A new report by the Centre for Civic Governance of the Columbia Institute sheds light on why districts are struggling to balance their budgets while the Minister of Education claims they received the "highest funding ever." The $122 million increase in the current 2008-09 operating grant fell $15 million short of the $137 million required to cover increased labour settlement costs. As a result, all school districts but two received less discretionary funding than in the previous two years. Discretionary funding is the amount of funding left over after contractual obligations are met. This left many districts having to use surpluses and/or reduce services to make up for budget shortfalls. Labour settlement costs increase each year to reflect salary increases or other improvements in working conditions that were negotiated in good faith through the bargaining process. While school boards are obligated to meet these contractual obligations, the Columbia Institute report showed that in 2008-09, the provincial government did not provide sufficient funds to cover increased labour settlement costs. (Contains 3 tables and 6 footnotes.)