January 2019 Board Meeting - Q3 Financial Results Information Report

Prepared By:

Lorie Gregg, Director of Corporate Services

Date:

December 18, 2018

Subject:

Q3 Financial Results

Background

The Leadership Team of the Windsor-Essex County Health Unit (“the WECHU”) monitors financial results on an on-going basis for the following programs:

• Mandatory programs funded to a maximum of 75% (“Cost-Shared”) by the Ministry of Health and Long-Term Care (“MOHLTC”) and the Corporation of the City of Windsor, the Corporation of the County of Essex and the Corporation of the Township of Pelee (hereinafter referred to as the “Obligated Municipalities”);
• Related programs such as Vector-Borne Diseases and Small Drinking Water Systems, funded on a cost-shared basis to a maximum of 75% by the MOHLTC and certain surrounding municipalities within the geographic boundaries of Windsor and Essex County;
• Related programs funded 100% by the MOHLTC;
• Related programs funded 100% by the Ministry of Children and Youth Services (“MCYS”);
• One-time business cases.

Cost-Shared Program Financial Results

The following is the financial information for the Cost-shared programs including Vector-Borne Diseases and Small Drinking Water Systems for the third quarter of 2018.

For the period January 1, 2018 to September 30, 2018, cash flows on account of the 2018 program year for this program are as follows:

At September 30, 2018, budget to actual variances for financial statement captions that exceed 75%, are detailed below:

• Association and Membership Fees:  Expenditures in this financial caption relate to memberships in an association or other group by virtue of professional requirements or to support initiatives associated with Public Health.  The majority of Association and Membership Fees are paid earlier in the fiscal year.  For the remainder of the year, fees will be lower and thus tracking will be in line with budget as the year progresses.
• Publications:  Expenditures in this financial caption include costs of subscriptions.  The dollar value of this negative variance is not material and will be monitored and offset by other underutilized financial captions as the fiscal year progresses.
• Taxes:  Expenditures in this financial caption include property taxes for the Windsor and Leamington offices.  Windsor property taxes are paid on an installment basis, 6 times per year while Leamington taxes are paid monthly.  The year-to-date variance/overspend results from the payment of four of six installments for the Windsor office and 10 of twelve installments for the Leamington office.
• Insurance:  Expenditures in this financial caption include costs associated with general liability insurance, property insurance, director and office insurance coverage as well as cyber coverage.   Insurance premiums are paid at the beginning of the year.  There will be no further insurance premiums in 2018 and this financial caption should remain underspent at year-end.

In addition to the budget to actual analysis above, the WECHU has provided forecasted financial results for the year-ended December 31, 2018.  These forecasted financial results consider actual year-to-date results at November 30, 2018, as well as estimates of expenditures for the remaining 31-day period.  Total forecasted expenditures for the year-ended December 31, 2018 are anticipated to be $663,133 underspent when compared to budget.  Material variances between forecast to budgeted financial results are detailed below:

• Salaries and Employee Benefits:  For the year-ended December 31, 2018, salaries and employee benefits are forecasted to be $537,776 underspent.  This is attributed to:
  • Gapping resulting from vacancies (i.e. extended recruitment processes; voluntary departures; unpaid leaves; back-filling positions for unpaid leaves);
  • Gapping resulting from variances in pay rates and utilization (i.e. recruitment of staff at pay lower pay rates compared to their predecessors; variance in budgeted versus actual overtime);
  • Impact of unsettled labour agreements.
• Travel and Meetings:  For the year-ended December 31, 2018, travel and meetings are forecasted to be underspent by $15,829.   It is the WECHU’s practice to evaluate all travel and meetings expenditures to determine whether attendance at meetings can be achieved remotely, that there is sufficient capacity within the department to support attendance and that attendance supports Public Health initiatives.
• Professional Development:  For the year-ended December 31, 2018, professional development is forecasted to be overspent by $18,116.  The WECHU approach to approving professional development is similar to that which was detailed above relating to Travel and Meetings.  In addition, the WECHU makes attempts to provide professional development on a group basis to achieve the needs of the WECHU in a cost-effective manner.
• Program Supplies:  For the year-ended December 31, 2018, program supplies are forecasted to be overspent by $132,417.  This is attributed to:
  • Acquisition of equipment to support visual health supports and vision screening as required under the Child Visual Health and Vision Screening Protocol, 2018 (“the Protocol”), amounting to $46,152.  As a function of the Q3 reporting, the WECHU submitted a one-time funding request to the Ministry of Health and Long-Term Care for $58,942.  This request is inclusive of both the cost of equipment as well as the staff time associated with coordination and training to support the Protocol.
  • Engagement of a third party consultant to conduct analysis and reporting to support the consultation project relating to Supervised Injection Services amounting to $22,800.
  • Acquisition of Information Technology hardware including computers and mobile phones of approximately $32,000.
• Board expenses:  For the year-ended December 31, 2018, Board Expenses are forecasted to be $7,886 underspent.  The budget for this financial statement caption contemplated additional meetings of the Project Governance Committee in support of the Windsor Office Project, which did not occur.  Additionally, the WECHU has made a concerted effort to monitor meal costs associated with the Board of Health meetings. 
• Professional fees:  For the year-ended December 31, 2018, Professional Fees are forecasted to be underspend by $10,280. Budgeted Professional Fees contemplated using third party legal services to support collective bargaining.  The WECHU bargaining team was formed of members of the Leadership Team and did not require the support of legal counsel in 2018.
• Rent:  For the year-ended December 31, 2018, Rent is forecasted to be underspent in the amount of $40,865.  Annually a general provision is included in rent to account for unanticipated circumstances (i.e. increases in additional rent per square foot for the Leamington location, etc.). 
• Utilities:  For the year-ended December 31, 2018, Utilities are forecasted to be underspent in the amount of $24,228.  Annually, a general provision is included in Utilities to account for the impact in the changes in utility rates as well as environmental factors that may/may not come to fruition.
• Taxes:  For the year-ended December 31, 2018, Taxes are forecasted to be underspent in the amount of $15,903.  Annually a general provision is included in Taxes to account for changes in the mill rate and or property values associated with the Windsor and Leamington offices.  The budget for Taxes is established in advance of the tax rates for the respective municipalities.
• Security:  For the year-ended December 31, 2018, Security expenditures are forecasted to be underspent by $9,582.  During fiscal 2018, the WECHU undertook to review its practices of having a third party service provider on-site after hours.  Changes were made such that security services are only required on those evenings when events are scheduled to occur and in circumstances where on-call staff are required to be present at the Windsor office after normal business hours.
• Offset revenues:  For the year-ended December 31, 2018, Offset revenues are forecasted to be $90,923 over budget.   Additional offset revenues were realized associated with the changes in certain requirements for Food Handler Training administered by the WECHU (increase of $52,501 over budget); sale of oral contraceptives, not funded by the changes in OHIP plus (increase of $17,433 over budget); interest income earned in the year (increase of $15,660 over budget).

As disclosed in previous quarterly reporting, the following financial risks exist that could have a material impact on the financial results of the WECHU at December 31, 2018:

• Status of collective bargaining agreements – Collective bargaining agreement with ONA (contract expired March 31, 2018) remains outstanding.  As such, the WECHU may be required, dependent upon the results of negotiations, to make retroactive payment for contractual increases not yet reflected in the year-to-date financial results disclosed above.
• Status of other labour related matters – Other labour related matters (i.e. pay equity; impacts associated with grievances) which remain unsettled, have not be reflected in the year-to-date financial results above given the uncertainty associated with the settlement of those matters.

Healthy Babies Healthy Children Program Financial Results

The Healthy Babies/Healthy Children Program is funded through the Ministry of Children and Youth Services.  This program supports 27.0 FTEs comprised of managers (2), nurses (17), family home visitors (4), social worker (1), and support staff (3).  The objective of the program is to ensure a healthy future for children and their families. 

At September 30, 2018, the HBHC program is $164,223 underspent.  Primarily this results from staffing vacancies associated with leaves of absences (i.e. maternity leaves, unpaid absences, etc.), not only having an impact on salaries and benefits, but also other financial captions such as mileage and travel and professional development. 

The forecasted financial results for the year-ended December 31, 2018, anticipate that this funding will be fully expended.  In Q4 of 2018, favourable variances within operating expense financial captions (i.e. Mileage and Travel, Professional Development, Purchased Services) are being redeployed to cover unfavourable variances in the Program Supplies financial captions.  The Salaries and benefits budget variance of $141,189 is anticipated to be absorbed by the Cost-Shared Program as the body of work completed by the Healthy Families staff for this program initiative is more heavily weighted to support this program. 

Refer to the Risks discussion noted in the Cost-Shared Program Financial Results section of this report, as this would be relevant to this program.

Nurse Practitioner Program Financial Results

The Nurse Practitioner Program is funded through the Ministry of Children and Youth Services.  This program supports 1 FTE (nurse practitioner).  The objectives of the program are to promote healthy pregnancy, birth and infancy for children, improve parenting and family supports, strengthen early childhood development, learning and care.

Actual results at September 30, 2018, generated an unfavourable variance compared to budget of $2,583.  Forecasted results at December 30, 2018, estimate that the unfavourable variance compared to budget will increase to $5,210.  The unfavourable variance will be funded from the Cost-Shared Program.

Refer to the Risks discussion noted in the Cost-Shared Program Financial Results section of this report, as this would be relevant to this program.

Financial Information for Related Programs Funded 100% by the MOHLTC

The 2018 Annual Service Plan and Budget Submission included a budget of $1,529,700 for Healthy Smiles Ontario (“HSO”), inclusive of the $120,900 augment approved by the MOHLTC on May 7th, 2018. 

At September 30, 2018, the net underspent budget amounted to $135,786.  Material variances are detailed below: 

• The base funding approval of $120,900 included an addition of 1 FTE (dental assistant) of $71,471 Salaries and benefits that the WECHU would not operationalize until such time as an approval was received.  The budget impact of this deferral resulted in an approximate underspend of $35,735.  The additional FTE commenced late August of 2018.

• In Q2 of 2018 additional Program Supplies costs of $16,425 were incurred on account equipment replacements.  In Q3 of 2018 additional Program Supplies costs of $20,646 were incurred on account of equipment replacements.

• Purchased services were underspent at September 30, 2018, due to the following:  i) The May 7th, 2018 augment to base funding included additional funding for purchased services of $36,400 for contract dentistry.  In the latter part of Q3, 2018, the WECHU completed the requisite policy work to procure and procured the services of a contract pediatric dentist. ii) The WECHU had only 2 contract dentists for Q1.  A third contact dentist was added in March of 2018 servicing our Leamington dental clinic; iii) Fees paid to contract dentists are typically one month behind.

• Offset revenue of $6,300 was earned in Q1 of 2018 on account of the sale of three autoclaves using a third party auction site as required by the WECHU policies and procedures for disposing of tangible capital assets.

Forecasted financial results for the year ended December 31, 2018, indicate that funding for the Healthy Smiles Ontario program to be fully expended.  Certain of the initiatives undertaken to support spending in the final quarter of the fiscal include:  i) Additional human resources in the dental clinic amounting to $19,139   ii) Equipment replacement amounting to $24,215; iii) Acquisition of various dental supplies (both direct service and promotional) to be used in fiscal 2019.

Enclosed above is the financial information associated with the WECHU’s requirements to:

• Comply and adhere to the Electronic Cigarettes Act:  Public Health Unit Guidelines and Directives: Enforcement of the Electronic Cigarettes Act;
• Comply and adhere to the Smoke-Free Ontario Strategy:  Public Health Unit Tobacco Control Program Guidelines and the Directives:  Enforcement of the Smoke-Free Ontario Act. 

At September 30, 2018, the total unspent budget amounted to $43,046.  The most notable variance related to:

• Salaries and benefits of $12,189 – reduction in salaries and benefits compared to budget due to a reduction in overtime; unpaid leave of absence resulting in a reduction of approximately $7,476; unresolved labour agreement resulting in unpaid salaries of $2,523.
• Program Supplies of $17,032 – due to timing of purchases. 
• Purchased Services of $8,684 – this represents legal services acquired to prosecute violations of the Smoke-Free Ontario Act, the frequency of which can vary depending upon the number of infractions.

Forecasted financial results as at December 31, 2018, anticipate that $11,488 of the total funding of $636,700, will remain unspent.  This variance is anticipated in the Purchased Services financial caption and, as indicated above, is dependent upon the number of infractions subject to prosecution.  Important to note in this circumstance, is the fact that the funding assigned to this financial statement caption (total approval of $25,200), can only be utilized to support prosecution activities.   Forecasted financial results for other financial captions are anticipated to offset and funding approvals spent by year-end.

A description of other related programs is included below:

Chief Nursing Officer Initiative:  Under the Organizational Requirements of the Ontario Public Health Standards, the Chief Nursing Officer role serves to enhance health outcomes of the community at individual, group and population levels:  i) Through contributions to organizational strategic planning and decision making; ii) By facilitating recruitment and retention of qualified, competent public health nursing staff; iii) By enabling quality public health nursing practice.  This funding envelope supports 1 FTE meeting certain qualifications as required by the Ontario Public Health Standards.  At September 30, 2018, there are no negative variances to report on.  Forecasted financial results for the year-ended December 31, 2018, show this funding as fully expended.

Enhanced Food Safety – Haines Initiative:  Base funding for this initiative supports the enhancement of the Board of Health’s capacity to deliver the Food Safety Program as a result of the Provincial Government’s response to Justice Haines’ recommendations in his report “Farm to Fork:  A Strategy for Meat Safety in Ontario”.  At September 30, 2018, there are no negative variances to report on.  Forecasted financial results for the year-ended December 31, 2018, show this funding as fully expended.

Enhanced Safe Water:  Base funding for this initiative supports the enhancement of the Board of Health’s capacity to meet the requirements of the Safe Water Program Standard under the Ontario Public Health Standards.  At September 30, 2018, there are no negative variances to report on.  Forecasted financial results for the year-ended December 31, 2018, show this funding as fully expended.

Harm Reduction Program Enhancement:  Base funding for this initiative supports the Board of Health in the activities associated with its Local Opioid Strategy.  More specifically it supports 2.5 FTEs dedicated to working on activities associated with:  i) Our local opioid response; ii) Naloxone Distribution and Training; iii) Opioid Overdose Early Warning and Surveillance.   At September 30, 2018, there are no negative variances to report on.  Forecasted financial results for the year-ended December 31, 2018, show this funding as fully expended. 

Infection Prevention Control Nurses Initiative:  Base funding for this initiative supports one additional infection prevention and control nursing FTE having certain qualifications.  At September 30, 2018, negative variances of $2,136 have resulted as salaries and benefits for this position have exceeded the approved funding.  Forecasted financial results for the year-ended December 31, 2018, show this funding as fully expended resulting in a negative variance of $13,855.  This negative variance will be absorbed by the Cost-Shared Budget.  Note: The budget to actual variance at September 30, 2018, is lower that the actual variance for this program initiative.  Given that no further funding was granted to the WECHU in the May 8, 2018 funding approval, actual financial results were adjusted such that the overage in this program initiative were being accounted for in the Cost-Shared Program financial results.  The forecasted financial results column represents the actual cost of the Program to the WECHU for the year-ended December 31, 2018, with any overage being addressed/funded through the Cost-Shared Program.

Infectious Disease Control Initiative:  Base funding for this initiative supports the hiring of infectious diseases control positions (4.5 FTEs) and supporting these staff to monitor and control infectious diseases.  They serve to enhance the Board of Health’s ability to handle and coordinate increased activities related to outbreak management.  At September 30, 2018, there are no negative variances to report on.  Forecasted financial results for the year-ended December 31, 2018, show this funding as fully expended.

Needle Exchange Program Initiative:  Base funding for this initiative supports the purchase of needles and syringes, and their associated disposal costs, for the Board of Health’s Needle Exchange Program.  At September 30, 2018, there are no negative variances to report on.  Forecasted financial results for the year-ended December 31, 2018, show this funding as fully expended.

Social Determinants of Health Nurses Initiative:  This initiative was established to support 2 public health nursing FTEs with specific knowledge and expertise in social determinants of health and health inequities issues, and to provide enhanced supports internally and externally to the Board of Health to address the needs of priority populations impacted most negatively by the social determinants of health.  At September 30, 2018, negative variances of $1,989 have resulted as salaries and benefits for these positions have exceeded the approved funding.  Forecasted financial results for the year-ended December 31, 2018, show this funding as fully expended resulting in a negative variance of $25,541.  This negative variance will be absorbed by the Cost-Shared Budget.  Refer to the note in the Infection Prevention Control Nurses Initiative discussion above regarding the Budget to Actual.

Refer to the Risks discussion noted in the Cost-Shared Program Financial Results section of this report, as this would be relevant to these programs.

Financial Information for Related Programs Funded 100% by the MOHLTC

Mandatory Programs:  Potassium Iodide Distribution Program:  One-time funding to improve nuclear emergency preparedness and increase knowledge amongst residents living within the primary and secondary zone of the Fermi 2 nuclear generating station.  Eligible costs include Potassium Iodide pill packs, and staff salaries, project materials, printing and postage associated with the distribution of KI packs and ongoing communication campaigns.  At September 30, 2018, $34,714, of the total approval of $167,000, had been expended.  In Q4 of 2018 into Q1 of 2019, activities will be focused on promotion and distribution of potassium iodide pills.  It is anticipated that funds will be fully expended by March 31, 2019.

Mandatory Programs:  Public Disclosure System:  One-time funding must be used to update software and inspection forms to meet the new disclosure requirements under the Ontario Public Health Standards.  Eligible costs include software update, disclosure, and migration.   At September 30, 2018, $8,548 of the funding approval had been expended.  In mid-November, the software was implemented for use by the public health inspectors to complete their inspection activities.  Work continues on the public disclosure component.  It is anticipated that the remaining funding will be fully expended by March 31, 2019.

Needle Exchange Program Initiative:  One-time funding for extraordinary costs associated with delivering the Needle Exchange Program.  Eligible costs include purchase of needles/syringes and associated disposal costs.  At September 30, 2018, this funding was fully expended.

Public Health Inspector Practicum Program:  One-time funding must be used to hire the approved Public Health Inspector Practicum positions.  Eligible costs include student salaries, wages and benefits, transportation expenses associated with practicum positions, equipment and educational expenses.  The practicum placements commence in May and conclude in August annually.  At September 30, 2018, this funding was fully expended.

Vector-Borne Diseases Program:  Enhanced Mosquito Surveillance:  One-time funding must be used for an enhanced surveillance program.  Eligible costs include salaries for students, supplies and additional equipment, identification and testing expenses, promotional costs and mileage.  At September 30, 2018, $34,798 of the total funding approval was expended.  It is anticipated that the remaining funding will be fully expended by March 31, 2019.

Capital:  One-time funding must be used to assist with costs to complete the capital planning requirements for a Stage 2 – Business Case submission.  Utilization of these funds is dependent upon the status of the work being completed internally and by third party consultants based upon the direction from the WECHU’s Board. At September 30, 2018, $51,351 of the funding approval had been expended.  It is anticipated that $113,809 of the total funding approval will be expended by December 31, 2018.  On October 31, 2018, the WECHU submitted a request to extend the deadline to expended funding to December 31, 2019 or March 31, 2020.  As at the date of this report, the WECHU has not received approval for this funding extension. 

As reported in October of 2018, the Capital funding has yet to be cash flowed to the WECHU.  It is our understanding that the request was resubmitted for review to the new Provincial Government.

Approved by:

 Theresa Marentette, CEO