2017-18 Audited Financial Statements Final Year End Report Presented to the Board September 18, 2018
Agenda • Transparency and Accountability Reporting • Key Financial Influences • Financial Highlights • Financial Position • Looking Forward – Significant Matters • Action Required
Transparency & Accountability Reporting • Enhanced transparency and accountability reporting provided through two additional documents • Financial Statement Discussion and Analysis (FSD&A) • Guide to Financial Statements
Key Financial Influences • Strategic Vision – Directions 2020 • Achieve Student Success • Enhance Learning through Technology • Foster a Sustainable Education Organization • Full year Implementation of MOA #17 - SCC decision on restoration of collective agreement language with respect to class size and composition. • Agreement to close the Non-Teaching Pension Plan and transition employees to the Municipal Pension Plan.
Financial Highlights – Operating Accounts • Our actual financial outcome for the 2017-18 year is consistent with our previous reporting at the end of the 3 rd quarter Increased revenues from 2 nd semester IE enrolment Non-usage of Lower Salary Contingency increments fund cost Surplus Elimination of MSP Premium Lower – PRGB substitute curtailment costs gain Higher Lower Casual slippage in Education Salary Assistants budgets due costs to turnover
Financial Highlights – Operating Accounts • The influences that contributed to our realized surplus include: • Increased revenues from Strong 2 nd semester International Education enrolment; • Salary increments for administration that were below budgeted levels; • Lower substitute costs resulting from shortage of available TTOCs as many had been hired under the Classroom Enhancement Fund to address restored teachers collective agreement language; • General shortage in availability of casual Education Assistants while maintaining a full staffing; • Higher level of slippage in all salary budgets due to staff turnover; • Elimination of the Medical Services premium resulted in a one-time PRGB curtailment gain; • Full retention of budgeted contingency fund.
Financial Highlights – Special Purpose Fund Accounts • All Special Purpose Funds tracked within the Amended Budget with the following exceptions: • CommunityLINK - funding received to support vulnerable students. • Funding level is insufficient to meet increasing demands and as a result, some of the costs incurred in providing needed services were funded thru the operating account. • Classroom Enhancement Fund –funding provided for restored collective agreement language. • Funding was used to staff 181 teachers and related TTOC and remedy costs, 23 EA’s, administration teaching relief time and other overhead costs. • In June, the ministry withdrew funding creating an underfunded expenditure of $793k. The district has requested full funding from the Ministry of Education to meet best efforts and incurred contractual obligations and is working with Ministry staff to resolve this matter.
Financial Highlights – Capital Fund Accounts • Funding for capital expenditures is sourced primarily through the Ministry of Education with incremental funding provided through locally generated capital funds • There were five schools under various stages of construction during the year Minnekhada Middle Smiling Creek Centennial Secondary Banting Middle Moody Middle
Financial Highlights – Capital Fund Accounts • Funding for the seismic replacement of Irvine Elementary was announced during the year and architectural drawing are well advanced. • The School District announced it is moving forward to advancing funds to support the design documents for Sheffield Elementary and the joint Burke Mountain Middle/Secondary School • Board has agreed to replace the 58 year old Board office with an Educational Learning Center at the Winslow campus site, to be funded from local capital.
Financial Highlights – Other items • Medical Services Premiums and Employer Health Tax • MSP premiums were reduced by 50% effective January 1, 2018 creating a savings of $350k. • MSP premiums will be completely eliminated effective Jan 1, 2020 and will be replaced with the Employer Health Tax effective Jan 1, 2019. This change created a release of associated liabilities in the Post Retirement Group Health Benefit Plan which was used toward one-time MPP transition costs. • Non-Teaching Pension Plan • Agreement was reached between the union representing support staff and SD43 to close the NTPP to new enrollees and transition active member to the Municipal Pension Plan. • Municipal Pension Plan(MPP) Application and Transition • On June 21, 2018, the MPP Board of Trustees approved the application to transfer active members of the NTPP. Estimated transactional costs of $11m have been recorded in the financial records as at June 30, 2018.
Financial Position • In broad terms, the current year surplus arises from two key sources: 1. Non-Grant Revenues = $5.52 M (1.76%) • International Education Program = $4.2 M • Investment Income = $1.0 M • Rental Revenue = $0.3 M • A key aspect of the District’s stability and sustainability approach is to ensure the recognition of all earned income prior to spending commitments • This is an aspect of best practices that the Board of Education has adopted • As an outcome, it is not unexpected to recognize these additional revenues and utilize them in subsequent years as per the noted policy
Financial Position 2. Ministry Grant Funding Underspending = $2.42 M (0.77%) • The elements that make up this amount are the aggregate of the individual financial lines as detailed in the Operations discussion in the FSD&A • The underspend is mostly related to replacement staffing shortages of teachers and educational assistants as well as non- usage of the contingency budget. Non-Grant Ministry Grant Revenues Funding Surplus (IE, Investment Under- and Rental spending Revenue)
Financial Position – Pension Stabilization Account • Pension Stabilization Account = $7.532 M • The closing of the NTPP plan effective December 31, 2017 to new enrollees and transferring active members to the MPP will result in a reduction of required solvency payments. • Solvency payments continue to be required until a new actuarial valuation is filed. Current year payments of $4.3 M has been set aside separately in a Pension Stabilization account. • In addition, last year, the Board had set aside $3.2 M related to the closing of the PRGB. The intent was to use this either toward MPP transactional costs or required solvency payments. • It was determined that this amount was not required for MPP transactional costs and has instead been contributed to the NTPP and deposited into the Pension Stabilization Account.
Financial Position • The Board of Education has established an Accumulated Operating Surplus Policy as part of its multi-year financial approach for stable and sustainable organizational health. • This policy is reviewed annually by the Board and outlines how the current year operating surplus is to be allocated for future years use. • This policy has been applied to the current year operating surplus and f urther details have been provided in Note 22 of the audited financial statements as to how restricted surplus funds are planned to be utilized in subsequent years. • Additionally, a Surplus Continuity Summary has been included in the Financial Statement Discussion and Analysis document as reference.
Looking Forward – Significant Matters • Organizational Capacity • Classroom Enhancement Funding Adequacy • Staffing costs • New classroom space • Grant Funding Model Review • International Education • Funding adequacy: Inflation and the Employer Health Tax • Bargaining 2019 • Facilities – Capital Funds • Technology Requirements
Action Required • At the September 18, 2018 Board of Education meeting, it is recommended that: • The Board motion to approve the Audited Financial Statements for the year ended June 30, 2018 for filing with the Ministry of Education by September 30, 2018. • The Board motion to appoint KPMG as our external auditors for the 2018/19 school year.
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