Expenditure Monitor 2020-21: Q3

Expenditure Monitor 2020-21: Q3

Publish date: March 11, 2021 ISSN 2562-9883
This report provides an update on the Province’s 2020-21 spending plan and reviews actual spending by the Province over the first three quarters of the 2020-21 fiscal year.
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About this document

Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario.

This report has been prepared with the benefit of publicly available information and information provided by Treasury Board Secretariat.

All dollar amounts are in Canadian, current dollars (i.e., not adjusted for inflation) unless otherwise noted.

Prepared by:
Michelle Gordon (Financial Analyst) and Jacob Kim (Financial Analyst), under the direction of Luan Ngo (Director, Financial Analysis) and Jeffrey Novak (Chief Financial Analyst).

© Queen’s Printer for Ontario, 2021

Citation
Expenditure Monitor 2020-21: Q3, Financial Accountability Office of Ontario, 2021.
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Highlights

Introduction

This report provides information on spending by the Government of Ontario (the Province) over the first three quarters of the 2020-21 fiscal year, from April 1, 2020 to December 31, 2020. The report:

The information in this report is based on the FAO’s analysis of the March 2020 Economic and Fiscal Update (the March 2020 Update), the 2020-21 Expenditure Estimates, the Supplementary Estimates, 2020-21, the 2020-21 Third Quarter Finances, and transactions recorded in the Province’s Integrated Financial Information System (IFIS) as of December 31, 2020.

Changes to the 2020-21 Spending Plan

Overview

In the March 2020 Update, the Province presented a spending plan for the 2020-21 fiscal year of $165.2 billion.[2] As of December 31, 2020, the Province’s spending plan for 2020-21 was up $14.5 billion, or 8.8 per cent, to $179.8 billion. The $14.5 billion increase to the Province’s spending plan occurred in the first ($759 million) and second ($13.8 billion) quarters, while in the third quarter there was no change to the overall spending plan.[3]

The $14.5 billion spending plan increase reported by the FAO is $1.6 billion lower than the spending plan increase for programs reported by the Province in its 2020-21 Third Quarter Finances. The 2020-21 Third Quarter Finances reflects government spending plan decisions through to February 5, 2021, which implies that the Province plans to increase authorized spending in the fourth quarter.[4]

Third Quarter Analysis

Although there was no change in the overall spending plan in the third quarter, the Province made significant budget reallocations. The largest increase was to the health sector, with $4.5 billion in new planned spending, followed by the ‘other programs’ sector ($1.6 billion in new planned spending) and the education sector ($1.0 billion in new planned spending). There were smaller changes to the remaining program sectors, with planned spending in the justice and children’s and social services sectors up $23 million and $19 million, respectively, while the spending plan for the postsecondary education sector was down $10 million.

The third quarter spending plan increases for the program sectors were funded through $7.1 billion in transfers from the Province’s three unallocated funds: the Health Fund ($4.2 billion decrease), the SPJF ($1.3 billion decrease) and the Contingency Fund ($1.5 billion decrease).[5] As of December 31, after accounting for top-ups and transfers during the first three quarters, the combined remaining balance in the Health Fund, SPJF and Contingency Fund was $4.7 billion. This represents a 60 per cent drawdown in the three unallocated funds in the third quarter, compared to the remaining balance at the end of the second quarter (September 30).

As noted in the 2020 Ontario Budget, any remaining funds in the Health Fund, SPJF and Contingency Fund by year end (March 31, 2021) will reduce both the budget deficit and Ontario’s net debt.[6]

Table 1 Changes to the 2020-21 spending plan by sector, as of December 31, 2020, $ millions Note: Figures exclude planned spending on some assets and $9.1 billion in additional planned spending by the broader public sector organizations controlled by the Province (hospitals, school boards and colleges), the Province’s agencies and the legislative offices. The second quarter adjustments in the ‘other programs’ sector and the Support for People and Jobs Fund have been revised based on updated information. Source: FAO analysis of the 2020-21 Expenditure Estimates, the Supplementary Estimates, 2020-21 and information provided by Treasury Board Secretariat.
Sector 2020-21 Spending Plan Q1 Adjustments Q2 Adjustments Q3 Adjustments Total Adjustments Revised 2020-21 Spending Plan
Health 61,753 2,083 413 4,533 7,029 68,782
Education 31,358 5 994 999 32,357
Postsecondary Education 6,984 2 -10 -8 6,976
Children’s and Social Services 17,944 158 49 19 227 18,170
Justice 4,948 25 23 48 4,996
Other Programs 24,734 1,010 4,098 1,556 6,665 31,400
Unallocated Funds:
COVID-19 Health Sector Response Fund 1,823 -1,505 4,147 -4,237 -1,594 229
Support for People and Jobs Fund 1,966 -629 1,699 -1,330 -259 1,706
Contingency Fund 1,300 -359 3,340 -1,549 1,433 2,733
Interest on Debt 12,407 12,407
Total 165,217 759 13,780 14,539 179,756

The rest of this section highlights key third quarter spending plan changes by sector and vote-item. For information on all of the Province’s transfer payment programs and ministries, visit the FAO’s website at: https://bit.ly/3uT5H6w.

Health: $4,533 million (7.1 per cent) increase, including:

Education: $994 million (3.2 per cent) increase, including:  

Other Programs: $1,556 million (5.2 per cent) increase, including:

Actual 2020-21 Spending

Actual Spending vs. Planned Spending

Over the first three quarters of the 2020-21 fiscal year, the Province spent $116.7 billion. Overall, this is $3.1 billion, or 2.6 per cent, less than planned.[8] All sectors[9] spent less than planned over the first three quarters, except for the education sector, which temporarily spent $1.5 billion more than planned due to the government’s decision to defer for 90 days Education Property Tax payments.[10]

Excluding education, the Province spent $4.6 billion less than planned through the first three quarters of 2020-21, led by ‘other programs’ ($2.4 billion under plan), interest on debt ($0.8 billion under plan), postsecondary education ($0.6 billion under plan) and health ($0.5 billion under plan). On a relative basis, ‘other programs’ spent 12.0 per cent less than planned through the first three quarters, followed by postsecondary education (11.6 per cent under plan) and interest on debt (8.7 per cent under plan).

Health sector spending was 1.0 per cent below plan as of the end of the third quarter. For context, health sector spending was 2.6 per cent below plan at the end of the second quarter, which means that the pace of spending in the third quarter was 1.9 per cent above plan.

Table 2 2020-21 spending by sector, as of December 31, 2020, $ millions Note: Figures exclude planned spending on some assets and $9.1 billion in additional planned spending by the broader public sector organizations controlled by the Province (hospitals, school boards and colleges), the Province’s agencies and the legislative offices. Source: FAO analysis of the 2020-21 Expenditure Estimates, the Supplementary Estimates, 2020-21 and information provided by Treasury Board Secretariat.
Sector Revised 2020-21 Spending Plan Planned Spending at end of Q3 Actual Spending at end of Q3 Actual vs. Planned at end of Q3 Actual vs. Planned (%)
Health 68,782 49,796 49,311 -484 -1.0%
Education 32,357 17,974 19,432 1,458 8.1%
Postsecondary Education 6,976 5,286 4,673 -613 -11.6%
Children’s and Social Services 18,170 13,738 13,575 -164 -1.2%
Justice 4,996 3,579 3,484 -95 -2.7%
Other Programs 31,400 20,190 17,776 -2,414 -12.0%
Unallocated Funds:
COVID-19 Health Sector Response Fund 229 N/A
Support for People and Jobs Fund 1,706 N/A
Contingency Fund 2,733 N/A
Interest on Debt 12,407 9,231 8,430 -801 -8.7%
Total 179,756 119,793 116,681 -3,112 -2.6%

The rest of this section highlights key vote-item spending that was above and below plan through the third quarter of 2020-21. For information on spending by all of the Province’s transfer payment programs and ministries, visit the FAO’s website at: https://bit.ly/3uT5H6w.

Health sector spending: $484 million (1.0 per cent) below plan through the third quarter, including:

Education sector spending: $1,458 million (8.1 per cent) above plan through the third quarter, including:

Postsecondary Education sector spending: $613 million (11.6 per cent) below plan through the third quarter, including:

Children’s and Social Services sector spending: $164 million (1.2 per cent) below plan through the third quarter, including:

Other Programs sector spending: $2,414 million (12.0 per cent) below plan through the third quarter, including:

2020-21 Spending vs. 2019-20 Spending

In the first three quarters of 2020-21, the Province spent $116.7 billion, which is $10.3 billion, or 9.7 per cent, more than was spent in the first three quarters of 2019-20. Health, education, children’s and social services, and ‘other programs’ all spent more during the first three quarters of 2020-21, compared to the first three quarters of 2019-20. On the other hand, spending on postsecondary education, justice and interest on debt was less in 2020-21 compared to 2019-20.

Table 3 Spending through the end of the third quarter by sector, 2020-21 vs. 2019-20, $ millions Note: Figures exclude spending on some assets, the broader public sector organizations controlled by the Province (hospitals, school boards and colleges), the Province’s agencies and the legislative offices. Source: FAO analysis of the 2020-21 Expenditure Estimates, the Supplementary Estimates, 2020-21 and information provided by Treasury Board Secretariat.
Sector 2020-21 Spending at end of Q3 2019-20 Spending at end of Q3 2020-21 vs. 2019-20 2020-21 vs. 2019-20 (%)
Health 49,311 43,759 5,552 12.7%
Education 19,432 17,294 2,138 12.4%
Postsecondary Education 4,673 4,967 -294 -5.9%
Children’s and Social Services 13,575 13,021 554 4.3%
Justice 3,484 3,513 -29 -0.8%
Other Programs 17,776 15,110 2,666 17.6%
Interest on Debt 8,430 8,748 -318 -3.6%
Total 116,681 106,412 10,269 9.7%

Status of Unallocated Funds

The Province’s initial $165.2 billion spending plan for 2020-21 included $5.1 billion in unallocated funds through three programs: the COVID-19 Health Sector Response Fund (Health Fund), the Support for People and Jobs Fund (SPJF) and the Contingency Fund. In the second quarter, the Province added $10.7 billion in ‘top-ups’ to these three programs through the tabling of Supplementary Estimates.

The unallocated funds in the Health Fund, SPJF and Contingency Fund cannot be spent directly by the Province but must be transferred to government programs through Treasury Board Orders. The Province transferred $2.5 billion from the three unallocated funds to various programs in the first quarter,[13] $1.6 billion in the second quarter[14] and $7.1 billion in the third quarter. Consequently, as of the end of the third quarter (December 31, 2020), the combined remaining balance of the Health Fund, SPJF and Contingency Fund was $4.7 billion.

Table 4 Status of unallocated funds as of December 31, 2020, $ millions Source: FAO analysis of the 2020-21 Expenditure Estimates, the Supplementary Estimates, 2020-21 and information provided by Treasury Board Secretariat.
Unallocated Fund Opening Balance Top-Ups Q1 Transfers Q2 Transfers Q3 Transfers Balance at end of Q3
COVID-19 Health Sector Response Fund 1,823 4,344 -1,505 -197 -4,237 229
Support for People and Jobs Fund 1,966 3,000 -629 -1,301 -1,330 1,706
Contingency Fund 1,300 3,394 -359 -54 -1,549 2,733
Total 5,089 10,738 -2,493 -1,551 -7,115 4,667

In the 2020-21 Third Quarter Finances, the government reported that the remaining balances for the Health Fund and SPJF were zero, while the Contingency Fund had a remaining balance of $4.0 billion. The 2020-21 Third Quarter Finances reflects government decisions through to February 5, 2021, which implies that in the fourth quarter the Province plans to transfer the remaining balances in the Health Fund ($229 million) and SPJF ($1.7 billion) to various programs and top up the balance of the Contingency Fund by at least $1.3 billion.[15]

The following three tables provide information on transfers from the Health Fund, SPJF and Contingency Fund during the third quarter of 2020-21.

Table 5Third quarter transfers from the COVID-19 Health Sector Response Fund, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry/Program $ millions
Ministry of Health
Operation of Hospitals 2,430
Ontario Agency for Health Protection and Promotion 284
Small Hospital Projects 170
Payments made for services and for care provided by physicians and practitioners 147
Community Mental Health 100
Outbreaks of Diseases 70
Integrated Health Facility Programs 32
Health System Information Management 15
Digital Health Strategy and Programs 12
IT Services Health Cluster 7
Independent Health Facilities 6
Public Health 5
Official Local Health Agencies 2
Ministry of Long-Term Care
Long-Term Care Homes – Operations 933
Long-Term Care Homes (Capital) 10
Long-Term Care Homes Program 3
Ministry of Seniors and Accessibility
Seniors Affairs Transfer Payment 11
Total Third Quarter Transfers 4,237
Table 6 Third quarter transfers from the Support for People and Jobs Fund, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry/Program $ millions
Ministry of Agriculture, Food and Rural Affairs
Grassroots Growth Program 5
COVID-19 Programming 2
Economic Development 0
Ministry of Children, Community and Social Services
Residential Services 7
Youth Initiatives 4
Children, Community and Social Services Infrastructure – Capital grants 3
Supportive Services 3
Child Protection Services 2
Children’s Treatment and Rehabilitation Services 1
Supports to Victims of Violence 1
Youth Justice Services 0
Complex Special Needs 0
Supports to Community Living 0
Indigenous Healing and Wellness Strategy 0
Ministry of Economic Development, Job Creation and Trade
Ontario Small Business Relief Program 65
Invest Ontario 10
Commercialization and Innovation Network Support 1
Ministry of Education
Priorities and Partnerships Funding – Third Parties 380
Ministry of Energy, Northern Development and Mines
COVID-19 Response – Energy Rebate Grant 240
Renewable Cost Shift 71
Ministry of Environment, Conservation and Parks
Conservation Partnership 5
Wastewater Monitoring and Public Reporting 5
Ontario Parks (Capital) 0
Environmental Planning and Action 0
Ministry of Finance
COVID-19 Response – Business Property Tax Rebate Grant 360
Ministry of Francophone Affairs
Francophone community grants 1
Ministry of Heritage, Sport, Tourism and Culture Industries
Tourism Recovery and Support 30
Ontario Arts Council 25
Ontario Trillium Foundation 25
Ministry of Long-Term Care
Long-Term Care Homes Program 10
Ministry of Municipal Affairs and Housing
National Disaster Mitigation Program (Capital) 2
National Disaster Mitigation Program (Operating) 2
Ministry of Natural Resources and Forestry
Forestry Initiatives 5
Ministry of Seniors and Accessibility
Seniors Affairs Transfer Payment 1
Ministry of the Solicitor General
Staff Training 1
Treasury Board Secretariat
Ministry Administration 60
Total Third Quarter Transfers 1,330
Table 7 Third quarter transfers from / to the Contingency Fund, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry/Program $ millions
Ministry of Attorney General
Agency Relations 3
Cabinet Office 2
Ministry of Economic Development, Job Creation and Trade
Business Research Institution Tax Credit -1
Ontario Innovation Tax Credit -5
Ministry of Education
Priorities and Partnerships Funding – School Boards 381
Child Care and Early Years 235
Ministry of Energy, Northern Development and Mines
Remote Air Carrier Support Program 11
Ministry of Government and Consumer Services
Centralized Supply Chain 7
Ministry of Health
Major Hospital Projects 72
Integrated Health Facility Programs 47
Community Health Programs 9
IT Services Health Cluster 9
Small Hospital Projects 8
Ministry of Heritage, Sport, Tourism and Culture Industries
Agencies and Attractions Sector Support (Operating) 52
Agencies and Attractions Sector Support (Capital) 4
Sport 3
Ontario Book Publishing Tax Credit -1
Ontario Interactive Digital Media Tax Credit -4
Ontario Computer Animation and Special Effects Tax Credit -7
Ontario Film and Television Tax Credit -61
Ontario Production Services Tax Credit -116
Ministry of Indigenous Affairs
Land Claim Settlements 14
Ministry of Labour, Training and Skills Development
Occupational Health and Safety 6
Prevention Office 1
Ontario Apprenticeship Tax Credit -1
Ontario Co-operative Education Tax Credit -20
Ministry of Long-Term Care
Long-Term Care Program (Capital) 150
Long-Term Care Homes Program 6
Ministry of Municipal Affairs and Housing
Housing Lands – Sale 73
Housing Lands – Lease 12
Ministry of the Solicitor General
Ministry Administration 22
Ministry of Transportation
Metrolinx Operating Subsidies 600
Ontario Northland Transportation Commission – Operating 10
Owen Sound Transportation Company – Operating 4
Road User Safety 3
Treasury Board Secretariat
Office of the Comptroller General 20
Total Third Quarter Transfers 1,549

Footnotes

[1] See below for more details.

[2] This spending plan was formally tabled in the 2020-21 Expenditure Estimates. Excludes $9.1 billion in additional planned spending by the broader public sector organizations controlled by the Province (hospitals, school boards and colleges), the Province’s agencies and the legislative offices. The Province does not actively monitor or control this spending. Also excludes $3.6 billion in additional planned spending on capital assets and $1.2 billion on operating assets.

[3] See FAO, “Expenditure Monitor 2020-21: Q2,” 2020 and FAO, “Expenditure Monitor 2020-21: Q1,” 2020 for additional information.

[4] On March 4, 2021, the Province tabled a second edition of Supplementary Estimates, which increased its 2020-21 spending plan by $6.9 billion.

[5] See the final section of this report for information on top-ups to and transfers from the three unallocated funds.

[6] 2020 Ontario Budget, p. 176.

[7] For more information, see FAO, “Tourism, Culture and Heritage: An Overview of the Tourism, Culture and Heritage Economic Sectors, Related Ministry Programs and the Impact of the COVID-19 Pandemic,” 2020, p. 13 and 2020 Ontario Budget, p. 223.

[8] At the start of the fiscal year, ministries estimate planned spending for each program by month, based on the program’s budget allocation in the Expenditure Estimates. “Planned” spending (or calendarization) for a program takes into account factors such as historical spending patterns and seasonality, and is used to monitor spending pressures and potential year-end savings (or underspending).

[9] Excludes the Health Fund, SPJF and Contingency Fund, as these unallocated funds do not have planned spending until funding is transferred to program sectors.

[10] In response to the COVID-19 pandemic, the Province allowed municipalities to defer for 90 days the quarterly submissions on June 30 and September 30 of Education Property Tax payments to school boards. In order to ensure that the deferrals did not have a financial impact on school boards, the Province temporarily adjusted the timing of its own payments to school boards. The FAO expects that the Province will transfer less funds than originally planned to school boards in the fourth quarter.

[11] See previous section for details.

[12] For more information on the Province’s suspension of time-of-use electricity pricing, see FAO, “A Financial Review: The Decision to Freeze Time-of-Use Electricity Pricing,” 2020. The Province introduced a second temporary electricity price reduction to 8.5 cents per kilowatt-hour from January 1, 2021 to February 22, 2021 for residential, small business and farm customers who pay time-of-use and tiered rates.

[13] For details on first quarter transfers see FAO, “Expenditure Monitor 2020-21: Q1,” 2020.

[14] The second quarter transfer amount has been revised from the $1.3 billion reported in the FAO’s “Expenditure Monitor 2020-21: Q2” based on updated information. An additional $241 million was transferred from the SPJF in the second quarter for the Canada Emergency Commercial Rent Assistance program. 

[15] In fact, on March 4, 2021, the Province topped up the Contingency Fund by $4.0 billion through Supplementary Estimates.