Patti Bacchus: Government needs to act quickly on employer health-tax relief for school boards

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      Does this ring a familiar bell? The chair of the Vancouver School Board (VSB) is calling on the provincial government to fund a new cost increase and the minister of education is replying by claiming that education funding is way up, and so on. 

      It’s a bit of political déjà vu for me, and I’ve been in that story too many times to count, but this time it’s Janet Fraser from the Vancouver Green party going after the new NDP government for the added costs of the new employer's health tax (EHT), which the VSB says will cost the district 50 percent more than medical services plan (MSP) premiums did, even before they were reduced, for an annual increase of $2.7 million once the transition to the new tax is completed. 

      Adding insult to injury, the tax’s introduction will hit the VSB extra hard in the 2019-20 school year with a double whammy when the EHT overlaps with the outgoing MSP for a grand total of $8.5 million that year—compared with this year’s MSP total of $4.8 million. That’s a massive chunk of change for the cash-strapped school board.

      To break the numbers down a bit, the VSB says its combined MSP and EHT costs for next school year—2018-19—will be $6.3 million, compared with this year’s MSP costs of $3.6 million. In 2019-20, the VSB will pay a combined MSP/EHT total of $8.5 million, and in 2020-21, when the MSP is completely phased out, the VSB’s EHT bill will be $7.5 million. Fraser makes a good point, and the numbers coming out of other districts appear to follow the same trend.

      The Surrey school district is calculating a hefty hike as well. Its MSP payments this year are $5.3 million, but it's calculating that its combined MSP and EHT for next year will be $8.6 million, $11.8 million in 2019-20, and $10.1 million in 2020-21.

      B.C. Teachers’ Federation president Glen Hansman is also calling for funding to cover the EHT costs for school boards, which he says could add up to tens of millions of dollars. B.C. School Trustees Association president Gordon Swan told me they’re on this issue as well. And despite having pretty much written the book on downloading costs to underfunded school boards, the B.C. Liberals made hay of it in the legislature this week as well.

      “More funding than ever”

      The standard B.C. Liberal government response to school boards’ complaints about increased unfunded costs was that it was spending more funding than ever on education and blah, blah, blah. It was true, technically, but its funding increases didn’t cover inflationary and other costs increases, and year after year school boards had to cut various items out of their budgets in order to balance them. The NDP education critic at the time, Rob Fleming, was adept at taking them to task on that misleading message in both the legislature and via the news media.

      Now the tables have turned and Fleming is the education minister with the tough job of defending a new cost he knows all too well will add to school districts' financial woes.

      I spoke to Fleming by phone on Monday and he came out firmly in defence of the EHT as a progressive public policy that will make life more affordable for families. He said the VSB will benefit from a $1.2-million “windfall” from reduced MSP payments this school year (MSP premiums were reduced by 50 percent as of January 1, 2018) and listed off millions and millions of dollars of new funding for education—and reminded me about all the additional teachers being hired this year. Fair enough, but that doesn’t address school boards’ concerns about how they’ll pay for the health tax.

      Fleming is correct that there’s a lot more money flowing into the school system and thousands of teachers are being hired, but school boards are still going to face many familiar operating budget challenges this spring. That’s because most additional money is going to cover the costs of complying with the restored teachers’ contract language as a result of the BCTF’s 2016 win at the Supreme Court of Canada (SCC), leaving little to nothing to restore the countless other things cut from budgets during the Liberals’ 16-year reign or to cover general inflation on existing supplies and services.

      One could argue that although the SCC decision was great news for teachers and students, it robbed the new government from getting credit for putting a lot more money into education. It really has no choice in the matter and the Liberals would have had to do the same.

      If the teachers had lost in court, the new government could sprinkle money back in and get a lot more credit than it’s getting, which makes me feel a little sorry for Fleming, who I know really cares about public education and understands the very real challenges faced by school boards. Sympathizing with a B.C. education minister is new to me, but that doesn’t make me any less sympathetic the position school boards are in, once again, facing an added cost and having to figure out what to cut in order to pay for it.

      The government’s in a tough spot with the EHT, with no simple way out

      Fleming told me that he and the finance minister are open to hearing ideas from school boards on how to manage the increased costs. He didn’t give me the impression, however, that they have any plans to provide school boards with tax exemptions or grants to cover its costs. I suspect they’re rightly worried that if they give school boards relief from the EHT, other public employers, nonprofits, and businesses will demand the same treatment.

      I like it when governments keep their election promises, and I support the move away from MSP premiums. I think Carole James came up with a smart and fair budget, overall, that shows they intend to follow through on their campaign promises. MSP premiums are a regressive tax and a lousy way to fund health care. When I ran into Premier John Horgan at an event last spring, he asked me if getting rid of MSP premiums would help school boards. I said I thought it would, but we didn’t discuss what would replace it. That omitted detail is where the devil is hanging out at the moment—for school boards, at least. 

      The hard truth is that governing is hard work, and if you deliver on promises to cut costs for some people, someone or something else usually has to make up for it. The key is to make sure you’re helping the people you want to help and not harming them inadvertently. If school boards have to cut services for kids in order to pay the EHT, that may well end up being the case.  

      I also know how much it sucks to be a school trustee trying to provide students with all the services and supports they need to succeed and getting another budget hit with no money to pay for it. So while I give high marks to government for keeping a key promise, I encourage them work on finding a way to implement the move from MSP to the EHT that doesn’t inflict collateral damage on the people they’re trying to help, like families with kids in public school.

      Here’s what I’d do 

      I know it’s a lot easier to sit in front of a keyboard and criticize than it is to govern, and I believe Fleming has one of the toughest gigs in government. If I was in his position (and lordy, lordy, I’m thankful I’m not), I’d be at the cabinet table asking my colleagues to consider one of three options: an EHT exemption for school boards, which isn’t completely unprecedented—they’re already exempt from property tax; transition grants to cover school districts’ cost of moving to the EHT that would ensure they don’t end up paying more than they do with MSP; or, at the absolute least, an amendment to the implementation schedule to reduce the double-whammy costs for the 2019-20 school year.

      This isn’t something the minister can mull over and debate with his colleagues for a few months. School-district accountants are working on their 2018-19 budget proposals now and they need to know if their districts are going to be on the hook for the whole EHT cost increase or something less. If they have to pay it, they’ll have to come up with ideas about how they’re going to, and that will likely mean some cuts to their proposed budgets. That won’t be easy, given how much budget gutting went on during the 16 years the B.C. Liberals were in government.

      This is the Horgan government’s opportunity to show that it does business differently than the B.C. Liberals and that it’s willing to listen and work to ensure public services aren’t eroded by its tax changes. And make no mistake about it: if they don’t do something soon, school boards like Vancouver will be looking at more painful cuts to pay the new tax and they will point the finger right at government when they do it.

      I won’t blame them a bit if they do. Been there, done that.

      Patti Bacchus is the Georgia Straight K-12 education columnist. She was chair of the Vancouver school board from 2008 to 2014.