The Board of Health reports having:

To present the 1998 operating budget estimates for Public Health in the context of the budget pressures facing the Corporation, and to outline the implications of a 15 per cent budget cut on public health programs and services.

Effective January 1, 1998 funding of public health is primarily a municipal responsibility, with over $40 million of provincial funding for public health programs being downloaded to the new City of Toronto. Provincial funding will continue only in specific areas, as outlined below.

As well, the Province recently announced one-time (15-month) grants for the following Toronto programs, pending final resolution of long term funding:

It is recommended that:

For the past several months staff of the former municipalities have been working with the Toronto Transition Team to consolidate the separate budgets of the seven former municipalities that make up the new City of Toronto. Since each had its own way of presenting / consolidating budgets, it was necessary to develop a single consistent format for budget presentation purposes. For Public Health it was agreed that the budget estimates would be consolidated under 10 Asub-programs@¹; these are for budget purposes only and are not indicative of current or future organizational structure.

The Transition Team, in cooperation with the staff of the former cities, recently submitted a preliminary draft 1998 budget to Council. The Transition Team=s draft budget assumes that existing service levels in the former municipalities are maintained across the new City in 1998. The preliminary gross operating budget for 1998 is approximately $6.4 billion, including the impact of provincial downloading. The budget is funded through a combination of grants, user fees, and other revenues, with the net balance funded through property taxes.

In its budget report, the Transition Team outlined major financial/budget pressures of $150 million (5.8 per cent potential tax increase), resulting from normal year-to-year pressures (Appendix A). To address these pressures, the Transition Team identified expenditure reductions and revenue enhancements of about $117 million (Appendix B) without reducing service levels, imposing any new user fees or deferring expenditures. They deemed the remaining $33 million worth of reductions as Aachievable@ resulting in a 0 per cent increase to the corporate budget prior to the impacts of downloading. Proposals for expenditure reductions or revenue enhancements submitted by the Public Health Service Review Team were reviewed by budget staff to ensure they were reasonable and that identified savings or increased revenues could be realized.

In addition to normal year-to-year budget pressures, the new City faces major increases in costs due to provincial downloading. In December 1997 the Province revised its estimates of the cost of downloading to the City from $66 million to $164 million. The $164 million represents a 6.4 per cent increase over the 1997 net operating budget, adjusted for changes in the education tax (Appendix C).

The Transition Team report also outlined one-time costs associated with amalgamating seven separate municipalities into one, ranging from $100 - $175 million in 1998. These costs include spending on computer technology required to achieve the efficiencies associated with identified savings, accommodation changes, relocation and retrofitting costs, and human resource costs including early retirements, severance, and retraining programs. Transition costs over three years are estimated to be about $385 million.

In order to address both the normal year-to-year budget pressures of $150 million, and the downloading pressure of $164 million, all departments, divisions, agencies, boards and commissions were directed by Council=s Budget Committee to submit plans outlining how they would manage a budget reduction equivalent to 15 per cent of their 1998 gross budget estimates, including but not limited to the reduction strategies/revenue enhancements recommended by the Transition Team. Based on 1998 gross expenditure estimates, the 15 per cent target reduction equates to $13.4 million for public health and $0.8 million for animal services.

The 1998 Preliminary Operating Budget Submission for Public Health is attached (Appendix D). This information was presented to the CAO on February 9, and staff advised at that time that the Board had not had an opportunity to review the budget submission and would be providing its own comments directly to the Budget Committee.

The 1998 net budget for Public Health (including Animal Services) is estimated at $89.2 million prior to the amalgamation savings/revenue enhancements recommended by the Transition Team. Net budget represents all expenditures minus revenues. These estimates are based on the 1997 budget of the six former Public Health and Animal Services units and assume that existing service levels in the former units are maintained in 1998. Overall the 1998 net budget is up $40.3 million over 1997. 99 per cent of this increase is due to provincial downloading.

The administrative and political process for budget consideration is in constant flux. At the moment, it appears the CAO will present to Budget Committee on Feb 23-24 a recommended budget that will outline measures to meet the internal pressures of $150 million while minimizing impacts on services. The report may also contain additional proposals for Council=s consideration to address the downloading pressures of $164 million which, if adopted, will have a substantial impact on services across the corporation. Although details of the CAO=s report are not yet public, its contents are expected to be based largely on staff submissions.

Following the CAO=s report, staff will provide informal briefings to Budget Committee members from February 25 - March 3. Public deputations will occur when the budget is reviewed by Standing Committees (week of March 23) and then Community Councils (week of March 30). A 2-day session for public deputations on March 23-24 is also being considered. From there, the budget will be referred to Strategic Policies and Priorities Committee (April 7) and then to Council (April 15-17).

The public health budget process at a staff level has mirrored that of other boards and operating divisions. Council=s Budget Committee established a target reduction of 15 per cent on the gross budget, which includes expenses related to programs which are 100 per cent provincial funded. As cuts can only be made in municipal expenditures, the actual per cent target is somewhat higher for both public health and animal services (Table 2). This is magnified by the time already elapsed in 1998, which further reduces our flexibility and increases the amounts that must be found in 1998 to meet this target. These additional reductions cannot be absorbed in one-time expenses, putting our base budget at substantial risk of a permanent reduction that may exceed even the Budget Committee=s target.

Table 2. Public Health 1998 Budget Reduction Targets ($000's)

The Public Health submission on the implications of such a reduction is contained in Section C of the budget submission (Appendix D). The reductions/revenue enhancements contained in the budget reduction plan are divided into three categories:

Table 3a & 3b below summarizes the dollar savings identified in the three categories.

Table 3a -- Public Health

Table 3b -- Animal Services

The fundamental mandate of the Toronto Board of Health is to provide or ensure the provision of the health programs and services required by the Health Protection and Promotion Act (the HPPA), the Regulations and Guidelines. The Board may also provide any other program or service in any area of the City if it is deemed necessary or desirable in relation to local health needs and if Council so approves (referred to as Alocal programs@).

Appendix D - Section C describes the potential impacts across Toronto of a 15 per cent budget reduction in 1998 on provincially mandated programs and on programs addressing local needs. With 82 per cent of the public health budget tied to staff, cuts of this magnitude will have a profound effect both on program delivery and on public health staff, whose numbers will have to be reduced. It will be very difficult to manage these losses in a manner that does not have some effect on the health of local communities. With over 50 per cent of staff currently assigned to programs in the areas of Infectious Diseases and Family Health, adverse impacts on these programs can be expected.

This would occur despite established evidence that public health interventions are cost-effective. For instance, every $1 spent on prevention of low birth weight saves $3 down the road in future hospital costs, physician visits and other services. Similarly, every $1 spent on vaccine preventable diseases saves $8 in future costs, while $1 spent on prevention of teen pregnancy saves $10 down the road.

It is anticipated in the longer term that some efficiencies in the planning, delivery and/or evaluation of programs and services could be achieved which would generate some savings. However, it will take a thoughtful process, considerable time and concerted effort by all concerned to identify these in a manner that does not undermine program delivery or mask a false economy. Moreover, such efficiencies are most likely to be identified in the course of corporate restructuring, which has not yet begun.

The Mandatory Health Programs and Services Guidelines prescribe a minimum standard that must be met across the province. Provincial needs-based planning methodology has shown that Toronto has the highest health needs of any urban area in Ontario; indeed, the former City of Toronto had the highest health needs of any health unit in Ontario. These data strongly support both the protection of current funding for public health and the value of additional reinvestments. In effect, the provincial minimum should be regarded as a Afloor@ rather than a Aceiling@ when it comes to public health programs and services in Toronto.

The timing of the budget process is such that major financial decisions carrying significant health implications will be made before the Board has an opportunity to review and understand the full scope of current programs and services. In particular, there is great financial pressure to Alevel down@ services designed to meet specific local needs, even though the Board has not had an opportunity to make policy decisions in this regard.

In light of the issues outlined above, it is strongly recommended that the Board recommend to Council that current investments in public health be maintained and that any savings resulting from the amalgamation be reinvested back into public health. This would help the Board ensure that both the provincial Mandatory Health Programs and Services Guidelines are met and that local health needs are met, including emerging health needs. It is further recommended that the Acting Medical Officer of Health report back to the Board on the elements of a reinvestment strategy for public health.

Although dated December 1997, the new Mandatory Health Programs and Services Guidelines were not actually released until February 5, 1998. As a result, staff have not had sufficient opportunity to review the new standards and assess their resource implications. Such a review has been initiated, but it will be a complex task to assess compliance across six former health units, given their differences in organizational structure, funding and approach to program delivery. A status report will be provided to the Board as soon as this work can be completed.

To implement downloading, the provincial government passed late in 1997 an omnibus statute known as the Services Improvement Act (also known as Bill 152). This Act amended the HPPA to implement the provincial transfer of public health financing to the municipal sector. In summary, the amended HPPA requires the Board of Health to provide or ensure the provision of mandatory health programs and services, while Council is legally obligated to pay the expenses of the Board and the Medical Officer of Health in this regard.

The Toronto Board of Health is also affected by City of Toronto Act No. 2 (also known as Bill 148), which stipulates that Toronto Council shall provide to the board of health such employees of the municipality as Council considers necessary to carry out the functions of the Board, including the duties of the Board in respect of mandatory programs.

The legal requirements that apply to the Board and Council in respect of the budget process are technically complex and will be the subject of initial discussion with Ontario=s Chief Medical Officer of Health on February 23. A further report to the Board from the City Solicitor on these matters is strongly recommended. This will ensure that both the Board and Council are properly advised of their legal authority and duties regarding the provision and funding of public health programs before final budget decisions are made.

Provincial downloading poses a significant challenge for 1998. In addition, one time transition costs associated with the amalgamation of six health units and six animal centres must be addressed. In some cases Council will have to spend money and/or negotiate changes to collective agreements in order to realize future savings. Some of the savings identified under Part A of the Public Health Budget Reduction Plan (Appendix F) depend on up front investments in information technology. As well, many of the spending reductions and revenue enhancements identified by staff will not be achieved if decisions are delayed too late into the fiscal year.

The new City of Toronto has the highest health needs of all urban areas in the Province. In order to help build and maintain the infrastructure that makes our City healthy, it is critically important not only to protect but to enhance spending on public health programs in order to help people achieve optimal health and quality of life.

Giuliana Carbone, Director of Administrative Services, North York Office