HomeMy WebLinkAboutCS 13/01
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REPORT TO COUNCIL
FROM:
Gillis A. Paterson
Director, Corporate Services & Treasurer
DATE: May 28,2001
REPORT NUMBER: CS 13-01
SUBJECT: 2000 Pre-Audit Balances of Reserves and Reserve Funds
RECOMMENDATION:
It is recommended that Report CS 13-01 of the Director, Corporate Services & Treasurer be
received by Council for information.
ORIGIN:
Report submitted annually to Council.
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AUTHORITY:
Municipal Act, R.S.O. 1990, as amended, Section 163
Ontario Regulation 438/97
FINANCIAL IMPLICATIONS:
Not applicable.
EXECUTIVE SUMMARY:
As in previous reports filed over the last three years, this report provides specific information on
each of the City's reserves and reserve funds, including year end balances. The current year end
balances have declined slightly overall from the 1999 highs due to tight budgetary restrictions to
keep tax increases to zero and lessen the need for debt financing.
BACKGROUND:
Based on the preliminary 2000 results, we can now report on the pre-audit actual activities within
the reserves and reserve funds for 2000. Caution must be exercised in using this information, as
the City Auditors have not yet finished their annual review.
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The "purpose" and the "recommended maintenance level" for each reserve and reserve fund are
set out in Appendices B and C respectively.
Report to Council CS 13-01
Date: May 28,2001
Subject: 2000 Pre-Audit Balances of Reserves and Reserve Funds
Page 2
It is anticipated that a report will be filed with Council later this year rationalizing the different
funds, balances and including a review of any underlying by-laws.
ATTACHMENTS:
1.
2.
3.
Appendix A
Appendix B
Appendix C
Summary of Reserve and Reserve Funds
Description of Reserves
Description of Reserve Funds
Prepared By:
Approved / Endorsed By:
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Caryn Kong,
Senior Financial Analyst
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...... Gillis A. Paterson,
Director, Corporate Services & Treasurer
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Attachments
Recommended for the consideration of Pickering
City Council
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Thomas J. Quinn, Chief Administrative Officer
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ATTACHMENT#..L TO REPORT#~-ol
APPENDIX A
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SUMMARY
CITY OF PICKERING
SUMMARY OF RESERVE AND RESERVE FUND PRE-AUDIT ACTUALS
DECEMBER 31, 2000
Pre Audit Actuals
Appendix B Summarv of Reserves 2000 1999 1998 1997
4610/4617 Working FundsNacation Pay 841,350 841,350 841,350 841,350
4611 Replacement of Capital 2,153,816 2,521,806 1,829,610 175,914
Equipment
4612 Contingencies 1,371,295 1,381,295 786,318 264,319
4613/4614 Self Insurance/Inventories 776,410 713,080 579,124 452,207
4618 Reskilling 83,900
4619 Rate Stabilization 249,139 2,981,232 1,786,232
4620 Dev. Charges - City's portion 1.889.000
7 .281.010 8.438.764 5.822.634 1.817 .690
Appendix C Summary of Reserve 2000 1999 1998 1997
Funds
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4225 Community Facilities 282,569 219,209 773,483 447,280
4227/4229 Development Charges 7,586,550 6,744,603 5,874,293 6,145,652
4228 Capital Works 850,630 826,082 613,464 403,758
4230 Parkland 3,875,813 4,242,340 5,778,228 4,161,322
4232 Public Works 1,304,410 1,194,655 1,185,154 1,096,536
4233 Pickering Baseball Assoc. 60.789
13.960.761 13.226.889 14.224.622 $12.254.548
Total Reserve and Reserve Funds $21.241.771 $21.665.652 $20.047256 $14.072.238
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ATTACHMENT#L TO REPORT#~.J3-01
APPENDIX B
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RESERVE FOR WORKING FUNDSN ACATION PAY G/L 4610/4617
Actual Balance December 31,1999
2000 Transactions
Transfers into the Reserve
Working Funds
Vacation Pay
$841,350
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Transfers out of the Reserve
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Pre-Audit Actual Balance December 31, 2000
Working Funds
Vacation Pay
$400,000
441.350
$841 350
1.
Purpose of the Reserves:
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The reserve for working funds is used to provide operating cash to assist in avoiding short
term interest expenses incurred on operations, typically during the first months ofthe year
prior to tax billing and at other times when cash inflows and outflows do not match as
occurs in any corporation.
The reserve for vacation pay was established to ensure that the cost of vacation pay
earned, but not taken, is correctly allocated to the taxpayers of that year and the Council
of that period. The Vacation Pay Reserve is no longer needed as such and it will be
recommended that it be collapsed and rolled into the Working Funds Reserve. A report
will be forthcoming later this year and this reserve will be recommended to be transferred
to Working Funds to provide a more appropriate balance in that Reserve.
The interest income on these funds form part of the annual Current Budget General
Government Revenue.
2. Recommended Maintenance Levels of the Reserves:
Reserve for Working Funds - It is recommended as a "rule-of-thumb" that this reserve be
up to 2% - 3% of total revenues.
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APPENDIX B (Page 2)
RESERVE FOR REPLACEMENT OF CAPITAL EQUIPMENT G/L 4611
Actual Balance December 31,1999
2000 Transactions
Transfers into the Reserve
2000 Budget
Various Recreation Revenues
$ 2,521,806
104.962
104.962
Sub-total
$2,626,768
Transfers out of the Reserve
2000 Contribution to Capital Fund
Finance, Roads, & Transit
(472.952)
Pre-Audit Actual Balance - December 31, 2000
$2.153816
1.
Purpose ofthis Reserve:
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The purpose of this reserve is to eliminate the need to levy for the full cost of major
equipment in the year of acquisition. The reserve acts as a stabilization factor and helps
to avoid both mill rate fluctuations and the issuance of long term debt or other means of
financing.
The interest income on these funds form part of the annual Current Budget General
Government Revenue.
2. Recommended Maintenance Levels of this Reserve:
This reserve should be kept at a level which is equivalent to the replacement cost of the
assets for which they were established. The reserve has fluctuated from the low as at
December 31, 1997 of $175,914 to a high of $2.52 million at the end of 1999. No
additional provision has been provided for in the current budget for several years and this
account continues to be under funded. Major additional contributions will be required in
future years.
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APPENDIX B (Page 3)
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RESERVE FOR CONTINGENCIES G/L 4612
Actual Balance December 31,1999
2000 Transactions
Transfers into the Reserve
2000 Budget
- General Government - Assessment Appeals
$1,381,295
150,000
Sub-total
150.000
1,531,295
Transfers out of the Reserve
2000 Cont to General Fund
- Western Branch Books
- Election Provision
(50,000)
010.000)
(160.000)
Pre-Audit Actual Balance - December 31,2000
$1.371.295
1.
Purpose of this Reserve:
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Like the capital equipment replacement reserve, this reserve acts in a tax stabilization
capacity. It was established in anticipation of unknown, unusual or extraordinary
expenditures which occur from time to time.
The interest income on these funds form part of the annual Current Budget General
Government Revenue.
2. Recommended Maintenance Levels of this Reserve:
Staff continue to monitor the balance of this reserve and the need for long term
contributions required.
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APPENDIX B (Page 4)
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RESERVE FOR SELF INSURANCE/INVENTORY G/L 4613/4614
Actual Balance December 31,1999
2000 Transactions
Transfers into the Reserve
- Inventory Adjustment
- Insurance Premiums Under Budget Provisions
$ 713,080
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63.330
63.330
776,410
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Transfers out of the Reserve
Pre-Audit Actual Balance - December 31, 2000
$776.410
1. Purpose ofthis Reserves:
Reserve for self-insurance
This reserve was established as a necessary form of asset protection. Specifically, it is to
cover insurance claims resulting from the increase in deductible levels. The higher
deductible reduced insurance premiums. Significant savings can be realized through
reduced premium costs and staff analyze the costslbenefits of such actions on an annual
basis.
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Reserve for Inventory
This reserve has been established to ensure that the cost of revolving inventories is
correctly allocated to the taxpayers of that year and the Council of that period.
The interest income on these funds form part of the annual Current Budget General
Government Revenue.
2. Recommended Maintenance Levels of this Reserve:
Reserve for Self Insurance
This reserve should be maintained at a level to ensure that the funding is adequate to meet
actuarial liabilities. This situation is analyzed by staff on a regular basis.
Reserve for Inventory
The maintenance level required is explained in the description of the purpose for this
reserve.
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APPENDIX B (Page 5)
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RESERVE FOR RATE STABILIZATION G/L 4619
Actual Balance December 31, 1999
2000 Transactions
Transfers into the Reserve
$2,981,233
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Transfers out of the Reserve to Current Budget
(2,732,094)
Pre-Audit Actual Balance - December 31, 2000
$249.139
1. Purpose of this Reserve:
The purpose of this reserve is to act as a mill rate stabilization factor for annual current
budget funding.
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The interest income on these funds form part of the annual Current Budget General
Government Revenue.
2. Recommended Maintenance Levels of this Reserve:
The level of this reserve will continue to be monitored.
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APPENDIX B (Page 6)
RESERVE FOR DEVELOPMENT CHARGES - CITY SHARE GIL 4620
Actual Balance December 31,1999
2000 Transactions
Transfers into the Reserve
- 2000 Provision
- Surplus
$
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400,000
1,489,000
Transfers out of the Reserve
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Pre-Audit Actual Balance - December 31, 2000
$1 889.000
1. Purpose ofthis Reserve:
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This reserve has been established to set aside funds for projected growth in the City. From
the 1999 Development Charges Study it was approved that a Reserve Fund be established for
the City's share i.e.. the non development charge portion, of the costs of services included in
the Development Charges study and that contributions be included in the Annual Current
Budget for consideration by Council. For the City to meet its obligations for the various
capital projects an annual contribution of $2.4 million is required.
The interest income on these funds form part of the annual Current Budget General
Government Revenue.
2. Recommended Maintenance Levels of this Reserve:
This reserve should be maintained at a level to ensure that the funding is adequate to meet
future capital growth in the City.
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ATTACHMENT # L TO REPORT #~3- 01
APPENDIX C
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RESERVE FUND FOR COMMUNITY FACILITIES G/L 4225
Actual Balance December 31, 1999
2000 Transactions
Transfers into the Reserve
Interest Earned
Contribution from Capital Fund
$ 219,209
9,021
54,339
282,569
Transfers out of the Reserve
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Pre-Audit Actual Balance - December 31, 2000
$~
1.
Purpose of this Reserve:
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This is a "discretionary" reserve fund established by Council to attempt to avoid both tax
rate fluctuations and the need for issuing long term debt for major expenditures required
for community facilities.
The interest income on these flmds form part of the Reserve Fund as per the Municipal
Act.
2. Recommended Maintenance l,evels of this Reserve:
The balances of this fund have fluctuated from the 1999 year low of$219 thousand to the
high in 1994 of $5.1 million. Additional amounts must be allocated to this fund.
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APPENDIX C (Page 2)
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RESERVE FUND FOR DEVELOPMENT CHARGES GIL 4227/4229
Actual Balance December 31,1999
2000 Transactions
Transfers into the Reserve
Capital Fund Contribution
Interest Earned
Net Developer Contributions
$6,744,603
4,638
366,765
2.309,371
9,425,377
Transfer to Capital Fund
2127 -Finance
2240 - Fire
2321 - Roads - External Subdivision
2321 - Roads - Vehicle
2360 - Specialized Transit
2718 - Parks - Development
2745 - Libraries - Materials
2745 - Libraries - Fixed Assets
2610 - Planning - Studies
$ (40,000)
(400,000)
(617,412)
(14,000)
(64,800)
(143,000)
(88,000)
(468,000)
0,615)
(1.838,827)
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Pre-Audit Actual Balance - December 31,2000
$7.586.550
1. Purpose ofthis Reserve:
This is an "obligatory" reserve fund and as such is governed by Provincial legislation,
regulation, City by-Law or agreement and requires revenue received for the special
purposes to be segregated from the general revenues of the municipality. Obligatory
reserve funds must be created whenever a statute requires revenue received for a special
purpose to be segregated from the general revenues of the municipality and the revenue is
to be used solely for the purpose prescribed by statute, i.e. in this case the monies
charged to developers must be held in trust and used to fund capital services required for
new growth.
The interest income on these funds form part of the Reserve Fund as per the Municipal
Act.
2. Recommended Maintenance Levels of this Reserve:
In accordance with development charge legislation, all development charge revenue must
be held within separate reserve funds and can only be used for the financing of growth-
related projects. As such, no reserve fund limits are appropriate for development charge
reserve funds because they are tied to growth-related capital requirements.
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APPENDIX C (Page 3)
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RESERVE FUND FOR CAPITAL WORKS G/L 4228
Actual Balance December 31,1999
2000 Transactions
Transfers into the Reserve
Interest Earned
Developer Contributions (refund)
$826,082
$33,798
(9.250)
24.548
Transfers out of the Reserve
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Pre-Audit Actual Balance - December 31, 2000
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1.
Purpose of this Reserve:
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This Fund is a "discretionary" one and is established pursuant to subsection 163.(2) ofthe
Municipal Act for specified purposes by Council related to the acquisition of assets.
The interest income on these funds form part of the Reserve Fund as per the Municipal
Act.
2. Recommended Maintenance Levels of this Reserve Fund:
This reserve fund has its lowest balance at the end of 1997 of $404 thousand, with the
highest balance in the last 4 years being $1.495 million at the end of 1995. The level of
this reserve will continue to be monitored.
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APPENDIX C (Page 4)
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RESERVE FUND FOR PARKLAND G/L 4230
Actual Balance December 31,1999
2000 Transactions
Transfers into the Reserve
Interest Earned
Recreational Land (cash-in-lieu)
Capital Fund Contribution
$4,242,339
188,724
114,400
6.563
4,552,026
Transfers out of the Reserve
Transfer to Capital Fund
2132 -Town Property - Trackless Tractor
2718 -Parks - Land Purchase 927 Tullo St.
- Ford Packer/Compactor
- Farm Tractor
- Playground Equipment & Misc
Park Development
$(69,577)
(118,750)
(23,011)
(7,875)
(457.000)
(676,213)
Pre-Audit Actual Balance - December 31, 2000
$3.875.813
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1. Purpose of this Reserve Fund:
This is an "obligatory" reserve fund and it has been established pursuant to subsection
163.(2) of the Municipal Act as required by subsections 42.(1), (5), (6), (7), (8) and (9) of
the Planning Act. This fund is governed by legislation, regulation or agreement and
requires revenues received for the special purposes to be segregated from the general
revenues of the municipality. Obligatory reserve funds must be created whenever a
statute requires revenues for a special purpose to be segregated from the general revenues
of the municipality and the revenue is to be used solely for the purpose prescribed by
statute.
The interest income on these funds form part of the Reserve Fund as per the Municipal
Act.
2. Recommended Maintenance Levels of this Reserve Fund:
Due to the obligatory nature of this fund, there are no limits on this fund.
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APPENDIX C (Page 5)
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RESERVE FUND FOR PUBLIC WORKS G/L 4232
Actual Balance December 31,1999
2000 Transactions
Transfers into the Reserve
Interest Earned
Developer Contributions - (Refund)
Capital Fund Contribution
$1,194,655
48,819
( 683)
70.1 19
$1,312,910
Transfers out of the Reserve
Transfer to Capital Fund
2321 - External Subdivision Works - Rosebankl
Strouds Lane
(8.500)
Pre-Audit Actual Balance - December 31, 2000
$1.304.410
1. Purpose of this Reserve Fund:
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This fund has been established by Council pursuant to subsection 163.(2) of the
Municipal Act. The purpose of the reserve funds is to acquire fixed assets, e.g. storm
sewers, without the need to fund on a long term nature through the issue of debentures.
The main purpose at this time is to fund the City's share of the cost of subdivision works
committed to under various subdivision agreements.
The interest income on these filllds form part of the Reserve Fund as per the Municipal
Act.
2. Recommended Maintenance Levels of this Reserve Fund:
The "average" annual balance of this fund over the last four years has been approximately
$1.25 million. This reserve should be kept at least at this level in the future. Staff will
periodically review the need for this level with the requirements contained in the capital
budgets and four year program :md report any different findings to Council.
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APPENDIX C (Page 6)
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RESERVE FUND FOR PICKERING BASEBALL ASSOCIATION
GIL 4233
Actual Balance December 31, 1999
2000 Transactions
Transfers into the Reserve
Interest Earned
Pickering Baseball Association
$ 0
789
60,000
60,789
Transfers out of the Reserve
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Pre-Audit Actual Balance - December 31, 2000
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1. Purpose of this Reserve Fund:
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This Reserve Fund has been established for the construction of the Brockridge Park
Clubhouse. The funding for this Reserve Fund shall initially be by contribution from the
Pickering Baseball Association, and thereafter from any other donors or contributors or
from such funds as the Council ofthe City of Pickering may from time to time approve.
The interest income on these funds form part of the Reserve Fund as per the Municipal
Act.
2. Recommended Maintenance l,evels of this Reserve Fund:
Due to the obligatory nature of this fund, there are no limits on this fund.
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