Back on track to a balanced budget at year end

At the end of June our Chief Financial Officer (CFO) identified the potential for a negative variance at the end of the year – meaning the organization might spend more than approved by Council unless some corrective action was taken.

I provided the context for this in a previous post – Balanced Budget By Year End

Our management team took immediate action and have brought spending back in line with the budget and are projecting a small surplus at the end of the year.  While we have some reserves to address some of the unexpected costs (e.g. more snow storms than expected), cost containment played a significant role.

There are still just under 3 months left in the year – lots of time for unplanned events to impact spending so careful monitoring and ongoing cost containment will be required to deliver a balanced budget at year end and we are well on our way to achieving this.

This is the recent update provided by our CFO to the Chair of Corporate Administration, Finance and Enterprise Committee.  One of their duties delegated by Council is to receive regular reports on how spending is tracking with the budget.

Chair Hofland:

At its meeting of September 15, 2013, the Corporate Administration, Finance and Enterprise Committee received the June 2013 Year End Variance Report that identified a projected year end unfavourable variance of $2.36 million (as of June 30, 2013). CAFE Committee further directed staff to provide monthly updates on progress towards mitigating the projected variance. This e-mail is provided as the first of these updates and identifies a range (worst case to best case) of initiatives that have been derived through the number of internal cost containment and mitigation strategies described in the June 2013 Year End Variance Report and the Efficiency Target Report received by CAFE at the same meeting of September 15, 2013. These offsets are being implemented with no impact on service levels. In total, save other unexpected pressures and/or savings occurring between now and year end 2013 staff currently project as of August 31, 2013 that there will be no (zero) year-end variance in 2013.

Projected Variance (as at June 30, 2013)                            $2.4 million

Less:

City Departments Cost Containment                                  $0.5 – 0.8 million

Reduced Benefits (new Contract September 2013)          $0.2 – 0.2 million

Lower Utility Costs (Community Energy Program)           $0.6 – 0.8 million

Lower Tax Write Offs / Higher Supp Revenue                   $0.5 – 0.8 million

Sub-Total Mitigation / Cost Containment Strategies   $1.8 – 2.6 million

Projected Shortfall / (Surplus) Before Reserves              $0.6 – (0.2) million

(as at August 31, 2013)

 Legal Reserve                                                                    $0.3 – 0.0 million

Winter Control Costs Reserve Offset                               $0.4 – 0.0 million

Projected Shortfall / (Surplus) After Reserves              $(0.1) – (0.2) million

(as at August 31, 2013)

The overview provided here relates to City departments only. Efforts are also already underway to work with the Local Boards and Shared Services areas to determine what contributions they may be able to make to these mitigation and cost containment strategies. Staff intend to include some outcomes from these when reporting out through the next 2013 Operating Budget Variance Report monthly update in November 2013 as well as through the 2013 Operating Variance and Efficiency Target staff reports scheduled in December 2013. In summary, staff remain confident that the upper range described in the totals above can be achieved such that in combination with other contributions outside City and corporate departments it will not be necessary to tap the Legal or contingency (for winter maintenance) reserves.

Regards

Albert Horsman, Executive Director and CFO