Report to: General Committee – Finance & Admin. Date of
Meeting: November 3, 2008
SUBJECT: September 2008 Year-To-Date Review of Operations and Year-End Projection
PREPARED BY: Andrea Tang, Manager Financial Planning
RECOMMENDATION:
THAT the
report dated November 3rd, 2008
entitled “September 2008 Year-To-Date Review of
Operations and Year-end Projection” be received.
EXECUTIVE SUMMARY:
Town
At the end of September
2008, the operating budget results (excluding Planning & Design,
Engineering, Building Services and Waterworks) reflects a favourable variance
of $1.516M. The $1.516M favourable
variance is comprised of a $0.730M favourable variance in Revenues, and a favourable
variance of $0.786M in Expenditures, as shown below:
|
Revenues
|
Fav./
(Unfav.)
|
|
Expenditures
|
Fav./ (Unfav.)
|
|
Income from
Investments
|
$1.177 M
|
|
Salary &
Benefit Costs
|
$1.778 M
|
|
WDO, Eco. Dev.
& Museum Grants
|
$0.168 M
|
|
Salary Gapping
Allocation
|
($0.455) M
|
|
Recreation &
Theatre User Fees
|
($0.396) M
|
|
Winter
Maintenance
|
($1.328) M
|
|
Rental Income
from 8100 Warden Ave.
and Esna Park
|
($0.273) M
|
|
Utilities
|
$0.463 M
|
|
Other
|
$0.054 M
|
|
Training/Travel/Promotion
& Advertising/Rental/Lease/Professional Fees
|
$0.381 M
|
|
|
|
|
Other
|
($0.053) M
|
|
|
$0.730 M
|
|
|
$0.786 M
|
The year-end deficit/surplus is projected to be in a range from
favourable $0.250M to $1.250M before year-end accounting accruals ($2.3
million) and before further potential impacts from the winter maintenance
program.
Planning & Design
Planning &
Design ended September with a year-to-date unfavourable variance of ($1.340M). This is due to unfavourable variance of
($1.505M) in revenues, offset by favourable variances of $0.158M in personnel
costs, and $0.007M in non-personnel costs.
Planning &
Design is projected to be unfavourable by ($1.430M) at year-end due to lower
user fees, partially offset by favourable variances in personnel and
non-personnel costs.
Engineering
Engineering ended
September with a year-to-date unfavourable variance of ($0.780M). This is due to unfavourable variance of ($0.974M)
in revenue, offset by favourable variances of $0.157M in personnel costs, and $0.037M
in non-personnel costs. It is
anticipated that recoveries from capital administrative fees will improve in
the 4th quarter.
Engineering is
projected to be unfavourable by ($1.822M) at year-end due to lower user fees.
Building Services
Building Services ended September year-to-date being on budget. This was mainly due to favourable variances
in personnel expenses of $0.113M and non-personnel expense of $0.102M; offset
by lower than expected building permits revenue of ($0.223M).
Building Services
is projected to be unfavourable by ($0.176M) at year-end resulting from lower
building permit revenues.
Waterworks
Waterworks ended September
with a year-to-date unfavourable variance of ($1.165M). This variance was due to an unfavourable
variance of ($2.292M) in the net sales and purchases of water resulting from
the significant amount of rainfall in the spring and summer months, offset by favourable
variances of $0.418M in personnel costs, $0.508M in non-personnel costs, and $0.201M
in revenues.
Waterworks is
projected to be on budget by year end.
It is anticipated that the unfavourable variance in the net sales and
purchases of water will be offset through salary gapping, favourable variances
in non-personnel expenditures and other revenues to achieve a balanced budget
at year-end.
FINANCIAL CONSIDERATIONS:
Staff will
continue to monitor variances for the remainder of the year.
On September 22, 2008,
Staff reported to General Committee the June 2008 year-to-date review of operations
and provided a year end projection in a range from ($0.500M) to $0.500M. The report outlined that Staff would report back
to General Committee on the YTD September results in early November.
Over the past three months, Staff have continued
to monitor the variances. At the end of
September, the Town’s operations (excluding Planning & Design, Engineering,
Building and Waterworks) achieved a favourable variance of $1.516M, overcoming
the unfavourable year-to-date variance in winter maintenance of ($1.328M)
through salary gapping and other favourable variances in non-personnel costs
and higher than expected investment income.
Based on the year-to-date September results,
Staff has updated the year-end projection to now be in a range of $0.250M to
$1.250M before year end accounting accruals of approximately $2.300M.
OPTIONS/
DISCUSSION
YEAR-TO-DATE OPERATING BUDGET VARIANCES:
Town
At the end of nine months, the 2008 operating budget (excluding Planning
& Design, Engineering, Building Services and Waterworks) results reflect an
overall $1.516M favourable variance.
The $1.516M favourable variance is comprised of variances in three
main areas of the Town’s operating budget:
$0.730M favourable
variance in Revenues
$1.323M favourable
variance in Personnel Expenditures
($0.537M)
unfavourable variance in Non-Personnel
Expenditures
$1.516M
The remainder of the report provides more details of the variances
above, and details of the Planning & Design, Engineering, Building and
Waterworks year-to-date variances.
REVENUES
At the end of September 2008, revenues were
favourable by $0.730M due to the followings:
|
Revenue Items
|
Fav./(Unfav.)
|
|
General Revenues
|
$1.126 M
|
|
Grant & Subsidy Revenues
|
$0.168 M
|
|
User Fees and Service Charges
|
($0.396) M
|
|
Other Income
|
(0.168) M
|
|
|
|
|
Net Unfavourable Variance
|
$0.730 M
|
General Revenues
The favourable variance of $1.126M was due to income from investments of $1.177M
of which $0.888M was due to the portfolio balance and $0.289M being interest
rate driven.
Grants & Subsidy Revenues
The Town has received a higher than budgeted Waste Diversion Ontario
grant in the amount of $0.088M, and two, one-time grants in Economic
Development and Museum in the amounts of $0.037M and $0.032M respectively.
User Fees and Service Charges
The unfavourable variance of ($0.396M)
was primarily due to Recreation ($0.237M) as a result of lower program
registration fees and swimming lessons; and Theatre ($0.143M) due to lower
ticket sales.
Other Income
The unfavourable variance of ($0.168M) was due to the loss of rental
income from 8100 Warden Ave.
and Esna Park ($0.273 M), financial services administrative fees on
sub-division agreements of ($0.221M) which is consistent with the lower
development trend being experienced by the Development departments partially
offset by proceeds from the sale of Town assets in the amount of $0.182M.
PERSONNEL EXPENDITURES
The September year-to-date personnel expenditure
variance was $1.323M favourable:
|
Salary Expenditures Items
|
Fav. / (Unfav.)
|
|
Full Time Salaries net of vacancy
backfills
|
$3.035
|
M
|
|
Overtime
|
($1.061)
|
M
|
|
Other Personnel Costs
|
($0.196)
|
M
|
|
Favourable Variance before Salary Gapping
|
$1.778
|
M
|
|
Salary Gapping
|
($0.455)
|
M
|
|
Salaries & Benefits Favourable
Variance
|
$1.323
|
M
|
The $3.035M favourable variance in full time salaries
net of vacancy backfills is the result of 67 net vacant positions; offset by an
unfavourable variance of ($1.061M) in Fire and Operations overtime due to an
average of 12 vacancies in Fire during the year and Operations requirements for
winter maintenance.
Further, the 2008
budget included $0.455M of annual salary gapping savings which has been fully
allocated to the individual business units.
NON-SALARY EXPENDITURES
At the end of September, Non-Salary expenditures were unfavourable
due to winter maintenance operations.
|
Non-Salary Items
|
Fav. / (Unfav.)
|
|
Purchased Services
|
($0.229) M
|
|
Materials & Supplies
|
($0.126) M
|
|
Transfer to Reserves
|
($0.182) M
|
|
Total Non-Salary Unfavourable Variance
|
($0.537) M
|
Purchased Services
The unfavourable
variance of ($0.229M) in Purchased Services was due to winter maintenance of ($1.109M)
with the majority of the unfavourable variance being offset by the following
accounts:
- $0.463M favourable variance in Utilities across the Town due to
lower consumption volume of $0.317M, and the delay in the opening of the Centennial
Community Centre expansion $0.146M;
- $0.381M favourable variance in training, travel, promotion
& advertising, rental/lease and professional services.
Materials & Supplies
The unfavourable variance in
Material & Supplies was due to purchases of salt and sand for winter
maintenance ($0.218M) and fuel & vehicle parts ($0.244M), offset by
favourable variances in library books & subscriptions and supplies $0.250M
(timing), and road maintenance & repairs.
Other Expenditures
The unfavourable variance of
($0.182M) represents a higher transfer to reserve than budgeted due to the proceeds
from the sale of Town assets to the appropriate reserves. There is a corresponding favourable variance
in revenues.
PLANNING & DESIGN
Planning & Design reported a year-to-date
unfavourable variance of ($1.340M) at the end of September (see Appendix 2).
The unfavourable revenue variance is due to lower user fees as a
result of lower development application activities, offset by a favourable
variance in personnel and non-personnel costs.
ENGINEERING
Engineering reported a year-to-date unfavourable
variance of ($0.780M) (see Appendix 3).
The unfavourable variance from revenue is due to lower user fees as
a result of lower capital administration fees and development application activities,
offset by favourable variance from personnel and non-personnel costs.
BUILDING SERVICES
Building Services reported to be on
budget at the end of nine months (refer to Appendix 4). The unfavourable variance from revenue is
mainly due to lower than projected building permit revenue offset by the
favourable variance from personnel and non-personnel costs.
WATERWORKS
Waterworks reported a year-to-date unfavourable
variance of ($1.165M) at the end of September (see Appendix 5).
The unfavourable variance
of ($2.292M) from net sales and purchases of water was a direct result of the
significant amount of rainfall in the spring and summer months. The lower purchases correspondingly results
in lower sales.
The favourable
variances from Operations are due to non-personnel costs of $0.508M as a result
of fewer residential meters installations (growth constraint) and lower
infrastructure maintenance, personnel costs as a result of 6 average vacancies
and revenues from higher ICI water meter sales.
YEAR-END PROJECTION
Town
Based on the September year-to-date results, it is anticipated that the
year-end projection will be in a range from $0.250M to $1.250M before year-end
accounting accruals.
It is expected that the year-end revenue variance will range from $0.250M
to $0.500M resulting from higher income from investments $0.800M, partially
offset by the loss of rental income from 8100 Warden Ave. and Esna Park of ($0.560M),
lower Recreation and Theatre user fees and lower financial services admin fees as
a result of lower development applications.
The year-end
expenditure variance will range from being on budget to $0.750M favourable. This variance is due to a favourable variance
in personnel expenditures resulting from vacancies; offset by unfavourable
variances in winter maintenance and vehicle parts & fuel. One of the factors that will have an impact
on the year end results
will be the winter maintenance program dependant on the amount of snowfall from
October to December 2008.
As noted in the September report, 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.
In the event where there is insufficient year-end operating surplus,
the year-end personnel accrual will either be unfunded or other funding sources
will be identified.
Planning & Design
and Engineering
Planning & Design is projected to have an unfavourable year end variance of ($1.430M)
due to lower user fees ($1.785M), partially offset by favourable variances in
personnel and non-personnel costs of $0.355M.
Engineering is projecting a year-end deficit of ($1.822M) compared to a
budgeted deficit of ($1.487M), an additional draw from reserve of $0.335M.
The projected deficits in Planning & Design ($1.430M) and
Engineering ($1.822M) will result in a total draw from the reserve in order to
achieve a balanced budget. This will
bring the combined reserve to a negative balance of ($1.657M) by the end of the
year.
Building Services
The projected deficit in Building Services ($0.176M) will result in
a draw from the reserve in order to achieve a balanced budget. This will bring the reserve balance to
$3.132M by the end of the year.
Waterworks
Based on the September
year-to-date results, Waterworks is projected to be on budget by year end. The revenue from water/sewer billings will
result in an unfavourable variance of ($1.776M), to be offset by the favourable
variances from personnel, non-personnel and other revenues.
FINANCIAL TEMPLATE
(Separate Attachment):