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Fraser Low-Beer, 3, plays amid signs at a protest over class sizes in front of the VSB offices in Vancouver on Thursday.John Lehmann/The Globe and Mail

British Columbia's Auditor-General says in a new report that the province's school districts are doing a good job of managing the money they are given – close to $5-billion this year. What the report does not answer is the ongoing question of whether there is enough money to go around.

While Carol Bellringer was outlining the findings of her audit on Thursday, the Vancouver School Board (VSB) was issuing layoff notices to 187 teaching and support staff while it tries to figure out how to meet a $24-million budget shortfall.

Deficits are illegal under B.C.'s education system unless approved by the Minister of Education, and the VSB and the ministry are currently in talks to try to close the budget gap before a June 30 deadline.

The layoff notices are the latest salvo in the funding battle between the province and the VSB. Board chair Mike Lombardi said he hopes the layoffs, effective June 30, will be unnecessary. But to undo that, Education Minister Mike Bernier would have to decide to top up Vancouver's budget.

"There is no other source. It is up to the province now," Mr. Lombardi said in an interview. "We have a growing economy and a surplus and a $100-million prosperity fund. And yet, we have the second-lowest per-pupil funding in Canada."

Some of the layoffs could be managed through attrition. Next month, board staff will announce 12 proposed school closings.

Last year, the provincial government brought in a third-party adviser to help the VSB deal with its budget shortfall, a move the minister said at the time was a "supportive" effort to help the board.

By comparison, Surrey's school board is also facing a funding shortfall, but it expects to be able to cover the $4-million gap with unspent contingency funds, lower utility costs and savings related to unfilled positions. The board expects to balance its budget without a reduction in services.

Ms. Bellringer told reporters she did not look at Vancouver specifically because the audit was aimed at financial management, not at whether enough money was provided for budgets. When asked if her audits offer any help to Vancouver, she responded: "I'm reluctant to answer that. … It really, truly is a discussion between the stakeholders."

Instead, Ms. Bellringer said, the audit was prompted because of repeated cases over the past decade where school district budgets ran off track, "resulting in abrupt and unplanned layoffs, other cost-cutting measures that resulted in sudden changes to service delivery, and loss of confidence by the school district community and partner groups."

She found that, "over all, school districts are following many of the good practices we expected in developing budgets and monitoring and approving expenditures."

But she recommended three improvements: better development and communication of strategic plans and linkage to budgeting, better reporting to school boards of financial performance and stronger budgetary and expenditure controls.

Ms. Bellringer's report examined the Kootenay, Richmond, Victoria and Nanaimo-Ladysmith school districts.

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