XC Report to Council Cover Page

INDEX
	*Police Services Board*		*Commission de Services Policiers*
1.	OPS LONG RANGE FINANCIAL PLAN AND 2007 BUDGET DIRECTIONS ACS2007-CCS-PSB-0001	01	PLAN FINANCIER À LONG TERME DU SERVICE DE POLICE D’OTTAWA ET 2007 DIRECTIVES BUDGÉTAIRES ACS2007-CCS-PSB-0001

1. OPS LONG RANGE FINANCIAL PLAN AND 2007 BUDGET DIRECTIONS

PLAN FINANCIER À LONG TERME DU SERVICE DE POLICE D’OTTAWA ET 2007 DIRECTIVES BUDGÉTAIRES

BOARD RECOMMENDATION

That Council approve the following steps to action the OPS Long Range Financial Plan:

a. Approve the forecast Ottawa Police Service four-year operating expenditure requirements and ten-year capital needs as detailed in Attachments 1 and 2.

b. Approve a user fee policy that maintains the proportion of tax rate support and revenue from the benefiting user for all fees not otherwise governed by by-law or previously approved Board objective.

c. Approve the 2007 transfer of Ottawa Police Services debt servicing budget of $5.258 million from the City of Ottawa to the OPS budget.

RECOMMANDATION DE LA COMMISSION

Que le Conseil, en vue de la mise en œuvre du Plan financier à long terme du Service de police d'Ottawa (SPO) :

a. approuve les prévisions des dépenses de fonctionnement sur quatre ans et des besoins en immobilisations sur dix ans du SPO, telles qu'elles sont décrites en détail dans les annexes 1 et 2;

b. approuve une politique de frais d'utilisation qui maintiendrait le rapport actuel entre le financement tiré des rentrées fiscales et les recettes provenant des utilisateurs bénéficiaires pour tous les frais non visés par un règlement municipal ou par une politique précédemment approuvée par la Commission;

c. approuve le transfert, du budget de la Ville d'Ottawa au budget du SPO, d'un montant de 5,258 millions de dollars au titre du service de la dette du SPO pour 2007.

DOCUMENTATION

1. Director of Finance & Materiel Management’s report dated 15 December 2006 is attached.

2. Presentation attached at Annex A.

3. Extract of Draft Minute, 18 December 2006 is attached.

REPORT

RAPPORT

DATE:	15 December 2006
TO:	Executive Director, Ottawa Police Services Board
FROM:	Director of Finance and Materiel Management, Ottawa Police Service
SUBJECT:	OPS LONG RANGE FINANCIAL PLAN AND 2007 BUDGET DIRECTIONS

RECOMMENDATIONS

1. That the Ottawa Police Services Board take the following steps to action the OPS Long Range Financial Plan:

a. Approve the forecast Ottawa Police Service four-year operating expenditure requirements and ten-year capital needs as detailed in Attachments 1 and 2.

c. Approve the 2007 transfer of Ottawa Police Services debt servicing budget of $5.258 million from the City of Ottawa to the OPS budget.

d. Forward the OPS Long Range Financial Plan to City Council for approval at the 11 January 2007 Council meeting.

2. That the Ottawa Police Services Board approve a 2007 Budget Direction which will result in either:

a. A $10.45 million increase in taxation in accordance with the Long Range Financial Plan, subject to adjustments identified prior to tabling of the budget; or

b. No increase in taxation.

BACKGROUND

The Ottawa Police Service Long Range Financial Plan sets the framework and policies for future annual budget processes, and confirms management and the Board’s commitment to financial planning and financial sustainability for the Ottawa Police. It provides a framework for setting the expenditure priorities of the Board, and a long term funding strategy for those identified needs.

In October 2002, City Council approved the newly amalgamated City of Ottawa’s first Long Range Financial Plan (LRFP). That report provided policy recommendations to address the City’s current and future capital expenditure requirements. In 2004, that plan was refreshed for the City as a whole, and the Ottawa Police Services Board approved a police specific LRFP that was submitted for inclusion with the City’s plan. The 2004 Police LRFP included an endorsement of the City’s debt financing policy and a plan to grow the OPS pay-as-you-go capital contributions program to fully fund lifecycle capital costs.

In July 2006, City Council approved an Integrated Planning Framework. This framework sets the schedule for integration of the City’s master planning processes. The Long Range Financial Plan is to be refreshed at the beginning of each new term of City Council. This report constitutes the OPS submission for approval by the Board, and consolidation into the City report.

Previous versions of the LRFP focussed entirely on the long term capital needs of the police service, and the City as a whole. This update will also provide a multi-year operating expenditure needs forecast, and the associated funding requirements. The inclusion of multi year operating budget requirements is in response to a recommendation from the City’s Auditor General’s 2005 Audit of the OPS Budget Development Process, and is consistent with the City’s Integrated Planning Framework.

With the inclusion of operating budget requirements, the LRFP is a comprehensive analysis of the high level forecast expenditure needs and associated funding strategies that will impact the guidelines for each annual budget process in the current term of the Police Services Board and City Council. The LRFP will also link to all future OPS Business Plans and other strategic planning documents.

On 25 July 2006, the OPS Board approved the 2007 Long Range Financial Plan and Budget Process report. Since that time, scheduling of the review and approval of the OPS Long Range Financial Plan has been significantly delayed and revised to follow changes implemented by the City as a whole. Part 1 of the City’s Long Range Financial Plan III was presented to City Council on 11 October 2006. City Staff have now tabled part 2 of that report, and public consultation is currently in progress.

City Council has also tabled the 2007 Budget Directions report. Within that report was a recommendation that the Ottawa Police Service table a Draft 2007 Operating Budget consistent with the citywide direction of no increase in taxation. This report will also provide the potential impacts of that direction to the Ottawa Police Service.

City Council is scheduled to approve all elements of the LRFP, as well as the 2007 Budget Directions on 11 January 2007.

The Board now has two tasks to complete in order to meet the accelerated budget schedule timelines:

a. Review and approve the LRFP for the Police Service at the December board meeting, so that these results can be included as part of Council’s deliberations on 11 January 2007;

b. Give budget direction to staff at the December board meeting on the development of the 2007 budget estimates, giving due consideration to Council’s direction, the Board’s responsibilities under the Police Service’s Act and the requirements outlined in the LRFP.

The accelerated budget schedule means that this process will need to occur in a compressed timeframe.

DISCUSSION

Ottawa Police Services Finances in Context

For every Canadian municipality that provides police service, the cost of providing that service constitutes one of the biggest financial commitments in the annual budget and resulting tax rate. For 2006, Ottawa Police services represent 16% of the total city property tax bill, excluding education, or $404 for an average residence with an assessed value of $276,000. On a cost per service basis, only the cost of transit service is greater than the cost of policing in the City of Ottawa.

As with all municipal costs, the Ottawa Police Service gross budget has increased in recent years. Increases have been primarily attributable to the Strategic Staffing Initiative (SSI) and contractual personnel costs. Gross annual budget increases since City amalgamation in 2001 are presented in Table 1.

Table 1: Ottawa Police Service Gross Operating Budget 2001 to 2006

	2001	2002	2003	2004	2005	2006
	$000	$000	$000	$000	$000	$000
OPS Operating Budget - Total Gross Expenditures *	128,761	137,130	144,279	158,427	174,670	189,167
% Annual Increase		6.5%	5.2%	9.8%	10.3%	8.3%

* Gross excluding Non Departmental expenditures resident with the City of Ottawa

As presented in Table 2, while gross spending has increased over this period, the increases have for the most part been proportional with the total City budget. The proportional police share of total City budget has increased slightly since 2003, from 7.8% to 9.0%.

Table 2: OPS Gross Budget in Proportion to Total City Budget

Gross Operating Budget	2001	2002	2003	2004	2005	2006
	$000	$000	$000	$000	$000	$000
City Operating Budget	1,681,519	1,726,046	1,838,862	1,898,290	1,988,385	2,113,224
OPS Operating Budget *	128,761	137,130	144,279	158,427	174,670	189,167
OPS as % of Total City	7.7%	7.9%	7.8%	8.3%	8.8%	9.0%

* Gross excluding Non Departmental expenditures resident with the City of Ottawa

Even with the proportionately greater increases in recent years, the OPS compares favourably to other municipalities in Ontario. For example, in Toronto, 10.0%[1] of gross municipal spending supports police services.

On a per capita basis, police costs in Ottawa fall in the middle of the pack for twelve Canadian municipalities most recently analyzed and published by Statistics Canada in November 2006.

Table 3: Police Costs Per Capita

	2005	StatsCan	Cost per
Service	Costs	Population	Capita	Rank
Toronto	$ 794,388,904	2,607,637	$305	1
Vancouver	$ 176,042,279	584,701	$301	2
Edmonton	$ 192,725,300	718,788	$268	3
Montreal	$ 472,709,169	1,873,813	$252	4
Calgary	$ 229,809,276	970,797	$237	5
Ottawa	$ 172,279,620	832,550	$207	6
Hamilton	$ 107,168,305	519,878	$206	7
Peel	$ 236,254,160	1,148,445	$206	8
Durham	$ 115,861,058	575,201	$201	9
York	$ 161,551,777	922,487	$175	10
Halton	$ 77,083,068	443,402	$174	11
Gatineau	$ 39,262,434	245,629	$160	12

Source: Police Resources in Canada, 2006. (Statistics Canada, 85-225) Based on 2005 data.

Other common measures quantified and published annually by Statistics Canada are Population per Police Officer, and Police Officers per 100,000 Population. The most recent statistics available at the time of this report are from 2005, as prepared in 2006. In these reports, Ottawa falls closer to the low end of the ranking.

Table 4: Population Per Police Officer

	2005		Population
	StatsCan	2005	Per Officer
Service	Population	Officers	Ratio	Rank
Montreal	1,873,813	4,346	431	1
Vancouver	584,701	1,303	449	2
Toronto	2,607,637	5,371	486	3
Edmonton	718,788	1,356	530	4
Calgary	970,797	1,599	607	5
Hamilton	519,878	762	682	6
Peel	1,148,445	1,667	689	7
Gatineau	245,629	346	710	8
Ottawa	832,550	1,138	732	9
Durham	575,201	776	741	10
York	922,487	1,174	786	11
Halton	443,402	533	832	12

Source: Police Resources in Canada, 2006. (Statistics Canada, 85-225) Based on 2005 population and 2005 police officers.

Table 5: Police Officers Per 100,000 Population

Service	Ratio	Rank
Montreal	232	1
Vancouver	223	2
Toronto	206	3
Edmonton	189	4
Calgary	165	5
Hamilton	147	6
Peel	145	7
Gatineau	141	8
Ottawa	137	9
Durham	135	10
York	127	11
Halton	120	12

Source: Police Resources in Canada, 2006. (Statistics Canada, 85-225) Based on 2005 population and 2005 police officers.

Under the Strategic Staffing Initiative (SSI), the sworn officer complement of the OPS has increased by 165 officers between 2002 and 2006. A further 30 officer positions were added in 2006 when the Strategic Growth Initiative (SGI) was introduced to ensure that OPS keeps pace with growth in the City.

CAPITAL NEEDS FORECAST

Attachment 1 to this report provides the 2007 to 2016 ten-year capital requirements forecast for the Ottawa Police Service by individual project and by category of need. The ten-year gross needs range from $13.7 million to $28.9 million annually, and totals over $192.5 million for the ten-year forecast, summarized as follows:

Table 6: OPS 10 Year Capital Needs Summary ($Millions)

		Funding
Category	Gross Need	Tax	Revenue	DC	Debt

Renewal of Assets	133.7	130.2	3.5

Growth	27.6			13.9	13.7

Strategic Initiatives	31.2	27.4			3.8

TOTAL	192.5	157.6	3.5	13.9	17.5

The capital needs analysis provided in this report represents an unconstrained capital program. The requirements and the associated funding strategy are not limited to the currently available funding envelope, but rather are presented to demonstrate the financial impact of the needs. Final decisions regarding affordability are subject to Board deliberation within each annual budget process.

The broad categorization of the capital program remains consistent with that used in previous LRFP and annual budget submissions, and the approach used by the City of Ottawa. The majority of the forecast is required for ongoing maintenance and Renewal of Existing Police Assets, including fleet replacement, facility maintenance, and information technology renewal. This comprises $133.7 million of the $192.5 million requirement, or 70%. This proportion is consistent with that forecast in the 2004 LRFP, and highlights the financial significance of maintaining current infrastructure, prior to consideration of additional capital.

As per policy approved by the Ottawa Police Services Board and City Council in 2004, Renewal of Asset projects are not eligible for development charge or debt funding. Therefore, this category requires a significant draw on the annual tax supported capital contributions, which in turn are reflected in the operating budget and the resulting police tax rate. Specific project revenue expectations included in the forecast arise from the disposal of fleet assets only.

The Growth category is defined as only those projects that are eligible for development charge (DC) funding from the DC by-law last updated in 2004. In this current capital forecast, the growth requirements are attributable to the immediate need for new facility acquisition and/or construction resulting from City growth and corresponding growth of the Police Service’s staff complement. New facilities costs total $27.6 million over the ten-year planning horizon, and are in addition to $7.5 million approved in the 2006 capital budget. In conjunction with City of Ottawa Finance staff, the 2004 DC by-law annual revenue cash flow is subject to review, and may not be sufficient to address the full growth needs currently identified. Shortfalls can be addressed in the next update of the development charge by-law in 2009. From a conservative perspective, the police growth needs in this forecast prior to 2009 are funded through debt. Should DC funding and/or DC funded debt be deemed available and sufficient, it will be applied in the corresponding annual budget process. Police management will continue to work with City of Ottawa management to confirm the sufficiency of DC funding.

The third category of forecast capital expenditures is the Strategic Initiatives. This category houses all requirements that do not qualify as renewal or growth. Major examples include annual Information Technology Strategic Initiatives to remain at the forefront of policing information technology, and annual facility upgrade initiatives. Total capital strategic initiatives over the forecast period total $31.2 million. Funding for this category is primarily tax-supported capital contributions, with the exception of certain initiatives that qualify for debt funding.

Capital Funding Strategy

The principles of the OPS Capital Funding Strategy were approved in the 2004 Long Range Financial Plan. At that time, the principles were summarized as follows:

Category	Primary Funding Sources
Renewal of Assets	Pay-As-You-Go
	Project Specific Revenue
Growth	Development Charges
	Debt
Strategic Initiatives	Pay-As-You-Go
	Debt

It is recommended that these principles be renewed and, therefore, the application of the needs and associated ten-year funding plan is graphically depicted as follows:

To summarize, the capital needs of the Ottawa Police Service are primarily derived from the renewal and improvement of existing infrastructure. The funding options available for those needs are limited, and the police tax base will be required to fund 82% of the need over the ten-year planning horizon.

CAPITAL FORMATION COSTS

Within the OPS capital funding strategy, the annual direct tax support, or “pay-as-you go” contributions and debenture debt servicing, have an impact on the annual police tax rate. Pay-as-you-go funding is a contribution straight from the operating budget (the tax rate) to the capital program. Debt funding creates annual debt servicing charges for a period of 10 to 20 years after the debt is issued. This also impacts the annual operating budget and tax levy in subsequent years after the debt is issued. For purposes of this report, that is assumed to occur two years following project approval.

Capital Contributions (Pay-As-You-Go)

As was forecast in the 2004 LRFP and the 2006 Approved Budget, the capital contributions of the Ottawa Police must be increased in the short term for significant upcoming projects. Highlights of those projects include:

Replacement of IT mobile workstations $3.0 Million (2008)
Replacement of the portable radio handsets $5.0 Million (2008 – 2009)
Refit of IT Infrastructure $10 Million (2009 – 2010)

The police tax base must fund these projects. There is no eligibility for development charge or debenture debt funding. The current OPS capital contribution in 2006 is $8.4 million, and will need to increase to $16.5 million by 2009 in order to fully fund all forecast needs that must draw from tax funding. The plan for these requirements began with the 2006 Approved Budget as the tax supported capital contributions were increased $3.2 million to ramp up funding for these purposes. These increases must continue to be phased as much as possible over the next three years to mitigate the immediate tax impact in each year as much as possible.

Within the current $8.4 million budget for contributions to capital is $2.8 million specifically segregated for renewal of the police fleet. At the request of the Board, a review of the police fleet is ongoing, and the City’s Auditor General is performing an audit of the program. For this LRFP, the fleet renewal component is assumed to increase by only an inflationary amount each year for the term of the forecast. That is subject to adjustment once the fleet review is completed.

Debenture Debt

Only a limited number of capital projects of the OPS are eligible for debt funding. In this LRFP, those projects are exclusively new facilities or building improvements. Over the 10-year horizon, the OPS are forecast to issue $17.5 million in new debt, with $13.1 required from 2007 to 2009.

Currently, the OPS have $18.4 million of issued and outstanding debt, and $28.4 million of unfunded debt. A debt-servicing budget base of $5.258 million currently resides with the City of Ottawa, and is comprehended in the calculation of the annual police tax rate. With the creation of the separate police tax rate in 2005, that base was intended to transfer to the police budget. Subject to approval, Recommendation 3 of this report will finalize that transfer.

The $5.258 million is sufficient for the annual debt servicing payments for the currently outstanding debt. All things being equal, as new debt is issued, the debt servicing operating budget needs to increase. However in 2006, $9.8 million of outstanding police debt was retired (paid in full). With that retirement, the 2007 actual debt servicing need is reduced by $2.3 million from 2006. Subsequently, as new debt is issued, the debt servicing line needs replenishment and will return to 2006 levels in 2009. (See Table 7)

In combination, the annual capital contribution and debt-servicing budget comprise the Ottawa Police Capital Formation Costs. The required level, and the mix, of capital formation costs constitute a decision point for the Ottawa Police Services Board. That is, to what extent will capital projects be funded from the current levy (pay-as-you-go), or debt financed for payment over a term of several years. To tie this back to the OPS approved capital funding strategy from 2004, Renewal of Assets projects will attract the scarce pay-as-you-go dollars. Certain strategic initiatives, and the portion of growth projects not eligible for development charge funding, are typically eligible for debenture debt funding. As is the case in 2007, debt retirement can allow for a shift of debt-servicing budget to the capital contributions line, and thereby mitigate the immediate tax rate impact.

With the transfer of debt servicing budget completed, the existing 2006 OPS Capital Formation Costs total $13.7 million, and are forecast to shift and increase over the next four year as illustrated in Table 7:

Table 7: OPS Capital Formation Costs ($Millions)

	2006	2007	2008	2009	2010

Debt Servicing	5.3	3.0	3.0	4.5	5.3
General Capital Contribution	5.6	8.8	11.0	13.2	14.5
Fleet Capital Contribution	2.8	3.0	3.1	3.3	3.4
Total	13.7	14.8	17.1	21.0	23.2
Annual Increase		1.1	2.3	3.9	2.2

OPERATING EXPENDITURE FORECAST

Attachment 2 provides the forecast 2007 to 2010 incremental operating budget pressures for the Ottawa Police Service. Annual pressures range from $10.5 million to $13.5 million, and are categorized into four major categories. Capital formation costs are explained in detail in the previous section. The remaining three categories are explained in further detail below.

Table 8: OPS Incremental Operating Pressures Summary ($000)


Category	2007	2008	2009	2010
Maintain Existing Service
Compensation	7,900	8,800	9,000	9,500
Growth	2,400	3,400	3,400	3,500
New Initiatives	500	500	500	500
Capital Formation Costs	1,050	2,350	3,850	2,250
Incremental Budget Requirement	13,550	15,000	16,800	15,800
Less Assessment Growth (2%)	(3,100)	(3,200)	(3,300)	(3,400)
Incremental Net Budget Increase	10,450	11,800	13,500	12,400
Police Tax Rate Increase	6.7%	7.1%	7.6%	6.5%
Impact on City Tax Rate	1.1%
FTE	1,818	1,863	1,908	1,953

Policing is a labour intensive public service. In 2006, approximately 85% of the $189 million Ottawa Police Service gross operating budget is dedicated to personnel costs. It supports salaries and associated benefits for 1,251 sworn officers, 522 civilian support staff as well as overtime and court time costs. The remaining 15% balance of the operating budget supports the materials, fleet, facility, and information technology needs of the personnel, and provides the capital formation budget for the services major capital needs. As such, the greatest operating budget pressures faced in any given year are collectively bargained pay increases and complement increases under the Strategic Growth Initiative to ensure the OPS keeps pace with City growth. Inflationary increases on purchased services and materials such as automotive fuel and heating fuels also impact the budget.

Maintain Existing Services

This category illustrates the required incremental operating budget increases to maintain 2006 levels of service only. This includes estimates for collectively bargained salary increases for the current complement, inflationary increases on fuel, utilities and purchased services. These necessary expenditure increases are mitigated by the Board-approved annual efficiency target, and subject to approval, a new user fee policy.

Recommendation 1b implements in principle that OPS user fees will increase each year in proportion to the cost of providing the service, unless governed by an existing by-law or Board approved revenue objective. The intent of this policy is to maintain the ratio between tax rate support and user fee support from the benefiting user. Once this general principle is approved, staff will review each user fee and its associated cost and submit a corresponding fee increase with the tabling of the draft budget. Exception will be made for Alarm Fees, which are governed by by-law and have a specific objective of reducing false alarms. That objective will override this general policy principle.

Growth

The Strategic Staffing Initiative (SSI) has guided the increases in OPS staffing that occurred between 2002 and 2006. The Strategic Growth Initiative (SGI 2013) was introduced in the 2006 budget to ensure that OPS plans for, and takes the steps necessary, to keep pace with City growth. Thirty sworn officer positions were added to the Police Service under the 2006 phase of SGI. Staff and management are in process of completing the SGI 2013 project charter.

For purposes of this LRFP, staff increases and associated costs are assumed to follow the complement growth forecast in the 2004 Development Charge Study, or 30 officers per year. The LRFP also assumes 15 civilian staff per year to support the growth of the force.

Anticipation of Senior Level government funding in this forecast is limited to the continuation of the Province of Ontario Safer Communities One Thousand Officers Partnership (SCOOP) program.

New Initiatives

Similar to the capital forecast, new initiatives not directly tied to growth are an annual expectation in the police budget. For purposes of this LRFP, staff have assumed $500,000 per year for this purpose. Details and exact requirements will come forward with each budget process.

Assessment growth is assumed at 2%. This is consistent with the assumption used in the City’s Long Range Financial Plan, and is also subject to update with each annual budget submission.

2007 BUDGET DIRECTIONS

Requirement for 2007: $10.5 Million Increase in Taxation

As per Section 39(1) of the Police Services Act, the Board shall submit operating and capital estimates to the municipal council that will show, separately, the amounts that will be required,

(a) to maintain the police force and provide it with equipment and facilities; and

(b) to pay the expenses of the board’s operation other than the remuneration of board members.

In total, the net budget increase required to maintain service levels and meet growth needs in 2007 is $10.45 million, as set out in the Long Range Financial Plan. This amount equates to a 6.7% increase over the 2006 police tax rate, or 1.1% on the citywide municipal tax bill. Following the further analysis completed by staff for this LRFP, this estimate is approximately $4.35 million less than the 2007 forecast that published with the 2006 Draft Budget last fall.

Impact of No Taxation Increase in 2007

City Council has put forward a direction to the Ottawa Police Service to identify reductions in expenditures or increased revenue to offset the projected $10.45 million net budget increase for 2007 and, therefore, achieve a 0% increase in taxation.

While staff have not had sufficient time to develop a comprehensive 0% increase scenario and to fully quantify the potential impacts of such a plan, the highlights of a scenario leading to $10.5 million of reductions are set out below.

Request for 30 positions to meet growth needs denied - This action would reduce the budget pressure $2.4 million. Existing resources would be stretched further to maintain services to the growing City, and the Ottawa Police per 100,000 population would drop from its most recently reported standing of 9^th out of 12 major police forces in Canada. (See Table 5)

Program cuts leading to the elimination of existing sworn and civilian positions – Based on analytical work undertaken in conjunction with the Police Program Review in 2003, program cuts were identified under a “5% Scenario” which would lead to the elimination of 46 sworn officers and 24 civilians and savings of $7.2 million. That reduction scenario would mean fewer Ottawa Police Service members available to serve the public and respond to calls for service. The number of access points and overall accessibility to police services will mean reduced service levels and longer response times on inquiries. This would immediately begin to undo a number of recent strides the Ottawa Police Service has made in addressing community concerns and emerging public safety issues. By virtue of provincial legislation, any reduction in police or civilian complement at an Ontario police service must be approved at a hearing convened by the Ontario Civilian Commission on Police Services (OCCPS).

Elimination of all new service initiatives - This action could reduce the incremental 2007 increase by $500,000, and will eliminate or defer all planned service adjustments or enhancements.

Adjustments to Capital Expenditure Plan – There may be a limited opportunity for savings in this area. The forecast for 2007 capital formation costs has already been adjusted for a short-term reduction in debt servicing. Any further reductions would eliminate the gains achieved in the 2006 Approved Budget to prepare the OPS for significant capital requirements forecast in the upcoming 3 to 4 year horizon.

Revised 2007 Budget Timetable

At a Special Meeting on 7 December, City Council approved revisions to the 2007 Budget Timetable. The following table provides the revised City Council timetable, and the revised Ottawa Police Services Board schedule to accommodate the adjustments. The timeframe has been shortened, and Board approval of the 2007 Budget will occur at a special meeting on 19 February, with full Council approval scheduled for the week of 26 February.

Event	Budget Date
City Council: Tabling of Citywide LRFP and 2007 Budget Directions	December 14
OPS Board: OPS LRFP & 2007 Budget Directions	December 18
City Council: Public Delegations on 2007 Budget Directions to Committee of the Whole	January 10
City Council: Deliberation and approval of 2007 Budget Directions	January 11
OPS Board Special Meeting: Table OPS budget estimates with Board	February 7
City Council: Tabling of Citywide 2007 Draft Budget	February 7
Public Consultations Meetings	February 12 – 16
City Council: Public delegations to Committee of the Whole	February 19 – 23
OPS Board Special Meeting: Public Delegations and Approval of 2007 OPS Budget	February 19
City Council: Deliberations and approval of the 2007 Budget	February 26 - 28, 2007

CONSULTATION

No public consultation has occurred in the preparation of this report. The revised 2007 Budget Timetable provides for specific timeframes and scheduled public meetings for purposes of public consultation on the Police Service’s and Citywide municipal budget.

FINANCIAL STATEMENT

There are no direct or immediate financial implications from the approval of this report. Capital and Operating needs forecasts are subject to annual budget approval. Impacts of policy recommendations, if any, will be reported in future Quarterly Financial Status Reports.

CONCLUSION

The Long Range Financial Plan provides a high level comprehensive forecast of the unconstrained capital and operating funding requirements of the Ottawa Police Service. In concurrence with the Citywide Integrated Planning Framework, the LRFP will be updated every four years, for the new terms of the Board and City Council. While the LRFP sets the long-term context, each year’s budget process provides the Board’s final approval for the annual requirements.

The funding options available to the Ottawa Police, both operating and capital, are limited. Funding for over 82% of the capital program and over 95% of the operating program comes directly from the police tax rate. The Police Service is facing significant short-term capital requirements and incremental operating budget increases to maintain existing service levels and accommodate City growth. A funding strategy to increase capital formation costs was recommended in the 2004 LRFP, and began in the approved 2006 Budget. This strategy needs to continue through 2009, at minimum.

Staff is recommending a $10.5 million increase in taxation for 2007, because adopting a 0% strategy for the 2007 Police Tax rate has significant ramifications for the Police Service. Programs will be cut. Seventy sworn and civilian positions would be eliminated. The number of access points and overall accessibility to police services will mean reduced service levels and longer response times on inquiries. This step would immediately begin to undo a number of recent strides the Ottawa Police Service has made in addressing community concerns and emerging public safety issues. The provincial civilian oversight body would invoke its mandate to ensure that adequacy standards are maintained throughout such a process. The Association, representing any laid-off members, would assume a vigilant stance to ensure the rights of employees are safeguarded. The impacts on the community have not yet been identified, given the limited window for consultation on the Directions Report.

Geoff Simpson

Director of Finance and Materiel Management

Debra Frazer

Director General

Vince Bevan

Chief of Police

Attachs. (2)

2007 – 2016 Ottawa Police Service Capital Needs Forecast

2007 – 2010 Ottawa Police Service Operating Budget Pressures Forecast

ATTACHMENT 2


Ottawa Police Service
2006 to 2010 Incremental Operating Budget Pressures Forecast

		$000's
	Category	2006 Approved	2007	2008	2009	2010
	Maintain Existing Service
	Compensation	7,600	7,900	8,800	9,000	9,500
	Fleet - Fuel and Maintenance	500	250	250	250	250
	Facilities and Leases	300	300	300	400	400
	Strategic Staffing Initiative - Comp	2,150	1,700	0	0	0
	Provincial Funding - SSI	(2,700)	(850)	0	0	0
	Strategic Staffing Initiative - Non Comp.	300	900	0	0	0
	User Fee Policy	0	(100)	(100)	(100)	(100)
	Efficiencies	(1,000)	(500)	(500)	(500)	(500)
	Subtotal Maintain Existing	7,150	9,600	8,750	9,050	9,550
	Growth
	New Divisional Facility Operating Costs	0	0	300	300	400
	Staffing for Growth (SGI 2013) - Comp.	450	1,600	2,300	2,300	2,300
	Staffing for Growth - Non Comp.	400	800	800	800	800
	Subtotal Growth	850	2,400	3,400	3,400	3,500
	New Initiatives
	CIS Project funds	250	250	250	0	0
	Other programs	450	250	250	500	500
	Subtotal New Initiatives	700	500	500	500	500
	Capital Formation Costs
	Debt Servicing	0	(2,300)	0	1,500	800
	Fleet Capital Contributions	250	150	150	150	150
	General Capital Contributions	2,550	3,200	2,200	2,200	1,300
	Subtotal Capital Formation	2,800	1,050	2,350	3,850	2,250
	*Incremental Budget Requirement*	$11,500	$13,550	$15,000	$16,800	$15,800
	*Less Assessment Growth*	($2,900)	($3,100)	($3,200)	($3,300)	($3,400)
	*Incremental Net Budget Increase*	$8,600	$10,450	$11,800	$13,500	$12,400
	*Projected Police Tax Rate Increase*	6.0%	6.7%	7.1%	7.6%	6.5%
	*FTE*	1,773	1,818	1,863	1,908	1,953

ANNEX A

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