HomeMy WebLinkAboutFIN-10-166 - Revised 2010 PSAB ReportREPORT
Report To:
Councillor B. Vrbanovic, Chair, and Members of the Finance
and Corporate Services Committee
Date of Meeting:
November 8, 2010
Submitted By:
Dan Chapman, General Manager of Financial Services
Prepared By: Sheri Brisbane, Supervisor of Financial Reporting
Ward(s) Involved: All
Date of Report:
October 22, 2010
Report No.:
FIN-10-166
Subject:
Revised 2010 PSAB Budget
RECOMMENDATION:
THAT the Revised 2010 PSAB Budget prepared in accordance with Regulation 284/09 of the
Municipal Act be approved by Council as appended to report FIN-10-166.
BACKGROUND:
Regulation 284/09 of the Municipal Act titled “Budget Matters – Expenses” requires Council to
adopt by resolution (within 60 days of receiving its audited financial statements for 2009) a
report that summarizes expenses excluded from the 2010 Budget.
REPORT:
PSAB changes effective in 2009 require the annual Consolidated Financial Statements to be
prepared using full accrual accounting. As a result certain expenses are included in the
financial statements that are not included in the budget. The applicable unfunded expenses for
the City of Kitchener include amortization expenses on tangible capital assets and employee
future benefits.
Amortization Expense on Tangible Capital Assets
Amortization expense on tangible capital assets of $28 million was recorded in the 2009
consolidated financial statements. The City’s 2010 Budget does not include an amount related
to amortization expense on tangible capital assets. The 2010 expense is estimated to be $26
million. Please be reminded that this expense is meant to represent the rate at which the City is
using up its assets (based on historical cost). It can therefore be used as a rough indication of
what should be budgeted for replacement.
Employee Future Benefits
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The PSAB standards do not require that liabilities associated with employee future benefits be
fully funded. The liability for employee future benefits in the City’s 2009 consolidated financial
statements equals approximately $23 million of which $4 million is funded by reserves and
reserve funds. These benefits include sick leave, post retirement benefits and workplace safety
and insurance benefits. The estimated increase for 2010 is 3.9% ($899k) based on inflation and
potential employee contract increases. As part of long term financial planning, City staff will
continue to develop strategies to close the funding gap.
Table 1: Shows the revised 2010 Tax-based Operating Budget (excluding Enterprises) which
includes the estimated impact of the excluded expenses documented above. The 2010
Approved budget is balanced as per Provincial requirements.
CITY OF KITCHENER
Less:Less:Add:Add:
2010 Budget
2010Transfers to & from Debt PrincipleAmortizationEmployee 2010
Approved Reserves & Future PSAB Budget
BudgetReserve FundsBenefits
REVENUES
Taxation - own purposes$ 99,224,535$ 99,224,535
User fees 20,383,960 20,383,960
Grants & Subsidies 856,205 856,205
Inter Fund Transfers 9,613,610 (9,613,610) -
Sundry Income 8,205,449 8,205,449
138,283,759 (9,613,610) - - 128,670,149-
Total Revenues
EXPENDITURES
Salaries, Wages & Benefits 85,771,219 899,068 86,670,287
Purchase of Goods & Services 20,637,425 20,637,425
Inter Fund Transfers 6,409,615 (6,409,615) -
Transfer Payments & Finance Expenses 18,831,778 (7,074,140) 11,757,638
Minor Capital Expenses 6,633,722 6,633,722
Amortization - 26,046,519 26,046,519
138,283,759 (6,409,615) (7,074,140) 26,046,519 899,068 151,745,591
Total Expenditures
- (23,075,442)
ANNUAL SURPLUS (DEFICIT)
88,358,000
ACCUMULATED SURPLUS, Beginning of year
$ 65,282,558
ACCUMULATED SURPLUS, End of year
FINANCIAL IMPLICATIONS:
None
ATTACHMENTS:
None
ACKNOWLEDGED BY:
Dan Chapman, General Manager of Financial Services
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