TO THE COUNCIL OF THE
CITY OF OTTAWA
2 Septembre 2009
The POLICE SERVICES BOARD
met on 27 July 2009 and submits the item
contained in this Report for the information and/or approval of Council at its
meeting of 2 SEPTEMBRE 2009.
La COMMISSION
DE SERVICES POLICIERS s’est réuni le 27 JUILLET 2009 et soumet l’article du présent rapport au Conseil pour
information et/ou approbation lors de sa réunion du 2 SEPTEMBRE 2009.
Present
/ Présences :
27
July 2009
Chair / président:
E.
El-Chantiry
Vice Chair /
vice-président: J. MacEwen
Members / Membres: D. Guilmet-Harris
H. Jensen
M.
McRae
B.
Monette
INDEX |
|||
NO./NO |
ITEM |
PAGE |
ARTICLE |
|
Police Services Board |
|
Commission de Services
Policiers |
1. |
FINANCIAL STATUS REPORT – SECOND
QUARTER 2009 ACS2009-CCS-PSB-0021 |
01 |
RAPPORT D’ÉTAPE FINANCIER DU DEUXIÈME
TRIMESTRE 2009 ACS2009-CCS-PSB-0021 |
1. FINANCIAL
STATUS REPORT – SECOND QUARTER 2009 RAPPORT
D’ÉTAPE FINANCIER DU DEUXIÈME TRIMESTRE 2009 |
BOARD
RECOMMENDATION
That Council receive this report
for information.
RECOMMANDATION DE LA COMMISSION
Que le Conseil prenne
connaissance du présent rapport à titre d’information.
FOR
THE INFORMATION OF COUNCIL
The Board has given direction to the
Chief of Police to pursue from the Federal Government reimbursement of costs
related to the Tamil demonstrations that occurred in April 2009.
La
Commission a donné instruction au chef du Service de police de demander au
gouvernement fédéral le remboursement des coûts liés aux manifestations tenues
par les Tamouls en avril 2009.
DOCUMENTATION
1. Chief of Police’s report dated 17
July 2009.
2. Extract of Draft Minute, 27 July 2009.
|
REPORT RAPPORT |
DATE: |
17
July 2009 |
TO: |
Executive
Director, Ottawa Police Services Board |
FROM: |
Chief
of Police, Ottawa Police Service |
SUBJECT: |
FINANCIAL STATUS REPORT -
SECOND QUARTER 2009
|
RECOMMENDATION
The
quarterly financial report summarizes the current financial position of the
organization, outlines the operational issues affecting the Service’s finances
and presents the projected year-end financial position for Ottawa Police
Service (OPS). This report presents a
projection of the Service’s year-end financial position and outlines the
significant variances that are known at this time. The accuracy of this projection improves with each quarter as the
Service’s expense and revenue patterns become more certain. The First Quarter Financial Status Report
was received by the Board in April. At
that time, a break-even financial position for 2009 was projected.
DISCUSSION
At the end of the second quarter, the OPS is
projecting a deficit position for the 2009 fiscal year, largely as a result of
the Tamil demonstration. The current
information indicates that the budget pressures identified in the first quarter
will continue, in areas such as WSIB costs, funding for the DART Team, and a
shortfall in alarm revenue. Additional
budget pressures arise in retirement and benefits costs and expenses related to
the Tamil demonstration. These
pressures are partially offset by revenue received from the Province this year
for the 2008 Police Officer Recruitment Fund, a positive trend in fuel prices,
surpluses in overtime and court time, vehicle maintenance expense and a
projected surplus in liability claims. Table 1
represents a summary of these significant variances and each item is discussed
in more detail below.
Ottawa Police Service2009 Projected Year End – Significant Variances |
|
Item |
$ Millions |
|
|
Tamil
Demonstration Costs |
(0.9) |
Retirement
Costs & Benefits |
(0.7) |
WSIB |
(0.3) |
DART
Team Funding |
(0.3) |
Alarm
Revenue |
(0.1) |
2008
Police Officer Recruitment Fund Revenue |
0.5 |
Overtime
& Court Time Surplus |
0.4 |
Fuel
Costs |
0.2 |
Vehicle
Maintenance |
0.2 |
Liability
Claims |
0.1 |
|
|
2009 Potential Operating Deficit |
($0.9) |
Identified
Pressures
a) Tamil Demonstration Costs
The
costs for the Tamil demonstration are reported separately as these are
extraordinary costs. (see Horizon
Issues below for further discussion on the cost recovery and the pursuit of
mitigating options). The duration of
the event, the impact of changing crowd sizes and the occurrence of two
statutory holidays at the outset of the protest has made it a significant operational
challenge to manage. These same factors
have created overtime and related support costs. The total cost to the OPS for these demonstrations was $925,000.
b) Retirement Costs and Retirement Benefits
In the first quarter report, it was mentioned in the horizon issues
that retirement costs and retiree benefits costs were starting to create budget
pressures. These pressures have grown
in the last 3 months with an additional 8 retirements. The budget was based on an expected number
of 36 retirements for 2009 but as of 30 June, a total of 40 members have
retired. Although it is typical that
most members plan their retirements for the first quarter of the year, we have
had an above average number of retirements for the second quarter. As well, the level of retirement
payout-per-employee is somewhat higher than expected. The benefit provider also sent notice in March of this year that
the employer portion of retiree benefits is increasing by 17.5% effective 1
January 2009. These situations
combined, are exerting a pressure of approximately $0.7 million. These costs
will continue to be monitored and reported on in the third quarter report.
c) WSIB
The pressures in
costs for WSIB (Workplace Safety and Insurance Board) still continue based on
actual results to June 30th. These
costs are included in compensation costs for the OPS. The costs in this area have been increasing significantly over
the past 3 years and although adjustments to the budget were made in 2009 to
increase the base by $120,000 to $1.3 million, actual expenditures are
projected to be in the $1.6 million range, creating a pressure of $300,000.
d)
DART Team Funding
The
Direct Action Response Team (DART) was implemented in 2007 with a mandate to
provide a highly visible and active uniform police enforcement presence in
communities where gang activities occur.
The Team works in partnership with the Guns and Gangs Unit, and also
takes on a preventive role by engaging in community mobilization efforts to
develop gang education, prevention and suppression strategies. It is composed of 9 members: 1 sergeant and
8 constables.
Until
December 2008, the Province provided funding for 6 members of the Team (the
sergeant and 5 constables). When the
first quarter report was presented, there had not been formal confirmation that
funding would resume in 2009. However,
police services across Ontario have been pressing the government to re-commence
funding for initiatives such as DART (Ottawa), TAVIS (Toronto) and PAVIS
(Peel), and on 22 June at the OACP, Minister Bartolucci announced the funding
was being renewed. He did not say when,
but it was understood to be "immediate".
On
that basis, a revenue shortfall in the range of $300,000 is forecast which
reflects a loss of funding for the first six months of this year.
e)
Alarm Revenue
In
2008 there was a shortfall in false alarm revenue of $156,500. It fell on the heels of a $150,000 budget
reduction in this area in the 2008 budget.
Alarm revenue for 2009 is again expected to be in a deficit of
approximately $100,000 position by year-end.
While this news is negative from a financial perspective, it has
important and positive operational impacts.
Lower than expected revenue means that the False Alarm By-law is working
- more people are aware of the impact of false alarms and are doing their part
to reduce them. As a result, officers
can spend more time on higher priority operational matters. This item will be closely monitored and if
necessary, a further reduction in the budget will be made in 2010.
f) 2008 Police
Officer Recruitment Fund Revenue
In 2008 the
Provincial Government announced the Police Officers Recruitment Fund, a Federal
program administered through the Province.
The Federal government committed to funding 2500 additional police
officers in communities across Canada over the next five years through this
program, and the Service was granted funding for 10 officers. When the program was launched it was unclear
when funds would be received for salary-related costs of officers hired in
2008.
In 2009 the
Province issued a cheque for $0.7 million to the OPS to cover the April 2008 to
March 2009 costs of the program. The
portion of these funds that relates to 2008 ($467,000) is surplus to the 2009
budget and can be used to offset other cost pressures this year.
g)
Overtime & Court Time
The
implementation of the new overtime policy has been having a positive impact on
overtime expenditures this quarter. At
the time of writing this report, information to end of May is available. Overtime earnings for January to May were
$1.0 million against a budget of $1.1 million (excluding Tamil overtime),
generating a year-to-date surplus of $100,000.
For the first 5 months earned overtime hours have decreased
approximately 23% when compared to the same period last year. The forecasted position for year-end is for
a $300,000 surplus. There is also a
projected surplus of $80,000 for court time.
h) Fuel Prices
The 2009 budget
for fuel was developed assuming an average retail price of $0.90 and an
anticipated volume of 2.9 million litres.
As a result of the economic slow down, the average price that the OPS
has been paying has dropped to $0.77 per litre, for the first 6 months of 2009.
Although, the second half of the year may see higher prices, at this time we
are expecting a projected surplus of $200,000 for 2009. Monthly monitoring of
fuel prices will continue and an update will be provided in the 3rd
quarter report.
i) Vehicle Maintenance
Vehicle
maintenance costs is projected to be in a $200,000 surplus position by the end
of 2009. This result is attributable to
the Board-approved funding of the capital replacement plan, allowing older
vehicles to be replaced prior to incurring significant maintenance costs.
j) Liability Claims
The
trend in liability claims filed against the OPS was a positive one in
2008. This trend has continued into
2009 to date. This item along with
other smaller surpluses will provide the remaining $100,000 surplus.
Additional
issues that may impact our year-end position are discussed below.
a)
Tamil Demonstration Costs
At
the direction of the Board, a letter requesting reimbursement from the federal
government for the costs of the Tamil demonstration was sent to the Minister of
Public Safety on 29 April 2009. As at
the time of writing this report, we have had no response to our request. Given this, the recovery of funds seems
unlikely and we will continue to pursue other options to offset this budget
pressure.
b)
DART Funding
If
funding for the DART Team is received retroactively, this will reduce our
forecasted pressure on this item by $150,000/quarter. However, if funding is delayed further, other sources of funding
will need to be identified.
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 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.
The financial implications are
contained in this report.
CONCLUSION
The
Police Service is forecasting a deficit for 2009 based on operating results to
the end of the second quarter. The OPS
will continue to pursue other options to alleviate the budget pressure largely
created by costs incurred related to the Tamil demonstrations. In October, Financial Services staff will
present to the Board the next quarterly report on the Service’s financial
position as at 30 September 2009. It
will provide an update on these issues and identify new pressures or solutions
that have emerged. The year-end
forecast will be adjusted accordingly.
(original
signed by)
Kathy
Murray
Director
of Finance
(original
signed by)
Jimmy
Mui
Executive
Director, Corporate Support
(original
signed by)
Sandra Arsenault
A/Director General
(original
signed by)
Vern White
Chief of Police
Attach.
(3)
Annex
A: Second Quarter Financial Report Summary by Directorate
Annex
B: Purchase Orders Issued Under Delegated Authority
Annex
C: Capital Budget Works in Progress
ANNEX A
ANNEX C
11. FINANCIAL STATUS REPORT – SECOND QUARTER
2009
Chief’s report dated 17 July 2009
Member
McRae referenced page 67 of the agenda and the chart entitled “2009 Projected
Year End – Significant Variances”. The
inclusion of the Tamil demonstration costs creates a potential operating
deficit. She expressed frustration that
all the good work done by staff to address costs such as overtime and court
time are going to be wiped out because of the demonstration.
Member
McRae suggested the Board may wish to ask the Chief to meet with the Federal Minister
to discuss the status of the Board’s 29 April 2009 letter requesting
reimbursement. She asked the Chief if
he had any advice on how the Board could assist him. The Board has been very outspoken regarding this matter; the
Board’s Finance and Audit Committee also discussed it. Member McRae felt that taxpayers’ money
should be used for local policing and not for dealing with issues the City did
not create.
Chief
White suggested the Federal Government would argue this was a local policing
matter, as it did not take place on federal jurisdiction. He agreed that funding should be received to
assist with policing the Nation’s Capital and that perhaps the Government would
also argue that the $2 million it has already promised is exactly for this
purpose. He viewed this as a one-time
occurrence similar to the NHL Playoffs that the Federal Government did assist
in funding. The Chief agreed the
Federal Government should have some responsibility in this matter and it should
be shared across the country. He
indicated he would be requesting a meeting with Minister of Finance
Flaherty. The Chief reiterated that he
does not have an issue with asking for reimbursement, however, he noted Ottawa
was not the only city with a demonstration and the Government may not be
willing to give something to Ottawa.
Member
McRae stated there is a need to have honest dialogue with our federal and
provincial partners so that they are aware of how this pressure hurts the
Service. The 2010 budget will be tabled
within the next three months and despite the great strides that have been made
internally to reduce costs, this Board must go out to the community with a
deficit budget that was not of their making.
Member McRae stated it may be incumbent on elected officials to lobby or
speak with federal members across the city.
Member
McRae proposed that this report be forwarded to City Council for information,
and suggested that the report also indicate the Board has given direction to
the Chief to pursue government funding for the costs incurred as a result of
the Tamil demonstrations.
Moved by
M. McRae
That the Ottawa Police Services Board forward this report to City
Council for information.
CARRIED
That
the Ottawa Police Services Board receive this report for
information.
RECEIVED