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Prime Minister Justin Trudeau, left, is greeted by Tsuu T'ina Chief Roy Whitney, centre, and National Chief Perry Bellegarde as he arrives on the Tsuut'ina First Nation near Calgary, Alta., Friday, March 4, 2016.Jeff McIntosh/The Canadian Press

The federal Liberals are taking a second look at ways to improve the deplorable state of education for Canada's First Nations after learning that funds they were counting on to tackle the issue were quietly taken off the books by the previous Conservative government.

Prime Minister Justin Trudeau based his campaign promise to provide more money for reserve schools on the assumption that funds committed by the former government of Stephen Harper that were supposed to begin flowing in 2016-17 remained part of the fiscal framework.

There was nothing in last year's budget to suggest otherwise. And Bernard Valcourt, then-aboriginal affairs minister, told a parliamentary committee last May that the money was still available, provided First Nations leaders would agree to the government's terms.

But a source, who spoke on condition of anonymity, told The Globe and Mail this week that the Liberals have discovered that the cash was removed from the ledgers last year when Mr. Harper was trying to balance the budget on the eve of an election campaign.

The Conservatives did not respond to requests for comment on Thursday.

The government source said the Liberals were worried prior to last fall's election that the Tories would cut the promised money for education. But when there was no indication that had happened, Mr. Trudeau's party promised to invest the "money committed by Stephen Harper that has yet to flow, plus an additional $300-million per year in incremental funding, totalling $750-million per year by the end of our first mandate."

The source said the government will now need to do more for First Nations education than was anticipated in the campaign platform because the starting level is lower than expected.

The money in question was part of an ill-fated attempt by Mr. Harper and his government to improve outcomes at reserve schools, where the most recent data suggest that the high-school graduation rate is running at about 40 per cent.

In early 2014, Mr. Harper promised multiyear funding of nearly $2-billion in exchange for the support of First Nations leaders for new legislation that would govern how education is delivered in their communities.

When Mr. Harper made that announcement, officials within the Finance Department took note and altered the forecasted spending to account for the commitment. The books were adjusted to show an extra $312-million being spent on First Nations education from kindergarten to Grade 12 in 2016-17, and increasing amounts being paid out in subsequent years because the Conservatives said it would escalate annually.

But the proposed law, the First Nations Control of First Nations Education Act (Bill C-33), was panned by chiefs, who said there had been inadequate consultation and that Ottawa was putting the real control in the hands of the aboriginal affairs minister.

Some of the $2-billion promised by the Conservatives was spent. But the impasse left $1.25-billion on the table.

That unspent money was then erased in the 2015-16 budget, something that was "not announced," a Finance Department official said in an e-mail on Tuesday.

When Carolyn Bennett, who was then aboriginal affairs critic and is now the Indigenous Affairs Minister, asked Mr. Valcourt at a parliamentary committee in May – a month after the 2015-16 budget was tabled – whether the funding was still in the fiscal framework, he suggested strongly that it was.

"That $1.25-billion over three years, increasing annually at the rate of 4.5 per cent, is statutory funding that would follow Bill C-33, which is still before the House," he told the committee. "If, for example, tomorrow morning we had a special meeting of the chiefs and assembly, and they decided to support Bill C-33, the money would be there."

The Assembly of First Nations also believed that the money was still on the table.

"It's our expectation that the remaining funds allocated under Bill C-33 are in place and available for investing in First Nations education," an AFN official said Thursday.

"First Nations are calling for and anticipating a significant investment in First Nations education in the upcoming federal budget as an important step in closing the gap between First Nations people and Canada and building a stronger country for all of us."

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