Federal Spending on Primary and Secondary Education on First Nations Reserves 6 December 2016 Office of the Parliamentary Budget Officer

Summary First Nations education is a Federal government responsibility. All other K-12 education is the responsibility of Provincial governments The Provincial Governments spend considerably more than the Federal government delivering education in small northern communities Budget 2016 commitments will begin to address the gap

Over 110,000 First Nations students Snapshot: Primary and Secondary (K-12) Education on First Nations Reserves Over 110,000 First Nations students About 500 band-operated schools serving about 65 per cent of the population About 33 per cent attend provincial schools 2 per cent attend the seven schools operated by the federal government or private schools

Band schools in Ontario- most are rural, many others with limited road access In 2012–13, roughly 12,000 students attended band-operated schools in Ontario. Forty-five band-operated schools (just over half) are located in northern regions of the province with limited or no road access. About 38 schools (44 per cent) could be considered rural. Four per cent of band-operated schools in Ontario could be considered urban. About 26 per cent of band-operated schools have fewer than 50 students. Another 24 per cent of schools had between 51 and 100 students.

Average Annual Escalators (adjusted for inflation 2004 – 2014) In 2004-05, federal spending on elementary and secondary (K-12) education programs for students living on reserve amounted to about $1.26 billion. This represented roughly 22 per cent of INAC’s budget and less than 1 per cent (0.59 per cent) of total federal spending. In 2014-15, program spending on elementary and secondary education exceeded $1.72 billion. This accounted for roughly 22 per cent of INAC’s budget and 0.61 per cent of total federal spending, or roughly 15,000 per FN student (if you divide 1.72B by 110,000) Adjusted for inflation, spending on educational programs increased at about 1 per cent a year during the 11-year period. These increases occurred in the context of enrolment that was relatively stable over the period. INAC provides funding for K-12 programs through a combination of Core and Proposal based mechanisms. Core funding is used to pay: Instructional services, professional and support staff, as well as paying for classroom supplies, student support services and busing for band-operated schools; and tuition fees for students attending provincial schools. Proposal-based funding supports defined, often time-limited projects, as well as students with high-cost special education needs. Tripartite agreements with JamesBay Cree, Atlantic Canada Mi’kmaw and most recently with BC. Sources: INAC Administrative Data, PBO Calculations.

Capital expenditures lapsed while program expenditures exceeded budgets Spending on education infrastructure was highly variable. Capital expenditures fluctuated between $83 million and $193 million per year between 2004-05 and 2014-15. An examination of planned and actual spending reveals significant lapses in planned capital spending in four out of five years. Sources: INAC Administrative Data, PBO calculations.

Education Spending in the Provinces: Ontario example Rural- limited road access Expenditure on elementary and secondary education comprises a much larger share of total provincial budgets, between 15 per cent and 25 per cent. In 2013-14, expenditures exceeded $60 billion. Between 2004-05 and 2013-14 provincial spending has been increasing at a higher rate than federal spending, even in the context of declining provincial enrolment. Statistics Canada data show a decline in the population of young people aged five to 19 in Canada of roughly 2 per cent, from 6,005,900 to 5,880,000, between the 2006 Census and 2011 National Household Survey. Provinces use funding formulas to allocate resources to school boards. Proposal-based funding is not a significant source of funding. 2015-16 Ontario 22.5 Billion Additional $214 million outside the formula less than 1% Illustration of Provincial Funding formula

How do they Compare? INAC funding mechanisms: do not adequately account for important cost drivers related to operating band schools; favour students living on reserves who attend provincial schools; and put small schools in remote and northern regions at significant disadvantage. Many band schools are located in remote, northern regions with small student populations. In addition, band schools face higher costs because of higher incidence of socio-economic disadvantage; commitments to provide culturally relevant instruction in indigenous languages; and large numbers of students for whom English or French is a second language. The incidence of children requiring special education support is also higher. This is related to inadequate accounting for important cost drivers, but it is also a function of provincial spending on education escalating at a faster pace than federal spending. INAC spending on tuition for students attending provincial schools is a function provincial tuition rates which track increases in provincial education spending. Combined these dynamics put small remote schools that do not have access to a provincial system at significant disadvantage. About 500 band-operated schools Over 30 per cent had fewer than 100 students About 30 per cent could be considered remote/special access/north of the 55th parallel. Roughly two- thirds of band schools are rural 3 to 4 per cent of band-operated schools could be considered urban.

Projected FN funding based on Ontario funding formula Using the Province of Ontario Funding formula to estimate per-student amounts.

INAC’s 2% Cap combined with increasing Provincial Tuition Fees Further Eroded the Capacity of Already Underfunded Band Schools: Per-student Funding Ontario Core Funding Increases in core funding under the 2 percent escalator were needed to pay increasing tuition fees for students on reserve attending provincial schools. Proposal funding was not sufficient to support band operated schools. Nor are there any guarantees that proposal money will be allocated to band schools facing higher costs due to small population, remote northern geography ….

Core/Proposal – Band Schools (blue) – per student Provincial Tuition Fees (tan) – per student

INAC / Provincial Comparisons Per-student Funding: Manitoba Small and Remote INAC / Provincial Comparisons Per-student Funding: Manitoba PBO was provided with financial information (core and proposal) for a sample of communities across Canada. This sample could then be compared with provincial school boards that operated adjacent to the reserves. Blue bars illustrate the per student amounts for 3 bands in Northern Manitoba operating their own schools in 2012-13. All three communities are remote fly-in communities. Grey bar is the a Manitoba provincial school board per-student amount. Frontier Division is a provincial school board responsible for educating students over a territory that covers 75 per cent of Manitoba. Over one-half of the Frontier Division’s revenue comes from INAC in the form of tuition fees paid to the board to educate students living on reserve. The gold bar represents the average INAC per-student allocation for students living on reserves in Manitoba. The grey bar is the provincial average per-student allocation for all students attending MB provincial schools.

Funding Shortfalls: High and Low Estimates   2016-17 2017-18 2018-19 2019-20 2020-21 5-year Total Budget 2016 Announcements 287.5 382.9 482.4 647.0 801.0 2600.8 PBO Low Gap Estimate 336.2 345.8 355.6 365.6 376.1 1779.4 Difference Low -48.7 37.1 126.8 281.4 424.9 821.4 PBO High Gap Estimate 664.8 684.0 703.5 723.6 744.4 3520.3 Difference High -377.3 -301.1 -221.1 -76.6 56.6 -919.5 Budget 2016 announced significant new investments for First Nations education. These investments will begin to roll out in 2016-17 and are projected to ramp up over five years. PBO estimates that in the medium term, new Budget 2016 investments in education program spending could begin to address funding shortfalls for band-operated schools. With respect to capital, in 2009, PBO estimated that over the medium term, education capital requirements ranged between $287 million and $307 million. This translates into annual shortfalls of between $94 million and $221 million. PBO estimates that again over the medium term, new budget announcements have the potential to address capital shortfalls, but only if the historical trend of lapsing significant amounts of capital funding is addressed.

Questions about this report? Mostafa Askari Assistant Parliamentary Budget Officer mostafa.askari@parl.gc.ca 613-992-8045 Elizabeth Cahill Author elizabeth.cahill@parl.gc.ca Visit our website www.pbo-dpb.gc.ca and look for the report under the publications tab.

Estimates of Per-student Funding Ranges: Band-Operated Schools in British Columbia