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AGENDA - Finance Advisory Committee - 20190522Finance Advisory Committee Wednesday, May 22, 2019 5:30 p.m. Holland Room Aurora Town Hall Meeting Agenda Public Release May 16, 2019 Town of Aurora Finance Advisory Committee Meeting Agenda Date: Wednesday, May 22, 2019 Time and Location: 5:30 p.m., Holland Room, Aurora Town Hall 1. Approval of the Agenda Recommended: That the agenda as circulated by Legislative Services be approved. 2. Declarations of Pecuniary Interest and General Nature Thereof 3. Receipt of the Minutes Finance Advisory Committee Meeting Minutes of April 30, 2019 Recommended: That the Finance Advisory Committee meeting minutes of April 30, 2019, be received for information. 4. Delegations 5. Consideration of Items Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Page 2 of 3 1.Memorandum from Acting Director of Financial Services Re: Updated Draft Council Budget Principles and Processes Direction Documents Recommended: 1.That the memorandum regarding Updated Council Budget Principles and Processes Direction Documents be received; and 2.That the Finance Advisory Committee provide staff with direction in regards to the proposed updated Council Budget Principles and Processes documents. 2.Review of Detailed Financial Budget Information Re: Aurora Public Library Recommended: 1.That the comments and suggestions of the Review of Detailed Financial Budget Information for Aurora Public Library be received and referred to staff for consideration and action as appropriate. 3.Memorandum from Project Management Office Re: Town’s Major Capital Projects Update Recommended: 1.That the memorandum regarding Town’s Major Capital Projects Update be received for information. 4.Distribution and Introduction of Detailed Financial Budget Information Re: Aurora Historical Society Recommended: 1.That the detailed financial budget information for Aurora Historical Society be received and deferred for discussion and detailed review at the June 26, 2019 meeting of the Finance Advisory Committee. Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Page 3 of 3 6. New Business 7. Adjournment Town of Aurora Finance Advisory Committee Meeting Minutes Date: Tuesday, April 30, 2019 Time and Location: 5:45 p.m., Holland Room, Aurora Town Hall Committee Members: Councillor Michael Thompson (Chair), Councillor John Gallo, and Mayor Tom Mrakas Member(s) Absent: None Other Attendees: Councillor Rachel Gilliland, Doug Nadorozny, Chief Administrative Officer, Jason Gaertner, Acting Director of Financial Services/Treasurer, Karen Oreto, Financial Analyst, Tracy Evans, Financial Analyst, Budget, and Ishita Soneji, Council/Committee Coordinator The Chair called the meeting to order at 5:47 p.m. 1. Approval of the Agenda Moved by Councillor Gallo Seconded by Mayor Mrakas That the agenda as circulated by Legislative Services be approved. Carried 2. Declarations of Pecuniary Interest and General Nature Thereof There were no declarations of pecuniary interest under the Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50. Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Minutes Page 1 of 5 Finance Advisory Committee Meeting Minutes Tuesday, April 30, 2019 Page 2 of 5 3. Receipt of the Minutes Finance Advisory Committee Meeting Minutes of March 27, 2019 Moved by Mayor Mrakas Seconded by Councillor Gallo That the Finance Advisory Committee meeting minutes of March 27, 2019, be received for information. Carried 4. Delegations None 5. Consideration of Items 1. Memorandum from Project Management Office Re: Town’s Major Capital Project Update Staff provided a status update on the major capital projects and noted the next steps. The Committee and staff discussed means of improving the standardized major project reporting structure. It was suggested that the reporting structure could include an overview of each project including the original scope, overall budget and expenditures of the project, and specific components could be explained further as necessary. Moved by Councillor Gallo Seconded by Mayor Mrakas 1. That the memorandum regarding Town’s Major Capital Project Update be received for information. Carried 2. Memorandum from Acting Director of Financial Services Re: A Comparison of Select Municipal Multi-Year Budget Frameworks Staff provided an overview of the comparison study of various municipalities with multi-year budget frameworks and noted that the City of Waterloo’s multi- Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Minutes Page 2 of 5 Finance Advisory Committee Meeting Minutes Tuesday, April 30, 2019 Page 3 of 5 year budget framework would be the best example upon which to build the Town’s framework. The Committee inquired about the implementation and approval process should City of Waterloo’s budget framework be considered. Staff noted that it would include two formal budget processes where Council would approve the budget for the first year of its term and receive an overview of the next three years and subsequently approve the remaining three-year budget in the second year of its term, with the condition that each future year budget is reconfirmed prior to each year commencing. It was suggested that further information on Waterloo’s budget framework including its future year budget reconfirmation report, and York Region’s budget reconfirming structure be provided to the Committee. The Committee further inquired about the next steps, and staff noted that the proposed multi-year budget framework would be incorporated in the Council’s budget principles and guidelines including details on requirements to mitigate inflation and be brought to the Committee for discussion prior to Council approval. Moved by Mayor Mrakas Seconded by Councillor Gallo 1. That the memorandum regarding A Comparison of Select Municipal Multi- Year Budget Frameworks be received; and 2. That the Finance Advisory Committee suggests that the City of Waterloo budget framework be considered; and 3. That the multi-year budget framework be incorporated in the Council budget principles and be brought to the Finance Advisory Committee meeting of May 22, 2019 for discussion. Carried 3. Round Table Discussion Re: Draft 2020 Budget Milestones Review Staff provided a brief overview of the 2020 budget milestones and sought the Committee’s input on the public stakeholder consultation meeting budget milestone. The Committee and staff discussed about means to improve public Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Minutes Page 3 of 5 Finance Advisory Committee Meeting Minutes Tuesday, April 30, 2019 Page 4 of 5 engagement throughout the budget process. It was suggested that various feedback means be considered focusing on key priorities of the budget as identified by Council and that public consultation could be incorporated as part of another budget meeting. Moved by Councillor Gallo Seconded by Mayor Mrakas 1. That the comments and suggestions regarding the Draft 2020 Budget Milestones Review be received and referred to staff for consideration and action as appropriate. Carried 4. Review of Finance Advisory Committee Updated Draft 2019 Work Plan Staff provided a brief overview of the updated work plan, and the Committee noted that the review of the recreation fee structure be included into the work plan. Moved by Mayor Mrakas Seconded by Councillor Gallo 1. That That the Finance Advisory Committee Updated Draft 2019 Work Plan be received for information. Carried 5. Distribution and Introduction of Detailed Financial Budget Information Re: Aurora Public Library Staff noted that Bruce Gorman, CEO, Aurora Public Library would be present at the next meeting to review the detailed budget information for Aurora Public Library. The Committee sought additional information, including the most recent unaudited financial statements for the library, clarifications on the 2017 and 2018 surpluses identified, and an overview of the impacts of the recently announced Provincial funding cuts to the library. Moved by Councillor Gallo Seconded by Mayor Mrakas Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Minutes Page 4 of 5 Finance Advisory Committee Meeting Minutes Tuesday, April 30, 2019 Page 5 of 5 1. That the detailed financial budget information for Aurora Public Library be received and deferred for discussion and detailed review at the May 22, 2019 meeting of the Finance Advisory Committee. Carried 6. New Business None 7. Adjournment Moved by Mayor Mrakas Seconded by Councillor Gallo That the meeting be adjourned at 7:15 p.m. Carried Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Minutes Page 5 of 5 Memorandum Date: May 22, 2019 To: Finance Advisory Committee From: Jason Gaertner, A/Director, Financial Services Re: Updated Draft Council Budget Principles and Process Direction Documents Recommendation 1. That the memorandum regarding the updated draft Council Budget Principles and Process documents be received; and 2. That the Finance Advisory Committee provide staff with direction in regards to its proposed updated draft Council direction documents. Background At its March 27, 2019 meeting the Finance Advisory Committee (FAC) undertook a review of its current budget principles and process direction documents and agreed that both these documents remain sound, but proposed one minor modification to its budget principles. The proposed modification stemmed from an acknowledgement of the possibility that the inflation in a given budget year may reach thresholds that are not tolerable to Council; consequently, some flexibility in this regard should be woven into this document. At its April 30, 2019 meeting the Finance Advisory Committee reviewed a staff memo that compared the multi year budget frameworks of a sample of different municipalities across Canada. At this meeting the FAC supported staff’s recommendation that the Town implement a multi-year budgeting framework similar to the one presently being utilized by the City of Waterloo. The Finance Advisory Committee subsequently requested that staff proceed with an update of Council’s budget principles and process documents in order to integrate the recommended multi-year budget framework. 100 John West Way Box 1000 Aurora, Ontario L4G 6J1 Phone: 905-727-4772 Email: jgaertner@aurora.ca www.aurora.ca Town of Aurora Financial Services Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 1 of 15 Updated Draft Council Budget Principles and Process Documents May 22, 2019 Page 2 of 3 Analysis Staff have undertaken three key modifications to Council’s Budget Principles and Direction documents to: 1. Introduce into these documents some flexibility for Council in instances where a given year’s inflation exceeds a threshold of two percent; 2. Integrate the recommended multi-year budget framework; 3. Update some of the key components and process milestones relating to the Town’s capital budget process. Introduction of some flexibility for Council in instances where a given year’s inflation exceeds a threshold of two percent In an effort to provide Council with some flexibility in instances where a given year’s inflation rate exceeds its comfort level, Council’s budget principles document’s clause 16 has been update to include the following new requirement: “Should a given fiscal year’s inflation rate exceed two percent, staff will present Council with options for the mitigation of any inflation in excess of two percent for its consideration.” Integration of the recommended multi-year budget framework Staff have made multiple updates to both of Council’s direction documents in order to integrate the recommended multi-year budget framework. The majority of the changes made relate to Council’s Budget Process document. Some of the key changes include: • The update of Council’s annual operating budget review and approval to reflect a review and approval of a single budget and the receipt of 3 forecasted outlook years in the first year of Council’s term. Then subsequently, in its second year the approval of a three year operating budget with each of its future year approved operating budgets being reconfirmed prior to their commencing; and • The allowance for material adjustments at the time of re-confirmation of each future year budget; and • The key budget process milestones updated accordingly. Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 2 of 15 Updated Draft Council Budget Principles and Process Documents May 22, 2019 Page 3 of 3 Update to reflect the Town’s current key capital components and process milestones Staff have made multiple updates to Council’s Budget Process document in order to reflect the Town’s current key capital components and process milestones principally being: • The Town’s newly approved Strategic Asset Management Policy, including its strong linkage to the Town’s Asset Management Plan; as well as, the Ten Year Capital Investment Plan; and • The approval of the Town’s upcoming year’s repair and replacement budget and receipt of the updated Ten Year Capital Investment Plan in July of each year. At tachments Attachment #1: Updated draft Council Budget Principles document Attachment #2: Updated draft Council Budget Process document Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 3 of 15 Council June 18, 2019 1 Council Budget Principles The Council of the Town of Aurora is responsible for two key elements in carrying out their duties. Council must represent and advance the interests, needs and actively plan for the future, and serve the residents and businesses of the community of the Town of Aurora, while also responsibly managing a large municipal corporation, including its future, resources, assets, needs and interests. The funding raised and used by the corporation comes primarily from within the community, and must be used wisely, obtaining good value and cared for responsibly. Within the context of annual corporation budgets, Council is committed to remain engaged with the community and continually strengthen the municipal corporation’s overall fiscal sustainability, balanced with the need for Aurora’s property taxation levels and water rates to remain comparable and affordable within the context of the Greater Toronto Area. In exercising its budget setting duties, Council should be mindful that the primary funding source is from taxpayers, and it is Council’s duty to be responsible in this regard, making fiscally responsible decisions with respect to services offered, service levels offered, and other uses and application of the taxpayers’ funding, being mindful of the long term and short term impacts to both the corporation and the taxpayer. Council recognizes that there are many different external influences which have impacts to the Town’s budgets, costs and services. The following items each cause tax increase pressures upon the budgets of the Town. Council is committed to address each of these issues in a manner which respects the taxpayer, the financial health of the municipal corporation and our staff serving Aurora: x New and emerging legislative compliance requirements increasing demand on municipal resources and staffing x Growth of the community, and the resultant volumetric increase in demand for services and facilities provided and available. Such costs are normally offset by growth in base revenues arising from the new residents and businesses. x Community expectations for newer, evolving and additional services and facilities over and above today’s existing service levels x The need to develop the financial capacity to meet current and future capital infrastructure replacement needs to provide reasonable service levels in a sustainable manner. Infrastructure sustainability funding has historically been a low priority for municipal governments across the country. Aging and deteriorating infrastructure requiring urgent repair or replacement has now brought this issue to the forefront for all levels of government. Attachment #1 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 4 of 15 Council June 18, 2019 2 x Economic pressures such as interest rate fluctuations and inflationary pressures x Cost increases in some supply sectors which exceed inflation, such as electricity x Pressures on wage and benefits costs, including collective agreements x Service and supply contract renewals and existing committed multi-year contracts Council recognises that during every budget debate, various perspectives and interests are represented and raised at the Council table. To assist in these prospective discussions, Council has reviewed and agreed on a consensus basis that the following principles will guide the development, review and approval processes of each budget for the Town. These Budget Principles will be reviewed by Council in the first year of each Council term, and at any other time as requested by Council. The following principles will guide the preparation, review and evaluation for approvals of the Annual Operating, Capital and Utility budgets for the Town: Open and Transparent Process 1. The Town’s Budget Process shall include opportunities for input from members of the public and community groups. All feedback, comments and suggestions received through solicitation tools such as email, website, surveys or others, will be conveyed to General Committee – Budget (Budget Committee) as they are received throughout the budget review process. 2. The Town’s Budget Process should include a formalized system or survey for community input, as determined by the Finance Advisory Committee. 3. All meetings of the Budget Committee shall be open to the public, except those aspects which are permitted and appropriate to be held in closed session, such as but not limited to discussions regarding collective agreement negotiation provisions, personnel matters, or litigation. 4. Budget materials, presentations, disclosures and Budget Committee review processes shall be open and transparent. All materials will be prepared with the intended audience being a member of the general public where reasonable and practical. A specific section of the Town’s website will contain all relevant budget materials, presentations, summaries and reports throughout the process, and updated to reflect the final approved budgets. 5. Council will undertake to complete the review and approval of operating budgets prior to the commencement of each the new budget year. For a budget in respect of the year following a municipal general election, the budget review process will begin early in the new budget year, as required by statute. Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 5 of 15 Council June 18, 2019 3 6. In making comparisons to other municipalities in respect to processes, performance, service levels, cost, revenue rates or any other basis, the Town shall have regard to, at minimum, the following municipalities: a. All other lower tier municipalities of York Region. b. Municipalities in the Durham Region, Peel Region, and Region of Halton Hills which have populations within 30% of the Town’s population. c. York Region where applicable. d. Ontario Municipal Benchmarking Initiative materials where applicable. Budgets to be Fiscally Responsible 7. The Town will prepare a traditional municipal balanced budget. Ontario Regulation 284/09 allows for exclusion from such budget certain accounting estimates such as amortization, and post-employment benefit liabilities. The impact of these excluded items will be presented separately as part of the budget submission as required of the Regulation. 8. The Town will not use or rely upon prior year operating surpluses to fund or balance the Operating Budget. 9. The Town will not rely on one-time or short-term temporary funding sources to fund or balance the Operating Budget, unless directly associated with corresponding temporary expenses for events or special purpose programs. 10. Council and staff will continually look to implement changes in technique, tools or approaches to delivering all services and functions which will reduce costs, or improve the efficiency or effectiveness of our work and programs. Where necessary, capital investments required to achieve such improvements will be prioritized. 11. The annual operating budget will not be impacted by year to year fluctuations of the actual capital budget approval. Rather a singular, stable and predictable funding transfer to Infrastructure Sustainability Reserves will be included. 12. Council is committed to adequately fund infrastructure repair, replacement and improvements through annually evaluating the future funding needs, and when indicated, increase annual contributions to infrastructure sustainability reserves. Such increases will be included in the Fiscal Strategy budget area. Additionally, the Town will ensure that its capital repair and replacement program remains in alignment with the approved asset management plan while attempting to replace assets at the optimal point in time to ensure the efficient and effective use of scarce capital funding as per the Ten Year Capital Investment Plan. 13. Council recognizes that budget decisions made in one year may impact future budget years. To ensure open and public awareness, the Town has adopted a multi- Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 6 of 15 Council June 18, 2019 4 year budgeting framework where Council approves the first year’s budget of its term and receives an accompanying forecast of the next three budgets. In the second year of its term, Council will approve a three year operating budget, including all related tax impacts. Using multi-year budgets and forecasts improves fiscal health and service delivery through: a. better coordination of budgeting and strategic priorities, b. greater certainty for departments in managing expenditures and service levels c. improved fiscal discipline of the organization d. streamlined budget reviews that focus on key changes in assumptions and the reasons driving such changes e. allowing staff to develop budgets with fixed targets in place, allowing early response to circumstances and budget constraints of such targets. f. reduces uncertainty about future year tax levies g. provides longer term outlook to outside organizations that rely upon the Town for a share of their funding, which enables them to plan and deliver their programs more effectively. In addition, when considering a new capital investment, Council will also consider the anticipated incremental operating costs that the new investment will produce. 14. A separate Special Phasing Budget will be used to address significant permanent tax pressures. These pressures will be mitigated through a phase-in over multiple fiscal years, using tax stabilization reserves where necessary. Foreseen significant pressures, such as the operating costs for a facility under construction, will be phased-in in advance where possible. Unforeseen pressures will be phased-in as promptly as appropriate. Phasing of such tax pressures may result in tax rate increases which are in excess of inflation so as not to adversely impact the delivery of existing services and facilities. Where appropriate, growth revenues will be allocated toward new costs such as these. 15. In the event that previously established operating budget directives are sought to be reduced by Budget Committee or Council, a balanced approach will be used whereby roughly 50% of such amount will be through internal cost reductions which have minimal impact on service levels, with the remaining amount through new revenue streams, fee increases exceeding inflation, or definitive service or program reductions identified by Budget Committee. Inflation is a Reality for both the community and the Corporation 16. Council and our taxpayers recognize that annual tax increases approximating inflation are necessary to support the perpetuation of existing services, facilities and operations, while accommodating new growth in population and the demand for more of these same levels of services, facilities and operations such growth creates. For reference, Council will refer to the annual 12 month CPI index for the Toronto Area, as reported by Statistics Canada for the period June 1st to May 31st, ending in the year prior to the budget under review. Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 7 of 15 Council June 18, 2019 5 Should the inflation rate for a given fiscal year exceed two percent, Staff will present Council with options for the mitigation of any inflation in excess of two percent for its consideration. 17. It is reasonable to expect that administrative support overhead type costs are necessary, and should remain in a consistent ratio to the cost of core front line services and operations. The growth of the community and demand for Town services affects both the core front line and administrative functions of the corporation. The Town will Advance Priorities 18. Council is committed to advancing the strategic priorities as set out in the Town’s Strategic Plan, balanced with affordable and coordinated advancements of the goals and objectives set out in our various Master Plans, including but not limited to: a. Strategy Plan b. Communications Strategic Plan c. Corporate Administrative Plan d. Corporate Environmental Action Plan e. Cultural Master Plan f. Downtown Revitalization Plan g. Economic Development Master Plan h. Information Technology Strategic Plan i. Long Range Asset Management and Investment Plan j. Official Plan (community growth plan) k. Parks Master Plan l. Promenade Plan m.Pursuit of Top 100 Employer status n. Servicing Master Plan o. Trails and Open Spaces Master Plan p. Transportation Master Plan It is recognized that it may not be financially possible to make advancement in all areas each year. Council will annually identify and prioritize such items during the annual budget review process. 19. Innovation, efficiencies, service excellence, maintaining public safety, and service level improvements come through the continuous learning and development of our staff. Training and development funding will be provided in the budget in the range of 1% to 3% (to be determined) of the Total Salaries and Benefits costs. In the first year of each term of Council, data from the comparator municipalities will be presented to confirm the Town’s percentage allocation. Historical Underfunding must be addressed 20. A separate annual Fiscal Strategy budget is intended to: Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 8 of 15 Council June 18, 2019 6 a. Eliminate the infrastructure funding gap which arose from a long history of underfunding the costs of wear & tear on (consumption of) our infrastructure. b. Reduce reliance upon unsustainable revenue sources by the operating budget, such as supplementary tax and other development driven revenues. The driver for the need for current tax increases in this regard is a historical underfunding of contributions to infrastructure reserves, and the provincially mandated new municipal asset management regulation. The impact of these factors is more pronounced as a Town’s capital infrastructure ages. This situation is being experienced in virtually all municipalities across Canada, particularly by those municipalities such as Aurora who implemented long periods without increasing taxes. The “no tax increase” years actually made matters worse for each of these municipalities, as the core operations experience inflationary pressures every year, as does the cost of rehabilitation and replacement of infrastructure. Current service levels of the base operating budget should not suffer due to the need to address this historical funding issue. Council is committed to increase property taxes in order to increase its contributions to reserves for funding necessary infrastructure rehabilitation and renewal. Both the Town’s approved strategic asset management policy and asset management plan which outline asset service levels and the Town’s strategy for meeting them; as well as the Town’s Ten Year capital Investment Plan are reviewed and updated on a regular basis. It is understood that the Fiscal Strategy budget will normally push the tax rate impact to the resident beyond inflation rates when combined with the Operating Budget. 21. Historically the Province has provided “tax room” to municipalities. Since 1998, the Province of Ontario has generally held education tax rates revenue neutral for existing properties each year, resulting in a decline of the portion of the property tax bill going toward education. Some of these reductions have been offset by increased regulatory compliance requirements which have directly or indirectly added costs to the municipalities. Overall, it needs to be recognized that due to the historical net zero tax increases for education taxes, the province annually opens “tax room” on the bill for municipalities to address funding pressures such as infrastructure and compliance costs. Council and the community need to recognize that to access this tax room, the local taxes need to increase by more than general inflationary levels. Failing to access this tax room in one year is difficult to recapture in future years. Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 9 of 15 Council June 18, 2019 1 Council Budget Review and Approval Process Operating Budget Council recognizes that budget decisions made in one year may impact future budget years. To ensure open and public awareness, the Town has adopted a multi-year budgeting framework where Council approves the first year’s budget of its term and receives an accompanying forecast of the next three budgets. In the second year of its term, Council will approve a three year operating budget, including all related tax impacts. Each year’s presented budget will be built in accordance to any directives received from Council as well as the principals outlined in Council’s budget principal’s document. Through a multi-year budget methodology staff are able to more effectively plan multi- year programs, revenue streams and staffing. As per the Municipal Act Council will be required to re-confirm each future year approved budget. Any variations in future year approved budgets from what was originally approved by Council need to be fully explained at the time of re-confirmation. Using multi-year budgets and forecasts improves fiscal health and service delivery through: x better coordination of budgeting and strategic priorities, x greater certainty for departments in managing expenditures and service levels x improved fiscal discipline of the organization x streamlined budget reviews that focus on key changes in assumptions and the reasons driving such changes x allowing staff to develop budgets with fixed targets in place, allowing early response to circumstances and budget constraints of such targets. x reduces uncertainty about future year tax levies x provides longer term outlook to outside organizations that rely upon the Town for a share of their funding, which enables them to plan and deliver their programs more effectively. It is important to note that the Budget Committee or Council are able to make adjustments to any future year approved budgets at the time re-confirmation. These adjustments may include, but are not limited to; a) Legislation changes b) Unplanned service level changes c) Unplanned incremental operating costs arising out of capital investments d) Material changes to the projected inflation rate e) Material changes to labour agreements Attachment #2 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 10 of 15 Council June 18, 2019 2 f) Changes to assessment growth projections All budget adjustments made to an operating budget subsequent to Council’s original approval of the budget will be communicated to Council as part of each budget’s re- confirmation report. Identified required budget increase adjustments Firstly, regardless of the materiality of an identified required budget increase adjustment, staff will strive to accommodate the adjustment within Council’s previously approved operating budget for the year. If any portion of an identified adjustment cannot be accommodated within the existing approved budget is material, the year’s budget will be formally opened. Staff will consequently prepare a budget decision unit business case outlining the requested increase to the currently approved budget for Council’s consideration. A material change is defined as any individual item that will have an impact of 1% on the property tax budget (or approximately $460,000). Otherwise, if the unaccommodated portion of an identified adjustment is not material it will be excluded from the budget or managed through a draw from the Town’s rate stabilization reserve. Identified required budget decrease adjustments If an identified required budget decrease adjustment is material, the year’s budget will be formally opened. Staff will consequently prepare a budget decision unit business case outlining the requested decrease to the previously approved budget for Council’s consideration. Otherwise, if an identified required budget decrease adjustment is deemed immaterial, an equivalent amount will be re-allocated within the currently approved budget to contingency budget. This contingency budget will form the first funding source for the accommodation of any arising required budget increase adjustments. Year end operating budget variances Should an annual operating budget conclude the fiscal year in a surplus position, any excess funds remaining will be allocated to the Town’s reserve funds as per the Town’s annual surplus control bylaw. Conversely, under this same bylaw should an operating budget conclude the fiscal year in a deficit position, it will be topped up from reserves accordingly. Budget review and approval process In conducting its operating budget review and approval process, the Budget Committee will consider the following components: Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 11 of 15 Council June 18, 2019 3 o The overall tax levy funded operating budget, including the Building Services Budget o Aurora Public Library Board funding request o Aurora Cultural Centre Board funding request (as per performance agreement) o Aurora Historical Society funding request (as per performance agreement) o Central York Fire Services Budget (as recommended by Joint Council Committee) o Annual Fiscal Strategy Budget o Annual Special Phasing Budget o Water, Wastewater and Storm Water rate funded Budgets Once these budget components have been reviewed by Budget Committee, Committee will recommend adoption to Council. All meetings of the Budget Committee are open to the public. Every operating budget will be supported at a minimum by the following: x Comprehensive departmental business plans outlining successes achieved in the previous year as well as priorities and resource requirements for the upcoming fiscal year(s). x A summary of key core, growth and other budget pressures that the draft budget is addressing. x Budget decision unit items for any budget pressures that have not been addressed within the proposed / previously approved operating budget. x Multi-year staffing plan Budget Communications Strategy and Key Messages Following recommendation for adoption of a single or multi-year operating budget, Budget Committee will discuss and provide direction to staff regarding key messages and budget highlights, including any specific statements or strategies to be included in media releases, website and other communications regarding the approval of the budget. Capital Budget Every four years at the beginning of its term in office, Council will undertake a review and approval of the Town’s Strategic Asset Management Policy and Asset Management Plan (AMP). The strategic asset management policy guides the development of the AMP; the AMP forms the foundational rationale upon which the Town’s Ten Year Capital Investment Plan is built and maintained. On an annual basis, in July, Council will undertake a review and approval of the Ten Year Capital Investment Plan prior to the budget year in question commencing. At this time Council will also review and approve the Town’s upcoming year’s repair and replacement capital plan. Council will review and approve the remaining components (Growth & New and Studies & Other) of the upcoming capital plan in October. This timing allows for the Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 12 of 15 Council June 18, 2019 4 pricing advantage of early tendering, as well as allowing for the integration of the capital plan into the operational plans, capacities and requirements of the affected business units within the Operating Budget as applicable. Budget Committee will recommend adoption to Council. Funding allocations approved in the annual capital budget will be effective January 1 of the budget year, unless otherwise specifically approved by Council. Rotating Annual Departmental Detailed Budget Reviews Separate from the Town’s normal budget approval process, the Finance Advisory Committee (FAC) will undertake a detailed line by line review of the core operational budgets for each Town department or service partner on a rotating basis, with an intent of completing a review of all departments and service partners at least once by the end of Council’s term in office. Any recommended material adjustments coming out of these reviews will be presented to Council for its consideration as a possible budget adjustment item to the following year’s operating budget. This rotating approach balances the need to review the details of each departmental budget with the expectation of efficient and effective use of Committee time commitment for the annual budget process. Detailed review of every department every year is not practical. The rotational approach allows for ongoing assurance by Council, new members to Council, and the general public that all areas of the budget have been reviewed in extensive detail within the last few years by a committee of Council, and that such reviews continue on a regular basis on a fixed schedule. This approach ensures that the Town’s regular budget review of the overall corporate budget submission can remain at a higher level of consolidation, focusing on service levels, performance indicators and overall compliance with budget directives. The rotation of detailed reviews will be as follows (calendar year of term): Year 1 Aurora Public Library Aurora Historical Society Community Services Year 2 Corporate Services Planning & Development Services Aurora Cultural Centre Finance & Corporate Accounts Year 3 Operational Services Water, Wastewater & Storm Water CAO/ Administration Year 4 None due to municipal election The detailed review will include, but is not limited to: Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 13 of 15 Council June 18, 2019 5 x the current approved operating budget, with provided expanded details; x all related fees and rates charged; x activities, services and service levels provided by the department; x open capital projects and status x the area’s related content details within the Ten Year Capital Investment plan x adequacy of staffing and funding to meet mandatory activities, services, commitments, and approved non-mandatory services, activities and programs and general expectations of Council; Council Budget Review and Approval Process Flow Year 1 January to March x Council Review and Approval of Strategic Asset Management Policy, Asset Management Plan; receipt of Ten Year Capital Investment Plan and approval of single year capital budget. x Council Review and Approval of single year operating budget, plus receipt of three outlook years for first year of term. June x Council budget direction to staff with regards to the next three years July x Receipt of next year’s Ten Year Capital Investment Plan x Approval of next year’s Repair & Replacement Capital Plan January to September x Annual Finance Advisory Committee detailed departmental budget reviews (rotating) October to November x Approval of next year’s Growth & New Capital Plan x Approval of next year’s Studies & Other Plan November to December x Receipt and approval of Year 2, Year 3 and Year 4 operating budgets Years 2 to 3 July x Receipt of next year’s Ten Year Capital Investment Plan x Approval of next year’s Repair & Replacement Capital Plan Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 14 of 15 Council June 18, 2019 6 January to September x Annual Finance Advisory Committee detailed departmental budget reviews (rotating) October to November x Approval of next year’s Growth & New Capital Plan x Approval of next year’s Studies & Other Plan November to December x Re-confirmation of next year’s previously approved operating budget o Annual adjustment process Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 1 Page 15 of 15 2016 2017 2018 2018 2019 2019 vs 2019 vs 2018 vs 2018 vsFull Year Full Year Full Year Approved Approved 2018 2018 2017 Actual 2017 ActualVariance ExplanationActuals Actuals Actuals Budget Budget + / - + / - + / - + / -REVENUE: 3-1116 PROCTORING FEES(224) (500) (553) (350) (350) - - 53 10.6%3-1202 GENERAL(92)------ --3-1206 DONATIONS(294) (1,491) (69) --- - (1,422) (95.4%)3-1300 RENTAL-- (21,479) (6,000) (15,000) 9,000 150.0% 21,479 -3-1302 CONCESSION----(2,000) 2,000 -- -3-1305 MEMBERSHIP FEES(1,470) (645) (360) (180) (300) 120 66.7% (285) (44.2%)3-1313 PROGRAM - ADULT-- (224) (100) (1,000) 900 900.0% 224 -3-1314 PROGRAM - CHILDREN(6,250) (9,364) (6,249) (8,000) (5,550) (2,450) (30.6%) (3,115) (33.3%)3-1401 INVESTMENT INCOME(54) (76) (107) (100) (100) - - 31 40.8%3-1410 SERVICE CHARGES(492) (643) (276) (600) (600) - - (367) (57.1%)3-1501 BOOK SALES(6,688) (5,298) (6,359) (6,200) (7,000) 800 12.9% 1,061 20.0%3-1502 FINES(41,204) (39,329) (42,023) (42,000) (42,000) - - 2,694 6.8%3-1503 LOST & DAMAGED FEES(6,036) (7,045) (7,251) (6,600) (7,000) 400 6.1% 206 2.9%3-1505 PRINTING FEES(11,984) (13,175) (14,219) (12,000) (12,000) - - 1,044 7.9%3-1508 PILOT PROJECT(250) (217) (235) (300) (300) - - 18 8.3%3-1802 PROVINCIAL OPERATING GRANT(44,140) (44,138) (44,138) (44,140) (44,140) - -- -3-1803 OTHER GRANTS(13,926) (7,122) (1,284) (1,285) (1,285) - - (5,838) (82.0%)3-1901 CONTRIBUTION FROM DISCRETIONARY RESERVES(8,254) (15,362)-----(15,362) (100.0%)Total Revenue(141,358) (144,405) (144,826) (127,855) (138,625) 10,770 8.4% 421 0.3%EXPENSE:4-2000 SALARIES - F/T1,988,135 1,893,224 1,709,262 2,078,667 1,936,598 (142,069) (6.8%) (183,962) (9.7%)4-2001 SALARIES - O/T13,830 12,841 12,198 --- - (643) (5.0%)4-2002 SALARIES - P/T254,525 402,647 472,413 423,778 513,557 89,779 21.2% 69,766 17.3% contract staff to fill vacancies and conversion of 1 full-time position to 2 part-time staff4-2003 VACATION PAY7,562------ --4-2004 SICK PAY722------ --4-2090 YEAR END ACCRUALS12,541 (10,457) 9,481 --- - 19,938 190.7%4-2100 BENEFITS - OMERS216,995 207,608 194,999 --- - (12,609) (6.1%)4-2101 BENEFITS - EHT43,988 45,324 42,540 --- - (2,784) (6.1%)4-2102 BENEFITS - WSIB7,685 7,827 7,826 --- -(1) (0.0%)4-2103 BENEFITS - CPP81,496 84,265 82,877 --- - (1,388) (1.6%)4-2104 BENEFITS - EI45,685 41,238 41,246 --- -8 0.0%4-2105 BENEFITS - DENTAL43,151 50,781 47,658 --- - (3,123) (6.1%)4-2106 BENEFITS - HEALTH74,221 75,491 73,619 --- - (1,872) (2.5%) 4-2107 BENEFITS - LTD/ADD30,867 29,773 31,653 --- - 1,880 6.3% 4-2108 BENEFITS - OTHER1,262 24,598 9,469 --- - (15,129) (61.5%)4-2109 BENEFITS - ALLOCATED--- 625,050 621,810 (3,240) (0.5%) - - TOTAL SALARIES & BENEFITS2,822,665 2,865,160 2,735,241 3,127,495 3,071,965 (55,530) (1.8%) (129,919) (4.5%) 4-3000 PURCHASE CARD CLEARING--8----8- 4-4000 OFFICE SUPPLIES4,023 4,654 4,373 4,000 5,000 1,000 25.0% (281) (6.0%) 4-4002 RECEPTIONS3,485 5,170 5,411 5,730 5,730 - - 241 4.7% 4-4007 COMPUTER SUPPLIES2,057 4,511 7,137 8,200 8,200 - - 2,626 58.2%4-4029 COLLECTION - ADULT- AUDIOVISUAL39,52548,289-----(48,289) (100.0%) moved to new account collections digital 4066TOWN OF AURORA (Line by Line Analysis - YTD Comparison)LIBRARYFinance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 1 of 29 2016 2017 2018 2018 2019 2019 vs 2019 vs 2018 vs 2018 vsFull Year Full Year Full Year Approved Approved 2018 2018 2017 Actual 2017 ActualVariance ExplanationActuals Actuals Actuals Budget Budget + / - + / - + / - + / -4-4030 COLLECTION - ADULT- ELECTRONIC RESOURCES51,36764,685-----(64,685) (100.0%) moved to new account collections digital 40664-4031 COLLECTION - ADULT- PERIODICALS16,19411,998-----(11,998) (100.0%) 4-4032 COLLECTION - ADULT- PRINT115,551 127,104-----(127,104) (100.0%) moved to new account collections physical 40684-4033 COLLECTION - ADULT- SERIALS19,14514,694-----(14,694) (100.0%) 4-4034 COLLECTION - JUVENILE - AUDIOVISUAL15,29417,185-----(17,185) (100.0%) 4-4035 COLLECTION - JUVENILE- ELECTRONIC RESOUR8,1399,469-----(9,469) (100.0%) 4-4036 COLLECTION - JUVENILE- PERIODICALS2,8382,268-----(2,268) (100.0%) 4-4037 COLLECTION - JUVENILE- PRINT74,40380,792-----(80,792) (100.0%) moved to new account collections physical 40684-4039 PROCESSING SUPPLIES30,771 48,180 21,959 25,400 25,000 (400) (1.6%) (26,221) (54.4%) in preparation of the renovation less physical items being placed into the collection 4-4040 BUILDING SUPPLIES473 915 109 500 - (500) (100.0%) (806) (88.1%) 4-4041 EQUIPMENT & FURNISHINGS3,469 966 873 3,000 2,000 (1,000) (33.3%) (93) (9.6%) 4-4042 PHOTOCOPIER SUPPLIES167------ -- 4-4043 CONTINGENCY2,364 1,356 5,718 3,000 3,000 - - 4,362 321.7%4-4061 2010 DVD COLLECTIONS3,000------ --4-4066 COLLECTIONS-DIGITAL-- 167,367 80,000 115,000 35,000 43.8% 167,367 -4-4067 COLLECTIONS-PERIODICALS-- 23,131 14,500 15,000 500 3.4% 23,131 -4-4068 COLLECTIONS-PHYSICAL-- 188,284 230,500 220,000 (10,500) (4.6%) 188,284 -4-5002 HEALTH & SAFETY PROGRAM502 2,237 4,304 2,500 2,500 - - 2,067 92.4%4-5018 TELEPHONE LINES12,146 14,988 15,544 15,000 17,000 2,000 13.3% 556 3.7% 4-5023 INTERNET LINE-- 20,094 20,000 21,000 1,000 5.0% 20,094 - 4-5026 COURSES & SEMINARS12,296 18,876 17,702 17,000 17,000 - - (1,174) (6.2%) 4-5028 MEMBERSHIPS975 6,988 3,739 4,500 4,000 (500) (11.1%) (3,249) (46.5%) 4-5029 MILEAGE3,223 2,805 2,003 4,000 3,500 (500) (12.5%) (802) (28.6%) 4-5033 EQUIPMENT REPAIRS1,115 1,312 1,000 7,200 7,200 - - (312) (23.8%) 4-5034 EQUIPMENT RENTALS9,957 18,055 16,111 18,000 19,500 1,500 8.3% (1,944) (10.8%) 4-5042 ADVERTISING2,500 973 949 1,000 1,000 - - (24) (2.5%) 4-5043 CONSULTING1,747 3,915 26,623 8,000 8,000 - - 22,708 580.0% one time HR consulting fee related to hiring new CEO4-5044 POSTAGE6,144 (14) 3,201 3,000 2,000 (1,000) (33.3%) 3,215 22,964.3% 4-5046 PRINTING16,698 11,856 12,321 17,130 16,130 (1,000) (5.8%) 465 3.9% 4-5048 AUDIT FEES4,995 5,043 3,271 5,200 5,000 (200) (3.8%) (1,772) (35.1%) 4-5053 GENERAL LEGAL21,263 801 - 2,500 2,500 - - (801) (100.0%) 4-5060 COST RECOVERY129 594 133 --- - (461) (77.6%)4-5061 SOFTWARE ANNUAL MTCE SUPPORT120,085 120,137 102,180 96,800 131,800 35,000 36.2% (17,957) (14.9%)4-5070 PROGRAMS - ADULT1,271 1,201 2,614 2,500 3,500 1,000 40.0% 1,413 117.7%4-5071 PROGRAMS - YOUTH14,723 13,936 13,539 15,100 17,500 2,400 15.9% (397) (2.8%)4-5072 CATALOGUING SERVICES57,106 40,575 43,009 66,000 66,000 - - 2,434 6.0%4-5073 BOARD TRAINING & DEVELOPMENT183 - 448 1,000 1,000 - - 448 -4-5074 PUBLIC RELATIONS7,661 8,931 8,675 8,000 8,000 - - (256) (2.9%)4-5078 ORGANIZATIONAL DEVELOPMENT2,098 24,779 - 20,000 20,000 - - (24,779) (100.0%) no CEO business plan initiatives for 20184-5090 COURIER- 3,399 3,929 3,000 5,500 2,500 83.3% 530 15.6% 4-5097 MAINTENANCE CONTRACTS1,154 1,111 932 1,200 1,200 - - (179) (16.1%) 4-8003 CONTRIBUTIONS TO DISCRETIONARY RESERVES277,368 302,211 525,991 130,000 130,000 - - 223,780 74.0% Board motion July 25/19 (18.07.75) to use operating surplus to fund the Library Interior TOTAL OTHER EXPENSES967,604 1,046,945 1,252,682 843,460 909,760 66,300 7.9% 205,737 19.7% TOTAL EXPENSES3,790,269 3,912,105 3,987,923 3,970,955 3,981,725 10,770 0.3% 75,818 1.9% NET BUDGET3,648,911 3,767,700 3,843,097 3,843,100 3,843,100 - - 75,397 2.0% Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 2 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 3 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 4 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 5 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 6 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 7 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 8 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 9 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 10 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 11 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 12 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 13 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 14 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 15 of 29 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 16 of 29 Aurora Public Library Board Financial Statements For the year ended December 31, 2018 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 17 of 29 Aurora Public Library Board Financial Statements For the year ended December 31, 2018 Contents Independent Auditor's Report 1 Financial Statements Statement of Financial Position 2 Statement of Operations and Accumulated Surplus 3 Statement of Change in Net Financial Assets 4 Statement of Cash Flows 5 Notes to the Financial Statements 6 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 18 of 29 Aurora Public Library Board Statement of Financial Position December 31 2018 2017 Financial assets Cash $ 5,428 $ 12,710 Receivable from the Corporation of the Town of Aurora (note 2)2,080,892 1,691,205 Other receivables 9 11 2,086,329 1,703,926 Liabilities Accounts payable and accrued liabilities 677,255 25,213 Employee benefits liabilities (note 4) 66,200 50,300 743,455 75,513 Net financial assets 1,342,874 1,628,413 Non-financial assets Tangible capital assets (note 5) 2,259,669 1,650,803 Accumulated surplus (note 6) $ 3,602,543 $ 3,279,216 On behalf of the Board Aurora Public Library Board Chair Chief Executive Officer The accompanying notes are an integral part of these financial statements 2 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 19 of 29 Aurora Public Library Board Statement of Operations and Accumulated Surplus Budget For the year ended December 31 2018 2018 2017 (note 7) Revenue Town of Aurora funding $ 3,943,100 $ 3,843,100 $ 3,847,700 Provincial operating grants 45,425 45,422 51,260 Grants and other -6,026 3,000 Fines and user fees 69,830 71,154 70,700 Interest and other 12,600 42,240 12,908 4,070,955 4,007,942 3,985,568 Expenses Salaries and employee benefits 3,127,495 2,751,141 2,865,160 Services and rent 248,430 178,091 167,656 Materials and supplies 306,644 295,217 247,501 Amortization 460,166 460,166 468,841 4,142,735 3,684,615 3,749,158 Annual surplus (deficit)(71,780)323,327 236,410 Accumulated surplus, beginning of yeaU 3,279,216 3,042,806 Accumulated surplus, end of year $ 3,602,543 $ 3,279,216 The accompanying notes are an integral part of these financial statements 3 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 20 of 29 Aurora Public Library Board Statement of Change in Net Financial Assets Budget For the year ended December 31 2018 2018 2017 (note 7) Annual surplus (deficit)$ (71,780)$ 323,327 $ 236,410 Amortization of tangible capital assets 460,166 460,166 468,841 Acquisition of tangible capital assets (1,069,032)(1,069,032)(425,716) Change in net financial assets (680,646)(285,539)279,535 Net financial assets, beginning of year 1,628,413 1,628,413 1,348,878 Net financial assets, end of year $ 947,767 $ 1,342,874 $ 1,628,413 The accompanying notes are an integral part of these financial statements 4 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 21 of 29 Aurora Public Library Board Statement of Cash Flows For the year ended December 31 2018 2017 Operating transactions Annual surplus $ 323,327 $ 236,410 Non-cash charges to operations: Amortization 460,166 468,841 Changes in non-cash operating working capital: Receivable from the Corporation of the Town of Aurora (389,687)(135,256) Other receivables 2 1,346 Accounts payable and accrued liabilities 652,042 (158,809) Employee benefits liabilities 15,900 15,362 Total Operating Transactions 1,061,750 427,894 Capital transactions Acquisition of tangible capital assets (1,069,032)(425,716) Financing transactions Principal repayment on long-term liabilities -- Increase in cash (7,282)2,178 Cash, beginning of year 12,710 10,532 Cash, end of year $ 5,428 $ 12,710 The accompanying notes are an integral part of these financial statements 5 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 22 of 29 Aurora Public Library Board Notes to the Financial Statements December 31, 2018 1. Summary of Significant Accounting Policies Management's Responsibility The financial statements of the Aurora Public Library Board (the "Board") are the responsibility of management. They have been prepared in accordance with Canadian public sector accounting standards established by the Public Sector Accounting Board ("PSAB") of the Chartered Professional Accountants of Canada. The Board is a registered charity and as such, is exempt from income tax under the Canadian Income Tax Act, and may issue income tax receipts to donors. Its primary role is to provide library services to the general public. Basis of Accounting Revenue and expenses are reported on the accrual basis of accounting whereby revenue is recognized as it is earned and measurable; and expenses are recognized in the period that goods and services are acquired, a liability is incurred, or transfers are due. Revenue Recognition Revenues are recognized as follows: a) Municipal contributions are recognized in the period to which the related expenses are incurred. b) Development charges are recognized over the period of services or when required expenses occur if applicable. c) Grants - Conditional grant revenue is recognized to the extent the conditions imposed on it have been fulfilled. - Unconditional grant revenue is recognized when monies are receivable. d) Fine and user fee revenue is recognized in the period in which it is collected. e) Interest and other income is recognized in the period it is earned. Use of Estimates The preparation of financial statements in accordance with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The principal estimates used in the preparation of these financial statements are the employee benefits liabilities, the estimated useful lives of tangible capital assets and valuation of tangible capital assets. Actual results could differ from management's best estimates as additional information becomes available in the future. Government Transfers Government transfers are recognized in the financial statements in the period in which the events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimates of the amounts can be made. 6 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 23 of 29 Aurora Public Library Board Notes to the Financial Statements December 31, 2018 1. Summary of Significant Accounting Policies (continued) Tangible Capital Assets Tangible capital assets are recorded at cost, less accumulated amortization. Cost includes all costs directly attributable to acquisition or construction of the tangible capital asset including transportation costs, installation costs, design and engineering fees, legal fees and site preparation costs. Amortization is recorded on a straight-line basis over the estimated life of the tangible capital asset using the following rates: Library collection 7 years Equipment 4 - 10 years Furniture 10 - 20 years One half of the annual amortization is charged in the year of acquisition and in the year of disposal. Non-pension Post-employment Benefits, Compensated Absences & Termination Benefits The Board accrues its obligations under employee benefit plans as the employees render the services necessary to earn employee future benefits. The Board has adopted the following valuation methods and assumptions: a) Actuarial cost method: Accrued benefit obligations are computed using the projected benefit method prorated on service, as defined in PSAB 3250 and PSAB 3255. The objective under this method is to expense each member's benefit under the plan taking into consideration projections of benefit costs to and during retirement. Under this method an equal portion of total estimated future benefit is attributed to each year of service. b) Accounting policies: Actuarial gains and losses are amortized on a linear basis over the expected average remaining service life ("EARSL") (expected remaining payment period in respect of the retiring allowance) of members expected to receive benefits under the plan, with amortization commencing in the period following the determination of the gain or loss. Obligations are attributed to the period beginning on the member's date of hire and ending on the expected date of termination, death or retirement, depending on the benefit value. Pension agreements The Board makes contributions to the Ontario Municipal Employees' Retirement System ("OMERS"), a multi-employer public sector pension fund, based on the principles of a defined benefit plan, which specifies the amount of the retirement benefit to be received by the employees on the basis of predefined retirement age, length of eligible service and rates of remuneration over a fixed period of time. Because OMERS is a multi-employer pension plan, any pension plan surpluses or deficits are a joint responsibility of all participating Ontario employers and their employees. As a result, the Board does not recognize any share of the OMERS pension surplus or deficit. Accordingly, contributions made during the year are expensed. 7 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 24 of 29 Aurora Public Library Board Notes to the Financial Statements December 31, 2018 2. Receivable from the Corporation of the Town of Aurora At the end of the year, the amount due from the Corporation of the Town of Aurora ("the Town") is as follows: 2018 2017 Receivable from the Town $ 2,080,892 $ 1,691,205 The amount receivable from the Town is non-interest bearing and has no fixed terms of repayment. This balance is short-term in nature, reflecting inter-fund balances. For the most part, this balance represents reserves (except Development Charges), accrued liabilities and payables net of cash balance. Additionally, the Town provides the facilities, including utilities and maintenance for the Board's operations for $NIL consideration. 3. Pension Agreements OMERS provides pension services to almost 500,000 active and retired members and approximately 1,000 employers. Each year an independent actuary determines the funding status of OMERS Primary Pension Plan (the Plan) by comparing the actuarial value of invested assets to the estimated present value of all pension benefits that members have earned to date. The most recent actuarial valuation of the Plan was conducted at December 31, 2018. The results of this valuation disclosed total actuarial liabilities of $100,081 million in respect of benefits accrued for service with actuarial assets at that date of $95,890 million indicating an actuarial deficit of $4,191 million. Because OMERS is a multi-employer plan, any pension plan surpluses or deficits are a joint responsibility of Ontario municipal organizations and their employees. As a result, the APL Board does not recognize any share of the OMERS pension surplus or deficit. Contributions made by the APL Board to OMERS in 2018 ranged from 9.0% to 14.6% depending on the level of earnings. As a result, $194,999 (2017 - $207,608) was contributed to OMERS for current year services. 8 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 25 of 29 Aurora Public Library Board Notes to the Financial Statements December 31, 2018 4.Employee Benefits Liabilities 2018 2017 Post-employment benefits - accrued obligation $ 53,700 $ 46,300 Accrued sick leave 12,500 4,000 $ 66,200 $ 50,300 Post-employment benefits Post-employment benefits are health and dental benefits that are provided to early retirees and employees currently on long-term disability. The Board recognized these post- employment costs as they are earned during the employee's tenure of service. 2018 2017 Post-employment benefits accrued obligation, beginning of year $ 109,800 $ 39,917 Add: Benefit expense 15,200 14,700 Interest cost 4,100 3,700 Actuarial Losses -61,783 Less: Benefits paid for the period (10,700)(10,300) Post-employment benefits accrued obligation, end of year 118,400 109,800 Unamortized actuarial losses (52,200)(59,500) Post-employment benefits - accrued benefit liabilities $ 66,200 $ 50,300 The accrued benefit obligations for the Board’s post-employment benefits liability as at December 31, 2018 are based on actuarial valuations for accounting purposes as at December 31, 2017 with projections to December 31, 2019. These actuarial valuations were based on assumptions about future events. The economic assumptions used in these valuations are management's best estimates of expected rates of: 2018 2017 Expected future inflation rates 2.00%2.00% Discount on accrued benefit obligations 3.40%3.40% Drug costs escalation 8.00%8.00% Other health care costs escalation 4.00%4.00% Dental costs escalation 4.00%4.00% The amount of benefits paid during the year was $15,220 (2017 - $12,381). 9 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 26 of 29 Aurora Public Library Board Notes to the Financial Statements December 31, 2018 5. Tangible Capital Assets 2018 Library Collection Equipment Furniture Assets Under Construction Total Cost Balance, beginning of year $3,051,684 $ 622,405 $ 741,831 $-$ 4,415,920 Add: Additions during the year 253,386 22,981 - 792,665 1,069,032 Less: Disposals during the year (361,292)(1,366)(154,012)-(516,670) Balance, end of year 2,943,777 644,020 587,818 792,665 4,968,282 Accumulated amortization Balance, beginning of year 1,661,111 512,451 591,555 -2,765,117 Add: Amortization during the year 376,181 47,706 36,279 - 460,166 Less: Disposals during the year (361,292)(1,366)(154,012)-(516,670) Balance, end of year 1,676,000 558,791 473,822 -2,708,613 Net book value $1,267,777 $ 85,229 $ 113,996 $ 792,665 $ 2,259,669 2017 Library Collection Equipment Furniture Total Cost Balance, beginning of year $ 3,003,976 $ 624,806 $ 741,206 $ 4,369,988 Add: Additions during the year 412,623 12,468 625 425,716 Less: Disposals during the year (364,915) (14,869) - (379,784) Balance, end of year 3,051,684 622,405 741,831 4,415,920 Accumulated amortization Balance, beginning of year 1,645,351 477,762 552,947 2,676,060 Add: Amortization during the year 380,675 49,558 38,608 468,841 Less: Amortization on disposals (364,915) (14,869) - (379,784) Balance, end of year 1,661,111 512,451 591,555 2,765,117 Net book value $ 1,390,573 $ 109,954 $ 150,276 $ 1,650,803 10 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 27 of 29 Aurora Public Library Board Notes to the Financial Statements December 31, 2018 6. Accumulated Surplus Accumulated surplus is comprised of the following: 2018 2017 Surpluses General revenue $(1,021,407)$ 5,618 Invested in tangible capital assets 2,259,669 1,650,803 Less: employee benefit liabilities (66,200)(50,300) Total surpluses 1,172,062 1,606,121 Reserves General capital reserve 2,393,649 1,643,233 Aurora Public Library Board Donation and Bequest Reserve 36,832 29,862 Total reserves 2,430,481 1,673,095 Accumulated surplus $ 3,602,543 $ 3,279,216 Invested in tangible capital assets The investment in tangible capital assets represents amounts already spent and invested in infrastructure and other non-financial assets. General Capital Reserve The Town Council has approved the setting aside of any of the Board's operating surplus in a year to a general library capital reserve for future capital projects. Aurora Public Library Board Donation and Bequest Reserve The Board has approved a reserve named "The Aurora Public Library Board Donation and Bequest Reserve" ("ALB Donation & Bequest") for future specified/significant donations and bequests received to support special programs or initiatives outside of the annual operating budget. Funds are transferred from the reserve for approved expenditures. If such funds are not fully expended in the approval year, they are held as Unexpended Funds. DC Reserve Fund - Library Service The Town levies, collects and holds development charges, a component of which is specifically to fund expansion of library services to accommodate growth. Allocations from these funds are approved by the Library Board as part of the annual budget process. Currently, the Town holds $3,864,351 (2017 - $3,851,683) of the Library Service related development charges in their segregated development charges accounts. This reserve fund is not reflected in these financial statements. 11 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 28 of 29 Aurora Public Library Board Notes to the Financial Statements December 31, 2018 7. Budget Reconciliation The Budget for 2018 adopted by the Board on October 19, 2017 was prepared on a basis not consistent with that used to report actual results (Canadian public sector accounting standards). The budget was prepared on a modified accrual basis, while Canadian public sector accounting standards now require financial statements to be prepared on a full accrual basis. Accordingly, the budget expensed all tangible capital expenditures rather than including an amortization expense. As a result, the budget figures presented in the statements of operations and change in net financial assets represent the 2018 budget adopted by the Board with adjustments as follows: Revenue Expense Net Approved net operating funding from the Town of Aurora $ 3,843,100 $ 3,843,100 $ - Budgeted grant, fines and user fees 127,855 127,855 - Total Board approved budget $ 3,970,955 $ 3,970,955 $ - Less: capitalized to TCA from operating accounts - (253,386) 253,386 transfers to/from other funds - (130,000) 130,000 Plus: 2018 Non-TCA capital projects' costs - 95,000 (95,000) DC funding from the Town of Aurora 100,000 - 100,000 amortization expense - 460,166 (460,166) Adjusted budget per the statement of operations $ 4,070,955 $ 4,142,735 $ (71,780) 12 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 29 of 29 Memorandum Date: May 22, 2019 To: Finance Advisory Committee From: Lianne Jalali, Project Management Office, Corporate Services Re: Town’s Major Capital Projects Update Recommendation 1. That the memorandum regarding the Town’s Major Capital Projects Update be received. Background The Town currently has multiple major capital projects underway in varying stages of completion. These major projects include the following: • Library Square • 89 Mosley (Armoury) Renovation • Fire Hall 4-5 • Joint Operations Centre Additional Work Analysis Library Square The development of the detailed design is underway. To help inform the design, a report will be presented to Council on May 21, 2019 summarizing options for the proposed Linkage and Café. Following that, a report will be presented to Council on July 16, 2019 seeking approval to proceed to the next phase of the project which is Construction Documentation. 100 John West Way Box 1000 Aurora, Ontario L4G 6J1 Phone: 905-727-4772 Email: jgaertner@aurora.ca www.aurora.ca Town of Aurora Financial Services Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 3 Page 1 of 4 Town’s Major Capital Project Update April 30, 2019 Page 2 of 3 The RFP to hire the project management firm closed on May 14, 2019, this firm will oversee the management of the capital project from this point forward to final occupancy. The target date to award the contract is in June 2019. As per direction from the March 21, 2019 Council meeting, public consultation on the Church Street parking expansion is scheduled for May 23, 2019. The job posting has been issued for the recruitment of the contract position of the Manager of Library Square who will be responsible for the implementation of the Business Plan. At this point, staff are working with the Aurora Cultural Centre and the Aurora Museum and Archives to find swing space to relocate their operations during the construction period. The monthly status update for this project can be found under Attachment #1 89 Mosley (Armoury) Renovation The project construction completion delayed by a month due to the weather condition, which affected the roof installation. The tentative construction completion date is August 1, 2019. The project risks indicated in the attachment #1 are as follow: • Weather: This may have further impact on the completion of the exterior work • Gas line installation: Enbridge scheduled the gas meter installation for August 28, 2019. The negotiation with Enbridge to accelerate the installation of the gas meter is underway. However, the risk mitigation plan is utilizing the existing gas meter to temporary supply gas to the building. The monthly status update for this project can be found under Attachment #1 Fire Hall 4-5 The request for proposal (RFP) to outsource the construction of the new Firehall will close on May 22, 2019. This project expected to substantially complete by October 31, 2020. The total completion of this project will be on December 31, 2020. The project risk indicated in attachement#1 is the potential increase of the construction cost due to the steel tariffs. The actual financial impact will determine once all proposals reviewed. Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 3 Page 2 of 4 Town’s Major Capital Project Update April 30, 2019 Page 3 of 3 The monthly status update for this project can be found under Attachment #1 Joint Operations Centre Additional Work The objective of this project is completing the outstanding capital works of the JOC. The project divided to thirteen (13) sub-projects that four (4) sub-projects completed, seven sub-projects will complete by end of 2019. The Intercom System and South Side Exterior Finishing projects will complete in 2020. All projects are on schedule and on budget so far. The monthly status update for this project can be found under Attachment #1 Attachments Attachment #1 – Major Capital Project Update: • Library Square • 89 Mosley (Armoury) Renovation • Fire Hall 4-5 • Joint Operations Centre Additional Work Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 3 Page 3 of 4 PROJECT NAMEBEGINFINISH# of DAYS STATUS PROJECTED ACTUAL REMAINDER STATUS HIGH MEDIUM LOW89 Mosley (Armoury)October 9, 2018 August 1, 2019296Concerned $5,359,900 $1,424,059 $3,935,841 On budget110Firehall May 3, 2019 December 31, 2020 608 On schedule $11,087,300 $309,982 $10,777,318 On budget010JOC - Additional Work October 1, 2018 September 30, 2020 730 On schedule$2,185,200 $533,431 $1,651,769 On budget000Library Square July 2, 2018 December 31, 2021 1278 On schedule $2,340,135 $579,638 $1,760,497 On budget000Total $20,972,535 $2,847,110 $18,125,425120Project Status LegendGreen Everything is progressing as planned. No intervention from the sponsor is required Amber Some risks and issues have been identified but the project team is handling and monitoring them Red Major problems or threats exist. The sponsor's intervention is required in this case Row Labels Sum of REMAINDER Sum of ACTUAL Sum of PROJECTEDFirehall 10777318.06 309981.94 11087300Library Square1760496.89 579638.112340135JOC - Additional Work 1651768.53 533431.47218520089 Mosley (Armoury)3935841.21 1424058.795359900Grand Total18125424.69 2847110.3120972535Attachement#1Major Capital Projects Update Summary Projects Gantt Chart TimelineBUDGETRISKSRow LabbelsSumumoff REMAIINDERSSummoffAACCTUAALLSumofofPROJECTEDFirehall1073099981.9411087300Library SSqua175799638.1123401355JOC - AAdditio165333431.4721852520089 Mossley (A3914224058.79535359909000Grand Total18128847110.3120097252535y(arrrrooooAAArMAIIMAMMNDENDERRRRR777777666559933122$0$2,000,000$4,000,000$6,000,000$8,000,000$10,000,000$12,000,000Firehall Library Square JOC - Additional Work 89 Mosley (Armoury)Project Budget SummarySum of REMAINDERSum of ACTUALSum of PROJECTEDValuesPROJECT NAMEFinance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 3 Page 4 of 4 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 4 Page 1 of 8 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 4 Page 2 of 8 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 4 Page 3 of 8 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 4 Page 4 of 8 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 4 Page 5 of 8 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 4 Page 6 of 8 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 4 Page 7 of 8 Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 4 Page 8 of 8 Public Release May 22, 2019 Town of Aurora Additional Items to Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 5:30 p.m., Holland Room •Additional attachment to Item 2 – Review of Detailed Financial Budget Information, Re: Aurora Public Library – Correspondence from Bruce Gorman, CEO, Aurora Public Library MEMO To: Town of Aurora Finance Advisory Committee From: Bruce Gorman, Chief Executive Officer Date: May 22, 2019 Subject: Town Partner – Budget Review The Aurora Public Library is pleased to have an audience with the Town’s Finance Advisory Committee and to provide some background for context. The Library takes pride in its financial acumen and judicious oversight of the funding provided by the Town in support of world class library service for your residents. As part of our fiduciary responsibility, the Aurora Public Library Board provides oversite through a Finance Sub‐ Committee. They meet regularly to monitor our financial position. This includes a line by line review of our operating accounts each year. The Library is pleased to provide our landlord and the residents of Aurora with $2.2M in leasehold improvements as our renovation project concludes in the coming weeks. As tenants we are grateful to the Town for the state of good repair of the facility. The outcomes of this renovation project will be a game changer for the Library and will allow us to impact residents in even more meaningful ways. This includes the availability of two new multipurpose rooms and a large “living room” for public events of all kinds. As well, we are providing more flexible spaces for residents to use as they wish. We listened to our residents last fall regarding their desire for more open hours. They overwhelmingly told us that additional operating hours would further enrich their life experience in Aurora. To that end we will be opening Monday mornings and staying open until 6 p.m. on Fridays later in 2019. The Library deploys cost avoidance strategies at every opportunity to maximize our financial envelope. This is in evidence by our ability to manage the usage of the Magna and Lebovic Rooms with existing staff levels. We continue to add more programs and events with no additional staff resources (961 programs delivered in 2018). This has resulted in an overall increase in program attendance of 14% and increased in person visits by 14% in 2018. We answered 88% more information questions from the public in 2018 compared to the previous year. And as noted above, we are opening additional hours Monday morning and Friday afternoon using existing staffing levels. Additional Items to Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 1 of 3 Some of our cost avoidance strategies include implementation of a One Desk service model, reallocating staff to provide additional/alternate public service. We are also deploying technology solutions wherever possible, including utilizing new communication tools and the implementation of an automated materials handling solution which lessens the staff requirement to handle returned materials, resulting in more staff resources to devote to other public services activities, all while getting material back on the shelves faster for public consumption. Aurora is expected to grow to nearly 70,000 by next year. It is well proven that the social well‐ being of a growing Town is a critical success factor in the economic prosperity, health and well‐ being of its citizens. The Library is proud to be a leader in this social domain as we welcome over 260,000 customers visits each year. We are the great social equalizer for all within the community. As we look to the future, we will continue to provide world class library service in a financially astute manner. Considerations going forward will include the increasing demand for digital collections and online courses. This is the way of the world and of the future; our customers want real time access to the wealth of digital collections the Library has to offer as they navigate their information driven daily lives. As evidence our eBook and eAudio circulation was up 24% in 2018. The Library is a primary source for the public to engage with technology. From training, to learning, to understanding, to exposure, the library is at the forefront. Indeed, technology is now infused into everything we do, every day. The Library is on the front lines of this journey with Aurorans. With ongoing training programs, our introduction to new technologies, and a new creative studio environment, we are assisting residents every day. As the rate of change of technology continues its exponential ride, it will be imperative to properly fund this ongoing evolution. In addition and alongside the exciting Library Square project we expect notable programming increases, particularly outside. The Library is committed to doing all we can to make Library Square as successful as possible. Programming is our specialty. We are experts. As Library Square unfolds, service levels would warrant additional human resources to support this new vibrant destination with dynamic and engaging programming. We also heard definitively that the public want additional Sunday hours and Sunday programming. This is arguably the most important family day of the week. The Library looks forward to opening on Sundays and engaging Aurorans with meaningful, rich family programming. Making this happen will be a financial consideration. The Library is excited to be woven into the fabric of Aurora. We are growing as the Town grows. As our partners and primary funders, we look forward to enriching our community each day side by side with the Town. The Ministry of Tourism, Culture and Sport has cut funding to a provincial agency that assisted public libraries in Ontario, including us. The Southern Ontario Library Service (SOLS) provides a Additional Items to Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 2 of 3 variety of services including inter‐library loans where libraries across the province share our collections. SOLS facilitates this through a delivery service. They suspended this service until May 31 as they evaluate their options, based on a 50% reduction of their budget. Libraries across the province have temporarily stopped the service. Our Board and many others Library Boards sent a letter to the Ministry asking for reconsideration of the SOLS budget cuts. I am waiting to hear from SOLS as to their options and will make informed decisions at that time. Until that time it is difficult to speculate as to the financial consequences but an alternate solution utilizing Canada Post and internal labour could approach $15,000 per year. Regarding library savings (surplus), operating financial statements do not include depreciation of tangible capital assets. The audited financial statements in accordance with PSAB standards require depreciation of tangible capital assets over their amortized useful life. This includes furniture, some technology and physical collections, which all have value in future years. The Library’s audited financial statement surplus differs from operating statement surplus as the physical collection is depreciated over a seven year useful life. Fluctuations occur based on spending decisions of our library experts in pursuit of the best collection to serve our community. It is worth mentioning that the digital collection, periodicals and some software are now accessed through licensing and are not depreciable. Therefore, it is important to understand that the audited financial statement surplus will differ primarily because we have a physical collection of books that is an essential service of the Library. __________________________ Bruce Gorman Chief Executive Officer Additional Items to Finance Advisory Committee Meeting Agenda Wednesday, May 22, 2019 Item 2 Page 3 of 3