Responding to Budget Chatter
Nov. 17, 2019
The CBE released information about our 2019-20 budget gap earlier this week. In my six years as Chief Financial Officer, I have seen some hard budgets and big budget gaps. But this one - $48 million – is the hardest we have ever faced.
In these times, it's important to know that we are working hard to minimize effects on students. We are digging deep to find efficiencies and keep our staff supporting students.
In the meantime, staff and community members have questioned me after hearing chatter about a few controversial things. I’d like to take this time to do some myth busting.
Education Centre lease
It’s easy for people to pick on. It’s a big building and the solution is to just walk away, right?
In reality, it isn’t that simple. The current Board of Trustees and administration is doing everything we can to keep the costs associated with the lease as low as possible.
Unfortunately there just isn’t much wiggle room. The CBE is obligated to make the specified lease payments out to 2031. It is a legally binding contract. If we break that contract we will be sued. If we are sued, we will lose. And when we lose we still have to pay.
We have been and will continue to work with the Province and others on alternatives; however, none have presented themselves.
This decision was made a decade ago, by a Board of Trustees and administration that is no longer at the CBE. It was supported by the Education Minister at the time. No one responsible for the 2009 lease decision predicted the low occupancy rates and inexpensive office space we would see in 2019.
All that said, we will continue to work to manage all costs, including the lease costs, to ensure we maximize the dollars available to our schools.
CBE’s administrative costs
Our administrative cost (Board and System Administration, or BSA) is below the 3.6 per cent cap imposed by Alberta Education. And keep in mind, our BSA costs include the entire cost of the Education Centre lease. If you remove the lease cost from our BSA total you would see that our actual administrative costs are around 2.8%. That is very low, even by private company standards.
I know it can be easy to see administration as some unnecessary spending for unneeded purposes. That, however, isn’t an accurate perspective. Administration costs are vital to the continued operation of any organization, big or small.
By definition administration includes things like payroll services (paying staff), procurement (buying necessary goods and services), financial services (accounting, financial reporting, budgeting, fees management, etc.), human resources (hiring, supporting and managing our 14,000 staff), providing legal services and supports, and building, supporting and maintaining an extensive technology infrastructure necessary to support a modern education system while protecting the petabytes of data from unwarranted and unwanted intrusion. These are just a few examples. There are a plethora of supports and services that are necessary to run a $1.4 billion organization with over 14,000 staff across 250 facilities.
Our administrative costs also go toward supporting our publically elected board of trustees.
For the 2018-19 school year, total BSA is approximately $48 million. I know that sounds like a big number but it is, as mentioned, less than the 3.6% cap imposed by Alberta Education.
Even if we stopped providing all of these essential administrative functions, we would barely close the 2019-20 funding gap with which we are currently grappling.
It is also important to know that the budget submitted to Alberta Education in the spring (as required by law) already included a $3 million cut to administration. That was on top of further cuts to administration over the last few years.
The focus is always, and rightly, on impacts to students and schools. We work diligently each and every year to keep our administrative costs as low as possible.
We are a very lean organization, despite the lease costs. With a workforce of over 14,000, the number of non-unionized employees (exempt) is small at 205. About 93 per cent of all CBE staff work directly in schools or are regularly deployed to schools.
There are eight senior executives called superintendents. Using averages, there are approximately 1,750 staff for each senior executive. That is a very, very low ratio by any measure. The CBE does not have any bonus program, and the wages of executive and exempt staff have been frozen for several years.
Accounting Error
All organizations are full of good people doing good work. From time to time errors are identified and corrected. That is what happens in a healthy, positive work environment. It would certainly be my expectation that when errors are made they are identified and corrected.
With regard to the accounting error referenced, it was solely about two different approaches to how financial information ought to be presented. Rather than an error, it was a difference of opinion.
That said, whether you call it an “accounting error” or a difference of opinion, the reality is the change had absolutely no impact on the dollars actually available to support students in the classroom.
These are challenging times. Please know we are doing all we can to minimize the impacts of this budget on our students and staff. As always, we are happy to take your feedback through our
budget feedback form.
Brad
