28 October 2013



Executive Director, Ottawa Police Services Board



Chief of Police, Ottawa Police Service








That the Ottawa Police Services Board receive this report for information.




The quarterly financial report summarizes the current financial position of the Ottawa Police Service (OPS), outlines the operational issues affecting the OPS’ finances and presents the projected year-end financial position for the organization.  This report presents a projection of the Service’s year-end financial position and outlines the significant variances that are known as of the end of September 2013.  The accuracy of this projection improves with each quarter as the OPS’ expense and revenue patterns become more certain.




Based on current information staff is identifying a potential year end deficit position for 2013 of $550K. Accordingly, a discretionary spending freeze order was issued to limit the pressure on the budget. The goal is to achieve a balanced position by year-end.


As highlighted in the second quarter report, the arbitration award issued on April 5, 2013, along with WSIB costs continue to exert pressure on the budget. Additional new pressures related to indemnification costs, legal fees, and overtime, are highlighted in the third quarter report. These significant pressures are being partially offset by solutions from paid duty and various other revenue accounts along with savings in court time costs, fleet maintenance, and Police facility costs. Each of these significant variances is summarized in Table 1 and discussed in more detail.


As always, the year-end position is still dependent on the impact of any changes in the various pressures and solutions that have been identified in the first 9 months of the year, as well as the impact of the horizon issues that are discussed below.

Table 1 - Ottawa Police Service

2013 Projected Year End – Significant Variances



Indemnification Costs & Legal Fees




2012 Contract Costs  


WSIB Costs


Total Pressures





Paid Duty & Other Revenue


Vehicle Maintenance


Court Overtime Costs


Facilities – Operating Costs


Alarm Revenue


Total Solutions


Projected  Surplus  (Deficit)



Identified Pressures & Solutions


a)      Indemnification & Legal Fees


The Ottawa Police Association collective agreement provides indemnification for officers in certain legal situations. There are several legal proceedings underway which are projected to create a deficit in this area. Steps will be taken in the 2014 Budget to increase the provision for indemnification and claims.


b)      Overtime


The stable pattern in overtime for the year changed in the third quarter and is now in a deficit in the range of $250K. Staffing shortages are one cause, with some of the deficit partially offset through vacancies.  OPS has also experienced a peak in missing person call outs by the Emergency Services Unit in the third quarter resulting in added pressure.  Staff is meeting with the sections in which shortages are putting pressure on the overtime budget and will be discussing strategies to reverse this trend.


c)      Contract Settlement Costs


As reported in the previous quarters, on April 5, 2013 the arbitrator awarded an across-the-board increase to the base salary of OPA members of 2.99% for 2011 and 2.95% for 2012 along with other modifications of their agreement.  The award has created a 2013 pressure in the range of $200K.    


d)      WSIB Costs


The Ottawa Police Services Board (the Board) was presented with the Workplace Accidents & Injuries: 2012 Annual Report at its March 2013 meeting and this report identified that costs in this area have increased over the past several years.  WSIB direct costs include wages, health care, pension, survivor benefits and administrative fees. A significant portion of costs are associated with permanent WSIB awards which occurred before amalgamation and these costs cannot be affected. Moving forward, OPS is taking measures through our Health Lifestyles and Safety section to minimize the frequency and severity of new workplace injuries to help reduce costs.  Even with these new measures and some minor adjustments to the budget base, a deficit of $200K may result by the end of 2013.


e)      Paid Duty & Other Revenue


Paid Duty and other revenue have provided surpluses in past years, and have continued to do so into 2013.  Staff projects a net surplus of approximately $200K in the various revenue and recovery accounts, arising largely from paid duty. There has already been an upward adjustment of $153K to the revenue budgeted for paid duty in 2013, however, the OPS has historically experienced a surplus in this area, largely due to one-time City requests.  This trend has continued in 2013 as a result of “Ottawa on the Move” and the high level of construction in the city.


f)       Vehicle Maintenance


Vehicle maintenance has provided surpluses in past years and information for the first eight (8) months indicates that this area of the budget will also provide a surplus in 2013. This surplus is attributable to the Board-approved funding of the capital replacement plan, which continues to allow older vehicles to be replaced prior to incurring significant maintenance costs.


g)      Court Overtime Costs


The projection of court overtime costs remains status quo from the last quarterly report at a $100K surplus based on trends and actual for the first 8 months of the year.


h)      Facility Operating Costs


Facility operating costs have provided small surpluses in past years, and based on information to date, this result will likely occur in 2013.  Staff projects a net surplus of approximately $100K in the various facility operating costs including the costs charged to the OPS by the City.


i)       Alarm Revenue


A small surplus of $50K is being projected for 2013 alarm revenue based on the actual volume of false alarm calls compared to the estimate used in the budget.


Horizon Issues


As of this report, there are two issues on the horizon that may create pressures in 2013.  The first matter relates to the Collision Reporting Centre (CRC) revenues for 2013.  A concern about the CRC revenues was mentioned in the Horizon Issues in the second quarter report as the launch of the automatic payment plan was delayed by 4 weeks due to technical issues. These factors have impacted the revenue in the first part of the year, and although the revenue in the last quarter has been increasing, it may still result in a small shortfall for 2013.


The settlement of the 2013 OPA contract is the second item on the horizon owing to the arbitration hearing scheduled for later this year, it is not possible to assess the financial impact of this matter at this time.


These factors will continue to be monitored and reported on in the final quarter.



Quarterly 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, provides the 3rd Quarter Financial Report – Summary by Directorate.

In this report, the compensation in each directorate has been adjusted to reflect the 2011 and 2012 settlements.  The actual costs have been distributed to each of the directorates as well. However, due to the difficult and time consuming process, the accrued provision for the settlement remains as a lump sum adjustment in Corporate Accounts rather than being distributed to each of the other directorates as well.  This explains the large credit in Corporate Accounts.  


§   Annex B, provides a list of all contracts awarded under delegated authority by the Chief that exceed $25,000. Staff have revised this Annex to reflect a new classification of the purchase orders, similar to the City’s, and summarizes the transactions from July to September.  A total $816k of purchase orders were issued in the third quarter. $545k or 67% of the total contracts were for information and technology items. The remaining portion was for consultant fee’s ($115k or 14%), professional services ($120K or 15%), and miscellaneous goods and services ($35k or 4%). Table 2 below provides a summary of these expenditures by type. Expenditure definitions are included in Annex B for reference.


Table 2: Purchase orders issued under delegated authority by type - third quarter.


Purchase orders issued under delegated authority by type -third quarter.



Professional Services


Consulting Services


Goods & Supplies


Fleet & Equipment


Facilities & Construction


Information & Technology


















§   Annex C, which provides a summary of the OPS capital budget works in progress.

As per the Financial Accountability Procedures Manual Section, the Director General may close capital projects by returning any remaining balance to the originating sources and fund any deficits.  Annex C also indicates which projects are being closed and the money returned to source, or any deficits funded from same.





Not applicable.




There are no financial implications.




The Police Service is forecasting a $550K deficit for 2013 based on operating results to the end of the third quarter.  In light of this information, a spending freeze has been ordered to limit spending to the end of the year, with the goal of achieving a balanced budget.


In March 2014, staff will present to the Board the final quarterly report on the Service’s financial position as of 31 December 2013.  It will provide a year-end update on the above-noted issues.




(Original Signed by)


Charles Bordeleau

Chief of Police


Attach (3):      Annex A:  3rd Quarter Financial Report – Summary by Directorate

                        Annex B:  Purchase Orders Issued Under Delegated Authority

                        Annex C:  Capital Budget Works in Progress


Responsible for the report:  Director General Debra Frazer