Herein are presented the financial statements of the Corporation of The Regional Municipality of York for the year ended December 31, 2001. This report highlights ongoing financial policies, practices, budgetary initiatives, and financial performance related to the Region’s programs and service delivery and presents the key financial results for the 2001 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 generally accepted accounting principles for local governments 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.

Standard and Poors’ maintained the Regional Municipality of York’s domestic currency debt rating at AAA. York Region’s high quality long-term debt rating is a product of its wealthy and growing resource base, low debt ratios and high degree of financial flexibility.

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 are submitted to the Ministry of Municipal Affairs and Housing are prepared on a basis consistent with the accounting practices.

The accounting firm of KPMG LLP was appointed by Regional Council to perform an independent audit of the Region’s 2001 financial statements. Its reports are included with the financial statements.

For the fourth 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, 2000. 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 GFOA for a fifth year.

York Region continues to be one of the fastest growing municipalities in Canada with a population of 792,000 at year end, attracting 38,000 new residents and 25,000 new jobs in 2001. By the year 2011 it is estimated that York Region’s population will be over 1 million and employment will be over 540,000.

Since 1996 York Region’s population has grown by 23.1% and is the fastest growing region in the Greater Toronto Area (GTA). In 2001, 31% of the GTA’s population increase occurred in York Region.

Despite economic slowdowns in many parts of the world in 2001, York Region’s economy continued to grow and diversify.

Manufacturing continues to be the Region’s primary employment sector, with strength in the printing, plastics, computer, auto parts and furniture manufacturing categories. There has been strong growth (approximately 50%) in the business services sector over the past three years. Computer systems design and related services remain the most significant category, accounting for nearly half of employees within the sector. The retail, food and entertainment sectors are also expanding rapidly, supporting the Region’s population growth.

Consistent with strong population and economic growth within York Region and continuing the positive trend of recent years, assessment growth for 2001 increased by 5.1%. The total estimated construction value was $2.9 billion in 2001, an increase of 4.5% over 2000, ranking York Region among the highest in Canada. All elements of the construction sector remained strong as industrial, commercial and institutional (ICI) construction generated 34% of the total value, up 5% from 2000, and 11,061 homes were completed and 10,908 new residential units started within York Region last year.

This trend of economic vitality is anticipated to continue in 2002 and beyond.

Housing Supply Strategy
Through consultations with citizens and community service providers, York Region has identified the need for an increased supply of rental, subsidized and affordable housing. With the recent transfer of social housing responsibilities from the Province, the Region is more directly accountable for addressing this need than ever before.

In 2001, Regional Council directed staff to develop a Housing Supply Strategy to increase housing choice and options for low-income households across the Region and to increase the rental housing opportunities in the private sector.

Over a 10-year period this strategy will provide 2,000 new units of subsidized housing within the Region of York through the development of new Regionally owned social housing units and an equal number of units delivered through partnerships with the non-profit and private sector.

Hospital Capital Funding
Hospital infrastructure took priority as 2001 marked the first year of a Hospital Capital funding program that was developed in partnership with the Region’s three community based hospitals and the Government of Ontario.

York Region has continued to go beyond its traditional responsibilities and will contribute a total of $62.5 million dollars over the next five to ten years for new construction projects at Southlake, York Central and Markham Stouffville Hospitals. The Province and local communities will share the balance of funding.

Transportation Master Plan
The main objective of the Transportation Master Plan is to support York Region’s growth and accommodate resulting transportation needs to the year 2031. The projected total gross capital costs for implementation of this plan range from $5.6 billion to $7.3 billion.

York Region is focused on an inter-regional network that reflects an integrated approach to transit development with the regions of Peel and Durham and the cities of Toronto, Brampton, Vaughan, Markham, and Richmond Hill. The Region of York is also seeking a private sector partner to participate in the development of its transit plan, and to manage and/or operate the system.

The Government of Ontario, through the Golden Horseshoe Transit Investment Partnership (GTIP) program, has indicated that initiatives with an inter-regional component and Public-Private Partnership (PPP) elements will be favourably considered for public transit funding.

Protection of the Environment
York Region has been a leader in protection of the environmentally sensitive Oak Ridges Moraine. In September 2001, the Region approved The Oak Ridges Moraine: Proposals for the Protection and Management of a Unique Landscape, a report developed in cooperation with the neighboring regions of Peel and Durham.

In November 2001, the Province released the draft Oak Ridges Moraine Conservation Plan, with many of the recommendations from the Tri-Regional strategy embodied in the Plan, the legislation and the concept of the Oak Ridges Moraine Foundation for securement of key Moraine Lands.

York Region has adopted a strategy of aligning and co-ordinating the activities of all departments to ensure a focused and co-operative effort towards the achievement of Regional goals. This approach has linked the Region’s long-term Vision 2026 strategy and Regional Council strategic focus to program objectives, work initiatives and performance indicators.

Multi-Year Approach to Business Plans
The Regional Corporation utilizes a multi-year philosophy for financial and human resource planning. Multi-year business plans and budgets for all Regional service areas are developed to proactively address program and service delivery needs.

This approach links overall corporate strategies directly to individual employee performance plans and allows the Region to expand the traditional one-year time frame to include a further two-year outlook of budgetary pressures. The critical focus is to ensure that decisions made during the annual budget process are sustainable and allow us to maintain a strong, viable long-term strategy.

Performance Measurement
The business plans incorporate performance measures into each program area to assist with understanding delivery objectives and aid in setting appropriate cost and quality targets. With the Region’s growing mandate and increased responsibilities, a greater emphasis is placed on public accountability. The introduction of a Performance Measurement Program has become a crucial element of York Region’s business planning system by:
• developing efficiency and effectiveness measures to evaluate service delivery;
• development of a cost allocation methodology to evaluate the full cost of service provision:
• linking employee compensation to program delivery and performance; and
• public reporting of service delivery outcomes demonstrating to taxpayers how their dollars are being managed.

In 2001, York Region continued its leadership in the Ontario Municipal CAO’s Benchmarking Initiative (OMBI). This initiative involves comparing our activities to those of other municipalities to continually search for improved and innovative methods of service delivery.

York Region has also continued its involvement with the Municipal Performance Measurement Program (MPMP). Results from the MPMP in 2001 had shown that York Region services and administration costs are amongst the lowest in Ontario. An emphasis on maintaining our effective and efficient services is continually being made through the refinement and improvement of our business practices and processes.

Financial Growth Management Strategy
Council’s growth-pays-for-growth policy ensures that the capital infrastructure required for growth is funded through development charges on new non-residential and residential development.

York Region’s policies ensure that growth and development are financed in a fiscally responsible manner to meet the future needs of our communities. Initiatives such as long- term, 25-year infrastructure master plans, the 10-year prioritized capital works plans and the fiscal analysis of all new development are the cornerstones of this approach.

It is estimated that about $3.6 billion of new capital infrastructure will be required to accommodate approved growth projections to 2021. 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 $3.6 billion estimate, there is a defined need for funding from senior levels of government.

The Region is currently in the process of updating its long-term water, sewer and transportation master plans. It is anticipated that these updates will be completed by the spring of 2002, and incorporated in the comprehensive Development Charge By-law review, scheduled for the third quarter of 2002.

Planning for the Future - A Sustainable Financial Strategy
The establishment, maintenance and prudent management of reserves are important components of the Region’s financial strategy. Reserve funding supports a significant portion of infrastructure capital costs and plays an instrumental role in offsetting unforeseen cost increases during uncertain economic cycles. Reserve balances are continuously monitored to ensure their adequacy and availability to meet the current and future needs of the residents of York Region in a fiscally responsible manner.

As shown in the chart, the projections of reserve balances are not expected to fluctuate appreciably over the next few years. Current balances for most reserves are considered to be adequate for their planned purpose.

Financial Management and Control
The financial management and control of The Regional Municipality of York is largely governed through 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.

York Region has established risk management programs and procedures to protect the Corporation’s assets against the financial consequences of accidental loss. Through a combination of self-insuring and the purchase of insurance, Corporate assets are preserved and public service capabilities are protected. Insurance coverage is purchased from a combination of traditional insurers and from a municipal insurance exchange.

The Region has also established a Risk Management Committee. This cross-functional committee helps to ensure, from a Regional perspective, that the various risk management programs support the business of the Region. The committee reviews claims against the Corporation to prevent them from reoccurring or at the very least minimize their adverse impact or likelihood of reoccurrence.

Regional Council approved the establishment of an Internal Audit role to assist the Region to achieve its objectives. This role provides advice on managing and controlling risk, performs independent appraisals on control systems, and participates as an advisor in the identification of efficiencies and improvements in new and existing processes, programs and services.

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 Plan and Budgets, to ensure compliance with Council guidelines and to balance competing priorities.

On April 12, 2001 York Regional Council adopted a total gross expenditure budget of $961.7 million. After applying the impact of assessment growth, the net tax levy impact for all Regional services was 2.5%, consistent with inflation. An additional 2.0% tax levy surcharge was allocated for Hospital Capital Funding. Subsequent to Budget adoption, Council approved an additional $2.0 million gross expenditure for Housing and Residential Services that was funded entirely from reserves and therefore had no additional tax levy impact.

The Budget addressed the challenges associated with managing both a rapidly growing Region and the increasing responsibilities given to municipalities as a result of recent provincial program re-alignments. Major enhancements to Policing, Emergency Medical Services, Transit, and various Capital Programs, combined with an increase in GTA Pooling costs associated with Social Housing, accounted for the majority of the Region’s increased financial pressures for the 2001 Budget.

The net result of York Region’s 2001 financial activities was growth in the consolidated fund balances of $38.2 million. The highlights of the financial results are detailed below.

Revenues
Total 2001 revenues of $747.5 million financed current fund operations, reserves and reserve funds and capital expenditures. Of this amount $495.0 million was raised through taxation and water and wastewater user fees. Provincial and federal transfer payments amounted to $99.5 million and development contributions of $84.9 million were made to the Development Charges Reserve Fund in 2001. Revenue of $54.7 million resulted from fees, service charges and other sources. Interest earned on Operating Funds, Reserves and Reserve Funds totalled $13.4 million.

Current Fund Expenditures
Expenditures for Current Fund Operations totalled $552.8 million in 2001.

The largest component was Social and Family Services expenditures of $163.8 million for programs such as:
• Ontario Works employment services;
• York Region’s share of GTA Pooled Social Assistance costs;
• Family Benefits Assistance;
• Child Care Management;
• Early Intervention and Special Needs services;
• the operation of long term care facilities providing 24 hour, 7 days a week care to 200 seniors; and
• homemaking services, and long term care community and outreach programs serving over 2,200 York Region seniors.

Regionally provided housing services for the operation of all public housing units in the Region in addition to York Region’s share of the GTA Pooled Social Housing costs totalled $77.8 million.

Combined GTA Pooling costs for Social Assistance and Social Housing accounted for expenditures of $79.7 million to the Region.

Protection to Persons and Property expenditures of $96.0 million included costs for Police Services, 9-1-1 Operations and funding to the Conservation Authorities.

Environmental Services costs represented water, wastewater and solid waste services totalling $64.2 million that included:
• the operation of 88 water and 20 wastewater facilities;
• the delivery and treatment of over 100 million cubic metres of water and wastewater;
• the administration of the Water for Tomorrow efficiency program that saved 7.6 liters of water per day in 2001;
• the operation of three Household Hazardous Waste Depots and two material recovery facilities; and
• the planning and management of the Region’s Solid Waste Strategy.

Transportation service costs of $62.0 million included costs for:
• the maintenance and management of over 3,200 lane kilometres of roads;
• the operation of a centralized traffic control system and 582 traffic signals;
• enhancements to the York Region Transit system; and
• York Region’s share of GO Transit costs.

The Health Services expenditure of $37.5 million included costs for:
• the delivery of Emergency Medical Services; and
• Public Health initiatives such as Control of Infectious Diseases, Chronic Disease and Injury Prevention, and Family Health programs.

General government expenditures of $47.9 million included $9.3 million for York Region’s share of funding for the Municipal Property Assessment Corporation and a $7.3 million contribution for new construction projects at York Region’s three community based hospitals (Southlake, York Central and Markham/Stouffville).

Planning and Development Services initiatives totalling $3.6 million provided enhanced geographic information systems, promotion of economic development and tourism, and management of Regional growth planning policies and land use development.

Capital Fund Expenditures
Capital Fund Expenditures in 2001 totalled $180.3 million.

Road improvements and expansion of the traffic system accounted for $80.3 million in expenditures for capital projects such as:
• widening of Highway 9 from Jane Street to Bathurst Street;
• widening of Highway 27 from Highway 7 to Rutherford Road;
• widening of Kennedy Road and McCowan Road from 16th Ave. to Major Mackenzie Drive; and
• various intersection and road surface improvements, and bridge and culvert rehabilitations.

Environmental service expenditures, totalling $80.2 million, represented construction of water and wastewater infrastructure for major capital projects such as:
• Duffin Creek Water Pollution Control Plant optimization;
• 9th Line sewer extension to Stouffville;
• 9th Line trunk sewer build in Markham; and
• Lake Simcoe Water Filtration Plant construction in Georgina.

Social and Health Services expenditures of $7.9 million represent mainly:
• renovations to long term care facilities at the Newmarket Health Centre; and
• construction completion of long term care facilities at the Maple Health Centre.

Protection to persons and property expenditures of $6.8 million included:
• enhancements to the Central Fire Dispatch communication equipment; and
• an upgrade to the York Regional Police communication and computer aided
dispatch systems.

General government capital expenditures of $4.9 million were made for the new York Region South Services Centre. Other capital expenditures for the upgrade of geographic information systems accounted for the remaining $0.2 million.

Devolution of Social Housing
Effective January 1, 2001 under the provisions of the Social Housing Reform Act, 2000 (Bill 128), the Province of Ontario transferred responsibility for social housing administration to municipal control. As a result of this action, the Region assumed ownership of the York Regional Housing Corporation (YRHC) and acquired control of the Region of York Housing Corporation (RYHC). Consequently, the financial activities of the two housing corporations are reported on a consolidated basis with the financial activities of the Region. The inclusion of mortgages and debentures of RYHC and YRHC, respectively, has resulted in an increase in the Region’s long-term debt of $100.7 million. The addition of this debt will have a nominal impact on the Region’s debt capacity and will not affect its AAA credit rating.

In 2001, York Region continued to focus on program results and service delivery commitments. Detailed quarterly progress reporting for all Regional service areas has allowed the corporation to better monitor business plan objectives and budgeted expenditures. Detailed progress reports provide the information needed to enact necessary financial decisions and ensure program service delivery commitments are achieved.

As the Region’s responsibilities grow, an even greater emphasis is placed on the ability to monitor results, proactively address areas that require improvement, and report timely information to both the departments within the corporation and to our community stakeholders.

Providing service to over 792,000 residents and 400,000 employees in a rapid growth environment requires proactive financial management and development of a sustainable financial strategy.

Through community partnerships, innovative service delivery and excellence in customer service, York Region has achieved many successes in 2001. With responsible fiscal policies and constantly improving financial planning processes, York Region will ensure that services are continually delivered to the community in an effective and efficient manner.

Sandra Cartwright
Commissioner of Finance and Regional Treasurer
June 2002

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