To the Members of Regional Council, Residents, and Ratepayers of The Regional Municipality of York, Newmarket, Ontario
Herein are presented the financial statements of the Corporation of The Regional Municipality of York for the year ended December 31, 2000. This report highlights ongoing key financial policies, practices, budgetary initiatives, provincial initiatives and presents the financial results for the 2000 fiscal year.
The financial statements and related information contained in this report are the responsibility of the management of the Corporation. They have been prepared in accordance with the accounting policies prescribed for Ontario municipalities by the Ministry of Municipal Affairs and Housing and standards established by the Public Sector Accounting Board (PSAB) of the Institute of Chartered Accountants. Management is confident that it has developed a system of internal control that ensures the financial information presented in the financial statements is both accurate and reliable.
THE FINANCIAL CONDITION OF A MUNICIPALITY IS ROOTED IN STABLE SOURCES OF FINANCING, ITS UNDER-LYING ECONOMY AND THE RELATIONSHIP WITH PROVINCIAL AND NATIONAL ECONOMIES. |
The accounting firm of KPMG LLP was appointed by Regional Council to perform an independent audit of the Region's 2000 financial statements. Its reports are included with the financial statements.
For the third consecutive year, the Government Finance Officers Association of the United States and Canada (GFOA) awarded a Canadian Award for Financial Reporting to The Regional Municipality of York for its annual financial report for the fiscal year ended December 31, 1999. The Canadian Award for Financial Reporting program was established to encourage municipal governments throughout Canada to publish high quality financial reports and to provide peer recognition and technical guidance for officials preparing these reports.
In order to be awarded a Canadian Award for Financial Reporting (CANFR), a government unit must publish an easily readable and efficiently organized annual financial report, whose contents conform to program standards. Such reports should go beyond the minimum requirements of generally accepted accounting principles and demonstrate an effort to clearly communicate the municipal government's financial picture, enhance an understanding of financial reporting by municipal governments, and address user needs. We believe our current report is reflective of the high standards associated with the CANFR award and we are submitting it to the GFOA.
FINANCIAL MANAGEMENT AND CONTROL
The financial management and control of The Regional Municipality of York is largely governed by by-laws that prescribe purchasing, accounting, investment, risk management procedures and debt policy. York Regional Council has sole authority to allocate funds through the approval of the operating and capital budgets. The three fundamental components of financial management and control of the Corporation of The Regional Municipality of York are its accounting practices, financial policy and business plan/budget process.
During 2000, York Region introduced the office of the Internal Auditor. The Internal Audit role assists the Region to achieve its objectives by providing advice on managing and controlling risk, independent appraisals on control, and participating in an advisory capacity in the identification of efficiencies and improvements in new and existing processes, programs and services.
The accounting function of the Corporation is the responsibility of the Regional Treasurer who ensures that all corporate accounting records and reports are maintained to conform to Council budgetary requirements, by-laws, policies, procedures, accounting principles and financial reporting requirements. York Region's financial statements as well as the Financial Information Return (FIR) which is submitted to the Ministry of Municipal Affairs and Housing are prepared on a basis consistent with the accounting practices.
REGIONAL FINANCIAL POLICY
A PROACTIVE FINANCIAL STRATEGY
In 1999, Regional Council adopted a Financial Mission Statement that embodied five principles. These principles represent a combination of our current practices and best practices of leading organizations.
List Financial Principles
MULTI-YEAR BUSINESS PLANS
Year 2000 marked the first year that York Region commenced multi-year business planning for all Regional service delivery areas. This approach allowed the Region to proactively address program and service delivery needs, linking program objectives with work initiatives and performance indicators. This process demonstrates to taxpayers how their dollars are being managed and what service delivery outcomes are actually being achieved.
The business plans incorporate performance measures into each program area to assist with understanding delivery and evaluation. Performance measures are a critical element of York Region's business planning system as they aid in setting appropriate cost and quality targets, and they allow an evaluation of actual success in meeting those targets. Each cycle of business planning improves the ability to deliver quality services and to evaluate results in order to promote continuous improvement and ensure public accountability.
Graph of Improving Corporate Management
FINANCIAL GROWTH MANAGEMENT
York Region ensures that growth and development are financed in a fiscally responsible manner. Initiatives such as the 25-year development charges forecast, long term infrastructure master plans, the 10-year prioritized capital works plan and the fiscal analysis of all new development are the cornerstones of this approach.
It is estimated that over $3 billion of new capital infrastructure will be required to accommodate approved growth projections to 2026. Over 70% of the funding is anticipated to come from development charges. As the Region moves into higher order transportation delivery, and services not included in the $3 billion estimate, there is a defined need for funding from senior levels of government.
GROWTH IN MUNICIPAL EQUITY
In 2000, Regional Council continued to focus on solidifying its municipal equity position. As at December 31, 2000 the municipal equity position increased $57.3 million in financial assets. Contributions to reserves and reserve funds were largely responsible for this increase.
York Region's policies ensure that funds are provided to meet the future needs of our growing communities. Reserves and reserve funds increased by $72.4 million in 2000, an increase of 30.5% over 1999. The Region's largest reserves are for water and wastewater capital expenditures, which combined totalled $90.9 million at the end of 2000. The Solid Waste reserve fund provides funds to address the Region's Solid Waste Management Strategy. This fund balance is $40.0 million at December 31, 2000.
Graph of 2000 Reserves & Reserve Funds
Pursuant to Public Sector Accounting Board requirements, development charge reserves are no longer reported under Municipal Position for financial reporting purposes. They are reported under liabilities as deferred revenue-obligatory reserve funds. The balance of the development charges at December 31, 2000 is $326.3 million.
THE BUSINESS PLANNING AND BUDGET PROCESS
DEVELOPING THE BUSINESS PLAN AND BUDGET
The Regional Municipality of York prepares balanced operating and capital budgets for each fiscal year, as required by Provincial legislation. Annual operating and capital expenses must be funded in whole, as legislation prevents municipalities from operating at a deficit.
In 2000, Regional Council established guidelines for the budget process including the requirement to maintain a zero percent increase for the Regional Tax levy after applying the impact of assessment growth. Operating budgets were prepared assuming existing service levels and any proposed changes in program service delivery were clearly identified, in accordance with Council policy.
Comprehensive Business Plans and Budgets for each Regional service delivery area were developed for a three-year timeframe and integrated into the overall corporate strategy.
BUSINESS PLAN AND BUDGET REVIEW PROCESS
The Budget Review Committee, comprised of the Regional Chair, the Chief Administrative Officer, the Regional Treasurer, and the Director of Business Planning and Budgets, reviews proposed Business Plans and Budgets, to ensure compliance with Council policies and guidelines.
Police Services and the Conservation Authorities are required by statute to submit their Business Plans and Budgets, as approved by their individual governing boards, to Regional Council for budgetary consideration.
Regional Council has established Standing Committees to review individual Business Plans and Budgets, prior to Council consideration. This provides an opportunity for Regional program areas, various boards and authorities and other agencies to present their respective business plans and budgets and identify major goals and objectives. The Finance and Administration Standing Committee reviews the recommendations of all Standing Committees and forwards the overall Business Plan and Budget outlining the impact on the tax levy and user rates to Regional Council for approval.
THE 2000 APPROVED BUDGET
York Regional Council approved the 2000 Budget on February 10, 2000. The Budget addressed additional pressures associated with policing, enhancements to Regional reserves, ongoing adjustments for Local Services Realignment initiatives and the pooling of social services and housing costs within the GTA, as well as the financial impact of 4.4% growth in property assessment.
The total budgeted expenditures were $823.7 million comprised of the current fund operating budget of $494.7 million, the capital fund operating budget of $273.8 million, contributions to reserves and reserve funds of $38.1 million and debt repayment of $17.1 million.
The 2000 Budget anticipated funding from net tax revenues/user charges, fees and services and other of $466.9 million, debenture financing of $21.1 million, development contributions of $149.1 million, transfer payments of $107.4 million and contributions from reserves and reserve funds totalling $79.2 million.
Graph of Distribution of $1 of Property Tax 2000
2000 FINANCIAL RESULTS
The net result of York Region's 2000 financial activities was growth in the consolidated fund balances of $67.0 million. The highlights of the financial results are detailed below.
Total 2000 revenues of $656.0 million financed current fund operations, reserves and reserve funds and capital expenditures.
Graph of Revenues
Current Fund Operations totalled $583.9 million in 2000. Of this amount $454.0 million was raised through taxation and water and wastewater user fees. Provincial and federal transfer payments amounted to $85.9 million and revenue of $34.1 million resulted from fees and services and other. Development contributions of $9.9 million were made to the Development Charges Reserve Fund in 2000.
Interest earned on Reserves and Reserve Funds totalled $12.8 million.
Financing for capital expenditures was comprised of $1.3 million from provincial and federal transfer payments and $1.2 million for work done on behalf of developers and area municipalities. Capital financing was also provided from water and wastewater rates and capital reserves in the amount of $56.8 million exclusive of interest earned on sinking funds.
Provincial regulation limits the amount of interest and debt repayment that a municipality may include in its annual estimates. This in turn limits the amount of new debt that a municipality may raise for a particular year. As of December 31, 2000, York Region had unused debt capacity equivalent to $68.3 million of additional annual interest and debt repayments as determined through this regulation. This represents a significant increase in capacity due to the changes in the Regional budget resulting from Local Services Realignment.
EXPENDITURES AND FINANCING COSTS
CURRENT FUND EXPENDITURES
Expenditures for Current Fund Operations totalled $471.3 million in 2000. The largest component was Social and Family Service expenditures of $154.4 million for Ontario Works and employment services and GTA pooling. Social Housing pooling costs were $69.0 million. Protection to Persons and Property expenditures of $82.4 million were for Police Services and funding to the Conservation Authorities. Environmental Services costs represented water, wastewater and solid waste services totalling $66.1 million. Transportation service costs of $33.4 million included costs for provincial and municipal road transfers. The Health Services expenditure of $33.9 million included long term care facilities costs for York Region's Newmarket and Maple Health Centres and costs for Emergency Medical Services. General Government expenditure of $28.9 million included $9.1 million for York Region's share of funding for Ontario Property Assessment Corporation. Planning and Development Services of $3.2 million included planning, geographic information systems and the cost of several Human Resources Development Canada initiatives.
The next stage of devolution occurred on January 1, 2001 when corporations controlled by municipalities assumed ownership and the direct operation of all public housing units previously owned by the Province. The Social Housing Reform Act, 2000 also transfers the responsibility for administering non-profit and co-op housing units over the following 18-month period.