|
|
REPORT RAPPORT |
|
|
REPORT RAPPORT |
|
DATE:
|
9 April 2012 |
|
TO/DEST:
|
Executive Director, Ottawa Police Services Board |
|
FROM/EXP:
|
Chief of Police, Ottawa Police Service |
|
SUBJECT/OBJET:
|
ANNUAL FINANCIAL REPORT: 2011
|
RECOMMENDATION
The 2011 Fourth Quarter Financial Report presents the year-end financial position of the Ottawa Police Service (OPS) and outlines the operational issues that have affected the Police Service’s finances in 2011. These results are subject to external audit and focus on OPS operations only.
DISCUSSION
Summary
The OPS ended the 2011 fiscal year with an operating surplus of $26,000. An additional $764,000 surplus has been allocated to the OPS from the City of Ottawa. This allocation is the OPS share of the surplus from the taxation accounts for 2011. As a result, the combined operating and taxation surplus was $790,000 for 2011.
The operating surplus of $26,000 was mainly the result of surpluses in various revenue and recovery accounts, arising from the increased volume of paid duty services, the recovery from evidence disposal, as well as a small positive variance in vehicle maintenance and an increase in alarm revenue. These surpluses were partially offset by budget pressures in areas related to fuel prices, benefits and WSIB costs, overtime pressures and legal costs. Many of these items had been previously identified in the quarterly financial status reports presented to the Board during 2011.
Table 1 summarizes these items and they are discussed in more detail below.
Disposition of Surplus
At its meeting on 28 March 2012, City Council approved the Finance and Economic Development Committee recommendation for the disposition of the 2011 tax supported operating surplus, which included the OPS portion of $790,000. It was approved that the total City surplus be applied towards various projects and reserve funds, the bulk of which went to the City Wide Capital Reserve Fund.
Table 1Ottawa Police Service2011 Year End – Significant Variances |
|
|
Item |
$ Millions |
|
|
|
|
Fuel Costs |
( 0.75) |
|
Benefit Costs and Retiree Benefits |
( 0.46) |
|
Overtime and Court Time |
( 0.25) |
|
WSIB Costs |
( 0.15) |
|
Legal Fees |
( 0.09) |
|
Paid Duty and Other Revenue |
0.64 |
|
Evidence Disposal Project |
0.45 |
|
Vehicle Maintenance and Other Costs |
0.30 |
|
Alarm Revenue Facilities Maintenance |
0.27 0.07 |
|
|
|
|
2011 Operating Surplus / (Deficit) |
$0.03 |
Significant Variances
a) Fuel Prices
The 2011 budget for fuel was estimated using a retail pump price of $1.00/litre, which aligned with the City of Ottawa budget assumptions. This amount was reduced to an effective price of $0.85/litre, after accounting for tax exemptions and discounts through the fuel card program. The budget of $2.4 million was based on a consumption of 2.7 million litres of fuel for 2011.
The average retail price for regular unleaded gasoline at Ottawa-area self-service filling stations is outlined in Table 2, which shows monthly averages well above the budgeted per litre price, ranging between a low of $1.14 in February to a high of $1.28 in May. The average price for the year was $1.224 per litre.
Table 2
|
Average Retail Price of Gasoline - 2011 |
|
|
|
|
|
Month |
Average Retail Price |
|
January |
$1.143 |
|
February |
$1.140 |
|
March |
$1.210 |
|
April |
$1.278 |
|
May |
$1.283 |
|
June |
$1.250 |
|
July |
$1.271 |
|
August |
$1.256 |
|
September |
$1.251 |
|
October |
$1.233 |
|
November |
$1.194 |
|
December |
$1.176 |
|
Average for 2011 |
$1.224 |
|
Source: Statistics Canada (http:// http://www.statcan.gc.ca/pub/62-001-x/2011012/t047-eng.htm- Table 13) |
|
At the end of December 2011, the deficit for fuel was $749,000 due entirely to the unfavourable price variance between the budgeted per litre versus actual price.
b) Compensation Benefits and Retiree Benefit Costs
The cost of employee and retiree benefit costs were higher than budgeted, resulting in a pressure of $460,000. Overall, the cost to the OPS for providing dental and major medical benefits have increased steadily over the past few years, due to both a larger volume of benefit claims and higher overall medical costs.
c) Overtime & Court Time Costs
The combined year end overtime and court overtime deficit was $248,000. The surplus of $194,000 projected in the Third Quarter Financial Status Report quickly turned into a large deficit in the fourth quarter due to the Congolese demonstrations, the Tar Sands demonstration, the Occupy Ottawa movement, Project Sleepwalker, and the five homicides in Ottawa in the last quarter of 2011.
d) WSIB Costs
Included in compensation costs for the OPS are the costs relating to WSIB (Workplace Safety and Insurance Board). The costs in this area have increased over the past four (4) years and, although adjustments to the budget were made in these years, a budget pressure of $149,000 resulted by the end of 2011.
e) Legal Fees
A deficit of $87,000 in legal costs reflects a higher than expected level of claim activity than budgeted. Legal costs arise from legal services provided by the City of Ottawa on various matters related to the OPS. Additionally, a small portion is related to the requirement for external legal counsel for prosecutions under the Police Services Act, indemnification costs as provided for in the Police Service Collective Agreement, and costs related to SIU investigations.
f) Paid Duty & Other Revenue
A net surplus of $640,000 occurred in various revenue and recovery accounts, including revenue from paid duty which account for the majority of this surplus. Although there has already been an upward adjustment to the budgeted revenue in these accounts, the OPS has historically experienced a surplus in this area largely due to one-time City requests and this trend has continued in 2011.
g) Evidence Disposal Project and Related Activities
As part of a comprehensive review of the Evidence Control Section (ECS), staff worked diligently to reduce the quantity of evidence at the Swansea facility that was past its disposal date. The Board approved funding in the 2011 budget for additional term employees to deal with this backlog of disposal items. Disposal of property and evidence is conducted in accordance with judicial orders and through auction or public tender as outlined in Section 132 of the Police Services Act. In accordance with Board policy, proceeds from this disposal activity are being applied towards the operating budget.
The disposal project is yielding significant results. The one-time revenue resulting from the disposal of the back-log of property and evidence is $450,000.
h) Vehicle Maintenance
The vehicle maintenance account has provided surpluses in past years. For 2011, the trend has continued and has resulted in a surplus at year-end of $300,000. This surplus is attributable to the Board-approved funding of the capital replacement plan along with responsible vehicle management, which continues to allow older vehicles to be replaced prior to incurring significant maintenance costs and the rotating of vehicles to maximize their usage.
i) Alarm Revenue
The volume of false alarms continues to decline, with an almost 5% reduction in the past year. In 2010 the false alarm fee was increased to $130 to better reflect the cost of attending a false alarm call. This change resulted in a surplus of $271,000 in 2011.
j) Facilities Maintenance
The facilities maintenance costs charged back from the City of Ottawa ended the fiscal year with a surplus of $72,000.
Reporting Requirements
Section 2(e) of the Board’s Policy BC-2 on Monitoring Requirements requires the Chief to provide the Board with information on specific operational issues. With respect to financial reporting, these requirements include:
· Annex A, which provides the Fourth Quarter Financial Report – Summary By Directorate;
· Annex B, which provides a list of all contracts awarded by the Chief that exceed $25,000;
· Annex C, which provides a summary of the OPS capital budget works in progress.
Not applicable.
There are no financial implications.
CONCLUSION
The Ottawa Police Service surplus on operations for 2011 of $26,000 is primarily due to increased revenue and recoveries, which more than offset the pressures in fuel and benefit costs. An additional $764,000 of taxation surplus brings the total 2011 OPS surplus to $790,000. At its meeting on 28 March 2012, City Council approved the Finance and Economic Development Committee
recommendation that the City’s 2011 tax supported operating surplus be applied towards various projects and reserve funds, the bulk of which went to the City Wide Capital Reserve Fund.
(Original signed by)
Charles Bordeleau
Chief of Police
Attachments (3):
Annex A: Fourth Quarter Financial Report Summary by Directorate
Annex B: Purchase Orders Issued Under Delegated Authority
Annex C: Capital Budget Works in Progress
