NLPS sees a $1.8 million surplus for last year, predicts nearly $1.2 million deficit for 2021-22

LAKELAND – At the end of November, the Northern Lights Public School (NLPS) Division's Board of Trustees heard the final report of the 2020-21 operating year’s revenue and expenditures, which saw a $1.8 million surplus.

The surplus came in $1.4 million higher than the division had anticipated or budgeted, and was confirmed by an independent auditor, Jeff Alliston from Metrix Group.

With a higher surplus in the 2020-21 Audited Financial Statement, Alliston reassured the board of trustees and superintendent that the findings seemed to be at an acceptable level.

“When it comes to surpluses, every division I audited this year ended up with a surplus. I think it has to do with cost cutting for COVID and other measures that people didn't know about a year ago, or they are working through the year, and they have ended up with additional unspent funding that could cause surpluses for the year. So, I definitely did see a trend in that,” he said, noting that the NLPS’s reserve funds surplus was not the highest or lowest he has seen for the 2020-21 year.

As school divisions try to make sure they aren’t holding on to too much money while not being in a position of not having enough, Alliston said he believes NLPS’s reserves are likely within an acceptable threshold.

NLPS Superintendent Rick Cusson added that Alliston’s feedback was welcome news, because he had informally heard from other superintendents across the province that their divisions were experiencing larger than expected surpluses as well.

During the Nov. 30 meeting, NLPS staff and board trustees also heard that the division’s net financial assets were $5.5 million for 2020-21, compared to $4.2 million reported the year prior based on the financial statements.

“This signifies that you have sufficient financial assets to offset your liabilities,” Alliston stated.

NLPS anticipating a $1.2 million deficit for current year

Following a new education funding framework introduced by the UCP government in February, the division is anticipating a $1.187 million deficit for the 2021-22 operating year.

The estimated shortfall comes from funds provided to the division for the current year by the province based on projections of enrolment.

With student enrolments dipping below what was forecasted and submitted to the province earlier this year, the division is expecting funds will be clawed back by the province to “true up enrolment numbers,” according to Paula Elock, NLPS’s secretary-treasurer.

“The work was conducted in December of last year projecting out for this year, when we had really no indication of how things were going to play out with the pandemic and where our enrollment numbers were going to be,” said Elock. “We didn't want to project too low, and we didn't want to project too high.”

NLPS had originally projected enrolment to be 5,646 and then revised those projections to 5,410 provincially funded students in the spring budget when they had more current information.

The division’s pre-pandemic numbers were reflecting an annual decline of one per cent annually, which is how NLPS determined the original numbers submitted to Alberta Education.

Now that the academic year has started, actual enrolment numbers have been determined reflecting there are 5,364 provincially funded students with a total of 5,608 “bums in seats” at NLPS schools.

Cusson attributes the additional drop in enrolment to a decline in students attending Kindergarten and pre-kindergarten programs, which he notes as being a trend seen across the province.

“The province has not seen the enrolment growth that they had anticipated for,” said Cusson. “We've seen some parents that are choosing to keep their kids at home for kindergarten, some other people choosing other avenues, private schools and whatnot, which takes that amount out of the funding model for us.”

With projections being higher than actual numbers, the division has to adjust for potential funding claw backs in the current year’s budget.

Elock acknowledged that although the division has had some money clawed back with respect to COVID mitigation dollar, additional funds have been provided through alternate streams such as the Learning Disruption Grant and $500,000 of federal funding through Jordan’s Principle which was not included in the spring budget.

NLPS will receive a total of $348,390 to provide support to 711 students from Grades 2 to 3 focusing on literacy and numeracy through the Learning Disruption grant from the province.

“So, there's a little bit of movement in some of those grants back and forth,” she said.

Funds also seeing movement were those being redirected into the division’s Program Unit Funding (PUF), an early intervention program that ensures young kids with disabilities are given the support they need to succeed in school.

The province’s new funding model does not account for the number of coded students at each school, but provides a grant envelope for the program. Cusson explains NLPS reallocated funds to make up the shortfall for the PUF program.

School boards not held harmless

As school boards across the province submit their 2021-22 enrolment numbers and fall budgets, school divisions’ administrations are already preparing to submit the 2022-23 projections to Alberta Education.

When the new education funding framework came into place earlier this year, a sentiment echoed was that with the new framework school boards would be held harmless from the impact of pandemic-related enrolment challenges.

Board Trustee Chair Karen Packard challenged the rhetoric of this notion, citing the clawing back of funds and the effect on the following years' operating budgets.

Elock noted that the new framework “is unpredictable, because it is - as a matter of fact - more complicated.”

She points out through the model that money owing to Alberta Education for a school year is not confirmed until close to March.

“They will not have even calculated what we owe them until next year, for this school year... so that makes it even less reliable and less predictable than under the old system,” Elock described to trustees.

“It does save the province money by doing it this way and the one benefit for school divisions with declining enrollment is it smooths those payments out instead of seeing a complete drop in revenue... So, it takes a little bit longer to feel that hit. On the flip side, if you're seeing an increase, it takes three years to see the full increase in funding as well.”

It does hurt a division the following year if projections do not line up with enrolment, but Elock notes it is better from the division’s perspective to owe money back to Alberta Education than to operate while underfunded.

“We did take an aggressive approach on the enrolment, but we did that purposefully because we knew that it was tied to the revenue, even though we knew that they would true up if we didn't come in with that projection,” she said.