Tripping over a dollar to save a dime tips to refining your budget process
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Presentation to the Federation of Northern Ontario Municipalities 2016 Annual Conference on improving municipal budget process
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Tripping over a dollar to save a dime tips to refining your budget process
- 2. Agenda • Importance of Financial Policies • Budget and Financial Control Policy –The Framework • Budget Process • Areas to Improve • A Council Perspective
- 4. Financial Policies –Why They Are Necessary • Communicates Council's priorities to staff and the public • Ensures consistency for all taxpayers • Ensures predictability • Everybody retires • Provides a written knowledge of how things are done • Makes transitioning staff easier
- 5. Financial Policies – A Busy Two Years in Parry Sound Policy Date Adopted Reserve and Reserve Fund Policy August 12, 2014 (NEW) Procurement Policy January 20, 2015 (Updated) Investment Policy January 20, 2015 (Updated) Capital Financing and Debt Management Policy March 3, 2015 (NEW) Operating Surplus and Deficit Policy April 7, 2015 (NEW) Payments and Payables Policy July 7, 2015 (NEW) Donations Policy July 21, 2015 (NEW) Budget and Financial Control Policy August 12, 2015 (NEW)
- 6. Financial Policies – Streamlining the Budget Process • Adopting policies makes the budget process faster • Reserve and Reserve Fund Policy • Provides a mechanism to save for future needs (it is not just "rainy day") • You do not need a reserve or fund for every different thing…Think larger bucket • Town went from 153 reserve accounts (57 active) to 19 reserves (now 28) • Group similar reserves together • Operating Surplus and Deficit Policy • Know what you are already going to do with any differences from budget • Fund to Reserves and Reserve Funds • Do not need to wait for the year end to be done in order to finish your budget
- 8. Budget and Financial Control Policy ‐ Guidance Budget • Defines "Baseline Budget" • Sets a target range for tax rate increase • Based on CPI (75% to 125% of CPI at July) • At a minimum the increase is equal to the union wage increase • Consistent priority method for capital projects Financial Control • Sets out reporting to Council • Q2 to Q4 with variance analysis • Monthly year to dates • Sets authority for changes to budget without Council approval
- 9. Tax Rate Range Tax Year 2009 2010 2011 2012 2013 2014 2015 Low 3.0% 3.0% 3.0% 2.3% 1.5% 1.9% 1.9% High 4.5% 3.0% 3.6% 3.8% 1.5% 2.0% 3.1% Actual ‐1.5% 0.0% 3.0% 2.5% 1.5% 0.0% 3.8% From 2009 to 2015 the average rate increase was 1.33% For same period the annual inflation (Core CPI) was 1.63% (Bank of Canada)
- 12. Presentations to Council • A general “Overview” meeting to go over the budget as a whole • Did not get into specific departments • Highlighted the “New Initiatives” and “Considered and Cut” lists • Highlighted capital • Making it “Fun” • Use PowerPoint • Use tables / charts
- 13. Budget Binder Before 2015 • Determination of Levy • Convert PSAB to "levy" • Listed the capital expenditures line by line • Listed the transfers line by line • Operating line budget Now • Policy and Overview • Determination of Levy • Convert PSAB to "levy" • Summary of capital expenditures and transfers to reserves • Operating budget • Capital budget • Reserve and Reserve Fund Transfers
- 14. Budget Binder – Policy and Overview • Executive Summary • Determination of tax levy • New Initiatives Summary • Items considered by staff and removed • Summary of Operating Budget • Financial Overview • Strategic Plan • Financial Policies • Performance Information • Org Chart and Staffing 9,972,616 11,228,832 10,968,020 11,233,338 11,667,606 2011 2012 2013 2014 2015 Budget Total Taxation
- 15. Budget Binder ‐ Operations Before 2015 • Presented by PSAB Segment • Every GL account • New items weren't separately shown • Each account only showed the total • Leads to inflated spending Now • Presented by Departments • Subtotals only by activity • "New Initiatives" highlighted in exec summary • 3 budgets for the year • Baseline • "One‐time" • Service level changes
- 16. Service Delivery Budget – Bobby Orr Community Centre 2015 2016 2014 Actual 2015 Budget (As Passed) Baseline Budget One-Time Items Service Level Changes Total Budget % Budget Change Total Revenues $ ( 185,466 ) $ ( 186,600 ) $( 186,600 ) $ - $ - $ ( 186,600 ) 0.0% Expenses Total Arena administration $ 40,949 $ 65,581 $ 63,278 $ 1,000 $ - $ 64,278 -2.0% Total Unlicensed larger equipment ( 4,935 ) ( 8,305 ) ( 875 ) - - ( 875 ) -89.5% Total Building 483,347 502,023 498,259 - ( 10,000 ) 488,259 -2.7% Total Ice surface 86,525 90,569 90,271 - - 90,271 -0.3% Total Equipment 24,697 42,324 42,300 - - 42,300 -0.1% Total Hall 39,128 35,293 35,100 - - 35,100 -0.5% Total Expenses $ 669,711 $ 727,485 $ 728,333 $ 1,000 $( 10,000 ) $ 719,333 -1.1% Net Loss $ 484,245 $ 540,885 $ 541,733 $ 1,000 $( 10,000 ) $ 532,733 -1.5% Remove Amortization ( 165,913 ) ( 165,300 ) ( 172,700 ) - - ( 172,700 ) 4.5% Net Levy $ 318,331 $ 375,585 $ 369,033 $ 1,000 $( 10,000 ) $ 360,033 -4.1%
- 17. Budget Binders ‐ Capital Before 2015 • Only one year presented • Showed only the total spent • Included "old definition" capital • Repairs • Consulting reports • "Not every year" expenditures Now • 5 Years, 1 year budget plus 4 forecast • Shows the cost plus the source of funds • Only includes Tangible Capital Assets • Irregular expenditures are "one‐time" costs in the operating budget
- 18. Capital Budget – Development and Leisure Services Development and Leisure Services Call- Sign Status Priority Cost Taxes Debenture Provincial Grant Federal Grant Other 2015 Carry Forward (Reserves) Reserves Reserve Fund Big Sound Marina - Dock B Replacement 4 Star - Critical Risk $ 410,000 $ - $ 142,425 $ - $ 126,900 $ - $ 140,675 $ - $ - Building Department Vehicle Replacement 4 Star - Critical Risk 25,000 - - - - - - 25,000 - Town Dock Gazebo Replacement 4 Star - Critical Risk 38,000 - - - - - - 38,000 - Old Fire Hall Repairs Replacement 4 Star - Critical Risk 25,000 - - - - - - 25,000 - Total $ 498,000 $ - $ 142,425 $ - $ 126,900 $ - $ 140,675 $ 88,000 $ -
- 19. Reserves – Parks Reserve Item Projected Balance Jan 1, 2016 Transfers In per 2016 Budget Transfers Out per 2016 Budget Ending Balance, December 31 2016 Parks General $ 73,000 $ ‐ $ (10,000) $ 63,000 Forestry Tower & Park 11,453 ‐ ‐ 11,453 Y. Williams Park 10,000 ‐ ‐ 10,000 Skate Board Park 9,531 ‐ ‐ 9,531 General Waterfront 73,793 ‐ (46,000) 27,793 Waterfront Advisory 4,250 ‐ ‐ 4,250 Kinsmen Park 20,000 ‐ ‐ 20,000 Big Sound Marina 140,675 ‐ (140,675) ‐ $ 342,702 $ ‐ $ (196,675) $ 146,027
- 21. Public Engagement • Use of Town website for budget survey • Streaming Council meetings, including budget meetings • Open house
- 22. Budget Report • Break amortization out of operating expenses to show "tax levy" portion • Slightly more detail in operating • Salary and Benefits • Materials • Contracted Services • Extend debt forecast for life of debt • Project future debt needs
- 23. Budget Process • Starting earlier • Strategic priority meeting in May • Capital budget and projections extended past 5 years • Forecast operating for 2 years
- 24. Budget Policy • Change to the tax rate range • Is not sufficient for "new services" • May not be sufficient to fund the capital investment requirements of the AMP • Is the CPI reflective of the inflation for a municipality?? • Discuss requirements for public engagement • Adopt multi‐year budgets
- 26. Mayor’s Perspective • Understandability of financial information • Presentations of information in a non‐technical manner • Focused discussion on the “Bigger” issues • Do we want to expand services offered at the arena? • Do we want to invest in the waterfront? • Council had the information to make informed, strategic decisions • Service A costs $xx,xxx and is 1.0% increase to the tax rate, meets 1 priority • Service B, C, D and E cost the same and would meet, meets all 5 priorities