1. M UNICIPAL O RIENTATION The Finance Function Scott Ryan, February 17, 2007

2. Areas of Interest Budgets Tax Rates Surplus Debt Financial Statements PSAB Changes

3. Budgets Means of planning and control “quantitative expression for a set time period of a proposed future plan.” Budgets are the link between accounting and leadership

4. Budget Cycle 1.Planning the performance 2.Set expectations against which to compare results (estimate costs) 3.Investigate and correct variations 4.Use feedback and changes to plan again

5. Establish Estimates Can you afford it Will it impact on rates Are there funds available to assist Can the cost be spread over multiple years Residents approve estimates Is it a new service? (section 33)

6. Budgeting Methods Incremental or zero based Rolling budgets Analyze the components of a service –Wages –Supplies –Utilities –Sundry

7. Budget Advantages Compel planning and plan implementation Provide performance criteria Promote coordination and communication Management must understand and support the budget but budgets cannot be too rigid

8. Timing Start early (Nov-Dec) Notify residents (section 55) Meet in March FILE (section 28)

9. Processes (Municipalities Act) 35 you have until April 1 to prepare estimates 36 estimates have to presented at annual meeting and voted on one-by-one by residents

10. Tax Rates 37 council by resolution sets tax rate to cover costs approved (net of other revenue) 37 may set frontage charges and may set different rates in areas where services differ Preliminary assessment values ready mid to late January and confirmed mid to late February

11. Processes Continued 40 fiscal year is Jan 1 to Dec 31 41 The council of a municipality shall cause –a) any surplus at fiscal year end to be transferred to the general fund for the next fiscal year or to a reserve fund; –b) any portion of a deficit in the general fund at the end of the fiscal year that is not offset from the reserve fund or other surplus funds to be debited against the general fund for the next fiscal year

12. Use It or Lose It Illustration

13. Debt Carefully and fully estimate costs for capital projects – include reduction for any source of funding to be received May borrow for capital expenditures through loan or debenture but only if proposed borrowing is approved by the residents at an annual meeting or special meeting called for that purpose (44) No council can carry debt in excess of ten percent of the current assessed value of real property in the municipality*

14. Financial Statements Feedback mechanism for ensuring operations are within estimates Ideally provided with variances (to budget and to previous year) Provide the early warning signs

15. PSAB Change Section 27 requires audited statements in accordance with Generally Accepted Accounting Principles (GAAP) Public Sector Accounting Board (PSAB) permits variations from GAAP, accounting for tangible capital assets (TCA) is one PSAB now recommends and New Deal requires compliance with GAAP for TCA

16. PSAB Change (Continued) Previously, fixed assets could be expensed if paid for from operations If debt taken on for capital projects, interest and principal payments are expensed annually Under GAAP, fixed assets (regardless of whether paid for or indebted for) are expensed proportionately over their useful life

17. Conclusion Plan your services first Determine costs of those services Obtain resident approval (March) Establish tax rate to cover costs Notify Minister Compare costs to estimates and adjust your plan accordingly Spend your surplus next year

18. Thank you