July 2022 Board of Health Meeting - Borrowing Policy Correspondence

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Preamble

In order to satisfy the operating or capital cash disbursement requirements, the Windsor-Essex County Health Unit (WECHU) may, from time-to-time, be required to obtain external temporary financing.  The requirement to fund operating cash disbursements should be short-term, in that they do not exceed a period of six (6) months in any fiscal year.  The requirement to funding capital cash disbursements may exceed a period of one (1) fiscal year.

Policy

The WECHU may enter into borrowing transactions under the following circumstances:

1. Borrowing money upon the credit (credit cards or corporate accounts, and line of credit) of the WECHU;
2. Issue, sell or pledge debt obligations of the WECHU, including without limitation, bonds debentures, notes or other similar obligations of the WECHU whether secured or unsecured;
3. Charge, mortgage, hypothecate or pledge as or any currently owned or subsequently acquired real or personal, movable or immovable property of the WECHU, including book debts, rights, powers, franchises and undertaking, to secure any such debt obligations or any money borrowed, or other debt or liability of the WECHU.

Roles and Responsibilities

Chief Executive Officer (CEO) – The CEO shall be responsible for:

• Approving all credit card and corporate account applications in advance of submission;
• Submission of business cases in support of WECHU borrowing requirements to the Board of Health (Board);
• Signing all Borrowing Agreements including renewals with financial institutions or other acceptable lending agencies, in conjunction with on of the Chair, Vice-Chair or Treasurer of the Board.

Director of Corporate Services – The Director of Corporate Services shall be responsible for:

• Preparation of all credit card and corporate account applications for approval by the CEO.
• Preparation of the business case in support of WECHU borrowing requirements to be presented to the Board;
• Overseeing the repayment, reconciliation and reporting process on account of Borrowing;
• Reporting to the Board on an annual basis the annual audited financial statements and all supplemental reporting on account of the WECHU’s borrowing transactions.

The Finance Department – The Finance Department shall be responsible for:

• Processing, recording and reporting of all borrowing transactions throughout the course of the fiscal year.

Procedure

Borrowing:

Borrowings through a credit card or corporate account shall:

• Be short-term in nature (typically 30 to 45 days);
• Be on the WECHU corporate credit card;
• Be on the WECHU corporate accounts, supported by a credit application approved by the CEO.

For other borrowings, the CEO, supported by the Director of Corporate Services, shall submit a business case in support of the WECHU’s borrowing requirements to the Board for approval.  The business case shall include:

• The purpose of the borrowing including the strategic and operational objectives it supports;
• The amount of borrowing and proposed timeframe;
• The cost of borrowing;
• The plan for repayment of borrowings over the proposed timeframe.

The CEO or their designate together with one of the Chair, Vice-Chair or Treasurer of the Board are authorized:

• To borrow from a financial institution or other acceptable lending agency on behalf of the WECHU as required from time-to-time;
• To sign all required Borrowing Agreements including renewals as required from time-to-time.

Repayment of Borrowing:

Borrowings on account of credit cards or corporate accounts shall be repaid in accordance with the credit card or corporate card payment terms.

For all other borrowings, balances shall be repaid in accordance with their applicable repayment schedules included in the Borrowing Agreement. Early repayment of borrowings, if permitted by the Borrowing Agreement, shall be proposed by the Director of Corporate Services to the Board for approval.

Reconciliation and Reporting on account of Borrowing:

The Finance Department shall be responsible for reconciling all borrowing transactions on a monthly basis.  Refer to the Cash Management Policy and Procedure for information regarding the reconciliation process.

Any borrowings on account of the line of credit by the WECHU of $100,000 and greater for a period extending beyond ten (10) business days, shall be reported to the Joint Board Extension Committee by the Director of Corporate Services.  This includes any relevant information regarding the nature of the borrowing.

As required by the terms of the applicable Borrowing Agreement, the Director of Corporate Services, shall report compliance with covenants included in Borrowing Agreements to the Board of Health (Board).

On an annual basis, the balances outstanding on account of borrowing transactions, shall be reported to the Board through the presentation of the annual audited financial statements.  For further details on the annual audited financial statements refer to the Financial Reporting Policy.  To supplement this reporting the Director of Corporate Services shall report:

• The current (as at date of presentation) and projected borrowing levels.  The projection shall be for a one (1) year timeframe.
• The amount of borrowings at a fixed and variable rate of interest.
• The term of the borrowings.
• Other information as determined appropriate.

Compliance

Failure to comply with this Policy and any associated Procedures may result in appropriate disciplinary measures.  Please see WECHU’s Discipline Policy.

Related Documents

Financial Reporting Policy