Toronto students will be taking home letters spelling-out the financial troubles being experienced by the school board, despite a new funding formula for schools announced by the government.

The new funding package, announced Jul. 12, put an extra $600 million into Ontario schools. Despite the infusion of cash and a new way to distribute it among schools, officials call it a "shell game."

"The ministry has moved money from one place to another," school trustee Josh Matlow said.

After crunching the numbers, the Toronto District School Board says the new funding formula will not help. The TDSB says funding levels have actually been reduced.

According to the school board the education ministry's changes will:

• Increase teacher salaries by 8.3 per cent at the expense of other grants, taking $10 million from the TDSB.
• Institute the new "School Foundation Grant," taking money from other existing grants and adding $11.6 million to the school board.
• Cut $17 million from the TDSB's budget due to declining enrollment numbers.

The net result is a loss of about $15.4 million dollars from the school board's budget.

In total the TDSB is forecasting an $85 million deficit for the 2006-07 school year, prompting concerns that massive cuts to programs and staff could be on the way.

The education minister defends the government's funding plan and denies that it is merely moving money around. Sandra Pupatello says the board is actually getting an extra $30 million compared to last year and flatly denies reducing funding by $15 million.

Pupatello says the TDSB needs to get control of its operations.

But the school board says the extra funding is going to cover new projects, such as decreasing elementary school class sizes, which have been spearheaded by the province.

The school board is expected to send a letter home to parents on Monday outlining the funding shortfalls and asking for parents to provide input in September.