Education Indicators in Canada: An International Perspective 2015
Chapter B
The output of eFinancial resources invested in education Chapter B
Financial resources invested in education

B1 Expenditure per student

Context

This indicator provides information on the investment, from all sources, in each student in public and private institutions at several levels of education. Expenditure by educational institutions per student is largely influenced by teachers’ salaries (see Indicators B3 and D2), pension systems, teaching and instructional hours (see Indicator D1), the cost of teaching materials and facilities, the program provided (e.g., general or vocational), and the number of students enrolled in the education system. Policies to attract new teachers or to reduce average class size or change staffing patterns have also contributed to changes in expenditure by educational institutions per student over time. Ancillary and R&D services can also influence the level of expenditure by educational institutions per student.

Effective schools require the right combination of trained and talented personnel, appropriate curriculum, adequate facilities and motivated students who are ready to learn. The demand for high quality education, which can translate into higher costs per student, must be balanced against other demands on public expenditure and the overall burden of taxation. Although it is difficult to assess the optimal volume of resources needed to prepare each student for life and work in modern societies, international comparisons of spending by educational institutions per student can provide useful reference points.

Policy-makers must also balance the importance of improving the quality of educational services with the desirability of expanding access to educational opportunities, notably at the tertiary level. In addition, decisions regarding the allocation of funds among the various levels of education are key. For example, certain provinces and territories emphasize broad access to higher education and some invest in near universal education for children as young as 3 or 4 years of age.

The indicator shows direct public and private expenditure by educational institutions^{Note 1} in relation to the number of full-time equivalent students enrolled. Note that variations in expenditure by educational institutions per student may reflect not only variations in the resources provided to students (e.g., variations in the ratio of students to teaching staff) but also variations in relative salary and price levels.^{Note 2}

Observations

• Expenditure per student for primary/secondary education in Canada, the provinces and at the OECD average was similar. However spending in the territories for primary/secondary education was somewhat higher, particularly in Yukon and the Northwest Territories.
• University expenditure per student in Canada was substantially higher in all provinces when compared with spending per student at the primary/secondary level. At $25,503, Canada’s figure was almost 70% higher than the OECD average of $15,111.

• For primary/secondary levels, core educational services represented the bulk of expenditure per student in Canada, across provinces and territories, ranging from 94% for the Quebec and Newfoundland and Labrador, to 99% in Yukon and Northwest Territories.  The corresponding OECD average^{Note 3} was similar at 94% of total expenditures on education.

Definitions, sources and methodology

Data refer to the 2011/2012 financial year and are for the elementary and secondary levels and for the university sector. A method is being developed to estimate this indicator for college as well. The OECD figures are from the UOE data collection on education statistics, administered by the OECD in 2014.^{Note 4}

Expenditure by educational institutions per student at a particular level of education is calculated by dividing the total expenditure by educational institutions at that level by the corresponding full-time equivalent enrolment. Only educational institutions and programs for which both enrolment and expenditure data are available are taken into account. In accordance with the OECD definition provided in the data collection manual, debt servicing expenditure is excluded.

Financial data for elementary and secondary school levels are based on five Statistics Canada surveys: the Survey of Uniform Financial System – School Boards (this is the largest source of expenditure reporting); the Elementary-Secondary Education Survey (ESES); the Survey of Federal Government Expenditures in Support of Education (most of which is for the education of First Nations students); the Survey of Financial Statistics of Private Elementary and Secondary Schools; and the Provincial Expenditures on Education in Reform and Correctional Institutions survey. The last two are inactive, but the figures are estimated based on data from previous years.

Enrolment data for elementary and secondary school levels are the sum of enrolment in public and private schools (ESES) and enrolment in First Nations band-operated schools (Indigenous and Northern Affairs Canada). Enrolment corresponding to the 2011/2012 financial year was obtained using 5/12 of the enrolment for the 2010/2011 school year and 7/12 of the enrolment for the 2011/2012 school year.

In Quebec, vocational training and general education for adults are included at the secondary level. Given that a significant number of these enrolments are part time, the headcounts were adjusted to full-time equivalent enrolments using a ratio last calculated in the 2009/2010 school year. Saskatchewan and British Columbia also report some general education for adults at the secondary level, but the headcount was deemed to be so close to the full-time equivalent value, that unadjusted headcount was used for this indicator.

For the university sector, the financial data were drawn from the Financial Information of Universities and Colleges Survey (FIUC), done in conjunction with the Canadian Association of University Business Officers (CAUBO), and the Survey of Federal Government Expenditures in Support of Education. The enrolment figures come from the Postsecondary Student Information System (PSIS); figures for the 2010/2011 and 2011/2012 academic years were used. Enrolment was first converted into full-time equivalents (i.e., the number of part-time students was divided by 3.5). Then the two academic years were weighted to correspond to the 2011/2012 financial year (April 2011 to March 2012) by applying 5/12 of the first and 7/12 of the second.

In addition, for the university sector, financial data are collected at an institutional level only, and cannot be divided by type of program. As a result, expenditures also include any expenditure for programs that are not at the Bachelor’s, Master’s, or Doctoral levels such as career, technical or professional training programs. In order to be consistent, enrolment for these additional programs have also been retained in the analysis. In 2010/2011 these programs made up less than 1% of full time equivalent enrolments in all provinces except for Alberta and British Columbia, where they accounted for approximately 2% and 12%, respectively. British Columbia results should be interpreted with this context. Enrolments for non-program courses (i.e. programs that do not result in a credential) were excluded.

For comparison with the OECD, expenditure in Canadian currency was converted into equivalent US dollars by dividing the national currency figure by the purchasing power parity (PPP) index for the gross domestic product (GDP). The value of 1.24 (for the calendar year 2011) was used. The PPP index was used because the market exchange rate is affected by many factors (interest rates, trade policies, economic growth forecasts, etc.) that have little to do with current relative domestic purchasing power in different OECD countries. Expenditure data are not adjusted for the differences in the cost of living across the provinces and territories.

Educational core services are the expenditure portion that covers the real mission of educational institutions, which is to provide education. There are also expenditures on ancillary services, which have two main components: student welfare services (transportation, lodging and meals) and services for the general public (museums, radio and cultural programs). In the university sector, ancillary services typically include bookstores, food services (dining hall, cafeterias and vending machines), residences and housing, parking, university press publishing, laundry services, property rentals, university facility rentals, theaters, and conference centers.

Education expenditure at the tertiary level also includes expenditure on research and development, such as subsidies received by the institution for research projects and an estimate of the proportion of other current expenditures allocated to research and development.

The OECD average is calculated as the average of all OECD countries for which data are available.

Note: The corresponding OECD indicator is B1, How much is spent per student?.

Tables for B1 Expenditure per student

B2 Expenditure on education as a percentage of GDP

Context

This indicator provides a measure of the proportion of national wealth that is invested in educational institutions by linking public and private expenditures with gross domestic product (GDP).

Expenditure on education is an investment that can help foster economic growth and enhance productivity. Education contributes to personal and social development and reduces social inequality. The allocation of financial resources to educational institutions is a collective choice, made by government, business, and individual students and their families. It is partially influenced by the size of the school-age population and enrolment in education, as well as relative wealth.

Observations

GDP allocated to educational institutions

• With 6.4% of its GDP allocated to educational institutions in 2011, Canada devoted more than the 5.3% average estimated by the OECD.
• In 2011, the financial commitment to educational institutions varied from one province or territory to another, ranging from 5.2% of GDP in Alberta^{Note 5} to 9.8% in Nunavut^{Note 6}.

Primary and secondary education

• In Canada, 58% of the national wealth invested in education in 2011 was spent on primary and secondary education (3.8% of the 6.4% allocated),^{Note 7} less than the 69% average for the OECD countries.

Share spent on tertiary education

• In 2011, 42% of the share of GDP that Canada invested in education (2.7% of the 6.4% allocated) was spent on the tertiary sector, more than the 30% average for the OECD countries (Table B.2.1).

Definitions, sources and methodology

This indicator shows expenditure (public and private) with regard to educational institutions as a percentage of gross domestic product (GDP), by level of education and for all levels of education combined.

“Expenditure on educational institutions” includes spending on both instructional and non-instructional educational institutions. Instructional educational institutions are entities that provide instructional programmes (e.g., teaching) to individuals directly in an organized group setting or through distance education.^{Note 8}  Non-instructional educational institutions are entities that provide advisory, administrative or professional services to other educational institutions but do not enrol students themselves.

Canada classifies expenditure by education level in a way that differs slightly from that of most other countries; that is, expenditure on pre-elementary education is grouped with expenditure at the elementary and secondary levels, while expenditure on postsecondary non-tertiary education (essentially technical and vocational training) is grouped with tertiary-type B expenditure. This should not affect international comparability, however, since expenditure at the elementary and secondary levels is dominant.
The financial data for Canada were drawn from seven Statistics Canada surveys^{Note 9} and exclude expenditure related to debt service. GDP data were provided by the System of National Accounts Branch. All data for Canada, the provinces and territories refer to the 2011 financial year. The OECD averages (for the 2012 financial year) are based on data from all countries collected by the OECD through the UOE data collection on educational systems, conducted jointly by three international organizations (UNESCO, the OECD and Eurostat) and administered by the OECD in 2014.

Note: The corresponding OECD indicator is B2, What proportion of national wealth is spent on education?.

Tables for B2 Expenditure on education as a percentage of GDP

B3 Distribution of expenditure on education

Context

This indicator outlines spending on education services and resources, identifying the proportion of budgets allocated to current and capital expenditures. A breakdown of current spending—compensation of teachers, other staff and other expenses—is also presented.

The distribution of expenditures may be influenced by a number of factors, including compensation for teachers, the generosity of pension plans, the size of the non-teaching staff, and the different needs for infrastructure. Budget allocation can affect the quality of services, the condition of equipment, and the ability of the education system to adapt to changes in enrolments. Both budgetary and structural decisions taken at the system level have repercussions extending into the classroom: they influence the nature of instruction and the conditions in which it is provided.

Observations

Current expenditure

• Current spending accounted for most of the educational expenditure in Canada, the provinces and territories, and for the OECD, on average.
• In Canada, current spending accounted for 93% of total expenditure for primary and secondary education and 90% of total expenditure for postsecondary education. Both of these proportions were similar to the comparable OECD averages.^{Note 10} 

• At the national level, current expenditures accounted for 93% of total expenditure for short-cycle tertiary education (college) and postsecondary non-tertiary education in 2011.  This proportion varied between 81% (Prince Edward Island) and 100% (Nunavut) among the provinces and territories.
• At the university level (Bachelor’s, Master’s, Doctoral or equivalent level), the percentage of total expenditures allocated to current expenditures ranged from 80% in Saskatchewan to 95% in Nova Scotia.

Compensation of staff

• For primary and secondary education, the compensation of staff (79%)—particularly teachers (64%)—accounted for the largest proportion of current expenditure^{Note 11} in Canada in 2011, a situation mirrored in OECD countries.
• At the postsecondary level in Canada, 67% of current expenditure was devoted to compensation of all staff, from which a share of 38% was dedicated to compensation for teachers.

• Compensation of all staff accounted for 67% of current expenditure at the short-cycle tertiary (college) and post-secondary non-tertiary level.  This percentage ranged from 58% in the Northwest Territories to 74% in Newfoundland and Labrador.
• At the university level, compensation of all staff accounted for 66% of current expenditure, ranging from 61% in Nova Scotia to 71% in British Columbia. 

Capital expenditure

• In Canada in 2011, 11% of education expenditure for postsecondary education was allocated to capital expenditure; the OECD average was 10%.^{Note 12}
• For primary and secondary, the proportion of education spending allocated to capital expenditure was less than that for postsecondary education both in Canada and in OECD countries (both at 7%).
• Capital expenditures accounted for 7% of total expenditures at the short-cycle tertiary (college) and postsecondary non-tertiary level and 12% at the university level.

Definitions, sources and methodology

This indicator shows the proportion of budgets allocated to current and capital spending at different education levels. Expenditures are based on accrual and cash (or fund) accounting, depending on the data source(s) used by the provinces/territories. It also shows the proportion of current expenditure allocated to compensation of teachers and of other staff, along with other current expenditure.

The distinction between current expenditure and capital expenditure is taken from the standard definition used in national accounts. Current refers to resources used each year by institutions as they carry out their activities. Capital covers assets that last longer than one year, including spending on new or replacement equipment and construction or renovation of buildings. Neither takes expenditure related to debt service into account.

Expenditure on educational core services includes all expenditure directly related to instruction and education; i.e., all expenditure on teachers, school buildings, teaching materials, books and administration of schools.

The data for Canada reflect the 2011 financial year, and figures were drawn from seven Statistics Canada surveys: the Elementary-Secondary Education Survey; the Survey of Uniform Financial System-School Boards; the Survey of Financial Statistics of Private Elementary and Secondary Schools; the Financial Information of Universities and Colleges Survey; the Survey of Federal Government Expenditures in Support of Education; and Financial Statistics of Community Colleges and Vocational Schools. Information for OECD member countries, and the OECD averages, refer to data for the 2013 financial year and are based on the data collection on educational systems conducted jointly by three international organizations—UNESCO, the OECD and Eurostat—and administered by the OECD.

Note: The corresponding OECD indicator is B6, On what resources and services is education funding spent?.

Tables for B3 Distribution of expenditure on education

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