TO THE COUNCIL OF THE CITY OF OTTAWA
LE 12 April 2006
The POLICE SERVICES BOARD met on 27 MARCH 2006 and submits the item
contained in this Report for the information and/or approval of Council at its
meeting of 12
APRIL 2006.
La COMMISSION
DE SERVICES POLICIERS s’est réuni le 27
mars 2006 et soumet l’article du présent rapport au Conseil pour
information et/ou approbation lors de sa réunion du 12 avril 2006.
Present
/ Présences :
27 MARCH/MARS 2006
Chair / Président : E. El-Chantiry
Vice Chair /
vice-président H. Jensen
Members / Membres : M. Bellemare
R. Chiarelli
D. Doran
D. Guilmet-Harris
D.
Morin
INDEX |
|||
NO./NO |
ITEM |
PAGE |
ARTICLE |
|
Police
Services Board |
|
Commission de Services
Policiers |
1. |
2005 FOURTH QUARTER FINANCIAL REPORT ACS2006-CCS-PSB-0003 |
02 |
RAPPORT FINANCIER
DU QUATRIÈME TRIMESTRE DE 2005 |
|
|
|
|
1.
2005 FOURTH QUARTER FINANCIAL REPORT RAPPORT
FINANCIER DU QUATRIÈME TRIMESTRE DE 2005 |
BOARD RECOMMENDATION
That Council direct any
2005 Ottawa Police Service year-end surplus to an Ottawa Police Service reserve
fund.
RECOMMANDATION DE LA
COMMISSION
Que le Conseil achemine tout surplus de fin d’année 2005 du
budget au fonds de réserve du Service de police d’Ottawa.
DOCUMENTATION
1. Director General’s report dated
17 March 2006, is attached.
2. Extract of Draft Minute, 27 March 2006, is attached.
|
REPORT RAPPORT |
DATE: |
17 March 2006 |
TO: |
Executive Director, Ottawa Police Services Board |
FROM: |
Director General, Ottawa Police Service |
SUBJECT: |
2005
FOURTH QUARTER FINANCIAL REPORT |
RECOMMENDATION
2. Request that Council direct any 2005 OPS
year-end surplus to an OPS reserve fund.
BACKGROUND
The
fourth quarter financial report presents the financial position of OPS at
year-end and outlines the operational issues that have affected the Service’s
finances in 2005. These results are
un-audited and focus on OPS operations.
The analysis does not include debenture debt costs or tax revenues and
remissions associated with the Police Tax Rate. The City will be bringing forward a comprehensive picture of all
of these accounts when it presents the 2005 audited financial results later
this year. Staff will update the Board
on the audited OPS financial results once they are tabled by the City.
DISCUSSION
Summary
Ottawa Police Service2005 Year-end – Significant Variances |
|
Item |
$ Millions |
Compensation (incl. Retirement costs) |
1.4 |
Program supplies and services
|
0.6 |
Revenue & Other Items |
0.5 |
Court Overtime |
0.3 |
Overtime |
(2.3) |
Fuel |
(0.2) |
2005 Operating Surplus |
$0.3 |
The Police Service ended the 2005 fiscal year with a budget surplus of $0.3 million on operations. Four factors contributed to the surplus: fewer than expected retirements ($1.4 million), a discretionary spending freeze on program supplies and services ($0.6 million), a number of revenue variances ($0.5 million) and a favourable arbitration regarding court overtime combined with increased controls in that area ($0.3 million). These positive results more than offset cost pressures in the areas of overtime ($2.3 million) and fuel ($0.2 million), creating a budget surplus of $0.3 million at year-end. Each of these significant variants is discussed in more detail below.
Compensation / Retirement Costs
The
Service’s $148.4 million salary and benefit budget yielded a surplus of $1.3
million, due mainly to fewer than planned retirements. Under the collective agreements, some
officers are eligible to cash-in a portion of sick leave credits upon
retirement. The budget for retirement
costs was planned on the basis of approximately 40 officers retiring from the
Service in 2005, an estimate that is in keeping with the number of members who
have achieved the retirement factor this year. The actual number of members
that retired was 8.
Revenue
Revenue generated by OPS exceeded the budget estimates
by approximately $0.5 million in 2005.
Four types of revenue contributed to this positive result: 1) the volume of criminal and police records
checks was very high in 2005, leading to a $280K positive revenue variance; 2)
revenue from secondments exceeded budget by $140K; 3) the Province’s Community
Policing Partnership Grant was $70K higher than expected; and 4) revenue
generated through the sale of police occurrence reports exceeded the budget
forecast by $30K.
On 25 September
2005, a spending
freeze was put in place through a General Order issued by the Chief. The spending freeze generated $0.6 million
of savings. Appendix A shows the
magnitude of these savings by Directorate.
Criminal Investigative Services contributed the largest amount to the
freeze – almost $0.5 million. The Patrol
Directorate and the Emergency Operations Directorate each contributed just over
$0.2 million. Corporate Services (which
includes the Fleet Section) registered a deficit in this area. It was caused by the sharp rise in the price
of fuel, as discussed below.
Court Overtime
The
work associated with the Court Overtime Review Committee, together with the
October 2004 Arbitration award, was instrumental in reducing court overtime
compensation costs in 2005. The chart
below illustrates this positive result.
Court overtime expenditures for the year were $1.6 million compared to a
budget of $1.9 million, creating a surplus of $0.3 million. This position is a dramatic turnaround from
the 2004 experience. The court overtime
costs figures for 2004 were $3.0 million compared to a budget of $1.7 million,
resulting in a deficit of $1.3 million.
Overtime
Overtime
expenditures for 2005 were $3.8 million, compared to a budget of $1.9 million,
creating a deficit of $1.9 million.
Included in the total figure are costs of $0.9 million for the 9
homicide investigations launched in 2005, including the Jennifer Teague
homicide which represents almost half of that amount. Other special projects within CIS account for $0.3 million of
overtime. Backfilling to maintain
staffing levels and “on call” requirements resulted in close to $1.0 million of
costs. Canada Day celebrations at 3
locations within the city caused $0.1 million of overtime.
The control and
management of overtime will continue to be a major focus for 2006. Staff will also be taking further steps to
analyze budget requirements for overtime, in accordance with recommendations
from the Auditor General.
Fuel
Fuel prices put pressure on the Service's
budget in 2005. On average, retail fuel
prices were approximately 16% higher during 2005, compared with 2004. The 2005 fuel budget was based on a per
litre cost of $0.77 and an estimated volume of 2.6 million litres. Actual fuel consumption was on budget, but
the higher cost of fuel resulted in a deficit for the year of $0.2 million.
Contribution of Surplus to OPS Reserve Fund
Staff is recommending that the
Board make a request to Council with respect to the disposition of the 2005 OPS
surplus. It is recommended that it be
contributed to an OPS reserve fund and, specifically, that it be used to help
finance the capital project to replace the OPS portable radios. In this way, the Board will ensure that it
stays on track with the Long Range Financial Plan. By following this strategy, it may also be possible to soften the
pay-as-you-go increases needed in the 2007 budget.
Reporting Requirements
Section
3.8.3 of the Board’s Policy Manual requires the Chief to provide the Board with
information on specific operational issues.
With respect to financial reporting these requirements include:
·
ANNEX
B, which provides a list of all contracts awarded by the Chief that exceed
$10,000 (as required in sub-section ‘a’);
·
ANNEX
C, which provides a list of all actual expenses related to the conduct of legal
matters (as required in sub-section ‘d’);
·
ANNEX
D, which provides a summary of OPS facility costs (as required in sub-section
‘b’).
Public
consultation is not required.
Not applicable.
The un-audited financial results show that the Service ended the 2005 fiscal year with a surplus of $0.3 million on operations. Staff is recommending that the Board make a request to Council for these funds to be contributed to an OPS reserve fund and earmarked for the portable radio replacement project. This strategy will ensure that the Service stays on track with its Long Range Financial Plan and may help to soften the pay-as-you-go increases needed in the 2007 budget.
Debra Frazer
Director General
I concur
Vince Bevan
Chief of Police
8. 2005 FOURTH QUARTER FINANCIAL REPORT
Director
General’s report dated 17 March 2006
A discussion took place regarding the information provided in the report and the following points of clarification were made:
· The variance between projected and actual retirements in 2005 is due to the arbitration award of the 3-6-9 retention pay bonus, which encouraged members to delay retirement to maximize their pension. The Service is fortunate to have retained the expertise of these members.
· A very comprehensive analysis of projected retirements and promotions was conducted for the 2004 – 2014 timeframe using factors from the OMERS retirement program to identify by rank when members can retire. There are a number of members who have achieved the required formula but who choose not to retire immediately. There are 253 members in the 2005 – 2009 timeframe who will be eligible for retirement; this translates to approximately 53 retirements per year, while roughly 40 have been budget for. As demonstrated in 2005, collective agreements can affect the retirement rate each year.
· The significant increase in requests for police records checks can be attributed to a couple of trends: 1) the introduction of a Crime Free Multi-Housing Program - an undertaking with landlords to use the police and criminal records checks process to determine rental status; and, 2) more employers requiring police and criminal records checks as a condition for employment.
· A comprehensive review of records checks was conducted approximately two years ago. Changes were made in the way service was delivered and fees were brought in line with the average for the Ontario market: $25.00 per records check with the option of an additional express fee of $10 for one day service. Currently there is a partnership with the non-profit community who rely on these checks for their employees, and volunteers in the non-profit sector are not charged for checks unless they opt to pay the express fee. Should a change in the fee structure be contemplated, various employers, including those in the non-profit sector, would have to be alerted and asked to provide input. There will be no fee changes in 2006.
· Volunteer groups such as soccer clubs or coaching leagues are being encouraged to submit their records checks as soon as they are received because of the current delays in processing checks. Further ways to improve service are being explored and the 2007 operational plan includes a project aimed at expanding access to police records check services. In the meantime, additional term resources have been assigned to deal with the existing backlogs in order to avoid overtime.
· Staff was asked to report back to the Board on the rationale for the current fee structure, whether the current fees are covering all costs associated with the process, and whether there should be inflationary increases on an annual basis.
· For the months of January and February 2006, both overtime and court time budgets have been underspent. Subject to the vagaries of the business, this bodes well for the rest of the year.
· The program budgets on page 32 show the surplus or deficit that resulted after the spending freeze implemented by the Chief in September 2005, as savings were needed to cover overtime elsewhere in the organization. The spending level is therefore not that of a normal year.
· The number of OPS members on the published Salary Disclosure list earning in excess of $100,000 is a result of overtime generated by assignment requirements and an individual’s specialty in the field. Management is cognizant of the overtime issue and that an individual can only maintain that pace for a given period of time. As a matter of practice, succession planning is constantly being applied within the organization.
· The Board’s deficit of $29,000 is attributed to a shortage in revenue from the auction proceeds account. The Police Services Act stipulates that funds derived from the auction of found articles falls under the control of the Board and not the Police Service. The auction revenue and expenses have traditionally been part of the account structure of the Board. It was agreed that for reporting purposes this item should be posted separately, as it is not something the Board has control over.
· Page 33, Annex B includes a contract for the yearly purchase of bicycles. Bicycles are designed for the rigors of patrol activity and are used by a range of officers. There are 40 bicycles available to officers in every district. State of the art bicycles are purchased and are sold at the end of the year at a very good resale price. This has proven more cost effective than repairing aging bikes. It also allows bikes to be ordered to fit individuals on the bike squad with the most up-to-date equipment. It was suggested that the revenue recovered from the sale of the bicycles be shown to offset the purchase costs.
· Results against the 2006 budget will be reflected in the first quarterly financial report due in April. As the information is not well developed at this time of the fiscal year, the report will reflect identified trends from 20 of the most important and influential accounts in the organization.
That the Ottawa
Police Services Board:
1. Receive
this report for information.
2. Request
that Council direct any 2005 OPS year-end surplus to an OPS reserve fund.
CARRIED