There are changes coming to Ontario's education system which will affect teachers and students alike.

Merging schools and school boards, imposing pay freezes and a cap on student credits are all on the government's agenda in order to help reduce the provincial deficit.

Areas of Ontario which have low population growth and declining school enrollment rates will see their school boards merge with others in the region while underutilized schools throughout the province will be asked to consolidate their resources with others.

Right now, school boards are allocated a certain number of funds for each student they have enrolled.

"The way school board funding works makes it easier for some boards in urban areas to keep small and underused schools open than to deliver services more efficiently," says the 2012 Ontario Budget report.

Consolidating underused schools will save the government about $70 million each year at maturity.

Merging school boards will also bring savings in administrative expenses.

"(This) will encourage economies of scale and allow the new boards to focus on resources on student achievement," the report says.

As required under the constitution, the government has no plans to merge separate and public school boards.

New contracts for teachers

Under the Ontario Liberals 2012 budget plan, teachers got a glimpse into what they can expect during their contract negotiations this year – the first round of bargaining since the global recession.

The budget calls for teachers to accept a two-year wage freeze with no incremental increases in their salary grid.

Teachers will also take a hit on their pensions as the government has made it clear that it will not be increasing its contributions to pension plans. All public service employees will likely be asked to reduce their benefits and/or increase their own contributions.

They are also being told that there will be a freeze on the sick days they have banked up until Aug. 31, 2012. Those unused sick days will be paid out upon retirement at the employee's salary rate, starting Aug. 31, 2012.

However, teachers will no longer be able to bank unused sick days after Sept. 1, 2012.

Instead, the government is introducing a short-term sick-leave plan which won't be able to be carried over year after year.

Under this plan, teachers will still be paid their full salary for six sick days. After that, they can take up to 24 weeks off sick and be paid two-thirds of their salary.

Students told to plan ahead

Students were also given notice by the government. The budget warns of changes that will force secondary school students to plan for their future wisely.

Whereas teens can currently opt to take an unlimited amount of extra credits in high school to boost their chances of getting into esteemed university programs, the government is now capping the amount of credits a student can take. Starting September 2013, students will only be allowed to take 34 credits – that's still four extra credits than what is required to earn a diploma.

According to the province, up to 20,000 students in Ontario opt to stay in high school for a fifth year in an effort to raise their grade point average, even if they have already earned their high school diploma. The current standard for students is four years of high school.

Forcing students out with the cap will save the government about $22 million a year in mature savings.

"The cap will motivate students to plan their courses appropriately while allowing them to seek additional or upgraded credits," the report says. "(It will strike) a balance between flexibility for students and the need for sustainability."

What stays the same

Though the province was recently advised to do away with several education programs in order to reduce the deficit, the Liberals have said they are committed to several initiatives they have made, particularly to early childhood education.

Among these commitments:

Full-day kindergarten will be implemented by September 2014

Class sizes will remain capped in early grades

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