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HomeMy WebLinkAbout14a Budget Committee Report 2 09 May 2011 REPORT NO. 2, BUDGET COMMITTEE TO: The Board DATE: 09 May 2011 A meeting of the Budget Committee was held this evening in the Board Room, 133 Greenbank Road, Ottawa, commencing at 7:34 p.m. with Trustee Rob Campbell in the chair and the following also in attendance: Donna Blackburn, Cathy Curry, Mark Fisher, Pam FitzGerald, Bronwyn Funiciello, Katie Holtzhauer, Theresa Kavanagh, Lynn Scott, Shirley Seward and John Shea. STAFF: Barrie Hammond, Director of Education and Secretary of the Board; Michael Clarke, Chief Financial Officer; Jennifer Adams, Executive Superintendent; Michèle Giroux, Executive Officer, Corporate Services; Walter Piovesan, Superintendent of Instruction; Cathy Dempsey, Assistant Treasurer; vices, Financial Systems Support and Labour Relations Costing; Sharlene Hunter, Coordinator of Communications; John MacKinnon, Central Audio-visual Technician; and Laurie Cameron, Board/Committee Coordinator. NON-VOTING REPRESENTATIVES: Heather Graham and Andrew Nordman, OCEOC; Bonnie Cheung and Sheila Lanthier, OSSTF- ESP; Tom Bickford, OSSTF-PSSP; Cheryl Cavell, OSSTF - Educational Assistants; Andrew Horwood, OSSTF Support Staff; Janet Fraser, OCETF; Monica Leonhardt, OCSSAN; David Wildman, OCEOTA; Rosanna DeMito and Terry Warner, Special Education Advisory Committee; and David Miller, Non-affiliated staff. 1. Call to Order The Chair called the meeting to order at 7:34 p.m. 2. Approval of Agenda Moved by Trustee Seward, THAT the agenda be approved. - Carried - 3. Public Question Period There were no public questions. 4. Process and Protocol, Chair of Budget Committee Chair Campbell referenced his memorandum to members outlining the budget process dated May 6, 2011. He noted there were some unique practices to the Budget Committee, including once the budget deliberation begins at the 26 May 2011 meeting, all subsequent meetings would be continuation meetings, and every budget motion would be treated as an amendment to the main motion. ld be for staff to present the recommended budget for the Ottawa-Carleton District School Board for 2011-2012. Budget Committee and non-voting members will then be asked to review the budget. In order to assist in providing a good understanding of the budget, questions will be addressed by finance staff. Budget Committee 1 9 May 2011 Report No. 2 Trustees will then be invited to provide oral notice of known amendment(s) to be presented at future budget meetings. Chair Campbell asked that trustees have their amendments filed with Maureen Strittmatter, Senior Board Coordinator, with a copy to Michael Clarke, Linda Welby and himself no later th than noon on May 19. Staff will then prepare the necessary impact statements where an analysis is possible related to the amendments for the 26 May Budget Committee meeting, when the budget motion will be moved and debated. Chair Campbell reminded trustees and non-voting members that the meetings of 26 and 31 May will be focused on the debate of proposed changes to the budget. In summary, he noted that the 2011- 2012 OCDSB recommended budget is based upon the assumption that the Board will not exceed the one percent use of reserves. If the Board wishes to exceed the one percent, Ministry approval would be necessary prior to 31 May 2011. In response to a query from Trustee Curry, Chair Campbell noted that technically a Board member could make a motion to approve the 2011- that it isten to the public delegations and to review the budget in detail before proceeding. 5. Budget Introduction, Director of Education Director Hammond welcomed Budget Committee and non-voting members. He expressed his appreciation to all members of the Dsubmissions and careful consideration of all ideas brought forward. Thanks was extended to Chief Financial Officer Clarke and Financial Services staff, for the detailed budget proposal provided this evening based upon the budget discussions held at DExecutive Council and planning sessions. Director Hammond reported that the proposed budget of $780 million dollars contained $17 million from previously agreed changes in the fourth year of the collective agreements, and the use of 1% 6.9 million to support instruction, transportation and school facilities. Because of a new compliance definition in the Education Act and regulations, and the provincial government converting to a PSAB (Public Sector Accounting Board) basis of accounting, the 2011-2012 OCDSB Budget contains a Capital Budget recommendation for capital expenditures of $22 million. The Letter of Transmittal on pages five to seven of the Budget binders shows the alignment of our new budget initiatives with the four new strategic priorities Plan: Well-Being, Engagement, Leadership and Learning. Director Hammond highlighted the budget meeting schedule, as follows: 16 May (Delegations) 26 May (Debate/Delegations, if required) 31 May (Debate, if required) 06 June (Debate, if required) 09 June (Debate, if required) 09 June (Special Board Meeting) In summary, Director Hammond noted that CFO Clarke and staff were present to provide a detailed overview of the proposed budget, and would be available throughout the process to assist trustees with decision making. Budget Committee 2 09 May 2011 Report No. 2 6. Report 11-097, 2011-2012 Recommended Budget Chief Financial Officer (CFO) Michael Clarke acknowledged the wide group who created the budget proposalwhose membership includes the Director of Education, Superintendents and the Executive Officer. He noted that the budget was the result of months of work, analysis and debate, and that the Superintendents had consulted widely to come to the budget presented tonight. He also thanked Finance staff members Charles Doust and Cathy Dempsy for supporting the budget process and compiling the binder presented to members. Chief Financial Officer Clarke reported that he would provide an overview of the 2011-2012 recommended budget, following which he and his staff would be pleased to address questions from members. He noted that staff would prefer to receive detailed questions in advance of budget meetings so that they may prepare the appropriate answers. All questions and answers received by staff will be posted on the OCDSB website the following day. CFO Clarke advised that staff were recommending a $780 million operating budget for 2011- 2012, of which 75% is allocated for instruction, 11% for school facilities (all school buildings), and the remainder to cover capital financing, transportation, central administration and continuing education. He confirmed the majority of the budget concentrated on students and services. CFO Clarke provided a funding break down, showing 95% of the budget covered by Grant Revenue and Other Grants, 4% by Other Revenue and lastly a 1% use of reserves. It was confirmed that staff had built into the budget the maximum amount of reserves possible that does not require specific Ministry approval. lan to eliminate the provincial deficit over the next seven years. Unfortunately reducing the provincial deficit creates funding difficulties for any entity funded by the province, including education. Fiscal Recovery Plan to be successful, that program spending must remain flat for 3 years, and then grow slowly. This is to occur despite the cost increases the province has already committed to, such as expanding its school day programing with the Full Day Kindergarten program for the next 2 years. CFO Clarke noted that the provincial government expects to limit its spending growth through the following measures, which will impact the OCD Providing no funding for incremental compensation increases for the first two years of any future collective agreements; Increasing pressure to pool purchasing volume with the broader public sector, limiting choice and potentially raising costs to the OCDSB, as the District already has extensive pooled purchasing; and Absorbing a 10% reduction to senior staff expenditures over two years, resulting in a reduction of $279,000 from the 2011-2012 (for which an explanation on implementation was requested from the Ministry of Education, but has not yet been received). CFO Clarke noted that OCDSB salary and benefit costs will increase one percent to one-and-a- half percent a year, even if no economic increases are given, due to the salary grid structure and ongoing annual cost increases in the existing benefit plans. If the provincial government holds program funding flat, the OCDSB will not receive any funding for this cost increase. One percent on salary and benefits is approximately $6 million dollars. CFO Clarke confirmed that the OCDSB could cover the shortfall for 2011-2012 using its reserves, but beyond that period it would depend upon whether the current Board was successful in advocating for more ongoing funding. If there were no grant increases in future years by the province, there will still be an increase in salaries and benefits, resulting in a funding gap of $6-8 million a year. Budget Committee 3 09 May 2011 Report No. 2 CFO Clarke noted that even if the District solves the $6.9 million deficit for 2011-2012, each year thereafter the District will have a deficit that adds to the previous $13 million deficit for 2012-2013, and a $21 million deficit for 2013-2014. CFO Clarke expressed the view that it was a pleasant change not to have to present a budget with recommended reductions. This budget will provide trustees time to advocate for additional funding for the District; however, he cautioned that if no additional funding is secured by January, consultations for reductions for 2012-2013 will need to be held. The OCDSB is growing modestly with a projected average daily enrolment for 2011-2012 of 67,923.50. CFO Clarke confirmed that the District would be in a growth situation even without the impact of Full Day Kindergarten, and that according to fiscal planning and multiyear projections, the District will not have to cope with declining enrolment for some time. Projected staffing for 2011-2012 was then reviewed with 86.8 % of staffing being noted for instruction (teachers, instructional and curriculum coaches, school office staff, social workers, etc.), 10.6% of staffing for Facilities, 2.2% for Central Administration and 0.4% for Continuing Education. CFO Clarke reported that staff was recommending that the OCDSB increase its budget from the -2012. He acknowledged this was a large increase, but that the majority of the difference would be funded by increased revenues. The largest single addition was noted to be the collective agreement and enrolment changes of $17.8 million, of which $17.5 million is due to the previously agreed changes in the fourth year of the collective agreements. The budget also includes existing collective agreement terms flowing through 2011-2012 at a cost of $6.5 million, the majority of which are covered by funding increases. A net accounting change cost of $12.8 million dollars due to PSAB changes was reported, which would be offset by revenues. The third category affecting the 2011-2012 budget is related to enhancements. This category includes $2.8 Million of reductions approved by the Board during the 2010-2011 Budget process to be implemented in 2011-2012, which are being reversed. In addition, CFO Clarke reported that the Board added $1.2 million to cover an additional 11 academic positions in March 2011, to address instructional and leadership training needs. An increase in Educational Assistant hours from 6.6 hours to 7.0 hours per day for the 2011-2012 school year at a cost of $1.7 million was recognized, most covered by grants. Year two of Full-Day Kindergarten at a cost of $2.9 million, which includes teachers, supplies, Early Childhood Educators, and additional teachers as OCDSB has more enrolment at some sites than the province anticipated; the four additional classes will be covered out of reserves. $4.8 million has been added for cost increases, including all other non-salary costs. $5.5 million has been added for new initiatives to fulfill of which $3.3 million is proposed for Instruction, esearch and safety issues, and an increase of $2 million dollars in the facilities budget to address existing urgent school building needs. Net enveloping prior to the use of reserves showed overspending in the areas of instruction, transportation and school facilities. The facilities overspend is for one year expenses, not ongoing budget. Continuing education shows a profit which helps offset costs. Central Administration and Capital Financing and Other and Amoritization must break even as per Ministry mandate. CFO Clarke noted that the budget recommended the use of $6.9 million in reserves. He confirmed this was the maximum amount of reserves that the OCDSB could use without receiving Budget Committee 4 09 May 2011 Report No. 2 specific approval from the province, which is based upon one percent of th Needs (GSN). Staff proposed the use of reserves as follows: $2.4 million for reinvestment in schools and students $0.5 million to fund 4 additional Full Day Kindergarten classes $0.3 million for student safety (gymnasium mats) $0.3 million for Facilities Renewal (133 Greenbank roof replacement) $0.1 million for Strategic Planning $3.3 million for Transportation funding envelope shortfall Of the items listed above, four are one-time expenditures (kindergarten classes, gym mats, roof replacement and strategic planning). The remaining two categories of reinvestment in schools and students, and transportation are key points in advocacy campaign to receive additional funding. CFO Clarke reviewed the Accumulated Surplus, Reserves and Deferred Revenue summary. He noted the unappropriated total operating accumulated surplus as forecasted for 31 August 2011 would be $10.9 million. Staff were recommending $6.9 million of the reserve be used in the 2011-2012 operating budget, leaving $4.0 million for future years, or for capital projects not funded by the province. In addition, CFO Clarke reminded trustees that they would be asked to approve the Capital Budget, which under the PSAB, has to be filed simultaneously with the operating budget. The Capital budget includes not only school buildings, but computers. In summary, CFO Clarke advised that staff had found themselves in an interesting position of having to build a budget proposal before the Board made its decision on an advocacy strategy and the next strategic plan. The assumptions upon which the budget was built were based upon the parameters already set. He noted that the budget decision was simple in principle, but would be difficult in detail. CFO Clarke sited short term increases compared with the risk of reductions in 2011-2012 due to a lack of funding. The 2011-2012 recommended budget is presented with the recognition that, if extra ongoing funding is not provided, there was a risk of needing larger reductions in 2012-2013. all their efforts in producing the recommended 2011-2012 OCDSB budget. 7. Questions and Answers questions, staff provided the following information: Positions recommended in the 2011-2012 budget will be ongoing; If the Board is unable to obtain additional funding for 2012-2013, and all other factors occur as projected, it will be necessary for the Board to make reductions so that the OCDSB can operate within its available funding; Any changes to be made to future budgets would need to be in the area of the uncommitted budget, and may impact the level of service provided in the schools; The Board could designate the 40 positions being added to the budget in 2011-2012 as term positions, but this would make it difficult to attract employees for the positions with the necessary skills; The impact statements will explain why staff have designated the proposed positions as ongoing positions; Budget Committee 5 09 May 2011 Report No. 2 At the beginning of 2011 the OCDSB had an unappropriated surplus of $12.2 million. The Board, at its 26 April 2011 meeting, approved the use of $2.5 million of its unappropriated surplus towards a wireless local area network. Staff are projecting a small year-end surplus, making the current projected year end designated surplus $11.0 million; Unappropriated surplus may be utilized for capital projects at any time during the year. Such use is not included in the Ministry calculation of the 1% budget use of reserves. If the board projects going over the 1% any time in the year, it must seek Ministry approval; Staff provided detail to show positions to support the draft Strategic Plan, which the Board has not yet seen or approved; It is a specific provision of the Ministry of Education budget process that school boards must demonstrate annually how their resources will be used to achieve their overall strategic plan, t strategic plan; The Provincial Fiscal Plan is based upon the public sector taking a two year salary freeze when collective agreements come to an end. Various representatives of employees in the public sector have made it clear that a two year salary freeze will not be supported. Therefore, collective agreements will have a massive impact on the 2012 to 2013 and 2013 to 2014 OCDSB budgets; The variance in the provincial enrolment projection a is due to the Ministry projecting enrolment one-and-a-half years in advance. The enrolment shown in the recommended budget is what OCDSB believes the actual enrolment will be; the OCDSB has a past history of being very accurate in their enrolment projections; The detailed Special Education funding was noted to be covered on pages 94 to 97 in the budget binder. A large increase in special education grants was noted as per year 4 of the collective agreement. The published Ministry enrolment also includes students over age 21; The $3.3 million allocation of reserves to Transportation is to fund what the OCDSB is currently underfunded by provincial grants. It is not for an increase in services. There are policy differences between the OCDSB and the Catholic Board, which is an area the Funding Advocacy Working Group has highlighted that the Board may wish to pursue; The $11.6 million in the Capital Budget for new schools is for schools already under construction, and does not include funding for other major renovations or replacements; The draft Strategic Plan will be presented to the Strategic Planning and Priorities Committee (SPPC) at its 01 June meeting. If approved at SPPC, it will then go forward to the 14 June Board meeting for final approval; and The 2011-2012 OCDSB budget is scheduled to be presented for approval at the special Board meeting on 09 June. Trustee Scott expressed appreciation to staff in supporting the direction the Board has been moving in terms of the Strategic Plan and pushing for advocacy for changes on how the OCDSB is if the Board can reach a high efficiency effectiveness rate. Trustee Scott noted the importance of the OCDSB honestly illustrating that it is not adequately funded for the transportation that we currently provide, to show the inequities in service levels to students depending upon the Board the student is in and how it is funded. In addition, Trustee Scott noted that transportation and staffing were shown on one purchased service agreement with the Ontario Student Transportation Authority (OSTA). Therefore, if OSTA staff were still on the OCDSB payroll, this should shortly be coming to an end. CFO Clarke agreed to follow-up to ensure this entry had been captured correctly. Budget Committee 6 09 May 2011 Report No. 2 Trustee Seward expressed concern that the $2.8 million shown for reinstatements under Proposed Enhancements for the 2011-2012 budget was for staff that were already in place, not new staff. CFO Clarke noted that the entry had been shown in this manner as the Board approved a reduction of $2.8 million in staffing during the 2010-2011 budget, to take place in the 2011-2012 fiscal year. Therefore, he noted it was necessary to add the staff back in . Chair Campbell stated that it was the responsibility of the Board to approve the budget, and this was a variance from the previous plan, so this item needed to be included in the budget as shown. CFO Clarke requested that trustees submit their budget questions to staff via email to lindawelby@ocdsb.ca who is maintaining the master list of questions. In addition, he invited board members who had questions regarding the budget process and protocol to speak with him directly. Chair Campbell informed trustees that the questions and answers would be posted as soon as possible on the OCDSB website. Terry Warner, representative for the Special Education Advisory Committee (SEAC), thanked CFO Clark for attending the recent SEAC meeting to answer special education budget related questions. He noted this had given the committee a sense of comfort with the budget process. Chair Campbell requested that trustees review the 2011-2012 budget document in preparation for the next meeting of the Budget Committee on 16 May, at which time delegations would be presented. He encouraged the community and interest groups to attend the 16 May meeting. Following the presentation of the delegations, the budget motion will be introduced on 26 May. Chair Campbell reiterated that May th 19 would be the deadline for all trustees to submit their amendments to Maureen Strittmatter in Board Services. Staff would then prepare the necessary impact statements for inclusion in the 26 May Budget meeting package. 8. New Business There was no new business. 9. Adjournment The meeting adjourned at 9:09 p.m. Rob Campbell, Chair Budget Committee Budget Committee 7 09 May 2011 Report No. 2