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

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 operating 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 of $294.500M which includes: Annual Budget Budget (in $M) Primary Operating Budget 180.810 Planning & Design 8.407 Engineering 6.467 Building Standards 9.026 Waterworks 89.790 294.500 Total Details of the YTD variance to budget and the year-end projections are outlined in this presentation Building Markham’s Future Together Towards a Sustainable Community Slide 2

2013 July Year-To-Date (YTD) Review of Operations Primary Operating Budget Favourable Variance of $0.082M Revenues Personnel Expenditures Non-Personnel Expenditures Favourable variance Favourable variance Unfavourable variance of $0.310M of $0.231M of ($0.459M) 0.2% of YTD Budget 0.4% of YTD Budget (1.0%) of YTD Budget Major drivers for revenue variance Fav./ (Unfav.) Major drivers for non-personnel variance Fav./ (Unfav.) Major drivers for personnel variance Fav./ (Unfav.) Theatre revenues (ticket sales, registration fees 0.344 M Winter maintenance (1.125) M Full time salaries net of vacancy backfills and and rental) Non-personnel expenditure gapping (0.341) M part time salaries 0.740 M Federal and Provincial grants 0.211 M Theatre professional entertainment fees (0.176) M Overtime & other personnel costs (0.509) M Property tax interest and penalties 0.201 M Streetlight hydro (0.104) M Total 0.231 M Property tax write-offs, vacancy tax rebate (0.131) M Investment income 0.170 M Training/travel/promotion/advertising/ 0.155 M Provincial Offences Act (POA) fines 0.137 M professional fees Snowplow recoveries from unassumed 0.104 M Operation materials and supplies 0.191 M subdivisions Maintenance and repairs 0.260 M Recreation revenue (0.961) M Contract service agreements 0.565 M Other 0.104 M Other 0.247 M Total 0.310 M Total (0.459) M Building Markham’s Future Together Towards a Sustainable Community Slide 3

2013 Year End Projection Primary Operating Budget Results from business operations before year-end accounting adjustments ($0.500M) to ($1.100M) unfavourable Revenues Expenditures Unfavourable ($0.650M) to ($0.680M) Unfavourable ($0.420M) to favourable $0.150M (0.4%) of annual budget (0.2%) to 0.1% of annual budget Main drivers are: Main drivers are:  Under subscription in community centre programs offered  Winter maintenance costs by Recreation (primarily fitness membership, aquatics and  Streetlight hydro pricing program registration)  Non-personnel gapping Offset by:  Theatre professional entertainment fees  Culture programs  Fire overtime  POA fines Offset by:  Government grants  Net personnel costs (excluding fire overtime)  Investment income  Corporate contingency  Property tax interest and penalties  Contract service agreements (asphalt repairs contract pricing)  Snowplow recoveries from unassumed subdivisions 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 operations 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 4

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 Slide 5

2013 Year End Projection Primary Operating Budget 2013 2012 2013 YE Projection (Worst) Year-End Projection Year-End Actual vs. 2012 Actual Fav./(Unfav.) Variance 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) 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 offset 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). Building Markham’s Future Together Towards a Sustainable Community Slide 6

2013 July Year-To-Date (YTD) Review of Operations Planning & Design Unfavourable Variance of ($1.473M) Revenues Personnel Non-Personnel Unfavourable Variance ($1.349M) Unfavourable Variance ($0.107M) Unfavourable Variance ($0.017M) (32.3%) of YTD Budget (3.6%) of YTD Budget (1.9%) of YTD Budget 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. 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 7

2013 July Year-To-Date (YTD) Review of Operations Engineering Favourable Variance of $0.165M Revenues Personnel Non-Personnel Unfavourable Variance ($0.199M) Favourable Variance $0.310M Favourable Variance $0.054M (8.4%) of YTD Budget 5.3% of YTD Budget 5.1% of YTD Budget 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. 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 8

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 9