1967-68 FISCAL YEAR

C.

D.

Civil Service Overhead

Salaries, Wages, Fringe Benefits

&

Associated Operating Costs (est.)¹

Major Statutory or Contractual Obligations Legislative Grants to School Boards, etc Unconditional Grants to Municipalities Teachers' Superannuation

Road Construction & Maintenance Grants Hospital & Health Grants, etc

Welfare-type Grants

Other Statutory or Contractual Grants to Municipalities & Local Boards or Institutions Interest on Public Debt

Major Transfer Payments to Persons Payment under Family Benefits Act

Premium Assistance under OHSC,

OMSIP

²

Contribution to Legal Aid Fund

Scholarships, Bursaries

&

Research Grants

Major Transfer Payments to Institutions Operating Grants to Universities

Operating Grants to

CAATS &

Ryerson2 Other Educational Grants

Operating Payments ^to 0(S)HC² Other

1Excludes salaries and wages included elsewhere in such specific areas as highways construc-tion and maintenance, or capital projects of PublicWorks.

2Theinitials OHSC refer totheOntario HospitalServices Commission, OMSIP toOntario Medi-cal Services Insurance Plan, CAATS to Colleges of Applied Arts & Technology, and 0(S)HC

toOntario (& Student) Housing Corporation.

TABLE B4

CLASSIFICATION OF ESTIMATED TOTAL BUDGETARY EXPENDITURES, LOANS AND ADVANCES,

1967-68

FISCAL YEAR

(Cont'd)

E. Capital Expenditure Highways and Roads Provision of Accommodation

Property Purchasesfor Roads

&

Parks

GO

Transit Other

F. Other Departmental Expenditure Highway

& GO

^Transit Maintenance Capital Grants for Vocational Schools Capital Grants for Farm Development Contribution to

OHSC

Payments under Medical Insurance Act All Other

Total Net General Expenditure, excluding Sinking Fund

G. Loans andAdvances

Ontario Education Capital Aid Corporation Ontario Universities " ^" "

Hydro-Electric Power Commission

—

secured advances less discount

Ontario (& Student) Housing Corporation ....

Municipal Works Assistance

—

loans and forgiveness

Loans forHospital Construction and Capital Assistance

Ontario Junior Farmers' Establishment Loan Corporation

Ontario Water Resources Commission Ontario Municipal Improvement Corporation All Other

Departmental capital expenditures on physical assets (category E) represent the provision of essential social capital, of which roads

form

the

major

component. These capital expenditures, though essential, are often considered partly flexible in terms of their timing and in the

manner

in

which they are financed.

On

the latter aspect, depending on the overall fiscal policy requirements of the time, a smaller or larger proportion of theseexpenditures will usually be financed out ofordinary revenues.¹⁰

Perhaps the

most

significant feature ofTable

B4

is the high proportion of total expenditures allocated to the financial support of local govern-ments, school boards and agencies.

The most

confining aspect of these payments,

making them

the least flexible in principle, is the fact that they are primarily statutory or contractual commitments, in large part based on expenditure decisions

made

at the local level.

For

instance, the legis-lative grantsto school boards,accounting for

some

21 per cent oftotal bud-getary spending, are based on a formula. This formula is regularly revised to ensure that provincial support of rapidly rising school board expendituresis maintainedat asufficiently high level.

The

Ontario

Govern-ment

has entered these

commitments

in recognition of local financial constraints and the need to ensure essential expenditures for the main-tenance and growth of local services and educational capacity.

The

expenditures within the relatively inflexible category

B commit

almost 40 per cent of the provincial budget.

In addition, theprovincial

government

has equally strong

commitments

to assist in financing higher education.

The

universities depend on the

government

for the largest part of their very large and rapidly rising expenditures. In addition, the Colleges of Applied Arts and Technology

(CAATS)

are entering a phase of rapid expansion and greatly increased cost which will have to be

assumed

by the government. Entered under category

D

in the table, these costs already account for 10 per cent of the budget and can be expected to absorb a growing proportion in the near future.¹¹

The

temporary build-up of

Canada

Pension Plan funds has enabled the

government

to

make

loans and advances to school boards and universities to cope with their tremendous capital expansion requirements. This pro-cedure has, infact, proven to be vastly

more

efficient and economical than a situation in which the school boards would have been forced to do their

own

borrowing in the capital market.

As shown

in Table B4,

some

$280 million

was made

available this

way

during 1967-68.

lOThat is, with more or less debt financing according to the need to stimulate total economic

activity.

i'Seediscussion insection 2.

Table B4, therefore, clearly illustrates the

many

rigid factors that play a dominant role in the provincial budget. This is not to suggest that the provincelacks discretionary powersinthese areas,but only that the

govern-ment

has accepted these persistent rigidities and growth areas in its

budget inrecognition ofthe essential needs behind each of these programs.

Any

reduction or even stabilization of total support under programs of this nature would presumably result in higher property taxes and inade-quate services at thelocal level as well as in the universities. Curtailment of supportfor the latter would probably

make

university training available to fewer eligible students.

2.

The Growth

ofExpenditures

Table

B4

provides a useful cross-section of the provincial expenditure structure in 1967-68.

But

there is another and

more dynamic

aspect to the government's

commitments

to established priorities. This concerns the growth of existing programs.

Growth may

occur as a

program

is gradually brought to operational standing over sev-eral years, as

demand

increases due to economic expansion and population

growth

oras qualitative improvements and extensions are made.

Again, education outlays provide a particularly dramatic example of the impact of economic expansion and population growth. During recent years they have increased at an annual rate of about 25 per cent to the point

where

they account for over 40 per cent of total provincial expend-iture.¹² This occurred as a direct function of the post-war upsurge in birth rates, together with rising costs and rising post-secondary enrolment

ratios.

In 1960, births in Ontario reached a peak of 159,000. For

more

than 20 years they had been increasing steadily

from

a low of 62,000 ⁱⁿ 1937.

But

while the peak in births occurred about eight years ago, the effect of declining birth rates will not be reflected in lower total enrolments for

some

time. This ispartly because thedecline inbirth rates has been quite slow, and partly because of increased post-secondary enrolment ratios as well as increased migration

from

abroad and

from

other provinces.

A more

detailed view of the implications of post-war births for educa-tion enrolment up to 1975-76 is provided in Table B5. Total elementary school enrolments can be expected to ^level off after 1970-71. This pattern

izExcluding assistance through the Ontario Universities Capital Aid Corporation and the Ontario Education Capital AidCorporation.

61

TABLE B5

ANNUAL RATE OF CHANGE IN ENROLMENT IN ONTARIO

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