Operations and Year- End Projection General Committee September 23, - - PowerPoint PPT Presentation

Building Markham’s Future Together

2013 July Year-To-Date (YTD) Review of Operations and Year- End Projection

General Committee September 23, 2013

Building Markham’s Future Together Towards a Sustainable Community Slide 2

2013 July Year-To-Date (YTD) Review of Operations and Year-End Projection

The report provides an overview of the 2013 July year-to-date actual

• perating results versus the calendarized operating budget and a

forecast of the year-end results to the annual plan. Council approved the 2013 annual operating budget on January 29, 2013

• f $294.500M which includes:

Details of the YTD variance to budget and the year-end projections are

• utlined in this presentation

Budget Annual Budget (in $M) Primary Operating Budget 180.810 Planning & Design 8.407 Engineering 6.467 Building Standards 9.026 Waterworks 89.790 Total 294.500

Building Markham’s Future Together Towards a Sustainable Community Slide 3

2013 July Year-To-Date (YTD) Review of Operations Primary Operating Budget

Favourable Variance of $0.082M

Non-Personnel Expenditures Unfavourable variance

• f ($0.459M)

(1.0%) of YTD Budget

Revenues Favourable variance

• f $0.310M

0.2% of YTD Budget

Personnel Expenditures Favourable variance

• f $0.231M

0.4% of YTD Budget

Major drivers for personnel variance Full time salaries net of vacancy backfills and part time salaries 0.740 M Overtime & other personnel costs (0.509) M Total 0.231 M Fav./ (Unfav.) Major drivers for revenue variance Theatre revenues (ticket sales, registration fees and rental) 0.344 M Federal and Provincial grants 0.211 M Property tax interest and penalties 0.201 M Investment income 0.170 M Provincial Offences Act (POA) fines 0.137 M Snowplow recoveries from unassumed subdivisions 0.104 M Recreation revenue (0.961) M Other 0.104 M Total 0.310 M Fav./ (Unfav.) Major drivers for non-personnel variance Winter maintenance (1.125) M Non-personnel expenditure gapping (0.341) M Theatre professional entertainment fees (0.176) M Streetlight hydro (0.104) M Property tax write-offs, vacancy tax rebate (0.131) M Training/travel/promotion/advertising/ professional fees 0.155 M Operation materials and supplies 0.191 M Maintenance and repairs 0.260 M Contract service agreements 0.565 M Other 0.247 M Total (0.459) M Fav./ (Unfav.)

Building Markham’s Future Together Towards a Sustainable Community

Main drivers are:

• Winter maintenance costs
• Streetlight hydro pricing
• Non-personnel gapping
• Theatre professional entertainment fees
• Fire overtime

Offset by:

• Net personnel costs (excluding fire overtime)
• Corporate contingency
• Contract service agreements (asphalt repairs contract pricing)

Slide 4

Main drivers are:

• Under subscription in community centre programs offered

by Recreation (primarily fitness membership, aquatics and program registration) Offset by:

• Culture programs
• POA fines
• Government grants
• Investment income
• Property tax interest and penalties
• Snowplow recoveries from unassumed subdivisions

2013 Year End Projection Primary Operating Budget

Results from business operations before year-end accounting adjustments ($0.500M) to ($1.100M) unfavourable

Expenditures Unfavourable ($0.420M) to favourable $0.150M

(0.2%) to 0.1% of annual budget

Revenues Unfavourable ($0.650M) to ($0.680M)

(0.4%) of annual budget Staff have incorporated mitigating strategies to reduce discretionary expenditures to partially offset unfavourable variances. Overall a net balanced budget will be achieved save and except for winter maintenance

• perations and streetlight hydro.

Staff recommend the year-end deficit before accounting adjustments be funded from the Corporate Rate Stabilization Reserve

Building Markham’s Future Together Towards a Sustainable Community Slide 5

2013 Year End Projection Primary Operating Budget

Year-end accounting adjustments ($2.000M) unfavourable

• Year-end accounting adjustments are not budgeted for by the City and include items such as

vacation accruals, Firefighters sick leave, 27th pay, severance and salary continuance, and post retirement benefits.

• Staff have developed strategies to reduce the year-end accounting adjustments in 2013 to $2.0M.
• Markham provides several employee benefits such as WSIB, long term disability benefits (“LTD”),

post-retirement benefits and vested sick leave benefits for Firefighters, the future liability for which are determined through an actuarial valuation and reported on the financial statements, as recommended by the Public Sector Accounting Board (“PSAB”).

• Management, on approval from City Council, has set aside funds specifically for the financing of

future costs.

• An actuarial analysis of the LTD accrued benefit obligation has identified an over contribution to

the reserve by approximately $2.000M to $2.500M Staff recommend the year-end accounting adjustments be funded from the LTD reserve

Building Markham’s Future Together Towards a Sustainable Community

• 1. Revenue ($2.664M) is mainly due to:
• Additional revenues for supplemental taxes, financial services and legal administrative fees for developer

agreements, and user fees and service charges for new property tax account set up fees, utility permits, and Museum program fees totaling of ($1.572M) that are not expected to materialize in 2013; and,

• Incremental deficit of ($1.000M) in recreation program revenues as a result of enrolment

targets in aquatics, fitness class fees/membership and program registration not being achieved.

• 2. Personnel ($0.640M) is mainly due to a decrease in average net vacancies of 5 ($0.510M) and an increase for overtime in

Fire and other personnel items of ($0.130M).

• 3. Non-Personnel ($1.120M) is mainly due to:
• Additional winter maintenance expenditures of ($3.157M) as a result of heavy snowfall in January through April
• ffset by $1.000M for PowerStream hydro interest income (which will be retained in the operating budget),

$0.544M for maintenance and repairs and $0.508M for property tax write-offs and vacancy tax rebates

• Incremental deficit of ($0.400M) for price escalations in streetlight hydro, mainly due to the Global Adjustment

escalations (in 2012 increases for Global Adjustment were offset by a decrease in the commodity price).

Slide 6

2013 Year End Projection Primary Operating Budget

2012 2013 YE Projection (Worst) Year-End Actual

• vs. 2012 Actual

Fav./(Unfav.) Variance Fav./(Unfav.) Variance

Best Worst Final Final Revenue (0.650) (0.680) 1.984 (2.664) Personnel Expenditures 0.730 0.730 1.370 (0.640) Non-Personnel Expenditures (0.580) (1.150) (0.030) (1.120) Net Surplus/ (Deficit) (0.500) (1.100) 3.324 (4.424)

2013 Year-End Projection Fav./(Unfav.) Variance

Building Markham’s Future Together Towards a Sustainable Community Slide 7

2013 July Year-To-Date (YTD) Review of Operations Planning & Design

Unfavourable Variance of ($1.473M)

Unfavourable variance of ($1.473M) YTD is mainly due to lower revenues resulting from timing of the development application submission. Higher development application activities in the last quarter of 2012 were the result of developer agreements being submitted prior to the Regional deadline for Development Charge (DC) increases and resulted in lower activities in first seven months of 2013. Non-Personnel Unfavourable Variance ($0.017M)

(1.9%) of YTD Budget

Revenues Unfavourable Variance ($1.349M)

(32.3%) of YTD Budget

Personnel Unfavourable Variance ($0.107M)

(3.6%) of YTD Budget

2013 Year End Projection

From To Budgeted surplus $1.333M $1.333M Projected deficit ($0.700M) ($0.500M) Unfavourable Variance ($2.033M) ($1.833M) Reserve Impact Draw from Reserve ($0.700M) ($0.500M)

Building Markham’s Future Together Towards a Sustainable Community Slide 8

2013 July Year-To-Date (YTD) Review of Operations Engineering

Favourable Variance of $0.165M

Favourable variance of $0.165M is mainly due to lower personnel expenditures from an average of 5 net vacancies offset by an unfavourable revenue variance due to lower than anticipated development activity.

Non-Personnel Favourable Variance $0.054M

5.1% of YTD Budget

Revenues Unfavourable Variance ($0.199M)

(8.4%) of YTD Budget

Personnel Favourable Variance $0.310M

5.3% of YTD Budget

2013 Year End Projection

From To Budgeted deficit ($0.649M) ($0.649M) Projected deficit ($0.800M) ($0.600M) Fav./ (Unfav.) Variance ($0.151M) $0.049M Reserve Impact Draw from Reserve ($0.800M) ($0.600M)

Building Markham’s Future Together Towards a Sustainable Community Slide 9

Planning & Engineering Reserve Balance

($ in millions)

2013 2013 2013 Budget Projection Projection From To Opening Balance at January 1, 2013 (0.907) (0.907) (0.907) Transfer to Capital and Interest Income 0.020 0.020 0.020 Transfer to/(from) Reserves Planning & Design 1.333 (0.700) (0.500) Engineering (0.649) (0.800) (0.600) Planning & Engineering Reserve Ending Balance (0.203) (2.387) (1.987)

Building Markham’s Future Together Towards a Sustainable Community Slide 10

2013 July Year-To-Date (YTD) Review of Operations Building Standards

($ in millions)

Unfavourable Variance of ($0.824M)

Unfavourable variance of ($0.824M) compared to budget is due to lower number of permits issued than budgeted.

Non-Personnel Favourable Variance $0.010M

0.8% of YTD Budget

Revenues Unfavourable Variance ($1.011M)

(22.0%) of YTD Budget

Personnel Favourable Variance $0.177M

5.9% of YTD Budget

2013 Year End Projection

From To Budgeted surplus $1.248M $1.248M Projected surplus/ (deficit) ($0.524M) $0.976M Unfavourable Variance ($1.772M) ($0.272M) Reserve Impact Transfer to/(from) Reserve ($0.524M) $0.976M

Building Markham’s Future Together Towards a Sustainable Community Slide 11

Building Reserve Balance

($ in millions)

2013 2013 2013 Budget Projection Projection From To Opening Balance at January 1, 2013 11.887 11.887 11.887 Transfer to Capital and Interest Income (0.055) (0.055) (0.055) Transfer to/(from) Reserves 1.248 (0.524) 0.976 Building Reserve Ending Balance 13.080 11.308 12.808

Building Markham’s Future Together Towards a Sustainable Community Slide 12

Unfavourable Variance of ($1.438M) vs. Budget

Non-Personnel Favourable Variance $0.119M

2.8% of YTD Budget

Revenues Favourable Variance $0.135M

28.2% of YTD Budget

Personnel Favourable Variance $0.159M

4.1% of YTD Budget

Sales & Purchases (net) Unfavourable Variance ($1.851M)

(13.1%) of YTD Budget

2013 July Year-To-Date (YTD) Review of Operations Waterworks

($ in millions) From To Budgeted Surplus $ 13.784M $ 13.784M Projected Surplus $ 12.284M $ 12.784M Projected Unfavourable Variance ($ 1.500M) ($ 1.000M) Reserve Impact $13.784M was transferred to the reserve at the time of budget approval. Adjustments to the reserve will be made based on the actual results at year-end.

2013 Year End Projection

Unfavourable variance of ($1.438M) mainly due to higher non-revenue water and lower sales volume, partially offset by higher revenues from water meter installations and lower Personnel and Non-Personnel costs.

Building Markham’s Future Together Towards a Sustainable Community Slide 13

Waterworks Reserve Balance

($ in millions)

2013 2013 2013 Budget Projection Projection From To Opening Balance - January 1, 2013 19.860 19.860 19.860 Transfer to/(from) Reserves at time of budget approval 13.784 13.784 13.784 Transfer to Capital and Interest Income (10.481) (10.481) (10.481) Transfer from Reserve for year-end deficit 0.000 (1.500) (1.000) Waterworks Reserve Ending Balance 23.163 21.663 22.163

Building Markham’s Future Together Towards a Sustainable Community Slide 14

Next Steps

• Staff will continue to monitor the results of operations and identify

strategies, where necessary, to continue to mitigate the unfavourable variance from winter maintenance.

• Further, Staff will provide an update on the year-end projection

(including year end accounting adjustments) as part of the September 2013 year-to-date review of operations and it will be brought forward to General Committee in November 2013.