June 2023 Board of Health Meeting - 2022 Annual Audited Financial Statements Resolution

ISSUE/PURPOSE

Approval of the annual audited financial statements.  This includes:

• The annual audited financial statements for the Windsor-Essex County Health Unit for the year-ended December 31, 2022 (Appendix A)
• The annual audited financial statements for the Windsor-Essex County Health Unit Ministry of Children, Community and Social Services Program Initiatives for the year-ended March 31, 2023 (Appendix B)

(Hereinafter referred to collectively as “the annual financial statements”).

BACKGROUND

Paragraph 59(2) of the Health Protection and Promotion Act R.S.O. 1990 states that “A board of health shall cause to be prepared statements of its financial affairs in each year including but not limited to, (a) an annual statement of income and expenses; (b) an annual statement of assets and liabilities; (c) an annual estimate of expenses for the year.”

The annual financial statements are audited by KPMG LLP, independent external auditors appointed by the Corporation of the City of Windsor.  On June 8, 2023, the Audit Committee of the Windsor-Essex County Board of Health (Audit Committee) convened to review the annual financial statements and audit findings report with Administration and KPMG LLP.  The Audit Committee has recommended the financial statements for approval to the Board of Health (Board). KPMG LLP is prepared to issue, pending approval by the Board, an unmodified audit opinion on the annual financial statements. 

Windsor-Essex County Health Unit (WECHU)

The enclosed is a summary analytical review addressing material changes in the annual audited financial statement captions year-over-year.

Statement of Financial Position

• Cash and short-term investments decreased 7,926,699.  Refer to the Statement of Cash Flows for details.
• Accounts receivable increased $2,546,835 primarily due to the following:  a) Increase in amounts receivable from the Province of Ontario of $2,188,711 over 2021.  This increase relates to an augment in funding approvals on account of COVID-19 General ($1,627,499) and COVID-19 Vaccination ($480,800) based upon Q2 2022 financial reporting.  b)  Increase in other receivables of $308,864.  The increase related to an amount receivable from the County of Essex of $264,704 for 2022 contributions, and $14,840 for interest receivable from the WECHU’s financial institution on account of our average outstanding cash balances for December 2022.
• Due to Province of Ontario decreased $2,676,659.  This balance is comprised of:

Of noteworthy mention is the following:

• In the period January to March of 2023, $882,238 was clawed back by the Ministry of Health (MOH) on account of the 2022 settlement.  The remaining, will be clawed back upon completion of the settlement review.
• A proportion of the 2021 Settlement was clawed back in advance of the MOH’s final review being completed.  The total amount of the claw back was $2,409,783.
• Completion of the 2019 and 2020 settlement reviews resulting in a claw back of settlements of $508,636 and $1,398,669 respectively. 
• Due to Municipalities decreased $1,798,243.  This balance is comprised of:

** The 2022 Budget contemplated a two (2) percent increase in the funding from the MOH.  The actual 2022 funding approval from the MOH was only one (1) percent.

The following amounts were paid to the Obligated Municipalities in 2022:

• The 2021 Settlement relating to the 2021 Cost-Sharing Mitigation Funding of $1,260,800;
• The 2020 Settlement of $337,007;
• The 2019 Settlement of $1,286,730.
• Trade accounts payable decreased $215,336.  Changes in this financial caption varies on an annual basis due to the timing of vendor invoicing.  The 2021 balance included an amount outstanding to OMERS on account of December 2021 contributions of $273,201.  
• Accrued payroll and deductions decreased $228,521.  On December 31, 2021, $107,577 was outstanding to employees represented by the Ontario Nurses Association on account of retroactive compensation increases for the collective bargaining agreement that expired April 1, 2021.  In addition, liabilities were recognized on account of certain labour related matters that arose in 2021 but were settled in 2022 of $191,497. 
• Deferred revenue decreased $441,844.  Fluctuations in deferred revenue year-over-year typically relate to the nature and timing of grant funding.  The decrease is primarily attributed to School-Focused Nurses funding.  At December 31, 2021, deferred revenue attributed to this grant funding amounted to $439,134 compared to $14,078 at December 31, 2022. 
• Tangible capital assets increased $3,160,779.  The net increase is attributed to:  i) Tangible capital asset additions of $3,442,533; ii) Amortization expense of $281,754.  Of the tangible capital assets acquired in the year, $3,431,595 were funded by the Ministry of Health using Mandatory Program funding (70%), and $10,938 were funded using Ontario Seniors Dental Care Program funding (100%). Refer to note 9 for additional details.
• Prepaid expenses decreased $76,253.  The decrease in this financial caption is primarily attributed to the timing of the payment of licenses for the WECHU’s document management licenses (M-files).  For the year-ended December 31, 2021, M-files licences for 2022, amounting to $99,616 were prepaid in advance of year-end.  M-files licenses for 2023, amounting to $99,616 were paid after the December 31, 2022, year-end.

Statement of Operations and Accumulated Deficit:

• Increase in Revenue from the Province of Ontario of $530,021.  The increase is attributed to the following:
  • Increase in approved base funding for Mandatory Health Programs Funding in the amount of $116,432 or one (1) percent for the period April 1, 2022 to December 31, 2022.
  • Increase in approved base funding for Ontario Seniors Dental Care Program (OSDCP) in the amount of $530,025 for the period April 1, 2022 to December 31, 2022.  Actual revenue earned for 2022 amounted to $1,936,350 based upon total admissible expenses, representing a $261,650 increase from 2021.   
  • Increase in One-time funding of $151,939. This is attributed to:  a) COVID-19 Vaccination Program funding in the amount of $4,051,134; b) COVID-19 General Program funding in the amount of $895,410; c) School-Focused Nurses Initiative funding in the amount of $1,857,824; d) Temporary Retention Incentive for Nurses funding in the amount of $603,013;  e) Mitigation funding in the amount of $1,260,800; f)  Public Health Inspector Practicum Funding in the amount of $40,000.
• Increase in Other Revenue of $595,945.  The increase is attributed to the following:
  • Increase in Interest income in the amount to $75,910 as interest rates were higher than 2021.
  • Increase in Miscellaneous in the amount of $119,702.  This increase is primarily attributed to the recovery of building occupancy costs from the OSDCP in the amount of $120,630.
  • Increase on Other grants in the amount of $299,678.  This increase is primarily attributed to the timeframe surrounding the IPAC Hub funding.  IPAC Hub funding commenced in October of 2021 and continued for the entirety of 2022.
  • Increase in Vaccine reimbursement in the amount of $93,606 (ISPA).  Total number of vaccinations given in 2022 were 15,329 as compared to 5,013 in 2021.

The Ministry of Health funds the WECHU to a maximum of 70% of admissible expenditures.  Admissible expenditures for the purposes of the Ministry of Health Settlement Process is defined below:

• Decrease in Expenses of $3,328,290.  Notable decreases include:
  • Decrease in Salaries and Benefits in the amount of $2,774,735.  Notable decreases from 2022 include:
    • Decrease in FTEs year-over-year.  On January 1, 2022, total FTEs amounted to 299.  On December 31, 2022, total FTEs amounted to 283.
    • Total payments on account of overtime, and retroactive payments for the 2021 fiscal year amounted to $1,314,435.  Overtime and retroactive payments for the 2022 fiscal year amounted to $329,346.
  • Increase in Legal, Audit and Consulting in the amount of $516,416. Notable increases from the prior year include:
    • Increase in legal of $221,521 over 2021 including the following:  i)In 2022, $24,118 was expended on legal advice for the review of the Consolidated Bi-Laws of the Board of Health for the WECHU and other legal matters involving the WECHU’s responsibilities under the Health Protection and Promotion Act (HPPA).  ii) In 2022, $10,461 was expended on legal advise pertaining to the recruitment of a Medical Officer of Health (relating to immigration and licensing).  iii) In 2022, increase in legal fees paid on account of general corporate matters and certain labour related matters in the amount of $173,665. 
    • Increase in consulting of $210,452 over 2021 including the following:  i) Increase in amounts paid to the Acting Medical Officer of Health on account of professional services rendered over 2021 of $198,407 (2022 – 12 months; 2021 – 4 months).  ii)  In 2022, the WECHU contracted an Acting Chief Executive Officer (CEO) while recruitment was underway for a permanent CEO.  The total amount paid on account of those professional services was $12,044 (approximately 6 weeks).
  • Decrease in Purchased Services in the amount of $1,244,910. Notable decreases from prior year include:
    • $192,677 was expended in 2021 for augmented vaccination support for the COVID-19 Vaccination clinics. 
    • $330,350 was expended in 2021 for augmented temporary support staff for call centre activities relating to COVID-19.
    • $686,498 was expended in 2021 for augmented case and contract management support.

Windsor-Essex County Health Unit Ministry of Children, Community and Social Services Program Initiatives

The annual audited financial statements for the Windsor-Essex County Health Unit Ministry of Children, Community and Social Services Program Initiatives include financial information for the Nurse Practitioner Program and the Healthy Babies Healthy Children Program for the period April 1, 2022 to March 31, 2023.

The enclosed summary analytical review addresses material changes in financial statement captions year-over-year.

Statement of Financial Position:

• Due from the Windsor-Essex County Health Unit:  Refer to the statement of cash flow for details on the decrease of $304,599 from March 31, 2022.
• Due to Ministry of Children, Community and Social Services:  The amount outstanding is as follows:
  • Settlement for the year-ended March 31, 2023, in the amount of $266,688;
  • Settlement for the year-ended March 31, 2022, in the amount of $734,310.  This settlement will be clawed back in fiscal 2023/2024.

Statement of Operations and Accumulated Deficit:

• Salaries and benefits increased $476,268 from the comparative period, April 1, 2021 to March 31, 2022.  In the comparative period, substantial nursing resources were deployed to support COVID-19 pandemic-related activities.  This continued until July of 2022, when these staff were returned to the Healthy Babies Healthy Children Program.  
• Mileage increased $19,190 compared to the fiscal year ended March 31, 2022.   This increase is consistent with the return of nursing resources to the Healthy Babies Healthy Children Program in July of 2022. 
• Program supplies decreased $30,961 compared to the fiscal year-ended March 31, 2022.  In the comparative period, the WECHU implemented an electronic information management system to support this Program of $35,361.  The cost was inclusive of implementation and licensing fees. 

A summary of the settlement with the Ministry of Children, Community and Social Services is as follows:

PROPOSED MOTION

Whereas, at the June 8, 2023, meeting, the Audit Committee of the Windsor-Essex County Board of Health reviewed the annual audited financial statements and recommended them to the Board for approval,

Now therefore be it resolved that the Windsor-Essex County Board of Health approve:

The annual audited financial statements of the Windsor-Essex County Health Unit for the year-ended December 31, 2022; and

The annual audited financial statements for the Windsor-Essex County Health Unit Ministry of Children, Community and Social Services Program Initiatives for the year-ended March 31, 2023.