The HWDSB will likely run a budget deficit. What does that mean for the future?

Judith Bishop, former chair of Hamilton's public school board, remembers the difficulties that accompany a budget deficit.

In the past, the deficit meant cutting school supplies, professional development, discretionary staff like math and literary specialists. Sometimes social workers and psychologists as well," she said.

It was an unpleasant experience for everyone involved."

That was in 2002, when cuts to provincial funding for education pushed school boards across Ontario to spend on staff and resources without receiving the subsidies to support them.

Despite the cuts, the Hamilton-Wentworth District School Board didn't want to reduce its supply of secondary staff and increase class sizes, Bishop recalled. By the end of the school year, the board had run a deficit - a move that is, and was, illegal, according to the Ontario Education Act.

Eighteen years later, Hamilton's school board finds itself in a similar predicament. Due to low student enrolment and a reduction in revenue related to the COVID-19 pandemic, the board is facing a revenue shortfall of $15.9 million.

The board has found some savings by reducing staff, and has appealed to the province for more funding. But staff have acknowledged that the board will likely run a deficit by the end of the school year.

In a board meeting in late October, current board chair Alex Johnstone warned trustees of the financial situation.

As we plan for our spring budget, we will very likely be looking at a deficit and I think that is a reality our board will have to start to prepare for," Johnstone said.

What would a budget deficit mean for future years?

From her experience, Bishop says deficits have a tendency to result in cuts to programming and staff.

The (board) is going to be looking at not only cutting staff, but also it will be forced to look at all its non-discretionary funding, which isn't much. It means delaying maintenance - if you're going to repaint a school every five years, maybe you'll do it every 10 years now instead," Bishop said.

Typically, when boards run deficits, a provincial supervisor is assigned to help manage finances. They examine the board's revenue and expenditures and make executive decisions on what will be cut and what will be saved to help balance the budget in the following year.

It's an awkward situation, really," said Bishop. There were decisions made that weren't always what we wished for."

This year is slightly different. In October, the Ford government relaxed the rules around budget spending due to the extraordinary circumstances of the pandemic. School boards are now allowed to run a deficit of up to two per cent of their overall budget, without consequence.

Stacey Zucker, associate director of support services at the HWDSB, says these new rules give the board some leeway to handle revenue shortages.

The board will likely run a deficit close to $11.5 million after reducing staffing costs and using its reserve funds, which narrowly falls within the government's two per cent threshold, Zucker said.

So we would be OK to do that, but that would use up all of our surplus money."

The board allocated up to $9 million from its surplus money this year to reduce class sizes in elementary schools. Assuming the board uses the entirety of its surplus money to help reduce the deficit, there won't be any remaining for future expenses.

We have enough this year from our reserves, but it could be harder in future years depending on the situation."

Jacob Lorinc's reporting is funded by the Canadian government through its Local Journalism Initiative. The funding allows him to report on stories about education.