During his 2 1/2 years as minister of education, Gerard Kennedy did much to restore peace and stability to the province's public schools after the turbulent eight years of Conservative rule. But when he abandoned his post in April to pursue the federal Liberal leadership, Kennedy left behind one large piece of unfinished business: fixing the Conservatives' education funding formula. The formula was an offshoot of the Tories' decision to take taxing power away from school boards and to make them entirely dependent on Queen's Park for their funding. Rather than allocate the money on a strict per student basis, the Tories concocted a complex formula that was supposed to take into account the geographical, social and economic differences among the province's 72 school boards, public and Catholic. The Tories also stipulated that boards must spend specific amounts on "classroom" programs as opposed to administration and overhead, although this rule was routinely ignored by the boards as they shuffled money from envelope to envelope to pay their heating and lighting bills, among other things. In their 2003 election platform, the Liberals promised to fix the "flawed funding formula." But once in office, Kennedy gave the highest priority to other Liberal promises, such as the reduction of class sizes in elementary schools. Thus Sandra Pupatello inherited the funding formula problem when she took over from Kennedy as education minister in April. And last week she took her first steps toward fixing it. Pupatello increased overall spending on education by 3.55 per cent, or $600 million, with the bulk of that amount going toward teacher salaries. That is a category of the formula that had heretofore been chronically underfunded, thereby forcing boards to rob from other envelopes to pay their teachers. Pupatello also addressed transportation - another problem category in the formula - with a three-year plan that will provide extra funding, but only if public and Catholic boards agree to work together and share resources. She also provided another $500 million in capital funding to renovate or replace deteriorating schools. After the announcement, Pupatello told me she believes the funding formula problem is now "97 per cent" solved. "The feedback we're getting is really good," she said. But there are still some problems. While fully funding teachers' salaries, Pupatello has eliminated or sharply reduced two other categories in the formula that were used by boards to meet local priorities. As well, because there is no separate category for salaries for support staff - everyone from educational assistants to school janitors - the boards remain under pressure on that front. And in the difficult area of special education, Pupatello has just bought time by extending funding at last year's levels. That time is supposed to be used searching for a "proxy" to replace the red tape the boards now have to endure to claim funding in this area. It may be a long search. The upshot of all this is that big urban boards like Toronto public are still struggling to make ends meet and will face a "significant" shortfall in funding for the coming school year, according to informed sources. That means there will be talk again of closing schools, shutting down swimming pools, eliminating outdoor education, and laying off educational assistants - just as there was during the Conservative years. And, as did the Tories, the Liberals will respond that the boards are spending too much on administration. Toronto public is a particular government target, with administration expenses 50 per cent over the norm. In its defence, the board notes that Toronto has the province's biggest and most complex school system, by far. On and on the debate goes, just as it did under the Tories. There is, of course, an alternative to this constant wrangling between funder (Queen's Park) and fundee (the school boards): give the boards back some taxing power - say, up to 5 per cent of their budgets - to raise money to address local priorities. Indeed, a panel headed by former Toronto mayor David Crombie recommended this option to the previous government, but the Tories ignored it. As a result, every school funding decision is effectively being made by bureaucrats in the education ministry, and, rather than dealing with local problems, the boards keep pointing their fingers at Queen's Park. It seems to be the Canadian way.