1 Report to: Finance Committee, Board of Health Submitted by: Dr. Nicola Mercer, Medical Officer of Health & CEO Subject: 2013 FOURTH QUARTER FINANCIALS TOTAL COST- SHARED PROGRAMS RECOMMENDATION(S) (a) That the Finance Committee recommends that the Board of Health receive the 2013 Fourth Quarter Financials as presented. BACKGROUND The 2013 Program-Based Grant Request for Cost-Shared Mandatory and Related Programs was approved by the Board of Health on December 5 th, 2012, and submitted to the MOHLTC on March 28, The total revenue and expenses budgeted for 2013 for the Cost-Shared Mandatory and Related Programs was $19,747,062 plus One-Time Funding Requests to be costshared of $236,836 (approved in March 2013), and $2,635,636 (approved in August 2013) for a total Cost-Shared Mandatory and Related Programs budget of $22,619,534. The budget line for One-Time Grants Revenue has been revised since the 3 rd Quarter Report to include $7,341 in grants approved on February 4, 2014 to reimburse WDGPH for costs incurred related to Pharmacist integration into the Universal Influenza Immunization Program for The line has been further revised to reflect the One-Time Funding recognized as revenue in 2013 ($1,275,620), leaving $1,604,054 in deferred revenue for 2013 One-Time Grants, to be recognized as expenditures are incurred in 2014 (up to March 31, 2014 per funding agreement). This report does not include expenditures outside of the Cost-Shared Mandatory and Related Programs such as Healthy Babies Healthy Children, Preschool Speech and Language, Healthy Communities, Canada Prenatal Nutrition Program, Smoke-Free Ontario, Healthy Smiles Ontario, or any of the community grants. PUBLIC HEALTH AND/OR FINANCIAL IMPLICATIONS: Current Net Position: March 19, 2014 Appendix 1 (attached) represents the statement of revenue and expenditures for the year ended December 31, As reported on the attached statement, the Agency spent $9,039,373 more than was received in funding for the year. This is due to the fact that capital expenditures for the two new facilities are included in the expenditures reported on this statement, whereas the financing received through the Financial Agreement between WDPGH and the three obligated municipalities is not reported as revenue. In total, WDGPH received transfers totalling $15,837,949 from the three obligated municipalities under the loan agreement to pay for Page 1 of 5
2 $9,039,373 of the building expenditures to the end of Advances requested under the Financial Agreement were based on Buttcon cash flow projections which were revised quarterly. Based on the large positive cash position (due to the building delays), the October 2013 scheduled transfer payment under the Financial Agreement was postponed. This means that as of December 31, 2013, WDGPH has on hand $6,798,576 in cash that was advanced under the Financial agreement, which will be transferred to the Facilities Reserve and drawn down throughout 2014 as the building of the facilities continues. This $6,798,576 is not a budget surplus, it is proceeds of the loan under the Financial Agreement not yet spent at the end of 2013 which will be spent in 2014 on building expenditures. The statement of revenue and expenditures should be reviewed in two distinct sections: Operating Expenses Capital Expenses Operating Expenses This section is the Cost-Shared Mandatory expenses of the Agency which includes employee expenses (salaries, wages, and benefits), and other operating expenses of the Agency. The results of operations for the year show a net positive variance totalling $2,376,087 (refer to the chart below for details): On the operating side, the net positive variance is comprised of the following: Item Variance % of Budgeted Amount Salaries $410, % Benefits $280, % Staff Training $21, % Travel $36, % Building Occupancy $1,435, % Office Expenses, Printing & Postage $34, % Professional & Purchased Services $226, % Program Materials and Supplies ($100,214) -19.6% Information and IT Equipment ($84,078) -32.3% All Other $6, % Interest Income $108, % Total net positive variance $2,376,087 Salary expenses were lower than budgeted by $410,275 due to several factors, including: step savings ($115,960), permanent staff unpaid leave of absence/maternity leave/staff changes/attrition/permanent staff on long and short term disability ($995,964), and offset by casual and temporary staff, vacation payouts, severance and term pay, and extra hours totalling ($701,649). Benefit expenses were under budget by $280,121 due to the linear relationship between salary and benefit expenses. Staff Training expenses were $21,582 lower than budgeted. Page 2 of 5
3 Travel expenses were $36,960 lower than budgeted due to measures taken to control this expenditure such as a comprehensive review of travel costs to find efficiencies for each division for the prior year. Building Occupancy expenses show a positive variance of $1,435,565 due to the increase in the operating budget for facilities that was added in 2011 ($600,000) and 2012 ($900,000) in order to fund a portion of the building costs for the new facilities during the construction period, cover the land lease payments to the University of Guelph, and to ensure that there are funds available for the repayment of the debt owed under the Financial Agreement, and additional operating costs associated with running these two new buildings once the Agency takes possession. Office Expenses, Printing & Postage expenditures are $34,155 lower than projected due to savings in general office supplies, courier and postage services. Professional & Purchased Services are showing a favourable variance of $226,579 due mainly to lower than budgeted expenditures for dentist payments under the CINOT program ($67,330), lower than budgeted consulting fees and fees for service ($94,907), lower than budgeted legal fees ($27,444), lower than budgeted advertising and membership costs ($31,178), and other minor variances netting to $5,720. Program Materials and Supplies are showing a negative variance of $100,214, mainly due to higher than projected expenditures on travel and Gardasil vaccines (which are offset by higher than projected revenues for both, recorded in the expenditures recoveries line), expenditures for the branding project under Communications, and the OLIS and E-health projects under IT (provincial funding was received for both the OLIS and E-health projects). Capital Expenses The second section is the capital projects expenditures line. In 2013, the Municipalities provided $500,000 (combined) in additional funding to the Agency in support of the goal of gradually building up the facilities budget over three years. This began with an additional $600,000 in 2011, $900,000 in 2012, and $500,000 in 2013 for a total increase in the facilities budget of $2 million going forward. This additional funding is going toward facilities costs and land lease payments which began in April Going forward until the new facilities are built, there will always appear to be a budget deficit attributable to the costs of building the facilities since WDGPH is financing a significant part of the cost through the Financial Agreement with the obligated municipalities. On the capital side, the negative variance is calculated as follows: Shelldale Leasehold Improvements ($21,281) Woolwich Leasehold Improvements ($13,964) Imperial Leasehold Improvements ($8,125) Vaccine Refrigerators ($1,203) New Guelph Facility ($8,677,120) New Orangeville Facility ($4,253,691) Internal Project Manager ($39,381) Page 3 of 5
4 UIIP Pharmacist Costs ($7,341) BES Server and Exchange Upgrade ($22,000) Firewall Replacement ($35,000) Health Protection Tablet Upgrade ($16,714) Info HR Support ($75,000) Telephone System Upgrade ($20,264) Dollars allocated from 2013 capital levy $500,000 Remainder of One-Time Funding received March 2013 $236,836 One-Time Funding received August 2013 $1,038,786 Total capital deficit ($11,415,462) The net negative variance of $11,415,462 for capital projects is offset by the Cost-Shared Mandatory operating positive variance of $2,376,087, leaving the net negative variance of $9,039,374 reported on Appendix One. As discussed above, this net negative variance has been fully financed through the proceeds of the loan from the three obligated municipalities as stipulated under the Financial Agreement. APPENDIX ONE 1) Statement of Revenue & Expenses for the Year Ended December 31, Prepared by: Shanna O Dwyer Manager, Finance Reviewed by: Carole Desmeules, Director, Finance, Human Resources and Corporate Services Approved by: Dr. Nicola Mercer, Medical Officer of Health & CEO Page 4 of 5
5 Wellington Dufferin Guelph Public Health APPENDIX ONE Statement of Operations and Surplus Total Cost Shared Mandatory and Related Programs Year Ended December 31, 2013 Budget YTD Budget Actual Variance Variance $ $ $ % Municipal and provincial funding Province of Ontario Ministry of Health and Long Term Care 6,547,797 6,547,797 6,547, % Province of Ontario Public Health Division 5,704,528 5,704,528 5,704, % City of Guelph 3,437,790 3,437,790 3,437, % County of Wellington 2,449,144 2,449,144 2,449, % County of Dufferin 1,602,804 1,602,804 1,602, % One Time Grants Ministry of Health and Long Term Care 2,872,472 1,275,622 1,275, % 22,614,535 21,017,685 21,017, % Other revenue Interest 5,000 5, , , % Total revenue 22,619,535 21,022,685 21,131, , % Expenses Employee salaries and wages 11,182,848 11,182,848 10,772, , % Employee benefits 3,162,270 3,162,270 2,882, , % Staff training 137, , ,647 21, % Board/volunteer training and recognition 30,800 30,800 27,274 3, % Travel 309, , ,321 36, % Building occupancy 2,725,201 2,725,201 1,289,636 1,435, % Office expenses, printing, postage 133, ,516 99,361 34, % Professional and purchased services 1,100,837 1,100, , , % Program materials and supplies 510, , ,201 (100,214) 19.6% Office equipment 44,412 44,412 47,971 (3,559) 8.0% Information and IT equipment 260, , ,247 (84,078) 32.3% Communication costs 173, , , % One time awareness initiatives (10) 100.0% One time and capital projects 1,775,621 1,775,621 13,191,083 (11,415,462) 642.9% Total net operating costs 21,546,584 21,546,584 30,700,698 (9,154,114) 42.5% Expenditure recoveries (523,900) (523,900) (530,194) 6, % Total net expenditures after expenditure recoveries 21,022,684 21,022,684 30,170,504 (9,147,820) 43.5% Excess of expenditures over revenue 1,596,851 1 (9,039,373) (9,039,374) Page 5 of 5 The attached notes form an integral part of these financial statements.