Dear Minister Lecce,
Following the release of the 2023-24 Grants for Student Needs (GSN), I am writing to you today, on the behalf of the Toronto District School Board (TDSB), to request an emergency meeting regarding the unfunded benefit and sick leave costs that are beyond the control of school boards as employers. These unfunded costs have a significant impact on school board finances and must be urgently addressed ahead of the June 30th deadline to approve a balanced budget.
In November 2022, the TDSB submitted its 2023-24 GSN consultation and asked the Ministry to provide additional funding to support the actual costs of employee benefits and sick leave, and to review the salary and benefit benchmarks. These requests were repeated in a letter that I sent to you in March 2023. We were extremely disappointed that these requests were not reflected in the release of next year’s GSNs.
The impact of this underfunding is significant to the TDSB’s budget. In 2023-24, TDSB employee benefit and sick leave costs are projected to be underfunded by $47.3 million. As you know, we have no control over these costs as they are set by other levels of government. Therefore, they should be funded completely by the Ministry.
In 2019, the CPP maximum annual pensionable earnings and employer contribution rates increased. The annual pensionable earnings limit increased by $10,700, and the employer contribution portion of CPP has increased from 4.95% to 5.95% over the past five years. There will be further funding pressures starting on January 1, 2024 when CPP is going to increase the yearly maximum pensionable earnings ceiling.
Moreover, the employer contributions for OMERS pension for non-teaching staff are not fully funded by the Ministry. As of January 2023, non-full time employees are now eligible to enrol in the plan and it is anticipated that change will increase the TDSB’s contribution costs.
Lastly, the sick leave entitlement changes in 2012, which provided employees with additional sick days per year, have resulted in a gradual increase in employee absenteeism, including short-term sick leave. In addition, long-term disability (LTDI) has also resulted in additional cost pressures for the TDSB. Increases in these two areas have impacted supply and LTDI cost increases.
In prior years, the TDSB was able to absorb the increase to employee benefits and sick leave costs through operational savings and working fund reserves. However, as you know, the TDSB was required to deplete its working fund reserves to cover costs associated with meeting the direction of Toronto Public Health during the pandemic, including reducing class sizes in priority neighbourhoods. Approximately $55.1 million was spent on additional staffing costs for smaller class sizes and $15 million was spent on other COVID-19 related expenditures (e.g. technology to support virtual learning, additional PPE).
The TDSB’s projected deficit prior to the release of the GSN was forecasted to be $63.2M and additional funding is needed to cover these cost increases in order to balance the operating budget.
Despite the fact that 90% of TDSB parents/guardians/caregivers believe that the Ministry should fully or partially cover the $70 million that the TDSB spent on pandemic-related costs (according to a survey from April 2023), it is clear through the recent GSN announcement that the province has no intention of replenishing the reserve funds Boards accumulated for particular purposes but were directed to use to cover pandemic-related costs.
This puts Boards, including the TDSB, in an incredibly difficult position. Without access to reserves to absorb the unfunded benefit and sick leave costs, and in the absence of Ministry funding to cover the actual costs, cuts to programs and services for students will be required to balance the budget. To avoid this, if needed, the Board will consider not including these costs when calculating its financial position and balancing its budget.
I look forward to meeting with you as soon as possible to discuss the Ministry’s responsibility when it comes to covering these costs which are wholly outside of the control of school boards.
Sincerely,
Rachel Chernos Lin
Chair, Toronto District School Board