective way of doing this is to tie funding directly to demand by using vouchers that increase at the rate at the CPI or a few percentage points above it.  These vouchers would allow parents to send their children to any public or private school they choose.  Higher enrollments would mean larger budgets, and lower enrollments would mean smaller budgets. 

Of course, this policy would only work in large communities, such as Whitehorse and Yellowknife, where there are a number of schools.  But, if parents in large communities had more choices, increased pressure would be put on teachers and administrators to improve education in smaller communities.

Consumer-controlled expenditures would also eliminate large swaths of public school bureaucracies that absorb considerable resources.  Schools would turn away from maximizing spending on peripherals and focus on objective, measurable, outputs that are essential for educating informed, enlightened, and employable citizens.

As a result, students would be tested on the core subjects, and the results would be published so that excellent schools attracted more students and low-performing schools would find ways to improve or they would wither and close as enrolment fell.  Under this model, schools would be free to experiment with new teaching and administration strategies, but they would need to deal with the consequences, both positive and negative.

Obviously, these changes would save considerable money for the three territorial governments, making schools much more responsive to the needs of students and parents and much more palatable to taxpayers. 

The cost disease has clearly infected the educational systems in northern Canada, and choice and competition is the best medicine to treat the disease.

Public Education Expenditures in Northwest Territories, Nunavut and Yukon: 1999 – 2010

Source: Patric Blouin, Summary Public School Indicators for the Provinces and Territories,1999/2000 to 2005/2006. (Report No. 81-595-M, No.067), (Ottawa, ON: Statistics Canada), 2008; and Statistics Canada, Summary Elementary and Secondary Schools Indicators for Canada, the Provinces and the Territories, 2006/2007 to 2010/2011, (Report No.81-585-M, No.099), (Ottawa, ON: Statistics Canada), n.d.