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Proposed Funding Distribution Methodology

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Proposed Funding Distribution Methodology THE NEW DEAL NON PUPLIC PROPERTY (NPP) PROPOSED FUNDING DISTRIBUTION METHODOLOGY References : A. CDS Letter “New Deal” Study Directive dated 24 October 2008. B. The New Deal Study Directive Funding Distribution emailed 4 October 2010. C. A-PS-110-001/AG-002 Morale and Welfare Programs in Canadian Forces, Volume 1 Public Support for Morale and Welfare Programs and Non Public Property. AIM 1. The aim is to present a new Non-Public Funds (NPF) funding distribution model for implementation at the commencement of FY 11/12. BACKGROUND 2. After reviewing funding distribution options (ref B), the Environmental Commands agreed that Option D had the most universal appeal and requested further refinement. 3. The model at reference B, Option D, negatively affects four bases (Suffield, Montreal, Leitrim and RMC). The funding model presented at Annex C is the most equitable solution that could be found by the Tiger Team. Alternate proposals resulted in a large negative outflow for other bases. While a complete solution was not found for aforementioned bases, Annex C minimizes their negative net change while achieving national equitability to the greatest extent possible. Each base that suffers a negative net change is addressed individually later in the “Unique Circumstances” section. 4. Work has commenced with VCDS with respect to reference A and the Outside Canada (OUTCAN) units: CFSU(E), CFSU© and CDCS (W). PRINCIPLES OF FUNDING DISTRIBUTION 5. The “New Deal” funding distribution methodology minimizes “prescriptiveness” in order to permit flexibility by the local chain of command to address local requirements. The funding provided by DGPFSS is only one part of a Base’s overall funding. If required, Bases are responsible to raise funds locally in order to provide services. 6. There will be no standardized charges or usage guidelines for Community Recreation Cards across the CF. 7. Families will not be asked to pay for something that they will not directly either participate in or benefit from. 8. In general, Bases / Wings should follow the provisions of CFAO 50-20 and table 1-3-1 of ref C in the charging of fees for Specialty Interest entities. 9. This funding distribution methodology will not affect current Consolidated Bank Accounts (CBA) or the interest accrued. 10. The current funding distribution methodology will be changed. CANEX Royalties will be reduced from 1.5% of local sales to 0.6% of local sales. Concession Royalties will be reduced from 30% of net local revenue to 15% of net local revenue. The CFPSA Morale and Welfare grant will be eliminated and replaced with an Equitability Adjustment Grant. 11. HR and Accounting Fees have been inconsistently applied and at time illogical by local management, therefore the entity’s real financial result may be distorted. These fees will no longer be paid for by the Bases and Wings, but will be absorbed by DGPFSS. Consolidated Insurance Premiums (CIP) will continue to be paid by the Bases and Wings. 12. The cost of CIP is not reflected in the Annex C. Although the overall cost of the premiums is not expected to rise, there will be a re-balancing of the premiums which will change the CIP amounts for individual Bases/Wings. FUNDING DISTRIBUTION METHODOLOGY 13. Without the injection of additional capital, all attempts to more equitably distribute the $2.0M that is currently at Base / Wing disposal would significantly and negatively impact a large number of Bases / Wings. Therefore, a further $1.5M of guaranteed funding has been added to the envelope for a total of $3.5M. The new funding distribution is based on three components: a) CANEX Royalties (approx $1.0M) b) Community Recreation Core Program Services (approx $1.0M) c) Equitability Adjustment Grant (EAG) (approx $1.5M) CANEX Royalties: 14. Recognizing that NPF are generated principally through the CANEX (both retail and concessions), Base / Wing Commanders will continue to be “incentivized” to generate NPF revenue through these operations. Also, the fact that Bases and Wings who are making Public contributions (O&M and PILT) to NPF concessions will receive a percentage of NPF sales and concessions within this funding model is additional incentive for Base / Wing Commanders to enhance their concessions portfolio. 15. CANEX royalties will be calculated at 0.6% of total local CANEX sales and 15% of net local concession revenue for a total of approx $1.0M. 16. During the development of the funding methodology 0.6% and 15% royalties were proven to achieve maximum equitability across bases while still respecting the $3.5M cap on overall funding. Community Recreation Core Program Services: 17. The provision of a core component is one of the key elements in a new distribution model. It recognizes the essential outcomes that NPP beneficiaries should receive regardless of location. Bases / Wings must provide core Community Recreation Program services as identified by an annual Community Needs Assessment (CNA) with guidance from DGPFSS. Core funding is provided to each base to assist with achieving a basic set of services and programs for members and families that one should find regardless of where one serves within Canada. While the Core funding model was developed using specific like items found at every base, it is not the intention for the funding to restrict the unique needs of a Base/Wing. The CNA is meant to assist Base / Wing Commanders in determining the unique needs of their community and offers flexibility in determining what is truly core for their specific base. 18. Core services found within the funding model at Annex A are designed to promote healthy lifestyles, life skills and community recreation involvement through the delivery of services to a wide age segment with broad appeal for the entire CF community. 19. The services will be offered by Personnel Support Program Community Recreation Departments where a demonstrated need(s) exists, and in accordance with the policies published by Director General Personnel Family Support Services (DGPFSS), DND and the CF. 20. Community Recreation Core Program Services are grouped into three elements: a) Community Needs Assessment (CNA); b) Active Living; and c) Community Programming. 21. The only mandatory portion of Core services for which funding is provided is the annual CNA. Base / Wing Commanders will be required to submit a letter of attestation annually to include verification of completion of a CNA and acknowledgement of action taken based on its results. 22. To “operationalize” the core community recreation costs into a revised funding distribution methodology, DGPFSS determined a model for costing each respective base. Annex B contains an explanation on how these costs were calculated. 23. Based on the core costing model, the funding distribution methodology was set at 33% of core in order to achieve an equitable balance between bases and remain within the $3.5M cap on overall funding. Equitability Adjustment Grant (EAG) 24. As per APS 110-001, units in Canada are grouped into four categories based on two factors including: proximity to major civilian populations (Urban, Semi-Urban, Rural and Remote) and Regular force population at each Base/Wing. See the table below for categorization of size: Less than150 150-500 500-1500 1500-3000 3000-5000 More than 5000 25. The EAG attempts to compensate for the various factors, such as lack of infrastructure or a small target population for programming, that contribute to life in a rural location not providing the same options as life in an urban area. The EAG also assists in achieving a baseline of service at smaller bases while also assisting with the demands for greater capacity at larger bases. 26. Bases / Wings will remain in their population category until the next full review in FY 13/14. If a base crosses a size threshold (increase or decrease) by 10% or more during a FY, then the Base / Wing may request an earlier review within the CNA Attestation letter. 27. In order to equitably distribute the $1.5M EAG, a baseline grant was established for an urban base with less than 150 people. For all other bases, a multiplier is applied based on the two factors (Geography/Size). GEOGRAPHY MULTIPLIER Urban 1 Semi-Urban 1.25 Rural 1.5 Remote 2.25 SIZE MULTIPLIER Less than 150 1 150-500 3 500-1500 6 1500-3000 9 3000-5000 12 More than 5000 15 28. Should a local situation develop where CANEX sales markedly deteriorate, DGPFSS will ensure that CANEX Royalty in any given year is not less than 75% of the new FY 2011/12 baseline. Similarly, should a local situation develop whereby CANEX sales increase greater than 150% of the new FY 2011/12 baseline, then any CANEX Royalty above 150% would be invested in CFCF. 29. If a new CANEX operation is established after the implementation of this funding model, the maximum amount of royalties (150%) will be waived until a 3 year baseline can be established. 30. Allocation to small units will be done as per ANNEX D. UNIQUE CIRCUMSTANCES 31. CFB Suffield . CFB Suffield suffers a large net loss in total funding under the new funding model. This is caused by the “grandfathering” of CFB Suffield’s CANEX Royalties at a rate above that of other bases (5% vs.1.5%) under the current funding model with the result that CFB Suffield has been receiving disproportionate funding relative to other similar bases. 32. DGPFSS, the Army and CFB Suffield shall commence immediately to develop a plan that respects and recognizes the BATUS’ contribution to CFB Suffield’s MW programs. 33. If an agreement is not reached prior to the commencement of FY 2011/12 then CFB Suffield will be funded at their 2009/10 level.
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