Toronto Zoo - 1998 Operating Budget Variance Report

and Contingency Request

The Strategic Policies and Priorities Committee recommends the adoption of the recommendations of the Budget Committee contained in the following communication (November 19, 1998) from the City Clerk:

Recommendation:

The Budget Committee on November 18, 1998, recommended to the Strategic Policies and Priorities Committee and Council that:

(1)the communication (October 27, 1998) from the General Manager and Chief Executive Officer of the Toronto Zoo be received as information;

(2)consideration of the request that the additional net program expenditure amount of $750,000.00 above the approved budget amount of $6,975,000.00 be funded from the City Contingency Account, be deferred to the end of 1998; and

(3)the Chief Financial Officer and Treasurer provide a cash flow to allow the Toronto Zoo to meet its operating expenditure requirements.

The Budget Committee also reports having requested the Chief Financial Officer and Treasurer to provide a report to the Budget Committee on a policy for the use of the Corporate Contingency Account.

Background:

The Budget Committee on November 18, 1998, had before it a report (October 27, 1998) from the General Manager and CEO, Toronto Zoo regarding the 1998 operating budget variance report and contingency request.

Mr. Cal White, General Manager and Chief Executive Officer, Toronto Zoo, appeared before the Budget Committee in connection with this matter.

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(Report dated October 27, 1998, addressed to

the Chair of the Budget Committee, from

Mr. Calvin J. White, White, General Manager

and CEO, Toronto Zoo)

At its meeting on Thursday, October 22, 1998, the Board of Management of the Toronto Zoo approved the following recommendation from the General Manager and CEO and asked that the request be forwarded to the Budget Committee for consideration and approval.

Recommendation:

It is recommended as a result of the revenue shortfall, that the additional Net Program Expenditure amount of $750.0 thousand above the approved budget amount of $6,975.0 thousand be funded from the City Contingency Account.

Background:

Earlier this year, City Council approved the Board recommended attendance level of 1.3 million visitors, a 3.3 percent increase in attendance levels over the 1997 budget and a 9.6 percent increase over the 1997 experience. As indicated in the attached Schedule of Attendance (Schedule A) and as further detailed in the September Operating Variance Report (attached), Zoo attendance in July and August fell far short of expectations. Our experience is similar to other attractions monitored by Tourism Toronto in the GTA.

The variance report for June initially indicated that the net program expenditure projected for the year would be on target, after staff initiated a $250.0 thousand expenditure reduction plan to offset the $250.0 projected revenue shortfalls. Staff assumed that the request for wage settlements would be added to the 1998 approved budget. In August, in revising the June variance report and outlook to the end of the year, it was indicated that the summer revenues had not met our expectations and a shortfall of $1,500.0 thousand from budget would be expected.

September Variance Report and Year End Outlook:

The September variance report, now complete, indicates that the Zoo will experience a revenue shortfall of $1, 598.0 thousand at year end (Schedule B). After providing for expenditure reductions, other cost saving initiatives and a reduction of recoverable expenditures, this net shortfall is approximately $750.0 thousand. Attendance and revenue for the month of September is on budget and is expected to remain on target to year end.

Expenditure Controls:

As in previous years, during the budget preparation, staff prepared a list of holdbacks in the amount of $950.0 thousand to offset potential revenue shortfalls. These holdbacks have been kept in place through the year. Additional spending has been deferred to 1999. The expenditure reduction list includes discretionary budget items including equipment, materials, supplies and services. Seasonal staffing levels were reduced somewhat during the summer due to the reduced attendance, however services to the public were maintained.

Contingency Request:

To fund the shortfall, a draw of $750.0 thousand is requested from the Corporate Contingency Account. Funds are required to meet ongoing cash flow requirements. It is clear that this amount cannot be made up by further expenditure reductions. Most of our expenditures over the remaining three months of the year will be for payroll and essential items such as animal food and animal care supplies and maintenance and repair supplies. Non-permanent staff levels have been reduced.

The request for a contingency draw could be reduced by the approval of an increase in the 1998 budget in the amount of $280.0 thousand as previously requested from the Budget Committee for wage settlements earlier this year and anticipated settlements with our other bargaining unit. As well, the Zoo has estimated savings in OMERS payments, as a result of a "contribution holiday", in the amount of $300.0 thousand and if these savings were kept within the Zoo's accounts this would help to offset the contingency request. The result is summarized as follows:

Funding for the revenue shortfall is as follows:(000's)

Projected 1998 Revenue shortfall$1,598.0

Net Expenditure Reductions (holdbacks)(848.0)

Net Revenue Shortfall to be funded from Contingency$750.0

Alternative Sources of Funds

Wage settlements request(280.0)

OMERS savings(300.0)

Contingency Request After Items Above$170.0

The use of alternative sources of funds would result in a draw of $170.0 thousand from Contingency.

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City of Toronto

1998 Operating Budget Variance Submission

for the Period Ending September 30, 1998

Overview

Board:Toronto Zoo

Year To DateEstimateActualOver/(Under) Estimate

(000's)($000's)(000's)%

Gross Expenditure18,005.217,056.5(948.7)(5.3)

Net Expenditure3,403.43,838.9435.512.8

Board Overview:

Attendance to the end of September is 1,086,658 or 90.1 percent of budget due to average levels of attendance rather than the expected boost from the opening of the new African Savanna in June. As a result admissions and parking revenues are below budgeted amounts. Expenditure holdbacks were implemented earlier this year by staff to compensate for the revenue shortfall.

Overall Net Expenditure is above budget by $435.5 thousand or 12.8 percent.

Projected Total YearEstimateActualOver/(Under) Estimate

($000's)($000's)($000's)%

Gross Expenditure22,910.022,062.0(848.0)(3.7)

Net Expenditure6,975.07,725.0750.010.8

Department/Agency Overview:

The Net Expenditure is projected to be $750.0 thousand, or 10.8 percent over budget.

Attendance for the year is expected to be 120,000 or 9.2 percent below budget. As a result visitor admissions and parking revenues are below budget by $1,703.0 thousand offset by the net of other revenue increases of $15.0 thousand. Funding for the Revenue and Visitor Experience and Enhancement Study, as approved in 1998, has been provided by the Zoo Stabilization Reserve in the amount of $90.0 thousand.

Expenditure reductions and hold-backs will offset the shortfall by approximately $939.0 thousand, leaving an excess in the total Net Expenditure of $750.0 thousand. As a result of the overexpenditure the Board will request funding from the OMERS savings, for the contractual wage settlements approved earlier this year and from a draw from contingency. Expenditure holdbacks, implemented earlier in the year, will result in a deferral of certain expenditures to 1999.

Overall, the Net Expenditure will be over budget at year end by $750.0 thousand or 10.8 percent.

Other issues: