A financial audit of the Calgary Board of Education's spending found over half of the central administration building's costs were being wrongly allocated as instructional programming, not administrative overhead.

Alberta Education found a total of $9.1 million that should have been recorded as administrative expenses, but was instead recorded as instructional expenses.

Before the audit, the CBE had the lowest administrative costs of the other three metro boards in the province at just 2.6 per cent of its budget, despite having the highest costs associated with the board and administrative office space, the report found.

But CBE board chair Trina Hurdman said they were not trying to hide any costs.

"It has always been fully disclosed in our financial statements and the government has asked us to allocate the cost of the lease into a different line item on our financial statements and we're happy to comply with that," she said.

Trina Hurdman, chair of the Calgary Board of Education, said the board was not trying to hide any costs. (Bryan Labby/CBC )

"Exactly what bucket it's accounted for doesn't really make a difference at the end of the day."

Re-allocating the funds will now mean the CBE will have the highest administrative spending of all Alberta boards, but will still keep the board under the 3.6 per cent of its budget it is allowed to spend on administration per Alberta Education guidelines.

Education Minister David Eggen said moving that $9.1 million into the correct category will give the public more clarity.

"By ensuring that we see where money is going into operating, I think that really helps us to see. And the CBE has been cooperative and they're looking at how they can rectify the situation," he said.

David Eggen, Alberta's Education Minister, said reallocating the funds will bring more clarity to the public. (CBC)

Hurdman said the money was allocated to instruction because it directly contributed to the employees that work out of the headquarters. Three hundred of the building's 500 staff are instructional employees, which include psychologists, IT support workers, speech language pathologists and Alberta Teachers' Association specialists.

The boards administration is housed in a six-year-old building in downtown Calgary, that has a total annual operating cost of $13 million.

The CBE is the only board to lease, not own, its headquarters in Alberta. The lease was signed while Calgary property values were at their highest before the economic downturn, and the board is locked into the lease until 2031.

The lease has a built-in escalation rate of 2.5 per cent per year, meaning the board will be leasing the space for $62 per square foot in the last year of its lease (up from $39 per square foot when the lease began).

Alberta Education said the review was intended to address questions about the CBE's allocation of resources and expenditures, after the CBE presented a budget for the 2017-18 school year that projected a $38.6 million shortfall.

The review found that the CBE's funding, expenses and spending allocations were comparable to other school boards.

"CBE under-budgeted revenues and expenses over the past three-year period, resulting in annual surpluses," the report noted. "CBE also continued to receive increased funding, including enrolment growth funding from Alberta Education.

Over the time period studied from 2013 to 2016, revenues increased 11 per cent while expenditures increased 10 per cent.