HomeMy WebLinkAboutCS 44/01
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REPORT TO COUNCIL
FROM:
Gillis A. Paterson
Director, Corporate Services & Treasurer
DATE: November 19, 2001
REPORT NUMBER: CS 44-01
SUBJECT:
Vacation Pay Reserve and Reserve for Inventory
RECOMMENDATION:
I. That Report CS 44-01 from the Director, Corporate Services & Treasurer be received;
2. The Vacation Pay Reserve be closed and the estimated balance of $441,350 be
transferred to the Self-Insurance Reserve;
3. The Reserve for Inventory be closed and the estimated balance of $245,271 be transferred
to Reserve for Rate Stabilization; and,
4. The appropriate officials of the City of Pickering be authorized to take the necessary
actions to give effect thereto.
ORIGIN:
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Director, Corporate Services & Treasurer
AUTHORITY:
Municipal Act, R.S.O 1990 as amended Section 163
Report to Council CS 13-01
FINANCIAL IMPLICATIONS:
Further to the recommendation on Report to Council CS 13-01, the Vacation Pay Reserve is no
longer needed as such and it is recommended that it be closed and the estimated balance of
$441,350 be transferred into Self-Insurance Reserve. Due to a short fall, the Self-Insurance
Reserve had not been replenish for a long time. With this transfer, the new balance for Self-
Insurance Reserve will be $972,489. This will provide a more appropriate balance for the Self-
Insurance Reserve.
The Reserve for Inventory is no longer needed and as such it be recommended that it be closed
and the estimated balance of $245,271 be transferred to Reserve for Rate Stabilization. Based
on the Current Budget requirement, there is a demand of $400,000 per year for both 2002 and
2003. With this transfer, the new balance for Rate Stabilization Reserve will be $494,410 and
this will provide for a more appropriate balance to meet the Current Budget demand for 2002.
EXECUTIVE SUMMARY:
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Not applicable
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to
Report to Council CS 44-01
Date: November 19,2001
Subject: Vacation Pay Reserve and Reserve for Inventory
Page 2
BACKGROUND:
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
original Reserve for Vacation Pay was set up in 1993 to comply with Section 3001 of the
Municipal Financial Reporting Handbook of the Ministry of Municipal Affairs and a
contribution of $430,000 was made to the Reserve from General Fund. Based on an increase in
accrued vacation pay as at Dee 31, 1995, an additional transfer of $11,350 was made in 1996
from General Fund. The total contribution of $441,350 has remained intact since 1996. This
Reserve Fund is no longer needed, as it is no longer necessary to provide for vacation pay earned
in this manner as vacations are taken in the year earned. In Report to Council CS 13-01 dated
May 28, 2001, it was recommended to transfer the Vacation Pay Reserve to Working Funds
Reserve. However, upon careful consideration by the Treasurer , it is more appropriate to
transfer this Reserve to the Self-Insurance Reserve to build up higher working capital for Self-
Insurance. Council approval is needed to close this Reserve and transfer the funds.
In 1984 the Ministry of Municipal Affairs and Housing issued a list of new changes to the
municipality's year-end financial report which involved Inventory. The Reserve for Inventory
was necessary to ensure that the cost of revolving inventories is correctly allocated to the
taxpayers of the year and the Council of that period. The initial year-end transfer of $66,204 in
1984 from General Government has been adjusted annually to reflect the inventories level of the
City. The Treasurer has reviewed inventory activities level over the last few years and has
concluded that the use of this reserve is minimal and is no longer required. As of December 31,
2000, the balance on this account is $245,271. As it is no longer necessary to provide for
Inventory, it is recommended that the Reserve for Inventory be closed and the surplus be
transferred to the Reserve for Rate Stabilization to build-up a higher working capital to meet
Current Budget demand for 2002. Council approval is needed to close this Reserve and transfer
the funds.
A TT ACHMENTS:
Not applicable
Prepared By:
Approved/Endorsed By:
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Caryn ong
Senior Financial Analyst
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\ GiTIls A. Paterson
Director, Corporate Services & Treasurer
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Recommended for the consideration of Pickering
City Council ~' (
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Tho~s J. Quinn, Chief Administrative Officer
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