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Meeting #1/13

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Meeting #1/13 Budget/Audit Advisory Board Meeting #1/13 Chair: Gerri Lynn O'Connor Vice Chair: Members: Maria Augimeri David Barrow Bob Callahan Dave Ryan April 12, 2013 8:30 A.M. WESTON ROOM B, BLACK CREEK PIONEER VILLAGE AGENDA Pages BAAB1. MINUTES OF MEETING #3/12, HELD ON OCTOBER 12, 2012 (Minutes Summary Enclosed Herewith on YELLOW) BAAB2. BUSINESS ARISING FROM THE MINUTES BAAB3. DISCLOSURE OF PECUNIARY INTEREST AND THE GENERAL NATURE THEREOF BAAB4. DELEGATIONS BAAB5. PRESENTATIONS BAAB5.1 A presentation by Rocco Sgambelluri, Chief Financial Officer, TRCA, in regard to item BAAB7.1 - 2013 Budget, Operating and Capital. BAAB6. CORRESPONDENCE BAAB7. SECTION I - ITEMS FOR AUTHORITY ACTION BAAB7.1 2013 BUDGET, OPERATING AND CAPITAL 3 1 BAAB8. SECTION IV - ITEMS FOR THE INFORMATION OF THE BOARD BAAB8.1 2012 YEAR END FINANCIAL PROGRESS REPORT 80 NEW BUSINESS NEXT MEETING OF THE BUDGET/AUDIT ADVISORY BOARD TO BE HELD ON JUNE 21, 2013, AT 8:30 A.M. IN WESTON ROOM B, BLACK CREEK PIONEER VILLAGE Brian Denney Chief Administrative Officer /ks 2 Item BAAB7.1 TO: Chair and Members of the Budget/Audit Advisory Board Meeting #1/13, April 12, 2013 FROM: Rocco Sgambelluri, Chief Financial Officer RE: 2013 BUDGET, OPERATING AND CAPITAL _____________________________________________________________________________ KEY ISSUE Recommends approval of the 2013 operating and capital budget. RECOMMENDATION THE BOARD RECOMMENDS TO THE AUTHORITY THAT WHEREAS the Conservation Authorities Act (CA Act) provides that a conservation authority, in establishing its annual levy, shall have the power to determine the proportion of total benefit of any project afforded to all participating municipalities that is afforded to each of them; THEREFORE LET IT BE RESOLVED THAT, subject to such regulations under the Conservation Authorities Act as may be approved by the lieutenant-Governor-in-Council: (i) all participating municipalities be designated as benefitting for all projects included in the 2013 Operating Budget; (ii) Toronto and Region Conservation Authority's (TRCA) share of the cost of the programs included in the 2013 Operating Budget shall be raised from all participating municipalities as part of the General Levy; (iii) the 2013 General Levy be apportioned to the participating municipalities in the proportion that the modified current value assessment of the whole is under the jurisdiction of TRCA, unless otherwise provided in the levy or a project; (iv) the appropriate TRCA officials be directed to advise the participating municipalities, pursuant to the Conservation Authorities Act and the regulations made thereunder, and to levy the said municipalities the amount of the general levy set forth in the 2013 Operating Budget, including property tax adjustments and non-Current Value Assessment (CVA) levy, and to levy the said municipalities the amount of the capital levy set forth in the 2013 Capital Budget and in the approved projects of TRCA; THAT the 2013 Operating and Capital Budget, and all projects therein, be adopted; THAT staff be authorized to amend the 2013 Operating and Capital Budget to reflect actual 2013 provincial grant allocations in order to determine the amount of matching levy governed by regulation; 3 THAT the cost of property taxes imposed by municipalities on conservation lands owned by TRCA be charged as additional levy to the respective participating municipalities, excluding the cost of property taxes which are passed on to a third party under a lease or similar agreement; THAT, except where statutory or regulatory requirements provide otherwise, staff be authorized to enter into agreements with private sector organizations, non-governmental organizations or government agencies for the undertaking of projects which are of benefit to TRCA and funded by the sponsoring organization or agency; THAT, as required by Ontario Regulations 139/96 and 231/97, this recommendation and the accompanying budget documents, including the schedule of matching and non-matching levies, be approved by recorded vote; AND FURTHER THAT authorized TRCA officials be directed to take such action as may be necessary to implement the foregoing, including obtaining needed approvals and the signing and execution of documents. RATIONALE Enclosed is the recommended 2013 Budget, Operating and Capital. The budget will be presented to the Authority at its meeting scheduled to be held on Friday, April 26, 2013. Municipal Approval Status Preliminary estimates are prepared in the summer and fall of each year for submission to TRCA's municipal funding partners. Staff meet with municipal staff as required by the budget processes and budget schedules followed by each major participating municipality. Presentations are made to municipal finance staff and the committees and councils of the funding partners as required. In the case of Peel Region, TRCA works closely with staff at Credit Valley and Halton conservation authorities to align budget information and requirements. A similar process occurs with York Region where TRCA works closely with the Lake Simcoe Region Conservation Authority. In Durham Region, the process is more complicated because five conservation authorities work to align budgets and financial submissions to meet the Region of Durham budget requirements. TRCA's submissions to the City of Toronto for capital and operating levy are reviewed with senior Finance and Toronto Water staff. The 2013 Preliminary Estimates were approved by the Authority in October, 2012, as the basis for submissions to TRCA's municipal funding partners. The funding identified in the apportionment of the levy reflects the amounts that the municipal funding partners have approved in their 2013 budgets for capital and operating. Contributions from the major funding partners, City of Toronto and the regional municipalities of Durham, Peel and York have received council. The Township of Adjala-Tosorontio and the Town of Mono have been advised of TRCA's levy request. MNR Transfer Payments The 2013 provincial funding which must be matched with levy has not been announced. The 2013 operating budget includes a provision for MNR transfer payments at an amount equal to the funding received in 2012. The 2012 funding level of $846,000 was reduced by $72,000 or 8.5% from the previous year. No time line has been given for the announcement of 2013 grants. 4 Notice of Meeting By regulation, TRCA has provided 30 days written notice to its member municipalities of the date of the meeting at which the Authority will consider the municipal levy. At the April 26, 2013, Authority meeting, a recorded vote on the budget recommendation including the non-matching municipal levy is required. The weighted voting procedure prescribed by regulation will be used, if necessary. Operating Budget - Overview of Key Issues Salary/Wage Costs The largest segment of the operating budget is wages and benefits, representing about 78% of gross operating expenditures. The Authority was advised in October, 2012, when the preliminary estimates were approved, that staff was recommending an increase of 2%, effective at the first pay in April, 2013. TRCA salary and wage adjustments over the last five years, as outlined below, have totalled 7%, representing a simple average increase of 1.4% per year. 2009 - 0% 2010 - 2% 2011 - 0% 2012 - 3% 2013 - 2% Staffing Levels The TRCA full time equivalents (FTEs) included in the operating budget are projected to be 410.3 for 2013 (as compared to 396.6 budgeted in 2012.) This is an increase of 13.7 FTE's from 2012. Refer to page 7 of the operating budget document (Attachment 1) for an explanation of the year-over-year changes, by section. Expenditures/Operating Revenues The 2013 operating expenditure budget is $38.36 million, an increase of $1.7 million or 4.6% over 2012 budget. The increase in expenditures will be financed by additional revenues (non-levy) of $1.22 million (5.1% increase) and additional general levy of 548,000 (4.6% increase.) Expenditure increases are, with minor exception, mainly due to new wage / salary costs ($1.26 million) and benefit costs ($607,000.) The benefit costs include increases to OMERS premiums of 0.7 of 1% on earnings to $51,100 and 1.8% on earnings in excess. The Living City Foundation (LCF) The Living City Foundation continues to enjoy success in attracting funding and donations for many capital and special TRCA projects. However, the LCF continues to have difficulty raising funds for unrestricted purposes and, therefore, the TRCA budget does not provide for any unrestricted funding in 2012 or 2013. The 2013 budget does include a new provision of $213,000 for donor acquisition. Although this amount was originally set aside to finance a new phase of the "door-to-door" donor acquisition program, it is staff's intention to review all options in assisting the LCF with donor acquisition. 5 Deficit Management The 2012 audited financial statements will not be available until the June meeting of the Budget/Audit Advisory Board. While there may still be a need to process a few minor adjustments to the year end results, 2012 results have been exceptional. The projected in year surplus for 2012 will exceed $4.4 million. Going into 2012 the cumulative deficit stood at $1.9 million of which approximately $900,000 relates to the new Petticoat Creek pool (which will be repaid from future revenues) and the balance to past operating deficits. The details of the 2012 net results are available elsewhere on the agenda, in the report titled "2012 Year End Financial Progress Report". The June report to the board may include recommendations regarding transfers to reserves from surplus. In 2013, there is provision for a $75,000 surplus within the operating accounts. This amount is the second instalment from Parks and Culture Division for the repayment of the amounts spent over available funding to complete the Petticoat Creek pool, which was operational in 2012 Municipal Funding Arrangements Each of TRCA's participating municipalities has its own unique budget requirements and annual budgetary pressures.
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