Report to: General Committee – Finance & Admin. Date of
Meeting: September 22, 2008
SUBJECT: June 2008 Year-To-Date Review of Operations and Year-End Projection
PREPARED BY: Andrea Tang, Manager Financial Planning
RECOMMENDATION:
THAT the
report dated September 22, 2008
entitled “June 2008 Year-To-Date Review of Operations
and Year-end Projection” be received.
EXECUTIVE SUMMARY:
At the end of
June 2008, the operating budget results (excluding Waterworks and Building
Services) reflects an unfavourable variance of ($0.863M). The ($0.863M) unfavourable variance is
comprised of a ($0.509M) unfavourable variance in Revenues and a ($0.354M) unfavourable
variance in Expenditures, as shown below:
|
Revenues
|
Fav./
(Unfav.)
|
|
Expenditures
|
Fav./ (Unfav.)
|
|
Planning and
Engineering Fees
|
($1.353) M
|
|
Salary &
Benefit Costs
|
$1.062 M
|
|
Rental Income
from 8100 Warden Ave.
and Esna Park
|
($0.168) M
|
|
Salary Gapping Allocation
|
($0.654) M
|
|
Revenue Strategy
|
($0.142) M
|
|
Winter
Maintenance
|
($1.328) M
|
|
Income from
Investments
|
$0.970 M
|
|
Utilities
|
$0.290 M
|
|
Other
|
$0.184 M
|
|
Training & Travel
|
$0.196 M
|
|
|
|
|
Other
|
$0.080 M
|
|
|
($0.509)
|
|
|
($0.354) M
|
Further details
of all variances are available in the Discussion section of this report.
Waterworks ended June
with a year-to-date $0.618M favourable variance. This variance was due to a favourable
variance of $0.087M in the net sales and purchases of water, favourable
variances of $0.280M in personnel costs, $0.168M in non-personnel costs, and $0.083M
in revenues.
Also, at the end of June, Building Services had a year-to-date favourable
variance of $0.308M. This was mainly due
to higher than expected building permits revenue of $0.257M and favourable
non-personnel expenses of $0.076M; which was partially offset by unfavourable
variance of ($0.025M) in personnel expense.
FINANCIAL CONSIDERATIONS:
Staff will
continue to monitor variances for the remainder of the year and report back to
Council with an update of the year-to-date September results in early November.
On February 12th, 2008,
Council approved the 2008 Budget of $355.3M (adjusted for the 2007 year-end
surplus). The 2008 budget consists of $158.1M
in the Operating budget, $7.0M in the Building Services Operating budget, $59.2M
in Waterworks Operating budget, and $131.0M in the Capital budget.
The Building
Services and Waterworks Operating Budgets are shown separate from the Town’s
Operating Budget as they are primarily user fee funded (e.g. Building Permit
Revenue and revenues based on water consumption, respectively) and separate
reserves have been established for each.
Each quarter, departments provide details of
significant financial variances (actual to budget) in their areas. The
variances are reviewed, substantiated and summarized by the Financial Planning department. Minor variances are reviewed by staff, but not
discussed in detail in this report.
OPTIONS/
DISCUSSION
YEAR-TO-DATE OPERATING BUDGET VARIANCES:
At the end of six months, the 2008 operating budget (excluding
Waterworks and Building Services) results reflect an overall ($0.863M) unfavourable
variance.
The ($0.863M) unfavourable variance is comprised of variances in
three main areas of the Town’s operating budget:
($0.509M)
unfavourable variance in Revenues (Section 1 of the report)
$0.408M favourable variance in Personnel Expenditures
(Section 2)
($0.762M)
unfavourable variance in Non-Personnel
Expenditures (Section 3)
($0.863M)
The remainder of the report provides more details of the variances
above, and details of the Waterworks and Building Services year-to-date variances.
SECTION 1 – REVENUES
At the end of June 2008, revenues were unfavourable
by ($0.509M) due to the followings:
|
Revenue Items
|
Fav./(Unfav.)
|
|
User Fees and Service Charges
|
($1.154) M
|
|
Grant & Subsidy Revenues
|
$0.057 M
|
|
General Revenues
|
$0.912 M
|
|
Other Income
|
($0.324) M
|
|
|
|
|
Net Unfavourable Variance
|
($0.509) M
|
User Fees and Service Charges
The unfavourable variance of ($1.154M)
was primarily related to lower revenues in Planning & Design and
Engineering fees ($1.353M), partially offset by favourable user fees in
Recreation $0.090M.
General Revenues
The favourable variance of $0.912M was largely due to Income from Investments of
$0.970M, - $0.582M – portfolio balance and $0.388M – rate.
Other Income
The unfavourable variance of ($0.324M)
was mainly due to the loss of rental income from 8100 Warden Ave. and Esna Park
($0.168M), and revenue strategy of ($0.142M) based on a budget of $.200M for
sponsorship and Corporate revenues.
SECTION 2 – PERSONNEL
EXPENDITURES
The June year-to-date personnel expenditure variance
was $0.408M favourable:
|
Salary Expenditures Items
|
Fav. / (Unfav.)
|
|
Full Time Salaries net of vacancy
backfills
|
$1.807
|
M
|
|
Overtime
|
($0.680)
|
M
|
|
Other Personnel Costs
|
($0.065)
|
M
|
|
Personnel Fav. Variance before Salary Gapping
|
$1.062
|
M
|
|
Salary Gapping
|
($0.654)
|
M
|
|
Salaries & Benefits Favourable
Variance
|
$0.408
|
M
|
The $1.807M favourable variance in full time salaries
net of vacancy backfills is the result of 64 net vacant positions; partially
offset by an unfavourable variance of ($0.680M) in Fire and Operations overtime
due to an average 10 vacancies during the year in Fire and Operations requirements
for winter maintenance.
Further, the 2008
budget included $0.654M of annual salary gapping savings which has been fully
allocated to the individual business units.
SECTION 3 - NON-SALARY
EXPENDITURES
At the end of June, Non-Salary expenditures were unfavourable
mainly due to winter maintenance. The
variances in the non-salary accounts are outlined below:
|
Non-Salary Items
|
Fav. / (Unfav.)
|
|
Purchased Services
|
($0.332) M
|
|
Materials & Supplies
|
($0.304) M
|
|
Other Expenditures
|
($0.126) M
|
|
Total Non-Salary Unfavourable Variance
|
($0.762) M
|
Purchased Services
The unfavourable
variance of ($0.332M) in Purchased Services was due to winter maintenance of ($1.109M),
and partially offset by the following accounts:
- $0.290M favourable variance in Utilities across the Town due to
lower rates and lower consumption volume $0.105M, and delay in the opening
of the Centennial Community Centre expansion $0.100M;
- $0.365M favourable variance in training, travel and road
maintenance & repairs (timing).
Materials & Supplies
The unfavourable variance in
Material & Supplies was due to excess purchases of salt and sand for winter
maintenance ($0.218M) and fuel & vehicle parts ($0.160M).
SECTION 4 - WATERWORKS
Waterworks reported a year-to-date favourable
variance of $0.618 M at the end of June (see Appendix 2).
The year-to-date
variance was mainly due to favourable variances in water/sewer billings $0.087M,
personnel expenditures (average of 6 vacancies) $0.280M, non-personnel $0.168M
and other revenues $0.083M.
There were fewer
meters installations (growth constraint) and less required maintenance resulting
in a favourable variance in non-personnel of $0.168M.
A Waterworks
year-end projection will be provided in early November when Staff presents the
year-to-date September results.
SECTION 5 – BUILDING
SERVICES
Building Services reported $0.308M
favourable variance at the end of six months (refer to Appendix 3).
The favourable variance is primarily due to higher than projected
building permit revenue (residential units - actual 1,258 units vs. budget 1,115
units).
YEAR-END PROJECTION
Town
Based on June year-to-date results, the year-end deficit/surplus is
projected to be in a range from ($0.500M) unfavourable variance to $0.500M
favourable variance (excluding Planning & Designed and Engineering). Staff will provide an update of the YTD
September results in early November.
It is anticipated that the year-end revenue variance will range from
being on budget to favourable $0.500M mainly
driven from higher Income from Investment $0.800M, partially offset by the loss
of rental income from 8100 Warden Ave. and Esna Park of ($0.560M).
The year-end favourable expenditure variance will range from ($0.500M)
unfavourable to being on budget. This
variance is driven by a favourable personnel variance due to vacancies and
offset by unfavourable variances in winter maintenance and vehicle parts &
fuel.
The year-end personnel accrual is estimated to be approximately
$2.300M which includes provisions for the firefighters vested sick leave program,
post retirement benefits and vacation pay.
Historically, these items have been funded from the year-end operating surpluses. Staff will investigate alternative funding
sources and will report back at the next update of the operating results in
November.
Building
As reported in the Building Services section of this report, as a
result of development activity being higher than anticipated, there is a
projected surplus of $0.369M which will be transferred to the building reserve. The projected year-end Building Services reserve is projected to be
$3.70M
Planning & Design
and Engineering
It is projected that the year-end variance will be unfavourable by
($0.789M) due to lower user fees ($1.319M), partially offset by favourable
variances in personnel and non-personnel costs of $0.530M. The Planning & Design and Engineering
reserve is projected to be in a negative balance of ($0.657M) at the end of the
year.
FINANCIAL TEMPLATE
(Separate Attachment):