The Corporation of the Town of Oakville (Town) is committed to responsible financial management of spending, revenue generating and program delivery within approved budgets and staff complement to ensure that the integrity of the municipality is maintained in accordance with the Municipal Act.
The purpose of this policy is:
- To ensure that council approved budgets, staff compliment and priorities reflected therein are implemented as intended by Council;
- To recognize that department heads/commissioners are accountable to the Treasurer, the Chief Administrative Officer (CAO) and Council for their spending, revenue generation and service delivery performance against budget approvals;
- To outline the financial management policies of the town related to operating and capital budgets and reserve/reserve fund control;
- To ensure that Council is informed of the status of budgets and any factors or risks that may impact the budget;
- To provide an element of flexibility to respond to evolving circumstances;
- To define the roles and responsibilities related to the budget control process;
- To outline the principles governing funding decisions outside of the annual budget process.
This policy applies to all staff responsible for budget management and all town agencies, boards, programs and services.
Except as otherwise provided in this policy, Council has the sole authority for approving funding to operating programs and capital projects.
All decisions involving amendment of approved budgets require the approval of Council, following public notice as prescribed by the Municipal Act, 2001.
Municipal Act, 2001, Section 291:
(1) Before adopting all or part of a budget under section 289 or 290, or amending such a budget, a municipality shall give public notice of its intention to adopt or amend the budget at a council meeting specified in the notice.
Interim Operating Authority
- Prior to the adoption of the current budget, spending shall be limited as set out in this Policy.
- Departments shall not incur any exceptional or new expenditure of a type, kind or extent that materially alters the quality or quantity of service provided until such changes are approved by Council.
- Until the current operating budget for the Town is approved by Council, a department head is authorized to make spending commitments to a cumulative total that does not exceed 50% of the prior year's budget approved by Council.
- The Treasurer shall seek the necessary Council approvals to undertake interim borrowing as set out under the Municipal Act.
Operating Budget Authority
- The operating budget approved by Council establishes the spending authority for a program.
- No commissioner/department Head has the authority to exceed the total approved expenditure budget for their program without Council approval.
- Budgets may only be redeployed subject to the following approval limits and subsequent reporting to Council through the vehicle of the quarterly financial status reports.
- Budgets are not to be reallocated to compensate for existing over-expenditures.
- Directors are responsible for managing within their existing budget. Reallocations between object codes (cost categories) within a program that do not affect the net operating budget of that specific program may be made by a department head and will be implemented on an expenditure basis only.
- The Treasurer upon recommendation of a Commissioner may authorize reallocations of gross expenditures between Programs at the lessor of 10% or $150,000 provided they do not affect the net overall operating budget for the town.
- The Treasurer and CAO may authorize gross expenditures which exceed the funding available in a Program by an amount not exceeding the lessor of 10% or $150,000.
- Any expenditures that would result in total gross expenditures exceeding the funding available in a program by an amount greater than the lesser of 10% or $150,000 requires Council approval prior to a commitment being made to incur such expenditures, except for purchases made in accordance with the emergency provisions of the Purchasing By-law.
- Revenues that are received beyond the level provided for in the budget shall not be spent or committed without Council approval. At year-end, such remaining revenues become part of the Town surplus.
Capital Budget Authority
- The Capital Budget approved by Council establishes the scope, funding and spending authority for each Capital Project listed in the Capital Budget document.
- Department heads do not have the authority to exceed the budget approved for a project or amend a project scope.
- The scope of a project may not be amended without Council approval.
- Commissioners upon recommendation from a department head may authorize additional gross expenditures where costs for a capital project increase to the extent that they exceed the original funding approval for the capital project by an amount not exceeding the lessor of 10% or $200,000. The Treasurer must be notified of the over-expenditure and is authorized to pay such excess, provided that:
- This policy is otherwise complied with;
- Funding is available to fund the over-expenditure, either from under-expenditures in other capital projects within the same Commission or by deferral of other capital projects within the same Commission;
- The Treasurer has certified that there is sufficient appropriate financing available for the capital project; and
- The over-expenditure and capital budget transfer must be reported to council in the next capital budget variance report.
- Where the capital project is over committed and funds are not available from another capital project, the Treasurer with the concurrence of the CAO, is authorized to provide the necessary funds from reserve, reserve funds or other appropriate sources provided the original scope of the project is not exceeded, and the required funds are not in excess of $350,000. Such allocations shall be reported as part of the status reports provided to Council.
- If the costs for a capital project exceed the original funding by more than $350,000 Council approval must be obtained to amend the capital project budget. The Treasurer shall recommend to the CAO the appropriate funding source.
- Capital projects will be closed based on any of the following criteria:
- The Capital Project Manager notifies Financial Planning that the project is complete;
- Capital projects having less than 5% of budget remaining and no activity for a period of 12 months will be deemed by Financial Planning to be completed and will be closed in consultation with related staff;
- Capital projects that have had no expenditures within 18 months of approval will be closed by Financial Planning in consultation with related staff. These projects will have to be re-budgeted in future capital forecasts.
- Except where a capital project has been financed through the issuance of debentures, any unspent funds in any capital project that is completed will be returned to the originating reserve/reserve fund upon closure. Any surplus funds resulting from capital projects funded by the capital levy will be returned to the general capital reserve.
The approval to fund an eligible capital project by debenture will generally be sought through the annual capital budget process. Favorable variances on completed capital projects that were debenture financed shall be transferred to the general capital reserve to be applied to reduce the overall corporate need to debenture finance in future years.
Reserve/Reserve Fund Investment
- Reserves and reserve funds shall be invested in accordance with the town’s Investment policy and procedure.
- Earnings from combined investments shall be credited to each fund in proportion to the balance of the fund.
- Interest shall be applied to reserves and reserve funds in accordance with Appendix A and B of the reserve procedure; summarized herein as;
- All equipment reserves as set out in Appendix A of the reserve procedure
- The general capital reserve
- The Pine Glen maintenance reserve
- Oakville Little League reserve
- Pine Glen capital reserve
- Bronte Tennis Club reserve
- All reserve funds – as set out in Appendix A of the reserve procedure
- All reserves and reserve funds that are eligible to receive interest through this process will be budgeted investment earnings based on an estimated rate of return and average balance of the portfolio for the year.
- At year end, the actual rate of return on the portfolio will be determined based on actual average balances of the portfolio.
- Interest and investment income will be distributed to the eligible funds based on the proportionate share of the fund to the total average balance of the portfolio at year end.
- Capital gains/losses on investment will be allocated to the tax rate stabilization reserve at year end.
Variance Reporting and Risk Identification
- Council shall be informed on a timely basis on all unfavourable financial matters and will receive, as a minimum, quarterly financial status reports for the periods ending March, June, September and December which will include updates on the following matters:
- Any material variance between approved program operating budgets and actual expenditures, actual revenues or actual service level quality/quantity.
- Twice annually, as part of the variance reporting, detailed reports will be provided to examine how actual revenues are tracking compared to budget.
- Any material unfavourable variance between approved budgets and scope for capital projects and actual spending/scope.
- Projected reserve/reserve fund balances and any material variances to planned contributions or expenditures.
- Projected outstanding debt principal and projected new debt to be issued in the year.
- Key Performance Indicators that represent economic viability of town programs and services will be reported annually.
The Director of Human Resources, in consultation with the Treasurer, shall be responsible for the monitoring of the approved staff complement of the Town and for taking appropriate steps to provide that the approved staff complement does not exceed the level authorized by Council. Every proposal to increase the total staff complement must be approved by Council.
“Account” means a financial liability of the Town, arising from a commitment and evidenced by any invoice, pay sheet, receipt or other document indicating payment is due for the goods or services specified in the account.
“Budget” means the projected revenue and expenses for a given year, either operating or capital.
“Capital Budget” means the annual Council approved plan for expenditures and financing sources to complete Capital Projects or one-time capital expenditures.
“Capital Budget Transfer” means the transfer of an unexpended budget amount from one Capital Project to another within the same Program.
“Capital Expenditure” means an expenditure incurred to acquire, construct or improve land, buildings, engineering structures or machinery and equipment used in providing municipal services. Capital expenditures should provide benefits lasting beyond one year, and should result in the acquisition of, or extension of the normal useful life of a fixed asset.
“Capital Program” means a collection of similar Capital Projects that are summarized at a service area level for reporting purposes.
“Capital Project” means an undertaking in respect of which expenditures is incurred to acquire, improve or install land, buildings, engineering structures, machinery or equipment including the installation of computer software, and is the level at which Council approves funding and funds control in the Capital Budget.
“Commitment” means a contractual obligation usually involving a purchasing document or legal agreement for the purchase of goods, services or construction, including the execution of any document evidencing the obligation.
“Council” means the Mayor and members of Council for the Town of Oakville.
“Department head” means the head of any Town department.
"Emergency" means an unforeseen situation of an urgent nature, presenting an unacceptable risk to the health and safety of persons or to property, requiring an immediate expenditure of funds.
"Financial Report" means the summary of financial activities related to the operation of the Town of Oakville provided to Council by the Treasurer.
“Object Code” means the lowest level of detail for expenditures/revenues are recorded in the Town’s general ledger.
“Operating Budget” means the annual Council approved plan for expenditures, revenues, staffing levels and service levels for operations of the City taking place from January 1st to December 31st in a given year.
“Program” means any organizational unit that may encompass one or more related municipal services and is the level at which Council approved funding and fund control in the operating budget.
“Program Services” means the individual activities within a Program.
“Purchasing By-law” means the Purchasing By-law of the Town, as amended.
"Treasurer" means the employee designated as such by Council for the position. The Treasurer shall exercise all powers and duties of the Treasurer as set out in the Municipal Act.