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| December
31, 2003 |
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| The
Corporation of the Regional Municipality of York (the “Region”)
was incorporated as a municipality in 1971 by the Province of Ontario.
The area municipalities within the regional boundaries include the
towns of Aurora, East Gwillimbury, Georgina, Markham, Newmarket, Richmond
Hill, Whitchurch-Stouffville, the Township of King and the City of
Vaughan. |
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| 1.
ACCOUNTING POLICIES |
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The consolidated
financial statements of the Regional Municipality of York are the
representations of management prepared in accordance with generally
accepted accounting principles for local governments established
by the Public Sector Accounting Board (PSAB) of the Canadian Institute
of Chartered Accountants.
The focus of PSAB financial statements is on the financial position
of the Region and the changes thereto. The Consolidated Statement
of Financial Position reports the financial assets and liabilities,
and the non financial assets and liabilities of the Municipality.
Financial assets are those assets which could provide resources
to discharge existing liabilities or finance future operations.
Municipal position represents the financial position and is the
difference between assets and liabilities. This provides information
about the Municipality’s overall future revenue requirements
and its ability to finance activities and meet its obligations.
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a)
Basis of Consolidation |
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i) |
These consolidated
financial statements reflect the assets, liabilities, sources of
financing and expenditures in the Current Fund, Capital Fund, Reserves
and Reserve Funds, and include the activities of all committees
of Council, the York Region Police Services Board and Housing York
Inc. During 2003, York Region Rapid Transit Corporation (Rapidco)
was incorporated and is expected to commence executing its mandate
in 2004.
The 2002
comparative figures have been reclassified to conform to current
presentation.
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ii) |
The
financial activities of the sinking fund are not included in these
statements. |
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iii) |
Funds
held in trust by the Region for the residents of Newmarket Health
Centre and Maple Health Centre and their related operations are not
included in the financial statements. The financial activity and position
of the trust funds and donations received on behalf of the Centres
are reported separately in the Residents’ Trust Funds and Donation
Account Statement of Financial Position, and Statement of Financial
Activities. |
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b)
Basis of Accounting |
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i) |
Accrual
Basis of Accounting
Sources of financing and expenditures are reported
on the accrual basis of accounting. The accrual basis of accounting
recognizes revenues as they become available and measurable; expenditures
are the cost of goods and services and are recognized when acquired
in the period, whether or not payments have been made or invoices
received. |
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ii) |
Capital
Assets
The historical cost and accumulated depreciation for
capital assets are not recorded for municipal purposes. Capital assets
are reported as an expenditure in the Consolidated Statement of Financial
Activities in the year of acquisition. |
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iii) |
Use
of Estimates
Since precise determination of many assets and liabilities
is dependent upon future events, the preparation of periodic financial
statements necessarily involves the use of estimates and approximations. |
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iv) |
Deferred
Revenue-Obligatory Reserve Funds
Development Charges, collected under the authority
of Sections 33 to 35 of the Development Charges Act 1997, are reported
as Deferred Revenue in the Consolidated Statement of Financial Position
in accordance with the recommendations of PSAB. Amounts applied to
qualifying capital projects are recorded as revenues in the fiscal
period in which the funds are expended on qualifying capital projects.
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v) |
Reserves
and Reserve Funds
Certain amounts, as approved by Regional Council, are
set aside in reserves and reserve funds for future operating and capital
purposes. Transfer to and/or from reserves and reserve funds are an
adjustment to the respective fund when approved. |
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vi) |
Government
Transfers
Government transfers are recognized in the period in
which the events giving rise to the transfer occur, providing the
transfers are authorized, any eligibility criteria have been met,
and reasonable estimates of the amounts can be made. |
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vii) |
Investments
Investment income earned on surplus current fund,
capital fund, reserves and reserve funds (other than development
charges) are reported as revenue in the period earned. Investment
income on the development charge reserve funds is added to the fund
balance and form part of the respective deferred revenue balances.
Investments
are carried at the lower of cost and market value. Any discount
or premium is amortized over the remaining term of the investments.
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viii) |
Pensions
and Employee Benefits
The Region accounts for its participation in the Ontario
Municipal Employee Retirement Fund (OMERS), a multi-employer public
sector pension fund, as a defined contribution plan. Vacation entitlements
are accrued for as entitlements are earned. Sick leave benefits are
accrued where they are vested and subject to pay out when an employee
leaves the Region’s employ.
Other post-employment benefits are accrued in accordance with the
projected benefit method prorated on service and management’s
best estimate of salary escalation and retirement ages of employees.
The discount rate used to determine the accrued benefit obligation
was determined by reference to market interest rates at the measurement
date on high-quality debt instruments with cash flows that match the
timing and amount of expected benefit payments. The cost of plan amendments
is accounted for in the period they are adopted. |
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| 2.
Budget Figures |
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The Regional
Municipality of York’s Council completes a review of its operating
and capital budgets each year. The approved operating budget for
2003 is reflected on the Consolidated Schedule of Current Fund Operations
and is included in the budget figures presented in the Consolidated
Statement of Financial Activities. The budget as approved by Regional
Council includes those expenditures which are part of current tax
levies and user charges. Figures are restated to include accruals
for amounts accounted for in these financial statements subject
to future funding.
Budgets
established for the Capital Fund and Reserves and Reserve Funds
are set on a project-oriented basis, spending of which may be carried
out over one or more fiscal years. The budgets reflected in the
Consolidated Schedule of Capital Fund Operations and the Consolidated
Schedule of Reserves and Reserve Funds and included in the Consolidated
Statement of Financial Activities is an annual budget only as required
by the recommendations of the Public Sector Accounting Board of
the Canadian Institute of Chartered Accountants.
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| 3.
Investments |
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Included
in cash and cash equivalents are short-term investments of $682,142,615
(2002 - $788,322,799) with a market value of $682,114,755, (2002 -
$789,447,786).
Long-term investments of $231,260,359 (2002 - $28,892,991) have a
market value of $231,733,731 (2002 - $29,592,858).
Under legislation, $465,911,637 (2002 - $387,740,010), is comprised
of both cash and cash equivalents and investments, is restricted as
it is required to fund obligatory reserve funds. |
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| 4.
Accounts Receivable |
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This
amount is comprised of the following receivables: |
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2003
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2002
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$
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$
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| Government
of Canada |
5,749,313
|
4,163,821
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| Government
of Ontario |
1,533,191
|
410,548
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| Other Municipalities |
61,961,399
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42,916,907
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| Others |
24,868,385
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26,065,779
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|
94,112,288
|
73,557,055
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| Less: Allowance
for Doubtful Accounts |
1,794,277
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1,887,323
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92,318,011
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71,669,732
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| 5.
Long-Term Liabilities |
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a)
The balance for long-term liabilities reported on the Consolidated
Statement of Financial Position is made up of the following items.
Interest rates for the debts range from 3% to 12%. |
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2003
|
2002
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$
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$
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| Total long-term
liabilities incurred by the Municipality including those incurred
on behalf of school boards and area municipalities and outstanding
at the end of the year amount |
405,032,088
|
339,668,442
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| to |
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| Mortgages
payable by Region of York Housing Corporation |
86,646,184
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88,396,479
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491,678,272
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428,064,921
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| Retirement
and sinking fund debenture |
1,266,527
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1,099,449
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| Less: Recoverable
from area municipalities |
17,724,888
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22,295,169
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| Recoverable
from school boards |
34,238,600
|
52,528,610
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| Net Long-term
Liabilities at the end of the year |
440,981,311
|
354,340,591
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b)
Long-term liabilities are repayable as follows: |
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| 2004 |
$35,260,195
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| 2005 |
45,894,019
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| 2006 |
35,025,457
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| 2007 |
42,288,558
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| 2008 |
36,107,500
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| Thereafter |
245,139,055
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| Net sinking
fund debt repayable according to actuarial recommendations |
1,266,527
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$440,981,311
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c)
Charges for Net Long-term Liabilities
Total interest charges for the year for net long-term liabilities
which are included in the Consolidated Statement of Financial Activities
were $21,781,626, (2002 - $21,768,972). |
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| 6.
Municipal Position – Capital Fund |
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Approval
of Council has been obtained for the pending issues of long-term liabilities
and for those commitments to be financed from revenues beyond the
term of Council. |
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| 7.
Amounts to be Recovered |
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Amounts
to be recovered represent liabilities established for accrual accounting
purposes. In some cases, reserves have been established to fund these
amounts. In other cases, the liabilities are to be funded from future
years’ budgetary allocations. Net increase in amounts to be recovered
is $95,263,224, (2002 - $28,403,419). |
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2003
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2002
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$
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$
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| Long-term
liabilities |
439,714,784
|
353,241,142
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| Benefits
payable for early retirees (c) |
19,074,511
|
16,087,283
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| Vested
sick leave benefits (a) |
11,232,250
|
10,537,217
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| Vacation
payable |
7,228,284
|
6,644,235
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| Insurance
claims (Note 9b) |
3,465,500
|
2,632,936
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| Accrued
interest payable on long-term liabilities |
3,130,965
|
2,001,052
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| Long-term
disability claims (e) |
2,091,316
|
1,458,009
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| Workers’
compensation obligations (d) |
1,927,488
|
1,458,009
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487,865,098
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392,601,874
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Actuarial
valuations: The following table sets out the extrapolated results
for each of the plans as at December 31, 2003: |
|
Benefits
payable
for
early retirees
|
Vested
sick leave
benefits
|
Workers'
compensation
|
2003
total
|
2002
total
|
|
$
|
$
|
$
|
$
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$
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| Accrued
benefit liability,beginning of year |
16,087,283
|
10,537,217
|
1,458,009
|
28,082,509
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26,236,745
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| Current
service cost |
1,071,864
|
824,283
|
837,121
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2,733,268
|
1,801,595
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| Plan amendments |
1,253,621
|
0
|
0
|
1,253,621
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0
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| Interest
cost |
1,060,358
|
634,036
|
114,282
|
1,808,676
|
1,578,622
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| Benefit
payments |
(398,615)
|
(763,283)
|
(481,924)
|
(1,643,825)
|
(1,534,453)
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Accrued
benefit liability,
end of year |
19,074,511
|
11,232,250
|
1,927,488
|
32,234,249
|
28,082,509
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The
actuarial valuations of the plans were based upon a number of assumptions
about future events, which reflect management’s best estimate.
The following represents the more significant assumptions made: |
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|
Benefits
payable
for
early retirees
|
Vested
sick leave
benefits
|
Workers'
compensation
|
| Expected
inflation rate |
3%
|
3%
|
3%
|
| Expected
level of salary increases |
4%
|
4%
|
N/A
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| Interest
discount rate |
6%
|
6%
|
7%
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a)
Liability for Vested Sick Leave Benefits |
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Regional
Operations
Since 2000, the accumulated sick leave plan has been
replaced by a Short-term Disability plan for employees in Regional
Operations. Under the plan, employees with five or more years of
service were given the option of receiving a cash payout of fifty
percent of the balance in their sick leave bank as at December 31,
1999 or deferring payment until termination of employment with the
Region. The estimated value of the liability of the accumulated
days for employees who chose the deferral option is $1,368,946 (2002
- $1,246,070) at the end of the year. Employees who had less than
five years of service at December 31, 1999 are given the option
on the fifth anniversary of their hire date to either receive payment
for the value of accumulated sick days as at December 31, 1999 or
defer payment until termination of their employment with the Region.
A reserve has been established for the past service liability and
is reported in the Consolidated Statement of Financial Position.
The reserve balance at December 31, 2003 is $4,435,753 (2002 - $4,617,667).
Police Services
Under the sick leave benefit plan, unused sick leave
can accumulate and employees may become entitled to a cash payment
of one-half of the sick bank balance to a maximum of six months
salary when they leave the municipality’s employ.
The liability for the accumulated days to the extent that they have
vested and could be taken in cash by an employee on termination
amounted to $9,863,304 (2002 - $9,291,147). A reserve was established
to provide for a portion of the Police Services past service liability
and the balance at the end of the year is $9,935,705 (2002 - $9,532,287)
and is reported in the Consolidated Statement of Financial Position.
According to an independent actuarial valuation report dated February
20, 2004 the total estimated liability for both regional operations
and police services is $11,232,250 (2002 - $10,537,217).
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b)
Pension Agreement |
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The
Region contributes to the Ontario Municipal Employees Retirement System
(OMERS), a multi-employer plan on behalf of approximately 3,147 members
of its staff. The plan is a defined benefit plan and specifies the
amount of the retirement benefit to be received by the employees based
on length of credited service and average earnings.
The latest actuarial valuation as at December 31, 2003 indicates that
current member and employer contribution rates are sufficient to fund
future benefits.
From August 1, 1998 to December 31, 2002 member and employer contribution
rates were 0%. In 2003, contribution resumed in the amount of $3,910,242
and is included as an expenditure in the Consolidated Statement of
Financial Activities. |
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c)
Post Employment Benefits |
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|
Employees
who retire under the OMERS pension plan at age fifty or greater with
a minimum of twenty years of service with the Region, are entitled
to continued coverage for extended health and dental benefits until
they reach age sixty-five.
According to an independent actuarial valuation report dated February
27, 2004 the total future cost associated with these benefits is $19,074,511,
(2002 - $16,087,283) and is reported in the Consolidated Statement
of Financial Position. |
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d)
Workers’ Compensation |
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|
Under
the Workplace Safety and Insurance Act, the Region is a self-insured
employer (Schedule II) for the majority of its employees.
According to an independent actuarial valuation dated March 2, 2004
the estimated liability for all claims incurred to December 31, 2003
is $1,927,488, (2002 - $1,458,009) and is reported in the Consolidated
Statement of Financial Position. |
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e) |
Long-Term
Disability Self Funding Arrangement |
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In
October 2002, the Region adopted a self-insured arrangement for its
long-term disability benefit (LTD). Under this arrangement, the Region
funds its own claims through a segregated reserve and contracts with
an insurance carrier to adjudicate and administer all claims on an
Administrative Services Only (ASO) basis. The estimated liability
for claims incurred in 2003 is $2,091,316 as at December 31, 2003
and is reported in the Consolidated Statement of Financial Position. |
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| 8.
Contractual Obligations and Commitments |
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a)
Water Agreements |
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|
Under
the terms of agreements with the Ministry of the Environment and the
City of Toronto, the Region is entitled to purchase water at rates
established every year. Payments in respect of these agreements amounted
to $16,824,243 (2002 - $17,028,323). Payments under these agreements
are financed by area municipalities based on water consumption. |
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b)
York-Peel Water Supply Agreement |
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|
In
2001, the Region entered into an inter-regional water servicing agreement
with the Regional Municipality of Peel. Under the terms of the agreement,
the Region is entitled to purchase water from Peel at a negotiated
rate, beginning in 2004. The agreement provides for a buy-in payment
of $52.4 million, payable in three equal installments of $17.46 million.
The first installment was paid in 2001 and subsequent payments are
due in 2004 and 2011. The Region of York will be required to pay operating
costs to the Region of Peel for water consumption based on the York
Wholesale Rate, commencing in 2004, through to 2031 and beyond. The
York Wholesale Rate will include a component to be contributed to
a Capital Repair and Replacement Reserve. Payments under this agreement
will be financed by the area municipalities based on water consumption. |
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c)
Lease Agreement-Information Technology |
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|
The
Region has entered into an agreement for the supply, service and lease
of information technology for a period of 3 years. The estimated lease
payments are $4.2 million for 2003, $4.3 million for 2004 and $4.9
million for 2005. |
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d)
Operating Leases |
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|
Under
the terms of various operating lease agreements, future minimum payments
for the next 5 years are apporximately as follows: |
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|
| Year |
$
|
| 2004 |
5,116,000
|
| 2005 |
4,485,000
|
| 2006 |
4,485,000
|
| 2007 |
4,581,000
|
| 2008 |
4,672,000
|
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e)
York Rapid Transit Plan |
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|
In
2002, the Region entered into a public-private partnership with York
Consortium 2002 to implement the York Rapid Transit Plan (YRTP). The
YRTP was developed from the Region’s Transportation Master Plan,
which identified the need to implement a rapid network that would
reduce the rate of traffic congestion and support economic and residential
growth. Implementation of the York Rapid Transit Plan is estimated
to cost $1.5 – 2.2 billion over the next 10 years.
Funding agreements with the Province of Ontario and the Government
of Canada have not been finalized. Consequently, no transactions were
conducted by Rapidco during 2003. |
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f)
Solid Waste Haulage and Disposal Services |
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Due
to the closure of the Keele Valley Landfill Site at the end of 2002,
the Region entered into agreements for the haulage and disposal of
waste. The agreements, with Green Lane Landfill, Onyx Waste Services
Inc. and Republic Services Inc., provide for waste to be hauled from
the Region’s transfer stations to sites in Southwold Township,
Ontario and Michigan, U.S.A. The initial term of the agreements is
five years. In subsequent years, the rate change per tonne will be
adjusted in accordance with the inflation rate.
Effective January 1, 2003 the Region assumed the responsibility for
waste disposal and diversion from the nine area municipalities. The
incremental operating costs of $8.4 million associated with this initiative
are added to the Region’s tax levy in 2003.
Under provisions of the contracts in place with third parties for
the disposal of waste, the Region has no obligations relating to the
closure or post-closure maintenance of the disposal sites. |
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| 9.
Contingent Liabilities |
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a)
Long-term Liabilities |
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|
The
Region is contingently liable for long-term liabilities for which
the responsibility for the payment of principal and interest is recoverable
from other municipalities, school boards and unconsolidated local
boards. The total amount outstanding as at December 31, 2003 is $51,963,488,
(2002 - $74,823,779) and is recorded on the Consolidated Statement
of Financial Position. |
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b)
Public Liability Insurance |
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|
During
2003, the Region insured public liability through participation in
a reciprocal insurance exchange, Ontario Municipal Insurance Exchange
(OMEX).
Public liability insurance limits are at $50,000,000. The Region increased
its level of self-insured retention, from the various deductible levels
under the independent insurance policies, to $100,000 on January 1,
1998 under the OMEX policies.
Insurance premiums, claims under the deductible provisions of policies
and claims in excess of insurance limits are paid from a Self Insurance
Reserve Fund established by the Region. The Region makes annual contributions
to the reserve on the basis of type of coverage, deductibles and insurance
limits. Contributions in 2003 were $1,883,612, (2002 - $1,251,113)
and are reported in the Consolidated Statement of Financial Activities.
The Region estimates that the liability as at December 31, 2003 for
all outstanding public liability claims is $3,465,500, (2002 - $2,632,936).
Environmental impairment liability is fully self-insured by the Region.
Total reserve available for public liability and environmental impairment
is $3,458,596, (2002 - $4,556,036). |
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c)
Contingencies |
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|
In
the normal course of its operations, the Region is subject to various
litigation and claims. The ultimate outcome of these claims cannot
be determined at this time. However, the Region’s management
believes that the ultimate disposition of these matters will not have
a material adverse effect on its financial position. |
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| 10.
Bill 140: The Fairness For Taxpayers Act |
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Bill
140, “The Fairness for Taxpayers Act, 2000” maintained the
Province’s commitment to limit property tax reform-related increases
to 5% per year for the Commercial, Industrial and Multi-residential
classes. This legislation, together with the Municipal Act, requires
that the Region manage any necessary inter-municipal tax adjustments.
The Region will only transfer funds between area municipalities as
part of the related tax adjustments and does not incur any direct
financial cost. |
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| 11.
Expenditures by Object |
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The
consolidated statement of financial activities reports expenditures
by function. The Regional Municipality of York’s expenditures
by object are as follows: |
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|
2003
|
2002
|
|
$
|
$
|
| Current
Fund Expenditures |
|
|
| Salaries,
wages and benefits |
236,143,885
|
200,477,778
|
| Long-term
debt charges |
21,781,626
|
21,768,972
|
| Materials,
services, rents and financial items |
300,237,545
|
261,348,715
|
| Asset acquisitions |
22,107,245
|
23,836,714
|
| Transfers
to other governments and the public |
71,140,073
|
79,658,840
|
|
|
651,410,374
|
587,091,019
|
|
| Capital
Fund Expenditures |
|
|
| Materials,
services, rents and financial items |
234,096,609
|
154,642,273
|
| Asset acquisitions |
41,181,007
|
29,268,588
|
| Transfers
to other governments and the public |
7,696,625
|
13,089,828
|
|
|
282,974,241
|
197,000,689
|
|
|
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| 12.
Local Service Realignment Costs |
| |
Current
liabilities include a $6,146,720 (2002 - $10,323,572) obligation due
to the Province for Local Service Realignment costs for Social Assistance
and Social Housing attributed to Greater Toronto Area (GTA) Pooling.
Annual Local Service Realignment costs for 2003 have been included
as expenditures in the Consolidated Statement of Financial Activities
based on billings from the Province for Social Assistance, an interim
agreement with the Province for Social Housing payments, and estimates
for unbilled amounts relating to 2003.
The total obligation for 2003 will not be confirmed until the final
billings for 2003 GTA Pooling costs are received from the Province.
|
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| 13.
Provincial Offences Administration |
| |
The
Region administers prosecutions and the collection of related fines
and fees under the authority of the Provincial Offences Act (POA).
The POA is a procedural law for administering and prosecuting provincial
offences, including those committed under the Highway Traffic Act,
Compulsory Automobile Insurance Act, Trespass to Property Act, Liquor
Licence Act, Municipal By-laws and minor federal offences. Offenders
may pay their fines at any court office in Ontario, at which time
their receipt is recorded in the Integrated Courts Offences Network
system (“ICON”). The Region recognizes fine revenue when
the receipt of funds is recorded by ICON regardless of the location
where payment is made.
The gross revenues consist of fines levied under Part I, II and III
(including delay penalties) for POA charges and amount to $6,236,304
(2002 - $5,592,047). The net loss amounts to $1,833,151 (2002 - $1,832,576).
Balances arising from operation of the POA offices are consolidated
with these financial statements. |
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| 14.
Service Contracts with the Ministry of Community, Family and Children’s
Services |
| |
The
Region has service contracts with the Ministry of Community, Family
and Children’s Services (MCFCS). One requirement of the service
contracts is the production of a report by management, Annual Program
Expenditure Reconciliation (APER) which shows a summary by service
of all revenues and expenditures and any resulting surpluses and deficits
that relate to the service contracts.
A review of these reports shows the following services to be in a
surplus position for the year ended December 31, 2003: |
| |
|
$
|
| Child
Care Services |
99,945
|
| Homelessness |
0
|
|
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|
| |
The
surplus amounts due back to MCFCS are reflected in the corporate liabilities
account. Subsidy revenue has been recognized according to the approved
service contract and not based on cash flowed. |
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