Unpacking the Auditor General’s Special Education Audit: Part I

Part I: Special Education in Ontario, the Funding Model, Why an Audit was Necessary, and How the Audit was conducted

Introduction

Earlier this year, Ontario’s Auditor General released a report on special education in Ontario. Ontario’s special education system can be described as one of the most comprehensive in Canada supported by legislation, guided by policy, and built on a promise that every student has the right to learn in an environment that meets their needs. However, behind that promise exists a complex network of processes, funding structures, and placement decisions that families and educators are required to navigate on a daily basis.

With the number of students with special education needs continuing to rise and as their needs become more complex, the Auditor observed a system under increasing strain. While educators report growing caseloads, families also face long waits for assessments, and school boards struggle to balance legal obligations with limited resources. 

The Auditor made 25 recommendations and audited three school boards: The Toronto Catholic District School Board, the Peel District School Board, and the Upper Canada District School Board. The findings were significant enough to spark the province‑wide discussion about equity, accountability, and the future of inclusive education.

This three-part series reviews the Auditor’s auditor’s work and findings. Part I provides an overview of Ontario’s special education system, explains why the audit was necessary, and outlines how it was conducted. Part II looks at the Auditor General’s findings, highlighting the systemic pressures affecting students, families, and educators. Part III reviews the Auditor’s recommendations and the Ministry of Education’s response, and considers what these findings mean for the future of inclusive education in Ontario. 

It’s important to remember the Auditor doesn’t make policy recommendations. The role of the Auditor’s office to explain how the systems, as built, are or are not performing. IAO has fundamental concerns about that underlying system, which we addressed in a letter to the Minister and in a meeting with the Minister’s office. This blog series touches on those issue, too, but primarily explores the Auditor’s findings, regarding the system as it is and the Ministry’s responses.

In this, Part I, of the series, we outline the groundwork for understanding the Auditor’s findings. It begins by unpacking how special education is designed in Ontario and the funding model. Next it explores what led to the Auditor General launching this audit in the first place, and what systemic pressures signaled the need for a closer look. It also looks at the criteria of the audit and how it was conducted.

The Law

Special Education in Ontario, combined with the Human Rights Code, is based on a legislative promise that every student regardless of disability has the right to be given support they require in order to learn, participate and thrive. Ontario’s Education Act school boards are required to provide special education programs and services while the Human Rights Code demands that all students with disabilities be accommodated to perimt access to an education on equal footing. The Ministry of Education establishes policies and funding formulas that shape what boards can offer. 

The default classroom for all students is the regular classroom. Special education students may, following a placement process, be placed in regular classrooms with support (direct or indirect), withdrawal support, be placed in special education classrooms (half day or all the time),  or, in a small number of boards, in special education schools. Placement decisions are supposed to happen through the Identification, Placement and Review Committee (IPRC) process.

Once “identified”, students are entitled to an Individual Education Plan (IEP), which outlines accommodations, modifications to and alternative expectations from the curriculum. As an overlay to all of this, the Human Rights Code requires that students with disabilities be accommodated to enable their full participation in the education system. As a result, many students also receive an IEP without an identification through the IPRC.

Without an IPRC, it is not legal to place students in special education classrooms. In addition, at the IPRC meeting, the first option to be considered is a regular classroom. In practice, families “by consent” will often have their children placed in special education classrooms, pending a formal decision. Unfortunately, as soon as there is a diagnosis, the assumption in many school boards is that the regular classroom is no longer appropriate. IAO has developed a detailed post on how placement decisions are made. 

The IEP is the central tool when it comes to planning and delivering support. IEPs must be delivered within 30 school days of placement. It must include measurable goals, outlines of accommodations, modifications and alternative expectations. Additionally it must be created in consultation with parents and should be reviewed and updated regularly. 

Funding 

Ontario funds special education primarily through the Special Education Fund, a multi‑component grant that includes per‑pupil allocations, differentiated special education needs (DSENA), specialized program and service allocations, and targeted funding streams. The Auditor’s report raises several concerns about how funding is structured and monitored. For readers seeking a deeper explanation of how special education funding works—and the challenges inherent in the current model—IAO’s FAQ provides a clear breakdown. 

Across Ontario’s boards, the Auditor found that 46 boards collectively spent $397.9 million above the amounts specifically allocated for special education needs (also called “sweatered” funds), while the remaining 26 boards did not spend all of their funding, in a combined amount of $51.2 million. It is also important to recognize spending more than is allocated in the special education budget is not “overspending”. While boards frequently talk about “overspending” in special education, IAO is clear that this is the intention: special education funding is intended to be incremental, beyond what is otherwise required for each student. IAO reiterates that the Supreme Court of Canada in Moore, decided in 2012, made it clear that the whole budget of the board is to be available for students with disabilities, to meet their disability related needs. Financial hardship is very difficult for boards to demonstrate, given the vast size of their budgets. Students with disabilities are entitled to protections under the law and discretionary programming can not take precedence over those rights.

What is much more surprising – and potentially interesting – to IAO is the 26 boards that underspent their sweatered funding. When IAO spoke with the Ministry, we urged that the Ministry look into what these boards are doing with their funding. Why aren’t they spending their money? Are students not being adequately served, or have these boards found a way to serve their students well with less money? The Ministry should make an effort to understand this.

Also in 2026, the province’s Financial Accountability Office released its review of education spending in Ontario. It concluded that spending would need to grow an by an average annual rate of 2.1 percent over the next three years to maintain current service levels. It further noted that the 2026 budget spending plan is below the cost driver projection by $0.7 billion in 2026-27, $1.2 billion in 2027-28, and $2.0 billion in 2028-29. To maintain current service levels, the Ministry will either need to provide the same level of service with less resources or committ additional funding beyond what is planned. In light of the audit findings, there is so much fundamentally that is not working as is, that simply maintaining funding “and doing what we always do” is not a solution, either way.

Why the Audit was Necessary 

The Auditor General initiated this audit due to Ontario’s special education system being under mounting pressure for nearly a decade now. Several things led to this concern, the main one being that students with special education needs increased by 7 percent between 2014-2015 and 2023-2024: this meant that there were more children present with co-occurring disabilities, mental health needs and behavioral challenges. However despite an increase in demand, boards reported chronic shortages of educational assistants, psychologists and speech language pathologists. 

Methodology

The audit assessed whether:

1. The Ministry provides specific guidance and effective oversight. 
2. The audited school boards comply with legislation, regulations and Ministry policies. 
3. IPRC decisions are transparent, individualized and well documented.
4. Individual Education Plans (IEP) meet the provincial standards and are implemented consistently.
5. Students are receiving timely assessments and supports.
6. Staffing levels especially EA’s are adequate and absences are dealt with appropriately.
7. Exclusions whether formal or informal are tracked and monitored.
8. Funding is used effectively and equitably.

To evaluate this criteria the Auditor General used a comprehensive mixed methods approach:

1. Document review: legislation, policies, board procedures, IEP’s, IPRC files.
2. Data analysis: wait lists, absenteeism rates, placement patterns, funding allocations.
3. Surveys: teachers, educational assistants and administrators.
4. Interviews: Ministry officials, board staff, educators.
5. Case file sampling: reviewing hundreds of students files for compliance and quality.

This approach allowed the audit to move beyond surface level observations and identify systemic patterns across the province. 

Part II reviews the extensive findings that reveal a system struggling to keep pace with the needs of students, families, and educators. You can find it here.