Financial Control Protocols within the
Revised Council-Committee Structure
The Policy and Finance Committee recommends:
(1)the adoption of the joint report (July 28, 1999) from the Chief Administrative Officer and Chief Financial
Officer and Treasurer, subject to amending Table 1, Item No. (3) contained therein by inserting the word "may"
before the words "Refer to BAC"; and
(2)the adoption of the joint report (July 6, 1999) from the Chief Administrative Officer and Chief Financial
Officer and Treasurer, subject to amending Recommendation No. (2) by deleting the words "Table 1 and", so that
such Recommendation now reads as follows:
"(2)the decision-making protocol set out in the section of this report headed "Guidelines for Routing of
Committee Reports with Financial Implications", Appendix A be adopted;".
The Policy and Finance Committee submits the following joint report (July 28, 1999) from the Chief Administrative
Officer and Chief Financial Officer and Treasurer:
Purpose:
This report establishes and recommends criteria for determining what matters the Policy and Finance Committee should
refer to the Budget Advisory Committee for its consideration. This report is supplementary to the joint report (July 6, 1999)
from the Chief Administrative Officer and the Chief Financial Officer and Treasurer entitled "Financial Control Protocols
within the Revised Council-Committee Structure"
Financial Implications:
There are no financial implications arising from this report, however, the recommended criteria are designed to clarify the
decision-making protocols for addressing matters with financial implications.
Recommendations:
It is recommended that:
(1)for those matters having significant in-year budget changes and/or future year commitments, that the Policy and
Finance Committee utilize the Budget Advisory Committee, when appropriate, to provide a detailed review and identify
funding and other options to minimize financial impacts for the City in a report back to the Policy and Finance Committee;
(2)the decision-making protocol set out in revised Table 1 be adopted; and
(3)the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.
Council Reference/Background/History:
At its meeting of July 20, 1999, the Policy and Finance Committee had before it the joint report (July 6, 1999) from the
Chief Administrative Officer and the Chief Financial Officer entitled "Financial Control Protocols within the Revised
Council-Committee Structure" respecting the roles and relationships for the planning, management and expending of
resources within the City of Toronto as well as the decision-making protocols for routing staff and Committee reports with
financial implications. The Policy and Finance Committee referred this joint report to the Budget Advisory Committee for
consideration and report thereon to the Policy and Finance Committee.
The Budget Advisory Committee, at its meeting of July 27, 1999, requested the Chief Administrative Officer and the Chief
Financial Officer and Treasurer to establish clear criteria as to which items should be referred to the Budget Advisory
Committee for consideration, from the Policy and Finance Committee and that said criteria be submitted to the Special
Meeting of the Policy and Finance Committee on July 28, 1999.
Discussion:
Criteria for the Referral of Matters to the Policy and Finance Committee:
The joint report (July 6, 1999) from the Chief Administrative Officer and Chief Financial Officer addressed the need to
provide guidelines for routing staff and Committee reports having financial implications within the revised
Council-Committee structure. The operative criteria for assessing when the financial implications of reports and
recommendations of staff and Standing Committees should be referred to the Policy and Finance Committee is whether the
financial impact requires an in-year change to the approved budget. Given the Policy and Finance Committee's
responsibility for recommending Council approval of expenditures not included in the approved budget, any in-year budget
changes would require approval from this committee. The key assumption underlying the approval process is that in-year
budget changes will only be recommended in exceptional cases.
Table 1 of the above-noted report summarized the approval process for likely scenarios resulting in in-year budget changes
from Standing Committee reports and recommendations.
Criteria for the Referral of Matters from the Policy and Finance Committee to the Budget Advisory Committee:
Within the revised Council-Committee structure, the Budget Advisory Committee is responsible for assisting the Policy
and Finance Committee in developing the annual capital and operating budgets. Functioning like a focused working group,
the Budget Advisory Committee engages in the detailed, intensive political review of the CAO-recommended budget
before providing advice to the Policy and Finance Committee on a final recommended budget that weighs City-wide needs
and priorities while achieving financial goals. The Budget Advisory Committee meets regularly during the budget process.
The Budget Advisory Committee may also meet on an ad-hoc basis to consider matters, referred to it by the Policy and
Finance Committee, that have a significant impact on a future budget. Recently, the Policy and Finance Committee has had
a number of issues before it with significant financial implications resulting in in-year changes as well as future year
impacts. In some cases, items having in-year changes have been referred to the Budget Advisory Committee for a more
detailed review of the issue to assess the financial implications and to identify other options including funding. The
detailed knowledge acquired from the budgetary review of individual program or agency budgets can be beneficial in
providing advice to the Policy and Finance Committee on matters having in-year or future year financial impacts. However
in other instances, matters may be sent on directly from the Policy and Finance Committee to Council for its consideration.
We continue to recommend that all in-year budgetary changes arising from Standing Committee reports and
recommendations be referred to the Policy and Finance Committee for its consideration first. The Policy and Finance
Committee should have the option of referring all matters that have significant in-year budget changes and/or future year
commitments to the Budget Advisory Committee, where a detailed review of the financial implications would identify
funding and other options to minimize financial impacts for the City.
A revised Table 1 reflects the approval process for likely scenarios where issues resulting in significant in-year budget
changes and/or future year impacts may benefit from a detailed review by the Budget Advisory Committee in support of
Policy and Finance Committee deliberations.
Revised Table 1: Approval Process for in-Year Budget Changes
Financial Issues that
may Arise at Standing
Committees |
Comments |
Standing
Committee
Approval |
Policy
and
Finance
Approval |
Budget
Advisory
Review |
Refer to
CFO |
1.Spending in
current year is within
budget and is for
purposes originally
intended (e.g.
allocation of an
approved budget item
) |
Standing Committee
recommends
allocation of budget-
no requirement for P
and F approval |
X |
|
|
|
2.There is
significant unexpected
expenditure but no
additional funding is
required in current
year because
significant service
level changes are
being made to offset |
Forwarded to P and F
for recommendation to
Council because of
changes to service
level, service standard,
priorities or risk
assumed by the
corporation from that
approved in original
budget. Only refer to
BAC for review if
future year
commitment. |
X |
X |
X
Only if
results in
future year
impact |
|
3.Funding is not
available in approved
budget for a proposed
expenditure in the
current year (e.g. new
item that can't be
accommodated in the
budget) |
Item requires P and F
recommendation to
Council because it is
beyond the scope of
the approved budget.
Refer to BAC to
identify options,
including funding if
financial impact is
significant. |
X |
X |
X
|
|
4.Item requires an
increase in gross
expenditures and
revenues above the
approved budget, but
approved net
expenditures are not
exceeded (e.g. new
provincial grants and
associated new
revenues and
expenditures) |
Item requires P and F
recommendation to
Council because of
changes to gross
expenditures or
revenues in approved
budget |
X |
X |
|
|
5.Minimal impact
in current year but
approval may cause an
increase in financial
commitments in future
years (e.g. new
initiative to be
implemented at end of
current year with
minimal costs in
current year but
significant costs in
future years) |
Standing committee
makes
recommendations with
respect to any policy
elements but
implementation is
subject to review in
next year's budget
process (i.e. no
implementation in
current year). The
financial component is
referred to the
originating
commissioner and to
the CFO for
consideration during
next year's operating
and capital budget
process. Refer to BAC
secretary to include in
pending file. |
X |
|
X
Refer to
BAC
secretary for
budget
process
pending file. |
X |
6.Financial issues
that impact future
years only (e.g.
emerging issues that
may result in
additional costs next
year) |
Standing committee
makes
recommendations with
respect to any policy
elements but
implementation is
subject to review in
next year's budget
process (i.e. no
implementation in
current year). The
financial component is
referred to the
originating
commissioner and to
the CFO for
consideration during
next year's operating
and capital budget
process. Refer to BAC
secretary to include in
pending file. |
X |
|
X
Refer to
BAC
secretary for
budget
process
pending file |
X |
Implementation:
Applying the criteria to staff and Committee reports and recommendations and Notices of Motion will require the Chief
Financial Officer and Treasurer and her staff, particularly in the Budget Services Division, to review all such reports,
recommendations and motions so that the financial implications are identified. Program managers will be including
recommendations in their reports that will specify if Policy and Finance Committee and Budget Advisory Committee
approval is recommended to assist the City Clerk in dealing with the implementation of these financial protocols.
Continued consultation between program areas, agencies and Finance and Clerks staff is necessary to support the
implementation of the financial protocols.
Conclusion:
The joint report (July 6, 1999) from the Chief Administrative Officer and Chief Financial Officer set out the roles and
relationships for the planning, management and expending of resources within the City of Toronto as well as the
decision-making protocols for routing staff and Committee reports with financial implications. It clearly identifies
guidelines for ensuring consistent treatment of matters with financial implications by defining an approval process based
on the revised Council-Committee structure.
However, further clarification has been requested to ensure consistency for Policy and Finance Committee in dealing with
matters with financial implications and its relationship to the Budget Advisory Committee. It is therefore further
recommended that for those matters having significant in-year budget changes and/or future year commitments, that the
Policy and Finance Committee utilize the Budget Advisory Committee when appropriate to provide a detailed review and
identify funding and other options to minimize financial impacts for the City in a report back to the Policy and Finance
Committee.
Consultation between program areas, agencies and Finance and Clerks staff is necessary to support the implementation of
the recommended financial protocols.
The Policy and Finance Committee also submits the following joint report (July 6, 1999) from the Chief
Administrative Officer and Chief Financial Officer and Treasurer:
Purpose:
This report sets out the roles, responsibilities, relationships and related financial control protocols for Council's new
committee structure.
Impact Statement:
The relationships, protocols and processes outlined in this report require no additional resources. However, the processes
and relationships are designed to enhance the efficiency, accountability and overall quality of the City's budget process and
financial management systems.
Recommendations:
It is recommended that:
(1)the roles and relationships described in the section of this report headed "Framework of Roles and Responsibilities for
the Planning, Management and Expending of Resources within the City of Toronto" be adopted;
(2)the decision-making protocol set out in the section of this report headed "Guidelines for Routing of Committee
Reports with Financial Implications", table 1 and Appendix A be adopted;
(3)in order to ensure that information on the financial implications of recommendations is available to standing
committees, community councils and City Council:
(a)all staff reports be required to identify clearly, at the beginning of the report, any financial implications including:
(i)the amount of expenditures and revenues;
(ii)the source of revenues;
(iii)any in-year financial implications beyond the approved budget; and
(iv)future year financial impacts;
and, when there are financial implications, include a statement indicating that the Chief Financial Officer and Treasurer has
reviewed and concurs with the financial implications; and
(b)standing committee and community council recommendations to Council and Notices of Motion introduced at
Council, which have financial implications beyond the approved annual budget, be accompanied by staff identification,
including review by the Chief Financial Officer and Treasurer, of any financial implications during consideration of the
items by Council; and
(4)the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.
Council Reference:
On February 2, 3 and 4, 1999, Council adopted as amended Clause No. 1 of Report No. 1 of the Special Committee to
Review the Final Report of the Toronto Transition Team, entitled "Revisions to the Council-Committee Structure". In
adopting the clause, Council directed the Chief Administrative Officer and the Chief Financial Officer and Treasurer to
submit a joint report fleshing out the budget-setting process for the year 2000 budget and related financial control
protocols, including:
(i)the relationship between in-year policy development by standing committees and the annual budget process;
(ii)the process to be used by the Policy and Finance Committee and Council in setting budgets for the whole range of
City programs;
(iii)the role of standing committees and community councils in the annual budget-setting process; and
(iv)guidelines for the in-year financial monitoring and management of specific program areas within standing
committees' portfolios.
Subsequently, on March 2, 3 and 4, 1999, Council adopted, as amended, a motion by the Mayor, seconded by the Deputy
Mayor, which defined the role of a Budget Advisory Committee:
(i)to assist the Policy and Finance Committee with the preparation of the annual operating and capital estimates; and
(ii)to consider items, referred to it by the Policy and Finance Committee, that have a significant impact on a future
budget.
Council incorporated into the motion a memorandum dated February 22, 1999 from the Chief Administrative Officer and
Chief Financial Officer and Treasurer entitled "Clarification of Planning and Financial Management Responsibilities".
On June 9, 10 and 11, 1999, Council struck out and referred to the Administration Committee for further consideration
Corporate Services Committee Report 6 (4). The following two recommendations were incorporated in the clause:
"all staff reports be required to clearly identify any financial implications including:
(I)the source of funding;
(ii)the amount of expenditures and revenues; and
(iii)any in-year financial implications beyond the approved budget or future year financial impacts;
and that financial/budgetary reports clearly identify any policy implications and the relevant committee approval received
or required for the policy change; and that these requirements be incorporated into the new staff report guidelines currently
in preparation by the City Clerk and the Chief Administrative Officer; (and)
(staff) develop a protocol¼.for dealing with staff reports, Standing Committee and Community Council recommendations
to City Council, and Notices of Motions introduced at City Council, which have financial implications, beyond the
approved annual budget or legal implications, such that staff can identify any financial or legal implications and bring such
information to the attention of Committee or Council for its consideration."
This report responds to Councils directive of February 2, 3 and 4, 1999, builds on the above-mentioned Council action of
March 2, 3 and 4, 1999, and takes into consideration the recommendations embodied in Corporate Services Report No. 6
(4).
Discussion:
Context:
The report on "Revisions to the Council-Committee Structure" included the following comments, which reflect the
underlying premise of the processes and relationships described in the present report:
"(Clear and rigorous financial control procedures) are necessary to ensure that budgets are developed in a coordinated and
consistent manner, allocations within budgets reflect Council's relative priorities and financial means, and allocations and,
therefore, priorities are not undermined by ad hoc and piecemeal in-year changes. Financial control procedures are
necessary, too, to hold staff accountable for the service levels that Council establishes through the budget process...
"As a general rule, the budget should be considered a service level contract. From the point when Council adopts the
budget, staff will be held accountable for delivering on the budget contract and service levels contained therein. The budget
setting process for the following year must be undertaken with all competing priorities on the table together. This approach
should not leave room for ad hoc in-year changes."
Framework of Roles and Responsibilities for the Planning,
Management and Expending of Resources within the City of Toronto:
Within the context of the above comments and the decisions made by Council on February 2, 3 and 4 and March 2, 3 and
4, 1999, the following description of roles and responsibilities provides the framework for the specific budget-setting
process for 2000, which is set out later in this report.
(a)Role of Policy and Finance Committee:
The Policy and Finance Committee has clear responsibility for recommending the budget. This committee sets the financial
priorities and recommends the rules of the game (via Financial Control By-laws, etc.). Once Council has approved the
budget, requests for in-year changes should only occur on a very exceptional basis and be made through this committee.
Policy and Finance is the finance committee of Council. The Policy and Finance Committee monitors in-year performance
of the City's programs through its regular review of budget variance reports.
(b)Role of the Council's Policy Committees and Community Councils:
Council's Committees each have services, which they oversee. Standing committees monitor the ongoing delivery of
programs and emergence of issues within their jurisdiction. They recommend program changes and develop policies. In
general their recommendations should not result in any in-year budget changes. Recommended program changes form part
of the mix of priorities to be taken into consideration in the preparation of future budgets.
(c)Role of the Budget Advisory Committee:
The Budget Advisory Committee assists the Policy and Finance Committee in developing the annual capital and operating
budgets. It engages in the detailed, intensive political review of the program budget requests before providing advice to the
Policy and Finance Committee on the budget submission to Council. The Budget Advisory Committee functions like a
focused working group. It need only meet regularly for the duration of the budget preparation process as determined by the
Policy and Finance Committee. It is expected that the Budget Advisory Committee will meet on a regular basis between
October and March.
During the other six months of the year, staff are gathering new information to present to the Budget Advisory Committee
in the next year's cycle. This time is also used to implement the directions taken as part of the last budget. It is therefore
unnecessary for the Budget Advisory Committee to meet regularly during this period. The Budget Advisory Committee
does not monitor in-year programs and operations. These are the responsibilities of the Policy and Finance and other
standing committees respectively.
The importance of the Budget Advisory Committee lies in weighing the priorities and submissions from all departments
and agencies during the budget process and making the necessary trade-offs to achieve particular fiscal goals.
(d)Role of the Audit Committee:
The Audit Committee assures Council that funds have actually been spent on the basis of program appropriations that were
approved by Council and ensures that financial controls are operating in an appropriate fashion.
(e)Role of the Chief Administrative Officer and Commissioners:
The Chief Administrative Officer is responsible for the general control and management of the administration of all
departments in the City; effective and efficient delivery of services; and for providing effective advice to the Mayor and
Council in developing and implementing policies, plans and programs.
The Chief Administrative Officer and the commissioners are authorized to implement the delivery of programs and
services consistent with Council's plans and direction. Staff's primary role is to implement Council's directives and
policies and manage the day to day operations in a professional manner on an ongoing basis. Adequate administrative
structures and accountability mechanisms have been established and approved by Council to ensure that the Standing
Committees and Council are advised on the actual accomplishments and results on a regular basis.
The Chief Administrative Officer is held accountable by the Policy and Finance Committee for ensuring that proper
planning and financial management structures and processes are in place, and for delivering on the approved budget. The
Commissioners are held accountable by the standing committees for program delivery within their areas of responsibility.
In addition, the performance management process requires commissioners to deliver on the budget contract.
(f)Role of the Chief Financial Officer and Treasurer:
The Chief Financial Officer and Treasurer, among other responsibilities, has a statutory responsibility to maintain proper
books of accounts for the corporation, ensure that appropriate financial controls, checks and balances are built into the
system. The Chief Financial Officer and Treasurer must ensure that the City has a budget, which can be used to set the mill
rate.
(g)Role of the Auditor:
The Auditor is accountable to the Audit Committee for reviewing and assessing programs on a regular basis to ensure that
expenditures are consistent with Council-approved objectives, by-laws and procedures. The Auditor also reports to the
Audit Committee on any system control problems and any program reviews, which suggest ways to improve on
performance.
(h)Delegated Authorities:
Once the budget is approved, it represents a financial plan to which the departmental program management is to be held
accountable. As part of the corporate management framework, and under existing By-law 7-1998, senior managers and
staff have been delegated authorities to take appropriate actions consistent with the approved financial plan (budget). The
Chief Administrative Officer, through the Chief Financial Officer and Treasurer, ensures that an appropriate delegation of
financial and program authorities document has been formally established, authorized and implemented.
Further appropriate internal controls have been established in the assignment of staff duties and responsibilities so that
decisions made by one person are automatically reviewed by another and, responsibilities are divided so that more than one
person is involved in any given transaction.
(i)Policies and Systems:
The Chief Administrative Officer, through the Chief Financial Officer and Treasurer, ensures that effective financial
management, business planning and asset management policies, processes and systems are in place through the
establishment and assurance of:
(a)an effective financial accounting system for the recording and reporting of expenditures, revenues, assets and
liabilities;
(b)a well designed management reporting and budget process for departmental programs which provides timely
information to facilitate the assessment of operational results in relation to plans and performance;
(c)established financial policies in relation to the account code structure, activity based costing, accrual accounting,
recognition of non-cash expenditures, asset management and administration costs, financial reporting and performance
assessment;
(d)clearly defined functional and organizational roles and mandates of the key positions within the Finance Department;
and
(e)the development of an effective establishment control system.
The Chief Administrative Officer, through the commissioners, ensures that effective business planning and management
systems are in place through:
(a)the implementation of a multi year business planning process which focuses on core programs, goals, objectives,
expected outcomes, resource requirements and performance measures;
(b)the development and establishment of relevant performance measures for City programs and services; and
(c)the development and implementation of performance review and management systems.
Guidelines for Routing of Committee Reports with Financial Implications:
The intent of the revised Council-committee structure is to limit, to the extent possible, the routing of reports through more
than one standing committee. A major issue in the previous committee structure was the duplication and bottlenecks
arising from routinely sending reports to standing committee, then Budget Committee, then Strategic Policies and Priorities
Committee. The fact that a matter before a standing committee has financial implications is insufficient reason in and of
itself to refer the matter to the Policy and Finance Committee. Most items have financial implications to some degree. The
question should be whether or not the financial impact is within the approved budget. Carefully applied criteria, based on
approved committee mandates, need to guide referrals to Policy and Finance Committee in order to prevent the
inefficiencies and duplication that bogged down the previous structure.
Within the revised Council-committee structure, the Policy and Finance Committee has responsibility for recommending
Council approval of expenditures not included in the approved budget. Responsibility for policy and program review and
development lies with the relevant standing committees. The following table summarizes the criteria that will be used to
determine when the financial implications of reports and recommendations at standing committees require referral of the
recommendations to the Policy and Finance Committee. It is important to reiterate that a key assumption underlying the
approval process is that in-year budget changes will only be recommended in exceptional circumstances.
--------
Table 1: Approval Process for in-Year Budget Changes
Financial Issues that may Arise
at Standing Committees |
Comments |
Standing
Committee
Approval |
Policy
and
Finance
Approval |
Refer
to
CFO |
(1)Spending in current year
is within budget and is for
purposes originally intended
(e.g. allocation of an approved
budget item ) |
Standing Committee
recommends allocation of
budget - no requirement
for P and F approval |
x |
|
|
(2)There is significant
unexpected expenditure but no
additional funding is required
in current year (e.g. reductions
can be made in other areas to
accommodate an unplanned
expenditure) |
Forwarded to P and F for
recommendation to
Council because of changes
to service level, service
standard, priorities or risk
assumed by the corporation
from that approved in
original budget |
x |
x |
|
(3)Funding is not available in
approved budget for a
proposed expenditure in the
current year
(e.g. new item that can't be
accommodated in the budget) |
Item requires P and F
recommendation to
Council because it is
beyond the scope of the
approved budget |
x |
x |
|
(4)Item requires an increase
in gross expenditures and
revenues above the approved
budget, but approved net
expenditures are not exceeded
(e.g. new provincial grants and
associated new revenues and
expenditures) |
Item requires P and F
recommendation to
Council because of changes
to gross expenditures or
revenues in approved
budget |
x |
x |
|
(5)Minimal or no financial
impact in current year but
approval may cause an increase
in financial commitments in
future years
(e.g. new initiative to be
implemented at end of current
year with minimal costs in
current year but significant
costs in future years) |
Standing committee makes
recommendations with
respect to any policy
elements but
implementation is subject
to review in next year's
budget process (i.e. no
implementation in current
year). The financial
component is referred to
the originating
commissioner and to the
CFO for consideration
during next year's
operating and capital
budget process |
x |
|
x |
(6)Financial issues that
impact future years only (e.g.
emerging issues that may result
in additional costs next year) |
Standing committee makes
recommendations with
respect to any policy
elements but
implementation is subject
to review in next year's
budget process (i.e. no
implementation in current
year). The financial
component is referred to
the originating
commissioner and to the
CFO for consideration
during next year's
operating and capital
budget process |
x |
|
x |
These scenarios for in-year budget changes arising at Standing Committees have also been summarized in a decision tree in
Appendix A.
A listing of items dealing with future financial issues referred by Standing Committees to the Chief Financial Officer will
be maintained for inclusion in the next year's budget deliberations. This list, categorized by originating Committee, can be
included in the Standing Committees' outstanding items lists to provide Committee members with some assurance that the
items have not been overlooked and will be considered as part of the next year's budget process.
Clear financial information must be included in standing committee reports in order to apply the decision-making protocol
described in table 1 above. The financial reporting requirements contemplated in Corporate Services Committee Report
No. 6 (4) provide a basis for appropriate guidelines. These guidelines should also apply to standing committee and
community council recommendations to Council and Notices of Motion introduced at Council, which have financial
implications beyond the approved annual budget. Therefore, it is recommended that:
(a)all staff reports be required to identify clearly in a financial impact statement, at the beginning of the report, any
financial implications including:
(i)the amount of expenditures and revenues;
(ii)the source of revenues;
(iii)any in-year financial implications beyond the approved budget; and
(iv)future year financial impacts;
and, when there are financial implications, include a statement indicating that the Chief Financial Officer and Treasurer has
reviewed and concurs with the financial impact statement; and
(b)standing committee and community council recommendations to Council and Notices of Motion introduced at
Council, which have financial implications beyond the approved annual budget, be accompanied by staff identification,
including review by the Chief Financial Officer and Treasurer, of any financial implications during consideration of the
items by Council.
Budget-Setting Process for Year 2000 Budget:
The roles, responsibilities and protocols outlined in this report provide a framework for the operating and capital budget
setting processes for the year 2000.
The Operating Budget:
The proposed schedule for preparing the year 2000 operating budget is set out in Table 2 below. The development of initial
forecasts will take place over the summer. The Policy and Finance Committee will kick off the political process on
September 16, 1999, when it considers a detailed report from the Chief Financial Officer and Treasurer on the timetable,
process and guidelines for the year 2000 operating budget. The Policy and Finance committee will consider an overview of
the operating budget forecast in October. During October and November, standing committees and community councils
will be briefed by program staff on service levels and standards. Departments and agencies will submit their operating
budget estimates at the beginning of November for review by the Chief Administrative Officer, Chief Financial Officer and
Finance Department during November and December. The Strategic Plan will have provided broad City direction late in
the fall to assist with priority setting.
Committee review and public consultation will take place from January through the end of March 2000. Council approval
of the operating budget is targeted for April 17 and 18, 2000.
--------
Table 2: Proposed Schedule for Year 2000 Operating Budget
|
Major Activities |
Dates |
(1) |
Distribution of preliminary operating budget forecast
instructions and template |
July 15, 1999 |
(2) |
Distribution of operating budget manual, instructions
and template |
July 30 |
(3) |
Submission of preliminary operating budget forecast
(included in Business Plan) |
September 10 |
(4) |
Administrative review of preliminary operating
budget forecast with Budget Office, CFO and CHIEF
ADMINISTRATIVE OFFICER |
September
13 - 29 |
(5) |
Policy and Finance Committee consideration of
financial principles and guidelines |
September 16 |
(6) |
Senior Management Team review of preliminary
forecast |
September 30 |
(7) |
Policy and Finance Committee briefing - overview
operating budget forecast |
October |
(8)
(a) |
Standing committees service levels/standards
briefings |
October/November |
(8)
(b) |
Community councils service levels/standards
briefings |
November 2, 3, 4,
9 and 12 |
(9) |
Submission of 2000 operating budget to Budget
Office |
November 1 |
(10) |
Administrative review:-Budget Office review of program/agency budgets
-CFO/CHIEF ADMINISTRATIVE OFFICER
review of program areas/agencies |
November
December 8 -17 |
(11) |
Committee review:
-Budget Advisory Committee review
-Standing committee review and public deputations
-Budget Advisory Committee wrap-up |
January 14, 21 -
28
February 7 - 14
February 24, 25,
28
and March 3,
2000 |
(12) |
Preparation of consolidated budget document |
March 3 - 20 |
(13) |
Consideration/approval of consolidated Budget:
-Special Budget Advisory Committee meeting
-Special Policy and Finance Committee meeting
-Special City Council meeting |
March 24
March 30
April 17 and 18 |
The Capital Budget:
The proposed capital budget process and timetable are recommended in a separate report from the Chief Financial Officer
and Treasurer entitled "2000-2004 Capital Program and 10-Year Capital Plan". The proposed schedule for the capital
budget process is set out in Table 3 below. Preparatory work to develop the 2000-2004 capital program has commenced at
the staff level. Departmental and agency preparation of their capital budgets will occur during the summer with Chief
Administrative Officer and Chief Financial Officer and Treasurer review of departmental and agency submissions taking
place late summer and early fall. Political review of the capital budget will commence in mid-October when the Policy and
Finance Committee considers an overview of the Capital Works Program and related issues. Preliminary review of the
capital budget by the Budget Advisory Committee will take place in October. The Budget Advisory Committee will review
the capital budget again in November following public deputations and consideration at standing committees and
community councils. Council approval of the budget document is anticipated by the end of 1999.
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Table 3: Proposed Schedule for Year 2000 Capital Budget
|
Major Activities |
Dates |
(1)
|
Development of new capital budget system - phase I |
June/July, 1999 |
(2) |
Review capital budget process and develop definitions,
instructions and guidelines - for review by Senior
Management Team |
June/July |
(3) |
Policy and Finance Committee consideration of process,
guidelines and timetable |
July 20 |
(4) |
Distribute capital budget guidelines and timetable |
July |
(5) |
Capital budget preparation (programs and agencies) |
July/August |
(6) |
2000 - 2004 Capital Works Program submission to
Finance Department |
September 3 |
(7) |
Administrative review:
-Budget Office review with programs/agencies
-CAO/CFO review with programs/agencies |
September/October |
(8) |
Policy and Finance Committee - overview of Capital
Works Program and related issues |
October 14 |
|
COMMITTEE REVIEW AND PUBLIC
CONSULTATION |
|
(9) |
Budget Advisory Committee preliminary review of
CAO recommended budget |
October 21, 22, 25 |
(10) |
-Capital Budget submission to standing
committees/community councils and public deputations |
November 1 - 12
(special meeting
dates) |
(11) |
-Final Budget Advisory Committee review and
wrap-up |
November 15, 16
and 17 |
(12) |
-Preparation of Capital Budget document |
November 18 - 22 |
(13) |
Consideration/approval of consolidated Capital Budget:
-Budget Advisory Committee meeting
-Policy and Finance Committee meeting
-City Council meeting |
November 26
December 7
December 16 and
17 |
Conclusions:
This report sets out a framework of financial control roles, responsibilities and reporting relationships for Council,
committees and staff. These protocols build on Council's decisions, earlier this year, regarding the revised
Council-committee structure and a role for the Budget Advisory Committee, which focuses on assisting the Policy and
Finance Committee to develop the capital and operating budgets. The report also summarizes the process and schedules for
the preparation of the year 2000 operating and capital budgets.
The recommendations in this report are intended to clarify decision-making mandates and roles, avoid duplication, enhance
accountability for financial decisions and reinforce the rigour of the budget process. As the Council of the new City of
Toronto enters its third budget cycle, these recommendations reflect the emergence, over the past year and a half, of more
stable, mature, made-in-Toronto decision-making structures and processes.
The Policy and Finance Committee also submits the following communication (July 27, 1999) from the City Clerk:
Recommendations:
The Budget Advisory Committee on July 27, 1999, recommended to the Policy and Finance Committee, and Council the
adoption of the joint report (July 6, 1999) from the Chief Administrative Officer and Chief Financial Officer and Treasurer,
subject to:
(1)the Chief Administrative Officer and the Chief Financial Officer and Treasurer being requested to establish a clear
criteria as to which items should be referred to the Budget Advisory Committee for consideration from the Policy and
Finance Committee; the said criteria to be submitted to the Special Meeting of the Policy and Finance Committee on July
28, 1999; and
(2)the Variance Reports being forwarded directly to the Budget Advisory Committee to assist in controlling
overexpenditure or time sensitive adjustments to the budget plans on a quarterly basis, in order that the Budget Advisory
Committee can report the results with accuracy to the Mayor and the Policy and Finance Committee for final approval.
The Budget Advisory Committee reports, for the information of the Policy and Finance Committee and Council, having:
(I)referred the communication (July 27, 1999) from Councillor Pitfield to the Chief Administrative Officer for a report
thereon to the September 14, 1999, meeting of the Policy and Finance Committee; and
(ii)requested the Chief Financial Officer and Treasurer to report back to the Policy and Finance Committee on the
possibility of doing a monthly Variance Report.
Background:
The Budget Advisory Committee on July 27, 1999, had before it a communication (July 20, 1999) from the City Clerk
advising that the Policy and Finance Committee on July 20, 1999, referred the joint report (July 6, 1999) from the Chief
Administrative Officer and the Chief Financial Officer and Treasurer to the Budget Advisory Committee for consideration
and report thereon to the Policy and Finance Committee, wherein it is recommended that:
(1)the roles and relationships described in the section of this report headed "Framework of Roles and Responsibilities for
the Planning, Management and Expending of Resources within the City of Toronto" be adopted;
(2)the decision-making protocol set out in the section of this report headed "Guidelines for Routing of Committee
Reports with Financial Implications", table 1 and Appendix "A" be adopted;
(3)in order to ensure that information on the financial implications of recommendations is available to Standing
Committees, Community Councils and City Council:
(a)all staff reports be required to identify clearly, at the beginning of the report, any financial implications including:
(I)the amount of expenditures and revenues;
(ii)the source of revenues;
(iii)any in-year financial implications beyond the approved budget; and
(iv)future year financial impacts; and
when there are financial implications, include a statement indicating that the Chief Financial Officer and Treasurer has
reviewed and concurs with the financial implications;
(b)Standing Committee and Community Council recommendations to Council and Notices of Motions introduced at
Council, which have financial implications beyond the approved annual budget, be accompanied by staff identification,
including review by the Chief Financial Officer and Treasurer, of any financial implications during consideration of the
items by Council; and
(4)the appropriate City officials be authorized and directed to take the necessary action to give effect thereto.
The Budget Advisory Committee on July 27, 1999, also had before it a memorandum (July 27, 1999) from Councillor Jane
Pitfield, East York, regarding the roles and responsibilities for the Budget Advisory Committee and the Policy and Finance
Committee.
--------
(Communication dated July 20, 1999, addressed to the
Budget Advisory Committee from the City Clerk)
The Policy and Finance Committee at its meeting on July 20, 1999, had before it a joint report (July 6, 1999) from the
Chief Administrative Officer and the Chief Financial Officer and Treasurer recommending that:(1)the roles and relationships described in the section of this report headed "Framework of Roles and Responsibilities for
the Planning, Management and Expending of Resources within the City of Toronto" be adopted;
(2)the decision-making protocol set out in the section of this report headed "Guidelines for Routing of Committee
Reports with Financial Implications", table 1 and Appendix A be adopted;
(3)in order to ensure that information on the financial implications of recommendations is available to Standing
Committees, Community Councils and City Council:
(a)all staff reports be required to identify clearly, at the beginning of the report, any financial implications including:
(I)the amount of expenditures and revenues;
(ii)the source of revenues;
(iii)any in-year financial implications beyond the approved budget; and
(iv)future year financial impacts; and
when there are financial implications, include a statement indicating that the Chief Financial Officer and Treasurer has
reviewed and concurs with the financial implications;
(b)Standing Committee and Community Council recommendations to Council and Notices of Motions introduced at
Council, which have financial implications beyond the approved annual budget, be accompanied by staff identification,
including review by the Chief Financial Officer and Treasurer, of any financial implications during consideration of the
items by Council; and
(4)the appropriate City officials be authorized and directed to take the necessary action to give effect thereto.
The Policy and Finance Committee referred the foregoing joint report to the Budget Advisory Committee for consideration
and report thereon to the Policy and Finance Committee.
--------
(Communication dated July 27, 1999, from
Councillor Jane Pitfield, East York.)
Recommendation:
It is recommended that the variance report be sent to the Budget Advisory Committee as well as the Policy and Finance
Committee to allow analysis.
At the July 27, 1999, Budget Advisory Committee meeting this recommendation was approved and deferred to the Policy
and Finance Committee as well as to the Chief Administrative Officer.
Current Situation:
Responsibilities of Financial Management split between two Committees:
Budget Advisory Committee - budget review
Policy and Finance Committee - review of variance analysis
Impact:The ability of both committees to function effectively is compromised as each activity requires the knowledge of
the other (budget review & variance).
Workload of Policy and Finance Committee:
The newly formed Policy and Finance Committee has a very heavy workload with diverse and complicated issues of
policy.
Workload of Budget Advisory Committee:
The Budget Advisory Committee meets regularly from October to March dealing only with budget planning and reporting
to the Policy and Finance Committee.
Observations:
The Policy and Finance Committee does not have the time required for a full review of variance analysis.
The Budget Review Committee, as a financial planning tool, needs to see the variations between budget plans and the
actual results, to take corrective action and avoid over expenditures - especially if they are time-sensitive.
Conclusion:
This recommendation is consistent with the recommendations contained in the two separate reports from the Chief
Administrative Officer in the matter of Revisions to Council-Committee Structure. This recommendation does not infringe
upon any other committee of Council and takes no authority away from Policy and Finance who has the prerogative and the
discretion to deal with the recommendations of the Budget Advisory Committee as they please.
For variance analysis to be actionable, it must be sufficiently detailed to provide information on whether or not to act and
what corrective action to take. Such an analysis requires very intimate and detailed knowledge of the original budget plan.
Splitting the responsibility for the budget planning and variance analysis between two committees could result in overall
weakening of the financial management process in the City and compromise Council's ability to set priorities in an
effective manner.
The Policy and Finance Committee submits the following attachment to the foregoing communication (July 27,
1999) from Councillor Jane Pitfield, East York:
Appendix 2: City of Toronto Budget Advisory Committee - Definition of Roles and Responsibilities
(1)The Purpose of the Budget Advisory Committee:
(a)to develop, enhance and maintain the budget process in the City of Toronto with a view to providing effective
financial management for all of the City's programs and services including agencies, boards and commissions; and
(b)to function as a "focus group" to assist the Policy and Finance committee in relation to the budgetary process in the
City - Budget preparation and variance analysis.
(2)Definition:
A "budget" is defined as:
(a)a financial planning tool:
(I)prepared in advance of a specific period; and which
(ii)identifies all potential resources that may be consumed in the delivery of the stated program deliverables; and
(iii)quantifies all intended deliverables; and which
(b)may be used during the specified period to monitor the operational and cost effectiveness of operations with emphasis
on:
(i)the nature of the variance - whether due to output volume changes or higher level of expenditures;
(ii)the extent to which management may have been able to control the resource consumption;
(iii)extent of management discretion in permitting the resource consumption; and which
(c)may enable an objective assessment of results achieved; and
(d)identify means by which management effectiveness may be improved; and
(e)provide feedback into the next budget cycle to enable the realization of the concept of "continuous improvements"
based on actual operational experience.
(3)Guiding Principles:
(a)the Budget Advisory Committee will act in an advisory capacity only to the Mayor, the Policy and Finance Committee
or any of the Standing Committees in the context of any matter relating to budgets;
(b)the focus of the budget Advisory Committee will be to:
(i)assist in the setting of financial priorities in the City through an effective budgetary process;
(ii)ensure a sound process for the development of budgets and variance analysis; and
(iii)identify continuous improvements through variance analysis by which the City's programs may be delivered more
efficiently.
(4)Role of the Budget Committee:
(a)Budget Preparation:
To examine, assess and evaluate the current situation and provide the leadership to ensure that the budgets achieve their
true character as a financial planning tool to facilitate and achieve continuous improvements through analysis of the factors
of variances.
(b)Variance Analysis:
To review the City's operational results on a timely and ongoing basis and identify variances caused by expenditure levels
as well as volumes of outputs and use that information to recommend corrective action as appropriate and ensure the
proper consideration of that information in the development of the program budget for the following period.
(c)Enabling Environment:
To ensure that an adequate enabling environment exists to permit the budgetary process to serve the City as intended; such
an environment would include: financial and operational management information systems, management policies to ensure
process integrity, training programs for managers to improve cost consciousness, and proper feedback mechanisms to
facilitate the concept of continuous improvements.
(5)Frequency of Meetings:
The frequency of meetings of the Budget Advisory Committee will be set by the Committee Chair based on the potential
agenda and workload anticipated.
|