Transfer Payments & Financial Reporting Branch

Transcript Transfer Payments & Financial Reporting Branch

2010-11 Estimates Forms

March 2010 Ministry of Education Training Sessions

Purpose: Training Methodology

To explain what is changing in the forms/budgeting process  Provide a high level view of each new transaction, including rationale of why changes are being made.

  Briefly, to the extent the policy has been discussed in previous presentations.

More detailed if concepts are new.

 Describe which forms are changing and how, as they relate to each transaction.

 This will form the bulk of the training.

 Walk through the transactions using the new forms.

   Sample EFIS forms have been provided in excel, into which boards can enter data.

The combination of the sample forms (which include detailed notes), power point package and instruction document provide comprehensive details of the changes.

Final EFIS forms will be issued with a detailed set of instructions.

Purpose: Budget Compliance

To show the implementation of the new section 231.(1) of the Education Act (effective September 1, 2010).

A board will be deemed to have a balanced budget if its expenses do not exceed its revenues for the fiscal year by an amount greater than the lesser of: 1) 2) 1% of the board’s operating revenue for the school board fiscal year the board’s accumulated surplus for the immediately preceding fiscal year This is often called the ‘1% provision’.

Overview

The training session is divided into two main categories:

1) 2)

Setting up the September 1, 2010 opening balances Budgeting for the 2010-11 in-year transactions

Overview – Opening Balances

Setting up the September 1, 2010 opening balances

a) Set-up opening TCA balance (Sch 3C) b) Move funds / ATBR to accumulated surplus (Sch 5) c) d) Appropriation for supported capital debt (Sec 12) Implementation of DCC

Overview – In-Year Transactions

Budgeting for the 2010-11 in-year transactions

a) Relationship of transactions b) Capital budgeting (Sch 3B) c) d) Deferred revenue (Sch 5.1) Deferred capital contributions (Sch 5.3) e) Account receivable from / payable to province (Sch 5.2) f) g) Allocations (Sec 1A) Transfer payments (Sec 1B) h) Adjustments to expenses for compliance (Sch 10 ADJ) i) j) k) Revenues (Sch 9) Statement of operations (Sch 1.1) Checking for compliance (Compliance Form)

1a) Opening Balances – Tangible Capital Assets (TCA) Purpose

 To record Tangible Capital Assets (TCA) to be in compliance with PS3150   Entry is to include TCA in accumulated surplus This J/E reverses the amounts that have been expensed in the past for TCA expenditures and records the amortization that would have been incurred on these assets up to Sept 1 2009

JE – September 1, 2009 DR -Tangible Capital Asset (TCA) CR - Accumulated Amortization – TCA CR - Accumulated Surplus / (Deficit) - Unavailable for Compliance 763,022,895 94,883,517 668,139,378

{Amounts are from Opening TCA balances on tab S3C-PY (pg 16) and Net TCA balance on tab Work4 (pg 10) of Estimate Forms example provided}

1a) Schedule 3C Opening Balance - Walkthrough

     Start with Sch. 3C (prior year, 2009-10) – pg 16 of Estimate Forms For Costs    Enter the September 1, 2009 opening balances which would be the August 31, 2009 closing balance (from 2008-09 schedule 3C) Enter all expected additions/betterments from the 2009-10 school year Enter all expected disposals from the 2009-10 school year For accumulated amortization    Enter September 1, 2009 opening balances would be the August 31, 2009 closing balance (from 2008-09 schedule 3C) Enter expected amortization expense for the 2009-10 school year Enter expected disposals/write-downs for the 2009-10 school year Closing Balances are forwarded to Sch. 3C (2010-11) (pg 15 of Estimate forms) Sch. 3C (2010-11) would be completed similarly to Sch. 3C (prior year, 2009-10)

1b) Reallocation of fund/ ATBR accounts Purpose:

   To be in compliance with PS1200 Standard is effective for fiscal years starting on or after January 1, 2009, therefore Boards are required to implement for 2009-10 school year Boards are required to reallocate fund balances to new accumulated surplus accounts at the beginning of the school year

1b) New Schedule 5 – Detail of Accumulated Surplus / (Deficit)

  Replacing Schedules 2.1 to 2.4, Old Schedule 5 and Appendix I Previously   4 fund accounts − − − − Operating (Schedule 2.1) Capital (Schedule 2.2) Reserve (Schedule 2.3 and old Schedule 5) School Activity (Schedule 2.4) 4 amount to be recovered (ATBR) accounts (Appendix I) − − − − Employee Future Benefits Interest to be accrued Vacation accrued Capital Financing

1b) New Schedule 5 – Detail of Accumulated Surplus / (Deficit)

 Subsequently:  3 Accumulated Surplus (Deficit) accounts − Available for Compliance • Balances are to be used in the calculation of compliance per Education Act, 231.(1) − Available for Compliance – Internally Appropriated • Internally restricted surplus (deficit) balances which are used in the calculation of compliance per Education Act, 231. (1) − Unavailable for Compliance • Balances that will not be used in the calculation of compliance per Education Act, 231.(1)

1b) Financial statement presentation of Accumulated Surplus

 Accumulated Surplus will be presented on the statement of financial position as a single balance Old Presentation New Presentation

1b) New Schedule 5 – Detail of Accumulated Surplus / (Deficit)

 Breakdown of Accumulated Surplus (Deficit) allocation  Available for Compliance includes − Operating Accumulated Surplus (Deficit) (formerly Sch. 2.1 and reserve for working funds on old Sch. 5)  Available for Compliance – Internally Appropriated includes − Retirement Gratuities (formerly on old Sch. 5) − − WSIB (formerly on old Sch. 5) Other Purposes (formerly on old Sch. 5)  Unavailable for Compliance − Employee Future Benefits (formerly on Appendix I – ATBR) − − − − − Interest to be Accrued (formerly on Appendix I – ATBR) Vacation Accrued (formerly on Appendix I – ATBR) School Generated Funds (formerly Sch. 2.4) Net TCA Debt & Not Permanently Financed Amounts (NPF) at August 31, 2010 (formerly Sch. 2.2 and capital financing on Appendix I – ATBR) − Amount recognized as deferred capital contribution (DCC) Note: Net TCA, Debt & NPF and amount recognized as DCC will be discussed in detail later in the presentation)

1b) Reallocation of fund/ ATBR accounts to accumulated surplus

1b) Schedule 5 - Opening Balances Walkthrough

 Worksheet 4 (Not part of EFIS) (pg 10 on Estimated Forms)    Worksheet is an offline calculation to help boards estimate the opening accumulated surplus for the 2010-11 budget − − Record opening balances in the September 1, 2009 column For Funds this entry is similar to how they were recorded on Sch. 2.1-2.4 and 5 For ATBR opening balances would be the Boards August 31,2009 ending balance on the 2008-09 financials − See Note 1 on Worksheet for a summary of where balances would have previously been inputted Record the expected in-year increase/decrease for the 2009-10 school year

1b) Schedule 5 - Opening Balances Walkthrough

 Worksheet 4 (Not part of EFIS) (…continued)   Appropriation for supported capital expenditures (Col. 4) automatically populated and forwarded to Schedule 5.2 Accounts Receivable/Payable Continuity Ending balances at August 31, 2010 are automatically forwarded to Schedule 5 (pg 17 on Estimated Forms)  Schedule 5 Detail of Accumulated Surplus / (Deficit) (pg 17 on Estimated Forms)   Balances at September 1, 2010 are pre-populated from Worksheet 4 for the training forms Cells will be white in EFIS for boards to manually enter data

1c) Opening Balances – Appropriation

Per SB memo 10, the Ministry is wrapping up the capital grant allocation model.

Why is the capital grant allocation wrap-up happening?  New Pupil Places (NPP) grants are used mainly for debt support with very little generated to support new schools or additions.

 Boards are experiencing a decline in enrolment for boards with enrolment growth.

– funding for NPP works well  Funding has become too complex with adjustments made to recognize other factors.

Implication  A new capital model is be implemented.

 The province will commit to fund supported capital debt, similar to what was done for pre-1998 debt.

 Boards will record receivable from the province and a corresponding revenue as at August 31, 2010. For this example, the entry would be (JE 2): DR: Accounts Receivable – Gov’t of Ontario $350,183,272 CR: Revenue $350,183,272

1c) Opening Balances - Appropriation

How will the new model work?

 Currently, for NPP funding, principal and interest is allocated based on a benchmark, combined as one amount.

 Starting in 2010-11, board will receive separate principal and interest amounts.

Interest  Boards will continue to receive a yearly allocation (i.e. revenue) for interest on debt, receiving a transfer payment for the same amount.

 The difference going forward is that the allocation will be based on actual interest requirements, not a benchmark, to the extent the

supported

related capital debt is

Principal  For principal payments, boards will record a

one-time

the value of the

outstanding supported capital debt

“the appropriation”).

allocation recognizing as at August 31, 2010 (i.e.  This results in boards reporting a very large revenue in the 2009-10 fiscal year, with a corresponding receivable from the province.

 Starting in 2010-11, boards will receive a yearly transfer payment for the actual principal requirement, not a benchmark, to the extent the

supported

related capital debt is

1c) Opening Balances – Appropriation

What is the definition of supported capital debt?

   

Supported capital debt

, for the purpose of the capital grant allocation wrap-up, is a debt incurred for projects supported under the existing capital programs.

The funding streams that are part of the capital grant allocation wrap up include NPP, Best Start, Growth Schools, PTR, Outstanding Capital Commitments, French Capital Transition, Capital Priorities, GPL renewal stages 1 to 4 and PCS.

Not included are Early Learning and Energy Efficient Schools.

Some capital debt are supported in whole or in part by another funding stream (ex. renewal or third party revenues). Renewal and third party capital contributions are not part of the capital grant allocation wrap-up, thus they are not considered supported capital debt

for the purpose of the capital grant allocation wrap-up

1c) Opening Balances – Appropriation

Determination of supported capital debt  Boards will be instructed to engage their auditors to perform specified audit procedures on capital debt.

 Ministry staff is developing a consistent set of procedures to be used by all boards, which will be communicated at a later date.

 The amounts determined through the specified procedures will form the basis of the appropriation calculation, with the final amount being determined by the Ministry.

 The Ministry may make adjustments based on information in the capital liquidity template.

Timing  These procedures will be performed on data as at August 31, 2010, close to the time when school board auditors will be doing their annual financial audit of their client boards.

 Since the Estimates forms are released in the spring and are due at the end of June, boards will be required to estimate these amounts.

1c) Opening Balances - Appropriation

Section 12 – Debt Charges Allocation (Forms, p36)      To determine the appropriation, supported capital debt will be pulled from Section 12.

Section 12 has changed to stratify the capital debt and sinking funds as supported and unsupported for both permanently financed and not permanently financed (NPF) amounts.

Otherwise, the schedule is fairly similar.

Boards will populate the supported and supported amounts in column 1.

The stratification will be verified by the finance officers during the review of board estimates.

1c) Opening Balances - Appropriation

Estimation of supported capital debt (Forms, p36)   Supported debt includes permanently financed pre-1998 amounts, which correspond to the old section 12 ‘approved capital debt’ section.

OFA loans would be recorded under ‘permanently financed post-1998’ since OFA loans would, for the majority of cases, represent supported capital debt.

 Examples of unsupported capital debt are amounts that relate to the construction of unapproved structures (ex. domes, admin buildings) and overspending on supported capital projects.

 Overspending on supported capital projects has been identified during the Ministry review of boards’ capital liquidity templates, and discussed/communicated to impacted boards.

 Unsupported capital debt can also relate to non-Ministry funding streams, such as education development charges (EDCs).

 For NPF, the supported amounts will be pre-populated in section 12, since boards will enter this amount on the capital budget. Boards will enter the unsupported NPF amount on section 12.

1c) Opening Balances - Appropriation

Section 12 – In-year transactions (Forms, p 36)  Debt issue/retirement, principal, interest and admin fee and sinking fund contributions will continue to be recorded on section 12.

 Principal, interest/admin and sinking fund contributions for be cash flowed to the boards in the year.

supported debt

will  The cash flow of the supported principal and sinking fund (SF) contributions will reduce the board’s receivable from the province (that was set-up by the appropriation).

 Boards will receive a yearly allocation (revenue) for the supported interest/admin amount, in addition to the principal and SF contributions cash flow. This is because the appropriation will not include an interest component, thus there is no receivable on which to draw down.

 Debt retirements on supported amounts will also be cash flowed in the year, less supported sinking fund retirements. There will be a corresponding reduction in the board’s receivable from the province. The cash flow will be to the extent that the board has not reissued the debt in another form (ex. OFA). Any refinancing of supported debt will require Ministry approval.

1c) Opening Balances – Appropriation

Impact on accumulated surplus (A/S) unavailable for compliance      The revenue related to the appropriation is recognized in the 2009-10 cycle (at Aug 31, 2010), thus it forms part of the September 1, 2010 A/S unavailable for compliance balance.

The calculation of this balance was demonstrated earlier, excluding the impact of capital.

With respect to capital, the A/S unavailable contains a deficit representing the outstanding debt related capital spending (section 12, column 1).

  Permanently financed amounts (A.K.A. ATBR capital financing balance) NPF amounts (A.K.A. negative capital fund balance) When the appropriation is recorded in A/S unavailable for compliance, it reduces the deficit balance created by the historical capital spending. Any deficit leftover represents the historical capital spending that is unsupported under the capital grant allocation wrap-up.

The A/S unavailable for compliance also contains the TCA balance, as shown earlier.

1c) Opening Balances – Appropriation

Summary: Impact on accumulated surplus/(deficit) unavailable for compliance related to TCA TCA (Sch 3C) $723,709,821 Not Permanently financed (Sec 12) ($41,513,906) Permanently financed (Sec 12) ($317,669,366) Less: Appropriation re: supported capital debt (Sec 12) $350,183,272 Unsupported outstanding capital debt (Sec 12/Sch 5) ($9,000,000) A/S surplus unavailable for compliance re: TCA (Sch 5) $714,709,821

1c) Opening Balances – Appropriation

Pupil Accommodation Debt Reserve (Internally Restricted Accumulated Surplus)    Since the province will recognize supported debt on existing capital programs, the pupil accommodation debt reserve at August 31, 2010 will be recovered.

This amount will also be subject to specified audit procedures.

It will be offset against any combination of amounts owing to school boards:  For future capital grant entitlement  To support debt servicing costs  Using the sample data, the following entry is required (JE 3): DR: Expense $12,284,747 CR: Accounts Payable – Gov’t of Ontario $12,284,747 DR: A/S available for compliance – internally restricted $12,284,747 CR: Expense $12,284,747 To recognize a liability to the province related to the pupil accommodation debt reserve, and close out the related expense to A/S available for compliance internally restricted at August 31, 2010.

1d) Opening Balances – DCC

Implementation of deferred capital contributions (DCC)  As noted in SB memo 10, the Office of the Provincial Controller (OPC) requires that the school board sector to follow a policy of deferral and amortization of capital grants (i.e. DCC). This aligns with the provincial standard and the current approach in other broader public sector consolidated entities.

What is DCC?

 DCC is an account used to record capital contributions. The amount in this account is recognized in revenue in proportion to how the related TCAs are recognized in expense through amortization.  Use of DCC will reflect the sector’s financial results in a way that avoids large swings between in-year surpluses and in-year deficits caused by a mismatch of capital grant recognition versus capital asset amortization.

1d) Opening Balances – DCC

What guidance can school boards follow to implement DCC?

    DCC will be implemented as per direction from OPC. Guidance will be from Section 4410 of the CICA Handbook (Not for profit organizations) to the extent the framework allows.

 Capital contributions are defined as government transfers for capital and third party capital contributions.

 For DCC related to depreciable assets, the DCC will be amortized into revenue at the same rate as the TCA.

For DCC related to non-depreciable assets (ex. land), the DCC will not be amortized into revenue.

Capital contributions will be recorded first in deferred revenue. Once they have been spent on capital, they will be transferred to DCC.

DCC will be implemented retroactively without restatement, using a reasonable method to estimate the opening balances.

1d) Opening Balances – DCC

Determining DCC Opening Balance    Amounts recorded in DCC will be the portion of the TCA that has been paid for with capital contributions, either provincial or third party.

To implement DCC in a cost beneficial manner, the Ministry has evaluated the TCA in the sector and determined that only a small portion of the TCA (representing the unsupported capital debt) has not been funded through capital contributions (approx. 2% 3%).

This unsupported debt can usually be related to particular assets (ex. admin building, domes).

1d) Opening Balances – DCC

Determining DCC Opening Balance     Before the introduction of the funding model in 1998, capital grants were provided to school boards to fund their capital projects. Boards had taxing power then and also funded part of their project costs through local taxation (generally a smaller % depending on the individual board’s tax base). Most boards long term financed the local share of their capital projects and raised annual taxes to meet the debt servicing costs of their capital debt. The province recognized unsupported pre-1998 capital debt through annual debt support grants provided in the GSN since 1998. The outstanding amounts of that debt will be recognized as revenue as part of the appropriation for eligible capital debt.

Given the NBV of assets consists largely of infrastructure investment in the sector over the last 10 years, and current legislation requires proceeds to be used for future infrastructure investment, this supports the Ministry’s position that most of the capital, including those previously funded from local property taxes, are capital contributions.

1d) Opening Balances – DCC

Recap:

the September 1, 2010 A/S surplus unavailable for compliance related to TCA is represented as follows (before the implementation of DCC).

TCA (Sch 3C) $723,709,821 Not permanently financed (Sec 12) ($41,513,906) Permanently financed (Sec 12) ($317,669,366) Less: Appropriation re: supported capital debt (Sec 12) $350,183,272 Unsupported outstanding capital debt (Sec 12/Sch 5) ($9,000,000) A/S surplus unavailable for compliance re: TCA (Sch 5) $714,709,821

1d) Opening Balances – DCC

Determining DCC Opening Balance    Effectively, the amount in A/S surplus unavailable for compliance represents the entire value of the TCA as at September 1, 2010, less the outstanding capital debt that is unsupported for the capital grant allocation wrap-up.

In other words, what is left is the portion of the TCA that has been funded through capital contributions.

This is the amount that will be recorded as the opening DCC balance.

1d) Opening Balances – DCC

 As a result, boards will record DCC and reduce the A/S unavailable for compliance for the same amount as at September 1, 2010. For this example, the entry would be: DR: A/S unavailable for compliance (Sch 5) $714,709,821 CR: Deferred Capital Contributions (Sch 5.3) $714,709,821 This journal entry is a restatement that reverses capital contributions that have been recognized as revenue in the past.

2a) In-Year Transactions – Capital Flowchart

Capital Allocation (Sec. 1 GSN)

Record allocation for the same amount as the increase in A/R DR: A/R CR: DCC 1 Decrease DR (funds received in advance used on eligible expenditures) DR: DR CR: DCC

Capital Budget (Sch 3B)

Record estimated additions DR: TCA CR: A/P 2

TCA Continuity (Sch 3C)

Increase A/R (eligible expenditures made relative to approval room) DR: A/R CR: DCC Increase DR (funds received in advance not yet used on eligible expenditures) DR: Cash CR: DR 4

Deferred Revenue (Sch 5.1)

A/R from Province re: Capital (Sch 5.2)

Transfer DR to DCC as capital contribution used DR: DR CR: DCC 5

DCC (Sch 5.3)

Record DCC (eligible expenditure made relative to approval room) DR: A/R CR: DCC

2b) In-Year Transactions – Capital Budget

Capital Expenditures (Forms, p11, 13 & 14)  Starting in 2010-11, board will complete a capital budget at Estimates.

 The purpose will be to capture expenditures to be made during the year that will be

capitalizable

 Any capital expenditures to be made for

non-capitalizable

items will be recorded as an expense (Sch 10).

Key:

Capital expenditures recorded in the capital budget (Sch 3B) will tie to the additions recorded in the TCA continuity (Sch 3C).

2b) In-Year Transactions – Capital Budget

Capital Expenditures (Forms, p11, 13 & 14): Data Requirements    By TCA category (rows) and funding source (columns).

For current year, and two following years (with less detail). Out-year data is required so that the province will project the proper amount to support school board capital construction.

 Moveable-type assets (p13) and new school (p14) data is entered through subschedules.

Other moveable-type asset data is required in less detail than at financial statements (equipment and first-time equipping included in ‘other’ category).

2b) In-Year Transactions – Capital Budget

Capital Expenditures (Forms, p11): Input Details        NPP column (col 1) contains NPP, Outstanding Capital Commitments and Best Start.

GPL column (col 2) contains Growth Schools, PTR, French Capital Transitional Adjustment and Capital Priorities.

GPL Renewal (col 3) includes stages 1 to 4.

Land rows are stratified by EDC and non-EDC (lines 2.2 and 2.3).

The portion of expenditures expected to relate to capitalizable interest to be input on line 2.23.

The other column (col 12) – example would be board admin expenditures School Generated Funds column (col 10) – example would be spending related to amounts raised

specifically

to make a capital purchase.

2b) In-Year Transactions – Capital Budget

 Using the sample dataset, the estimated capital expenditures of $58,616,092 on the capital budget would be recorded as additions on the TCA continuity on schedule 3C.

2b) In-Year Transactions – Capital Budget

Capital Approvals vs. Expenditures (Forms, p12)  The purpose of this schedule is to compare capital approvals/allocations to estimated expenditures.

 Boards can apply capital deferred revenues against capital expenditures here.

 Schedule shows the receivable that the board will record from the province based on eligible capital expenditures.

 Will also show remaining approval room.

2b) In-Year Transactions – Capital Budget

Capital Approvals/Allocations (Forms, p12, columns 1 to 12)      Top portion of schedule show approvals/allocations.

Columns 1 to 6 show approval room. This is the amount up to which boards may spend to be entitled to record a receivable from the province.

Columns 7 to 11 pre-populated with amounts that have been received by the board (amount was recorded in deferred revenue).

Two new capital grants are shown: Minor TCA (minor tangible capital assets) and short term interest on capital These grants must be spent on their intended purpose. To the extent amounts spent are capitalizable, the spending would trigger recognition in DCC.

2b) In-Year Transactions – Capital Budget

Capital Approvals/Allocations (Forms, p12, lines 1 & 2)     Line 1 includes only approval for Ministry funded amounts at August 31, 2010; it is net of third party amounts and any cash down.

Line 2 deducts the portion of line 1 that is long term financed at August 31, 2010.

The Ministry will pre-populate lines 1 and 2 for GPL renewal (col 3).

For lines 1 and 2 in columns 1, 2 and 4 to 6, the Ministry will provide these amounts separately from the EFIS forms, along with a file explaining how the amounts were calculated.

  The board will enter the amounts provided in the EFIS forms.

If the board feels there is a discrepancy, the board will enter the data believed to be correct.

 The board would then submit a reconciliation to the Ministry explaining the difference.

2b) In-Year Transactions – Capital Budget

Capital Approvals/Allocations (Forms, p12, lines 3 to 6)      Boards will enter an amount at line 3 for the portion of NPF that would be considered supported for the capital grant allocation wrap-up. The total supported NPF amount is flowed to section 12, and used in the calculation of the appropriation amount.

If the board has NPF, a negative amount would be entered here.

If the board prefinanced, a positive amount would be entered here.

 The prefinancing would be included in line 2 so it has already been deducted from the approval room, but no amounts would have been spent against this.

 Therefore, the prefinanced portion would be added back to the allocation room.

Line 6 shows the expected approvals for 2010-11.

For columns 7 to 11, the amounts in lines 4 to 6 come from the deferred revenue schedule (Sch 5.1), opening balances plus in-year contributions.

2b) In-Year Transactions – Capital Budget

Expenditures (Forms, p12, line 7)  Lines 7.1 to 7.3 are pre-populated with the expenditures entered at page 11.

 The amounts are split into EDC and non-EDC eligible.

Capital Deferred Revenues (Forms, p12, line 8)  At lines 8.1 and 8.2, boards would enter the amount of deferred revenue they wish to apply to any of the project categories (ex. to cover spending over approval/allocation).

 On line 8.1, boards can apply any EDC deferred revenue, which will be matched against EDC-eligible capitalizable spending.

 On line 8.2, boards can apply any other capital deferred revenue related to non-EDC eligible capitalizable spending.

 The amount recorded on the capital budget will also be recorded on the deferred revenue schedule (Sch 5.1, column 5, lines 2.9, 2.13, 2.14 or 2.17 to 2.26).

 The application of deferred revenue must meet the original criteria for deferral, and can only be to the maximum available opening plus current year deferred revenue.

2b) In-Year Transactions – Capital Budget

Net Capital Expenditures ( Forms, p12 , line 9)  Net capital expenditures are the estimated capital expenditures less the capital deferred revenue used against the spending.

  Equals lines 7.1, 7.2 and 7.3 less lines 8.1, 8.2 and 8.3 respectively.

The amounts are split into EDC and non-EDC eligible.

Remaining Approval Room/(Capital Budget Shortfall) ( Forms, p12 , line 10)  A positive results means that the board has remaining approval room or allocation available after deducting net capital expenditures.

  A negative result means that the board has a capital budget shortfall.

The amount of the shortfall will be the difference between the additions recorded in TCA and the additions recorded in DCC (Sch 5.3).

 Equals line 6 less line 9.1 (EDC) or line 9.2 (Non-EDC)

2b) In-Year Transactions – Capital Budget

Capital Grants Receivable Before Line 12 Adjustment (Forms, p12, line 11)   A receivable will only be recorded for amount in columns 1 to 6 since these are the programs that have approval room.

 Boards will record a receivable from the province to the extent they made eligible capital expenditures within their approval room.

Columns 7 to 12 represent allocations that are received in advance, in cash (recorded as deferred revenue). A receivable will not be recorded in these column because this would result in double funding.

 Equals the lesser of line 6 (approval room) and line 9 (net capital expenditures).

2b) In-Year Transactions – Capital Budget

Energy Efficiency / Pupil Accommodation Deferred Revenue (Forms, p12, line 12)   These deferred revenues must first be applied to any eligible capital spending on those programs.

 Some boards have deferred revenue balances for capital energy efficiency and pupil accommodation, meaning cash was received in advance of spending.

To the extent that there is not enough deferred revenue to cover the spending, the board will then record a receivable from the province.

 This is an automated calculation, with the amount pulled from deferred revenue (Sch 5.1, lines 2.5 and 2.10, columns 1, 2 and 3).

2b) In-Year Transactions – Capital Budget

Total Capital Grant Receivable (Forms, p12, line 13)  Equals line 11 (preliminary receivable calculated) less the line 12 (adjustment for deferred revenue received from province).

 This is the receivable from the province that the board will record based on eligible capital expenditures made within their approval room.

Approval Remaining (Forms, p12, line 14)  For columns 1 to 6, line 14 shows the remaining approval room under each program.

 Remaining allocation for columns 7 to 11 is the ending balance on the deferred revenue schedule (Sch 5.1).

2b) In-Year Transactions – Capital Budget

Using this example, the entries would be: DR: Accounts receivable from province (Sch 5.2) $33,540,624 CR: Deferred Capital Contributions (Sch 5.3) $33,540,624 To recognize the amount that the province owes the board for eligible capital spending. The amount is a capital contribution, so the credit is to DCC.

DR: Deferred revenue (Sch 5.1) $200,000 CR: Deferred Capital Contributions (Sch 5.3) $200,000 To recognize capital energy efficiency and pupil accommodation deferred revenues in DCC, since the amounts were spent on eligible capitalizable items.

DR: Deferred revenue (Sch 5.1) $7,934,352 CR: Deferred Capital Contributions (Sch 5.3) $7,934,352 To recognize third party and other provincial capital deferred revenues in DCC, since the amounts were spent on eligible capitalizable items (Sch 3B, line 8.3, col 13).

2b) In-Year Transactions – Capital Budget

An entry is also required for school renewal, short term interest on capital and Minor TCA.

Green Schools Pilot School Renewal Short Term Interest on Capital Minor TCA School Generated Funds Total DR Available ($) (Sch 3B, line 6) (Col 1) 0 5,404,215 81,451 9,968,177 0 Eligible Capital Expenditures ($) (Sch 3B, line 7.3) (Col 2) 0 5,551,834 80,000 4,038,418 0 DR Applied ($) (lesser of Col 1 and Col 2) 0 5,404,215 80,000 4,038,418 0 9,522,633 DR: Deferred Revenue (Sch 5.1) $9,522,633 CR: Deferred Capital Contributions (Sch 5.3) $9,522,633 To recognize school renewal, short term interest on capital and Minor TCA, since the amounts were spent on eligible capitalizable items.

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2c) In-Year Transactions – Deferred Revenue

The deferred revenue schedule is similar to the old schedule (Forms, p18):   Operating and capital sections Legislative and non-legislative grant sections Differences include:  Lines to report other Ministry, other government reporting entity and federal government data  New capital legislative grants (Minor TCA, Short term interest on capital)    School renewal amounts no longer recorded in pupil accommodation No additional new amounts to be added to pupil accommodation Lines to report board level donations and school generated funds raised

specifically

for capital purchases

2c) In-Year Transactions – Deferred Revenue

Also new is the addition of two columns (Forms, p18, cols 4 and 5), which relate to transferring amounts to DCC.

   In some cases, the cells are input cells so that boards can allocate as required amongst the categories.

 Only applicable in the capital section.

Amounts recorded in column 5 correspond to the eligible capital expenditures recorded in the capital budget (Sch 3B).

Error message will be generated if the total does not tie to reporting in capital budget.

2c) In-Year Transactions – Deferred Revenue

Transfers to DCC Related to Prior Year Expenditures (Forms, p18, Col 4)      When boards initially set up DCC, DCC will equal the board’s TCA balance, except to the extent that the board had an amount that was unsupported for the capital grant allocation wrap-up.

This means that a portion of the prior capital spending was not supported by capital contributions.

That is, the board has a

prior year eligible capital expenditure balance

in the amount of DCC less TCA.

Assume that in the the current year, a board records capital deferred revenues (ex. from proceeds of disposition (POD) or education development charges (EDCs)).

The board would be able to transfer the capital deferred revenue to DCC, up to the amount of the

prior year eligible capital expenditure balance (opening TCA less opening DCC)

2c) In-Year Transactions – Deferred Revenue

Transfers to DCC Related to Prior Year Expenditures (Forms, p18, Col 4)      Using the example, the board has an opening TCA balance of $723,709,821 and an opening DCC balance of $714,709,821.

The difference of $9,000,000 represents spending on TCA that was not supported through capital contributions.

The board sells a school in 2010-11, recording the full proceeds of disposition of $5,000,000 in deferred revenue.

The board can choose to recognize the POD in DCC, based on, and up to a maximum of, the prior year eligible capital expenditures of $9,000,000.

In this example, the board recognized $3,000,000 of deferred revenue in DCC based on prior year expenditures. The remainder of the POD ($2,000,000) was applied against current year expenditures as per the capital budget.

DR: Deferred Revenue (Sch 5.1) $3,000,000 CR: Deferred Capital Contributions (Sch 5.3) $3,000,000 To recognize a portion of prior year eligible capital spending. The amount is an in-year capital contribution from POD, so the credit is to DCC.

2c) In-Year Transactions – Deferred Revenue

Transfers to DCC Related to Prior Year Expenditures (Forms, p18, Col 4)      In another example, the board records $6,420,447 in deferred revenue for EDCs in-year.

The board still has prior year eligible capital expenditure room ($9,000,000 opening less $3,000,000 POD used equals $6,000,000).

The board can choose to recognize up to $6,000,000.

In this example, the board recognized $486,095 of deferred revenue in DCC based on prior year expenditures.

The remainder of the deferred revenue ($5,934,352) was applied against current year expenditures as per the capital budget.

DR: Deferred Revenue (Sch 5.1) $486,095 CR: Deferred Capital Contributions (Sch 5.3) $486,095 To recognize a portion of prior year eligible capital spending. The amount is an in-year capital contribution from POD, so the credit is to DCC.

2d) In-Year Transactions – DCC

(Forms, p20)  This is a new schedule in 2010-11 used to track deferred capital contribution (DCC) transactions.

 Schedule is entirely pre-populated if board spent within capital room.

 Lines 2.0 to 2.30 show the opening balance adjustment and contributions from deferred revenue.

 The contributions are pulled from the deferred revenue schedule (Sch 5.1, col 5), except for line 2.6.1

  Line 2.6.1 is where capital grants are recorded directly to DCC.

From page 12 of the capital budget, boards will record a receivable from the province for eligible capital spending (Sch 3B, col 13, line 13). The credit side of the entry is recorded on line 2.6.1.

2d) In-Year Transactions – DCC

Using the example, the following entries are recorded. All of these entries have been described in previous slides.

DR: A/S unavailable for compliance (Sch 5) $714,709,821 CR: Deferred Capital Contributions (Sch 5.3) $714,709,821 This journal entry reverses capital contributions that have been recognized as revenue in the past.

DR: Accounts receivable from province (Sch 5.2) $33,540,624 CR: Deferred Capital Contributions (Sch 5.3) $33,540,624 To recognize the amount that the province owes the board for eligible capital spending. The amount is a capital contribution, so the credit is to DCC.

DR: Deferred revenue (Sch 5.1) $21,143,080 CR: Deferred Capital Contributions (Sch 5.3) $21,143,080 To recognize capital deferred revenues in DCC, since the amounts were spent on eligible capitalizable items.

($200,000 + $7,934,352 + $9,522,633 + $3,000,000 + $486,095)

2d) In-Year Transactions – DCC

   Forms, p20, lines 3.0 to 3.9 show the DCC continuity as it relates to the TCA continuity schedule.

The concept is that DCC is equal to TCA, except to the extent that the board had an amount that was unsupported for the capital grant allocation wrap-up.

Any differences between DCC and TCA will be due to capital spending not supported by capital contributions.

Balance at September 1, 2010 (Forms, p20, column 5)  Column 5 shows the opening DCC balance at Sept 1, 2010 ($714,709,821) which is the opening balance of the TCA ($723,709,821) less unsupported capital spending before Sept 1, 2010 ($9,000,000).

  Opening TCA comes from the TCA continuity (Sch 3C).

The unsupported capital spending comes from Section 12, and is stratified as:    EDC non-EDC eligible (other) non-EDC eligible (land) $486,095 $7,500,000 $1,013,905

2d) In-Year Transactions – DCC

Additions (Forms, p20, column 6)    Column 6 shows additions to DCC during 2010-11 ($51,197,609) which are the additions to TCA ($58,616,092) less unsupported capital spending during 2010-11 ($7,418,483).

TCA additions come from the TCA continuity (Sch 3C), which agree to the capital expenditures recorded on the capital budget (Sch 3B, page 12).

The unsupported capital spending comes from the capital budget (all negative amounts on Sch 3B, lines 10.1 and 10.2), and is stratified by EDC ($615,648) and non-EDC eligible ($6,802,835).

2d) In-Year Transactions – DCC

Deferred Revenue Related to Prior Year Eligible Capital Expenditures (Forms, p20, column 7)    Column 7 shows an increase to DCC during 2010-11 ($3,486,095) which represents a reduction in the pre-Sept 1, 2010 unsupported capital spending.

This concept was explained in the deferred revenue section 2c.

Amounts are pre-populated, stratified by EDC and non-EDC.

     The EDC amount comes from Sch 5.1, line 2.21 (EDC), column 4.

The non-EDC amount comes from Sch 5.1, column 4, all except for line 2.21.

Amounts are allocated to ‘other’ and ‘land’ in proportion to the opening unsupported capital spending in column 5.

The amounts are split this way because only unsupported spending related to depreciable assets will be amortized.

The portion related to depreciable assets (i.e. land) will not be amortized, and will perpetually reduce the DCC balance compared to the TCA balance.

2d) In-Year Transactions – DCC

Subtotal Before Disposals and Amortization (Forms, p20, column 8)  Note that the balance of column 4, line 2.30 matches the balance of column 8, line 3.0 ($769,393,525), providing two different presentations for different data input and collection purposes.

Subtotal Before Disposals and Amortization (Forms, p20, column 9)  Column 9 shows disposals to DCC during 2010-11 ($4,000,000) which are the disposals to TCA ($4,000,000).

  TCA disposals come from the TCA continuity (Sch 3C).

Unsupported disposal amounts are assumed to be $0. Boards that expect to dispose of assets in 2010-11 where the net book value of the asset contains a

material

unsupported amount should contact the Ministry for further instructions.

2d) In-Year Transactions – DCC

Subtotal Before Disposals and Amortization (Forms, p20, column 9)  A sample disposal transaction would be recorded as follows: DR: Account Receivable $5,000,000 CR: Deferred Revenue (Sch 5.1) $5,000,000 DR: Deferred Capital Contributions (Sch 5.3) $4,000,000 DR: Accumulated Amortization (Sch 3C) $6,000,000 CR: Tangible Capital Asset (Sch 3C) $10,000,000 These journal entries record the disposal of a capital asset with a cost of $10,000,000, accumulated amortization of $6,000,000 and a proceeds of disposition (POD) of $5,000,000. The POD is recorded to deferred revenue due to Reg. 446/98, which requires POD be spent only on eligible capital.

2d) In-Year Transactions – DCC

Amortization (Forms, p20, column 10)    Column 10 shows the DCC amortization for 2010-11 ($18,848,758) which is the amortization of TCA ($19,578,097) less the amortization of unsupported capital spending ($192,606 plus $536,733).

TCA amortization comes from the TCA continuity (Sch 3C).

The amortization of the unsupported capital spending is calculated as pre-Sept 1, 2010 and post-Aug 31, 2010.

2d) In-Year Transactions – DCC

Amortization of the unsupported capital spending pre-Sept 1, 2010 (Forms, p20, col 10, line 3.2)   Only the amortization of non-EDC eligible-other unsupported capital spending is amortized. This is because the other categories (EDC and non-EDC eligible-land) relate to land, which is never amortized.

The amortizable portion is calculated as: Total non-EDC eligible-other unsupported capital spending at Aug 31, 2010: $4,857,264

…..column 8, line 3.2

Divided by: Average remaining service life (RSL) of the depreciable TCA at Aug 31, 2010: 25 years

…..line 4

Equals: $192,606

2d) In-Year Transactions – DCC

Amortization of the unsupported capital spending pre-Sept 1, 2010 (Forms, p20, col 10, line 3.2)  The unsupported capital spending will be amortized at the same rate as the TCA. This is done by determining the average RSL of the depreciable TCA.

Average RSL (years) = Total NBV of depreciable TCA at Aug 31, 2010 ($) (Note 1) Amortization of TCA for 2010-11 ($/years) Note 1: Excludes land, construction in progress and pre-acquisition costs

2d) In-Year Transactions – DCC

Calculation Methodology      Boards calculate their TCA in detail, on an asset-by-asset basis.

Since DCC can be calculated by taking TCA less unsupported capital spending, tracking on an asset-by-asset basis for DCC is minimized.

This has been shown in columns 5 to 9 with respect to additions and disposals.

A similar approach is taken to calculate amortization pre-Sept 1, 2010.

It is necessary to calculate amortization post-Aug 31, 2010 on an asset-by-asset basis.

2d) In-Year Transactions – DCC

Amortization of the unsupported capital spending post-Aug 31, 2010 (Forms, p20, col 10, line 3.6)     Only the amortization of non-EDC eligible unsupported capital spending is amortized. This is because EDC are always used to purchase land, which is never amortized.

Non-EDC eligible unsupported capital spending is amortized on an asset-by-asset basis.

This is because increases in unsupported amounts post-Aug 31, 2010 will likely be related to assets with remaining service lives that are much longer than the average RSL of the TCA.

Also, these amounts may be related to TCA that are still in CIP, in which case, they are not amortized at all.

2d) In-Year Transactions – DCC

Amortization of the unsupported capital spending post-Aug 31, 2010 (Forms, p20, col 10, line 3.6)   To calculate the amortization, boards will keep a sub-ledger including all assets on which overspending occurred. The unsupported spending on these assets will be divided by expected service life to determine the yearly amortization amount.

Data obtained from capital budget (Sch 3B, page 12, line 10.2) Program (Col 1) Asset Type (Col 2) Energy Efficiency School Renewal Other TOTAL Moveable 40 Year Building Land Unsupported Spending (Col 3) $2,665,216 $147,619 $4,000,000 Total Service Life / Remaining Service Life (Col 4) 5 years 40 years Infinite Yearly Amortization of Unsupported Spending (Col 3 / Col 4) $533,043 $3,690 N/A $536,733

2e) In-Year Transactions – A/R from Province

  This is a new schedule in 2010 11 used to track the board’s account receivable from / payable to the province for eligible capital expenditures.

This schedule is completely pre-populated from other schedules; it is shown to summarize the transactions.

Supported permanently financed amount (Forms, p19, column 1)  The total supported permanently financed amount comes from Section 12 (line 12.51, col 25) and represents the portion of the outstanding debt that the Ministry will recognize as part of the capital grant allocation wrap-up. Supported not permanently financed (NPF) amount (Forms, p19, column 2)  The total supported NPF amount comes from the capital budget (Sch 3B, page 12, line 2, columns 1 to 6) and represents the portion of NPF that the Ministry will recognize as part of the capital grant allocation wrap-up.  If the board has prefinanced (i.e. the board has obtained financing but has not yet made any expenditures, no amount will appear in column 2. Any supported financing will be implicitly included in column 1.

2e) In-Year Transactions – A/R from Province

In-year capital grant receivable (Forms, p19, column 4)  These amounts come from the capital budget (Sch 3B, page 12, line 13, columns 1 to 6).

 This is the receivable from the province that the board will record based on eligible capital expenditures made within their approval room during the year.

Recovery of Pupil Accommodation (PA) Debt Reserve (Forms, p19, column 4.1)  The receivable from the province is reduced to the extent the board has a payable to the province related to the PA debt reserve.

2e) In-Year Transactions – A/R from Province

Principal payments and retirement of supported debt (Forms, p19, column 5)  This column contains payments required to be made on supported debt.

 The Ministry will flow the cash required to make these payments, thus reducing the board's receivable from the province.

  The principal amounts come from Section 12 (lines 12.17 and 12.18, col 3).

The retirement amounts (net of any sinking fund retirements) will be calculated in correspondence with the Ministry’s transfer payment group.

Payable re: Pupil Accommodation (PA) Debt Reserve (Forms, p19, line 2.0)  This row tracks amounts owing to the province related to the PA debt reserve.

2e) In-Year Transactions – A/R from Province

These transactions are summarized using the example.

DR: Accounts Receivable – Gov’t of Ontario (Sch 5.2) $350,183,272 CR: A/S unavailable for compliance (Sch 5) $350,183,272 To record a receivable from the province as at August 31, 2010, based on the province’s commitment to fund supported capital debt and NPF (the appropriation).

2e) In-Year Transactions – A/R from Province

These transactions are summarized using the example (con’t) DR: Cash $10,802,760 CR: Accounts receivable from province (Sch 5.2) $10,802,760 To record receipt of cash from the province to make principal payments on supported capital debt.

DR: Accounts Payable – Gov’t of Ontario (Sch 5.2) $12,284,747 CR: Accounts receivable from province (Sch 5.2) $12,284,747 To reduce the receivable to the extent the board had a payable to the province related to the pupil accommodation debt reserve.

2f) In-Year Transactions – Allocations

 Section 1 has been divided into:   Section 1A – Allocations (Forms, p33) Section 1B - Transfer Payments (Forms, p34)    The purpose of Section 1A (Allocations) is to show the operating and capital allocations which will be granted in the year.

Note that the sample Section 1A shown is for illustrative purposes only and may change upon issuance of the GSN. All figures are hypothetical.

The purpose of Section 1B (Transfer Payments) is to show the operating and capital transfer payments which will be flowed in the year, in cash.

2f) In-Year Transactions – Allocations

Operating Allocations (Forms, p33)    This form is similar to the old section 1 in that the general operating allocations (line 1.1 to lines 1.17) are still represented in the same way.

One change is to the capital debt support payments – interest portion (line 1.20). It will no longer be based on a benchmark; it will be based on the interest expense for supported permanently financed capital.

This will not include any amounts for short term interest (this amount is on line 1.63).

2f) In-Year Transactions – Allocations

Capital Allocations (Forms, p33)      There are some changes with respect to the capital allocations.

Capital allocations (with the exception of capital grants on line 1.60), will be recorded in deferred revenue.

This is similar to how the pupil accommodation grant used to be recorded.

Capital allocations include: Line 1.61 - Minor tangible capital assets Line 1.62 - School renewal Line 1.63 - Short term interest on capital Line 1.64 - Green schools pilot Capital grants on line 1.60 are recorded to DCC, with the other side of the entry to accounts receivable from the province (calculation explained in section 2b).

2f) In-Year Transactions – Allocations

Minor tangible capital assets (Forms, p33, line 1.18 and 1.61)      This is a new capital allocation and it is calculated as the operating allocation (line 1.17) multiplied by 2.5%.

This amount (ex. $9,968,177) is deducted from the operating allocation at line 1.18 and added back as a capital allocation at line 1.61.

Effectively, a portion of the operating allocation (2.5%) is available to be used for spending on minor tangible capital assets (minor TCA).

To the extent the minor TCA spending is capitalized, the amount will flow from deferred revenue to DCC.

To the extent the minor TCA is expensed, the amount will flow from deferred revenue to revenue. Thus, any amount not spent on capitalizable minor TCA will be available for use on operating expenses.

2f) In-Year Transactions – Allocations

Short term interest on capital (Forms, p33, line 1.63)      This is a new capital allocation to be used for short term interest expenses related to capital.

During construction of an asset, short term interest costs should be capitalized.

When the asset is substantially complete, the short term interest costs should be expensed.

To the extent the interest is capitalized, the amount will flow from deferred revenue to DCC.

To the extent the interest is expensed, the amount will flow from deferred revenue to revenue.

2f) In-Year Transactions – Allocations

Operating allocation to be used in compliance calculation (Forms, p33, line 1.90)     When determining if a board is in compliance with the Education Act (231.(1)) with respect to any in-year deficit incurred, it is necessary to compare the board’s expenses for the year (adjusted for compliance) against the board’s operating allocation for the year.

This calculation of compliance will be explained further in section 2k.

Of relevance here is the calculation of the

operating allocation for compliance

It is calculated as a board’s general operating allocation (line 1.17), net of any savings from strike or lock-out (line 1.88).

2g) In-Year Transactions – Transfer Payments

Forms p 34  Section 1B (Transfer Payments) shows the operating and capital transfer payments which will be flowed in the year, in cash.

Operating Transfer Payments   The general operating allocations for transfer payment purposes (line 1.1 to lines 1.17) match the general operating allocations on section 1A. These amounts will be flowed in cash.

Similarly, the capital debt support payments – interest portion (line 1.20) match the section 1A amount, and will be flowed in cash.

2g) In-Year Transactions – Transfer Payments

Forms p34 Capital Transfer Payments: Capital debt support payments – principal portion     The capital debt support payments – principal portion (lines 1.57 and 1.58) do not have a corresponding allocation amount.

This is because the board already received the allocation when recording a receivable from the province for eligible capital spending.

The payment of the principal is simply a draw on the receivable balance (as explained earlier in section 2e).

The retirement of capital debt would be treated the same way.

2g) In-Year Transactions – Transfer Payments

Capital Transfer Payments: Other (Forms, p34)   Other capital transfer payments will be flowed up-front in cash: Line 1.61 - School renewal Line 1.62 - Short term interest on capital Line 1.63 - Green schools pilot The operating allocation for transfer payment purposes will not segregate the minor tangible capital assets (minor TCA) amount; it will be flowed as part of the operating allocation for transfer payment purposes.

2h) In-Year Transactions – Adjusted Expenses

 Schedule 10 ADJ is used to calculate adjusted expenses for compliance. Schedule 10 ADJ will start from the revised schedule 10.

Schedule 10.1 and 10.2 (Forms, p27 & 28)  Elementary and secondary data will continue to be recorded on schedule 10.1 and 10.2, excluding amortization  Capital expenses that do not meet the capitalization threshold will still be recorded in the Supplies and Services column.

Schedule 10 (Forms, p23 & 24)  Schedule 10 will now contain all expenses that were previously recorded in the funds.

  Boards will now record amortization, replacing capital expenditures.

Amortization will be recorded for five categories:      Instruction Administration Transportation Pupil Accommodation Other

2h) In-Year Transactions – Adjusted Expenses

Schedule 10 (Forms, p23 & 24)    The total amortization recorded in schedule 10 will tie to the amount (including write-downs and adjustments) recorded in the TCA continuity (Sch 3C).

Capital expenses that do not meet the capitalization threshold will still be recorded in the Supplies and Services column.

The Pupil Accommodation section will include expenses such as interest on capital, school renewal amounts spent on operating items, and operating leases on portables. This list is not exhaustive.

2h) In-Year Transactions – Adjusted Expenses

Schedule 10 ADJ (Forms, p25 & 26)     Schedule 10 ADJ is used to calculate adjusted expenses for compliance, which is carried forward to the Budget Compliance form.

Adjustments to interest and vacation accrual remain the same as in prior periods.

For employee future benefits (EFB), boards must enter the increase/decrease in the unfunded EFB liability as in prior periods New to 2010-11, boards must add back any changes to EFB expense due to plan or benefits changes where improvements will be been made effective 2010-11.

2i) In-Year Transactions – Revenues

Schedule 9 (Forms, p21 and 22)        Similar to schedule 10, all revenues that were previously recorded in the funds will now be recorded on schedule 9.

The revenue schedule has been reorganized to align with the Statement of Operation (Sch 1.1) headings.

Legislative grants will flow in from section 1A to line 1.1, except to the extent that some allocations are deferred (special education).

Deferred allocations will be recorded on line 1.2 when they meet the requirement to be recorded in revenue.

Tax revenues will flow in from section 1B to line 3.

New lines that have been added to the deferred revenue schedule (Sch 5.1) will be linked to schedule 9, for example, revenues from other ministries and government reporting entities.

New line included to record amortization of deferred capital contributions, from schedule 5.3.

2j) In-Year Transactions – Stmt. of Operations

Schedule 1.1: Statement of Operations (Forms, p4)      When all of the transactions have been completed, the statement of operations will be fully pre-populated.

This represents the budget for 2010-11.

The revenues less expenses will show the in-year surplus or deficit.

The accumulated surplus/deficit continuity is also presented.

Funds are no longer shown on this statement.

2k) In-Year Transactions – Compliance Check

Budget Compliance Form (Forms, p5)        The in-year surplus/deficit for compliance is calculated as the total revenue from the statement of operations (Sch 1.1), less the total expenses adjusted for compliance (Sch 10 ADJ).

If the board has an in-year surplus, compliance has been met.

If the board has an in-year deficit, the test for compliance must be performed.

If the in-year deficit is less than the lesser of: i.

ii.

The opening accumulated surplus available for compliance (Sch 5) One percent of the operating allocation (Section 1A) then the board is compliant.

If the board is not compliant, and the board has a ministerial approval to have an in-year deficit greater than the legislated amount, the board would record the approval amount on line 0.10.

The approval amount will correspond to written communication received from the Minister.

If the board is still not compliant, the board may be asked to submit a Financial Recovery Plan.

Questions?

Further Information

1) Finance Officer

As a first point of contact, please direct queries to your finance officer, who will coordinate with the Reporting Entity Team to resolve your query.

2) Reporting Entity Team Elizabeth Sulkovsky,

Senior Business & Policy Analyst 416-325-8527 [email protected]

Patrick Pelletier,

Business Analyst 416-325-2058 [email protected]

Marie Li,

Manager 416-326-0201 [email protected]