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10. OPERATING STATUS REPORT - SEPTEMBER 30, 2007 RAPPORT D'ÉTAPES
DES DÉPENSES DE FONCTIONNEMENT - AU 30 SEPTEMBRE 2007 |
Committee Recommendation
That Council receive this report for information.
Recommandation du comité
Que le Conseil municipal prenne connaissance du présent rapport.
Documentation
1. City Treasurer's report dated 20 November
2007 (ACS2007-CMR-FIN-0034).
Report
to/Rapport au :
Corporate Services and Economic Development Committee
Comité des services organisationnels et du
développement économique
and Council / et au Conseil
20 November 2007 / le 20 novembre 2007
Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière municipale
Contact
Person/Personne ressource : Tom Fedec,
A/Manager, Financial Planning/Planification
financière
Financial Services/Services financiers
(613)
580-2424 ext. 21316, Tom.Fedec@ottawa.ca
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SUBJECT: |
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OBJET : |
RAPPORT D’ÉTAPES DES DÉPENSES DE
FONCTIONNEMENT - AU 30 SEPTEMBRE 2007 |
REPORT RECOMMENDATION
That the Corporate Services and
Economic Development Committee and Council receive this report for information.
RECOMMANDATION DU
RAPPORT
Que le Comité des
services organisationnels et du développement économique et le Conseil
municipal prennent connaissance du présent rapport.
This report represents the third “Quarterly Operating Status” report for
2007 showing actual spending and revenues against amounts budgeted for the
period ending September 30, 2007. Any
adjustments that have been made under delegated authority to the 2007 budget
since the last quarterly report are also identified in this report.
In addition the
following documents are attached as appendices:
Appendix B A 2007
operating forecast. The explanatory
notes are provided within the body of this report.
Appendix C A
compensation schedule showing the actual salary / benefits and overtime costs
incurred by department / branch to September 30 versus the full year budget.
Appendix D Projected year-end balances in the City’s Capital Reserve Funds.
DISCUSSION
3rd Quarter Year-to-Date Results – Appendix A
The presentation of the financial information in the 2007 quarterly operating status reports is presented on a “calendarized” basis. This calendarization takes into account the seasonal nature of various City services and matches actual spending or revenues against the budget for the same time period, instead of against the whole year budget. Appendix A to this report shows the nine-month year-to-date actual expenditures and revenues compared to the same period budget.
The results for the nine-month period indicate that the expenditures and revenues of the majority of City departments are tracking close to the 100% level. Because of timing issues related to the actual processing and recording of expenditures and revenues, departments have reviewed these results incorporating any timing issues in the development of their 2007 forecasts. These impacts are discussed in the 2007 Year-End Forecast section of this report.
Of concern in the non-departmental accounts of the City, are the supplementary taxation revenues. Actual revenues received to date are significantly below the projected budget levels for the first nine months of 2007. This is discussed in the Forecast section.
A summary of the major budget adjustments and transfers made since the June 30 Status Report, either through the delegated authority given to the City Treasurer or through Council-approved reports is presented below. Reclassification or corrections of departmental expenditure, recovery or revenue budgets are not reflected in this table.
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Nature of Budget
Adjustment |
Amount
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Funding Source |
Net Effect on
Budget Revenues and Expenditures |
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Reduction Provincial one-time funding for Healthy Babies Healthy Children (Public Health) |
(0.143) |
Decrease in Revenue and Expenditure |
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0.124 |
Provincial Funding |
Increase in Revenue and Expenditure |
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Base increase for Healthy Babies Healthy Children (Public Health) |
Provincial Funding |
Increase in Revenue and Expenditure |
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One time funding Ottawa Public Library for CUPE Settlement ACS2007-BTS-EMP-0006 |
0.138 |
City Wide Reserve |
Increase in Revenue and Expenditure |
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Additional funding for Smoke Free Ontario (Public Health) |
0.127 |
Provincial Funding |
Increase in Revenue and Expenditure |
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Sub-Licence Fees from Enbridge and Hydro Ottawa 100% recoverable (Public Works) |
0.085 |
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Additional funding for High School Grants project – Smoke Free Ontario (Public Health) |
0.030 |
Provincial Funding |
Increase in Revenue and Expenditure |
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Reduced requirement for OC Transpo pension plan based on actuarial analysis |
Transit Reserves |
Decrease in Revenue and Expenditure |
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Additional 1.5% provincial funding for day center programs (Long Term Care) |
0.005 |
Provincial Funding |
Increase in Revenue and Expenditure |
The total effect of these adjustments to the 2007 budget is that the gross expenditures and revenue budget has been decreased by $0.4 million respectively to $2.2 billion.
In addition to the above adjustments, the following adjustments between branches within a department or between departments were made to reflect organizational changes or to more appropriately realign program costs and revenues. No change to the overall total corporate budget results from these adjustments.
Budget Transfers
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Value($millions) |
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Reorganization |
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Transfers to Financial Services and City Clerk’s Services from Office of the Executive Director - Business Transformation Services |
0.181 |
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Transfers between Planning and the Environment branches |
2.080 |
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Transfer to the Executive Directors Office in Business Transformation Services (BTS) from Corporate Communications and Corporate Planning and Performance Reporting |
0.044 |
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Transfer to Corporate Communications and Corporate Planning from Executive Directors Office - BTS |
0.148 |
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Transfer to Transit Services from Traffic Operations, cash office coin processing duties |
0.009 |
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0.192 |
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Functionalization of
Expenditures / Revenues |
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3.560 |
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From Human Resources Corporate Provision to Employee Services -pension administration |
0.362 |
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From Legal Services to Self Insurance account in Non Departmental - revenues received from organizations using City facilities |
0.162 |
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From Non-departmental to Departments / branches – Administration Cost Allocation to Water and Sewer |
29.187 |
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Further allocation of “temporary” gapping provision to departments from Corporate Efficiencies and Gapping in non departmental |
1.662 |
During the course of
the year, Council approves a number of reports that will potentially have
funding implications for the 2008 operating budget. In order to keep Council apprised of these implications, this
section lists the reports and the potential financial impact on the 2008
budget. For the period from July 1st
to September 30th, one report has been approved by Council with 2008
implications.
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Report / Recommendations |
CouncilDate |
2008Impact ($millions) |
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Surface Operations integrated security and inventory controls ACS2007-PWS-SOP-0005 |
Sept 12
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The presentation of
the forecast as shown in Appendix B has been modified from previous formats by
segregating the forecast into the following sections:
1. Tax Supported
Services
a. City Tax Supported
Programs,
b. Ottawa Police Services
2. City Rate Supported
Programs (Water and Sewer Utility)
In the June 30th
Status report, the forecast of the City’s year-end financial position projected
an overall surplus of $5.5 million.
With over 10 months of actual results and a careful review of budgetary
requirements for the remainder of the year, it is projected that the City will
end the year with a $7.9 million deficit, representing 0.36% of total budget
expenditures. Appendix B provides
details of the 2007 year-end forecast by department and branch.
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June 30th |
Sept 30th |
Change |
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$000 |
$000 |
$000 |
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Tax Supported Programs |
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City
Programs |
294 |
(2,526) |
(2,820) |
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Police
Services |
(1,500) |
(2,400) |
(900) |
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Non
departmental |
2,990 |
(7,070) |
(10,060) |
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Subtotal |
1,784 |
(11,996) |
(13,780) |
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Rate Supported Programs |
3,750 |
4,100 |
(350) |
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Total |
5,534 |
(7,896) |
(13,430) |
The major factors
contributing to the change between the June 30th and September 30th
forecasts are described below.
Tax Supported Program
Changes
In total, the City
tax-supported programs are projecting a $2.5 million deficit representing a
$2.8 million change from the small surplus of $0.3 million projected in the
June 30th forecast. The
major factor contributing to this change is the projected $3.6 million
retroactive payment (July 2005 to December 2007) by the City to Amalgamated
Transit Union 279 (ATU) employees for the Ontario Health Tax Premiums. The City has applied for a judicial review
of the arbitrator’s decision in this matter.
The Court has not yet ruled on this application.
Police Services have
increased their deficit forecast from $1.5 million to $2.4 million. Based on the Police staff report to the
Ottawa Police Services Board, the increase is due to the costs associated with
the civilian job evaluation process.
The June 30th Status report had projected a $3.0 million surplus in the non-departmental accounts. Based on current information, a deficit of $7.1 million is now projected based on a large revenue shortfall in the supplementary taxation revenues account.
Supplementary taxation revenues are
expected to be $6.0 million lower than budget.
This is due to delays in the delivery of the supplementary assessment
roll by the Municipal Property Assessment Corporation (MPAC). As a result of the Ontario Ombudsman’s
report, MPAC has had to implement a new computer system. Implementation problems have resulted in
delays in adding properties to the tax roll and have reduced supplementary
taxation revenues for all municipalities in Ontario.
The June 30th forecast had projected a $3.0
million surplus in the Payment in lieu of Taxes (PILT) account on the basis
that valuation disputes with the Federal government would be resolved before
year-end. Based on delays in the Dispute Advisory Panel
(valuation appeal) process and the sale of two federal Government Properties, it is
projected that the City will only be able to achieve the revenues as budgeted
for 2007. The Dispute Advisory Panel is a process used
in situations where the City and the Federal government cannot agree on the
valuation of a federal property. This
valuation determines the amount that the Federal government will pay to the
City in the form of PILT’s. There are a
number of property valuations in front of the Dispute Advisory Panel including
Parliament Hill and the Supreme Court.
Rate Supported
Programs
Water and Sewer
operations are projecting a $4.1 surplus due mainly to delays in filling vacant
positions and to savings in hydro and chemicals resulting from reduced water
treatment volumes.
The 2007 adopted
budget reflected the carry-forward of $11.3 million representing the 2006
Corporate Efficiency Savings target that was not achieved in 2006. In addition, the 2007 Council approved
reduction to the compensation envelope of $3.0 million has been included in the
efficiency target, increasing the target to $14.3 million.
As was stated in the
previous Status Reports, the Branch Process Review Program has been initiated
to identify major areas where savings, business improvements and efficiencies
can be achieved towards the Corporate Efficiency Target.
To date, this target
has been reduced by $1.1 million from efficiency savings in:
·
Real Property Asset Management - heating fuels and sponsorship revenue
for the billboard sponsorship program ($0.6 million).
·
By-Law Services - additional parking fine revenues derived from the
implementation of the deployment plan and early discount program ($0.5
million).
As an interim means to manage and achieve a significant portion of the remaining $13.2 million target, staff has implemented a “temporary” gapping program. Based on the results as of September 30th, departments have been allocated $8.0 million as temporary gapping representing an increased allocation of $1.7 million in comparison to the June 30th Status report. This reduces the unachieved portion of the efficiency / gapping target to $5.2 million.
As in previous years, any portion of the
efficiency target that is not achievable in 2007 will be addressed as part of
the year-end disposition and will be carried forward to form part of the 2008
budget.
As per the Auditor General’s 2005 audit report, which recommended the reporting of compensation costs, including actual allocations for overtime, salary and benefits, Appendix C is provided. Departmental and branch actual compensation expenditures from January 1st to September 30th have been compared against the annual 2007 compensation budgets. The total actual and budget provisions have been presented in the schedule under the following three categories:
As reported in the June 30th Status report, a new schedule has been prepared and is attached as Appendix D. This schedule lists the various capital reserve funds that support the financing of the City’s capital works.
The September 30
cash balances in each of the tax and rate supported reserve funds are listed.
This is followed by the “commitments” which represent the amounts that are
still to be transferred to Council approved projects as costs are incurred. The “contribution” column represents the
additional funds that are projected to be contributed to the reserve funds in
the remaining three months of 2007 mainly from property tax and water / sewer
revenues as approved by Council.
CONSULTATION
All departments were consulted in the
preparation of this report.
Based on current projections, a deficit of $9.6 million has been
identified in the City’s tax supported program areas and a $4.1 surplus in the
City’s rate supported program area. In
addition, the Ottawa Police Service has advised that a deficit of $2.4 million
is projected for 2007. Final year-end
financial positions and dispositions of any surpluses or funding of deficits
will be reported to Council in 2008.
The Quarterly Status Report is in accordance with Council’s direction of achieving sustainable finances and represents a key financial element as outlined in the Fiscal Framework document.
Appendix A – 2007 Operating Status Report as of September 30, 2007
Appendix B – 2007 Operating Budget Forecast
Appendix C – 2007 Compensation & Benefits / Overtime Report as of
September 30, 2007
Appendix D – Capital Reserve Funds
Forecast
DISPOSITION
Financial Services Branch
will make the necessary accounting adjustments.