Expenditure Monitor 2020-21: Q4

Expenditure Monitor 2020-21: Q4

Publish date: July 21, 2021 ISSN 2562-9883
This report provides information on spending by the Province through the end of the 2020-21 fiscal year (March 31, 2021), including changes to the 2020-21 spending plan, unaudited spending results, an updated budget deficit projection, and the year-end status of the Province’s three unallocated funds.
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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 (Senior Financial Analyst), Jacob Kim (Financial Analyst) and Matthew Stephenson (Manager, Financial Analysis), 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: Q4, 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) through the end of the 2020-21 fiscal year. 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 (Volume 1 and 2nd Edition), the 2021 Ontario Budget, and transactions recorded in the Province’s Integrated Financial Information System (IFIS) as of April 22, 2021.

The closing date for spending transactions related to the 2020-21 fiscal year, which ended on March 31, 2021, was April 22, 2021. However, there will still be 2020-21 spending transactions that are recorded between April 22, 2021 and when the 2020-21 Public Accounts of Ontario are released (typically in September). Depending on the nature of these transactions, there may be material changes from the information presented in this report and the 2020-21 Public Accounts of Ontario.[2]

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.[3] By the end of the 2020-21 fiscal year, the Province’s spending plan had increased by $22.1 billion, or 13.4 per cent, to $187.3 billion. In the first and second quarters of 2020-21, the Province added $759 million and $13.8 billion, respectively, in planned spending, while in the fourth quarter the Province added another $7.5 billion.

By sector, the largest spending plan increases went to ‘other programs’ ($12.4 billion, 50.2 per cent increase), health ($8.4 billion, 13.6 per cent increase) and education ($2.6 billion, 8.2 per cent increase). The children’s and social services and justice sectors both received spending plan increases of $237 million during 2020-21, while the postsecondary education sector’s spending plan was reduced by $150 million during the year.

The Province started the 2020-21 year with a total of $5.1 billion in unallocated funds through three programs: the Health Fund, the SPJF and the Contingency Fund. After accounting for top-ups and transfers during the year, the remaining balances at the end of 2020-21 were $3.4 billion in the Contingency Fund and zero in the Health Fund and SPJF. (The final section of this report provides more information on the three unallocated funds.) As noted in the 2020 Ontario Budget, the remaining funds in the Contingency Fund will reduce both the budget deficit and Ontario’s net debt.[4]

Fourth Quarter Analysis[5]

In the fourth quarter, the Province added $7.5 billion to the 2020-21 spending plan. Most of the spending plan increase went to the ‘other programs’ sector ($5.7 billion), while the education sector increased by $1.6 billion and the health sector increased by $1.4 billion. There were smaller changes to the remaining program sectors, with planned spending in the justice and children’s and social services sectors up $189 million and $11 million, respectively, while the spending plan for the postsecondary education sector declined by $142 million.  

The fourth quarter spending plan increases for the program sectors were partly funded through transfers from the Province’s three unallocated funds: the Health Fund ($229 million drawdown), the SPJF ($1.7 billion drawdown) and the Contingency Fund ($3.3 billion drawdown). However, the $3.3 billion transfer from the Contingency Fund was offset by a $4.0 billion top-up, increasing the Contingency Fund’s balance by a net $703 million.

Table 1 Changes to the 2020-21 spending plan by sector, $ 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 Changes Q2 Changes Q3 Changes Q4 Changes Total Changes Revised 2020-21 Spending Plan
Health 61,753 2,083 413 4,533 1,377 8,406 70,159
Education 31,358 5 994 1,580 2,580 33,937
Postsecondary Education 6,984 2 -10 -142 -150 6,834
Children’s and Social Services 17,944 158 49 19 11 237 18,181
Justice 4,948 25 23 189 237 5,186
Other Programs 24,734 1,010 4,098 1,556 5,744 12,409 37,144
Unallocated Funds:
COVID-19 Health Sector Response Fund 1,823 -1,505 4,147 -4,237 -229 -1,823
Support for People and Jobs Fund 1,966 -629 1,699 -1,330 -1,706 -1,966
Contingency Fund 1,300 -359 3,340 -1,549 703 2,136 3,436
Interest on Debt 12,407 12,407
Total 165,217 759 13,780 7,528 22,067 187,283

The rest of this section highlights key fourth 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/3kfuDm2.

Health: : $1,377 million (2.0 per cent) increase, including:

Education: $1,580 million (4.9 per cent) increase, including:  

Postsecondary Education: $142 million (2.0 per cent) decrease, including:

Justice: $189 million (3.8 per cent) increase, including:

Other Programs: $5,744 million (18.3 per cent) increase, including:

2020-21 Spending (Unaudited)

Unaudited Spending vs. Planned Spending

The Province spent $177.0 billion over the 2020-21 fiscal year. Overall, this is $10.3 billion, or 5.5 per cent, less than planned. In 2020-21, all sectors spent less than planned, led by ‘other programs’ ($3.7 billion or 10.0 per cent under plan), interest on debt ($1.1 billion or 9.1 per cent under plan), health ($1.0 billion or 1.5 per cent under plan), children’s and social services ($0.4 billion or 2.4 per cent under plan) and postsecondary education ($0.3 billion or 4.0 per cent under plan). There was also a $3.4 billion end-of-year balance in the Contingency Fund that was not spent.

The $10.3 billion in net savings will be used to reduce both the budget deficit and Ontario’s net debt.

Table 2 2020-21 unaudited spending vs. planned spending by sector, $ millions Note: Figures exclude spending on some assets and additional 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 2020-21 Unaudited Spending Unaudited Spending vs. Revised Spending Plan Unaudited Spending vs. Revised Spending Plan (%)
Health 70,159 69,131 -1,028 -1.5%
Education 33,937 33,780 -158 -0.5%
Postsecondary Education 6,834 6,563 -271 -4.0%
Children’s and Social Services 18,181 17,737 -444 -2.4%
Justice 5,186 5,080 -106 -2.0%
Other Programs 37,144 33,424 -3,719 -10.0%
Unallocated Funds:
COVID-19 Health Sector Response Fund N/A
Support for People and Jobs Fund N/A
Contingency Fund 3,436 -3,436 -100%
Interest on Debt 12,407 11,279 -1,128 -9.1%
Total 187,283 176,994 -10,289 -5.5%

For context, the FAO compared the Province’s planned spending against actual spending for the last 10 years and found that actual spending was, on average, $3.8 billion or 2.7 per cent lower than planned. The savings each year ranged from $2.0 billion in 2017-18 to $7.3 billion in 2018-19. This indicates that savings in 2020-21 of $10.3 billion was significantly higher than over the previous 10 years. (On the other hand, overall spending in 2020-21 was still 13.7 per cent higher compared to 2019-20. See next section for more information.)

Figure 1 Annual spending savings: actual spending less planned spending, 2010-11 to 2020-21

Note: Figures exclude additional 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 FAO has adjusted some totals to reflect in-year accounting adjustments so that planned and actual spending are on the same basis.

Source: FAO analysis of the Public Accounts of Ontario and the Expenditure Estimates.

Accessible Version
Year Actual less planned spending ($ billions) Actual less planned spending (per cent)
2010-11 -4.9 -3.6%
2011-12 -2.5 -2.0%
2012-13 -2.2 -1.7%
2013-14 -3.4 -2.6%
2014-15 -3.1 -2.3%
2015-16 -5.2 -3.7%
2016-17 -4.5 -3.2%
2017-18 -2.0 -1.3%
2018-19 -7.3 -4.5%
2019-20 -3.2 -2.0%
2020-21 -10.3 -5.5%

The rest of this section highlights key vote-item unaudited spending compared to the revised 2020-21 spending plan. For information on spending by all of the Province’s transfer payment programs and ministries, visit the FAO’s website at: https://bit.ly/3kfuDm2.

Health sector spending: $1,028 million (1.5 per cent) below plan, including:

Education sector spending: $158 million (0.5 per cent) below plan, including:

Postsecondary Education sector spending: $271 million (4.0 per cent) below plan, including:

Children’s and Social Services sector spending: $444 million (2.4 per cent) below plan, including:

Other Programs sector spending: $3,719 million (10.0 per cent) below plan, including:

2020-21 Spending vs. 2019-20 Spending

In 2020-21, the Province spent $177.0 billion, which is $21.3 billion, or 13.7 per cent, more than was spent in 2019-20. ‘Other programs’ ($9.9 billion), health ($9.3 billion), education ($2.6 billion), and children’s and social services ($0.3 billion) all spent more in 2020-21 compared to 2019-20. On the other hand, spending on postsecondary education (-$0.3 billion), interest on debt (-$0.3 billion) and justice (-$0.1 billion) was lower in 2020-21 compared to 2019-20.

Table 3 2020-21 unaudited spending vs. 2019-20 actual spending, $ millions Note: Figures exclude spending on some assets and additional 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 2019-20 Actual Spending 2020-21 Unaudited Spending 2020-21 vs. 2019-20 2020-21 vs. 2019-20 (%)
Health 59,843 69,131 9,288 15.5%
Education 31,222 33,780 2,558 8.2%
Postsecondary Education 6,897 6,563 -333 -4.8%
Children’s and Social Services 17,391 17,737 346 2.0%
Justice 5,137 5,080 -57 -1.1%
Other Programs 23,558 33,424 9,866 41.9%
Interest on Debt 11,610 11,279 -331 -2.9%
Total 155,657 176,994 21,337 13.7%

For context, the FAO estimates that from 2010-11 to 2019-20, spending increased by an annual average of only $2.8 billion or 2.1 per cent. For 2020-21, the $21.3 billion or 13.7 per cent spending increase is significantly above the recent average annual growth rate due to the COVID-19 pandemic.

2020-21 Budget Deficit Projection

Based on the spending information presented in this report and the FAO’s most recent revenue forecast from the Spring 2021 Economic and Budget Outlook, the FAO has updated its 2020-21 budget deficit projection to $29.3 billion. In comparison, in the 2021 Ontario Budget, the Province projected a 2020-21 budget deficit of $38.5 billion. The difference between the FAO’s and the Province’s 2020-21 budget deficit projections is $9.2 billion.

Table 4 2020-21 budget deficit projections, 2021 Budget vs. FAO Projection, $ millions * Other Spending represents additional spending by the broader public sector organizations controlled by the Province (hospitals, school boards and colleges), the Province’s agencies and the legislative offices. Note: 2021 Budget is the Province’s 2020-21 interim budget deficit forecast in the 2021 Ontario Budget. FAO Projection is the FAO’s budget deficit forecast based on the FAO’s revenue forecast from the “Economic and Budget Outlook,” Spring 2021, the spending recorded in the Province’s Integrated Financial Information System (IFIS) as of April 22, 2021, and other estimated spending adjustments Source: 2021 Ontario Budget, FAO, “Economic and Budget Outlook,” Spring 2021, and information provided by Treasury Board Secretariat.
Province FAO Difference
Revenue 151,813 154,479 2,666
Expense
Direct Spending:
Health 72,308 69,131 -3,177
Education 33,982 33,780 -202
Postsecondary Education 6,740 6,563 -177
Children’s and Social Services 18,033 17,737 -296
Justice 5,204 5,080 -124
Other Programs 36,790 33,424 -3,366
Interest on Debt 11,664 11,279 -385
Other Spending* 5,560 6,796 1,236
Total Expense 190,281 183,790 -6,491
Surplus/(Deficit) (38,468) (29,311) 9,157

The FAO estimates that 2020-21 total revenue will be $2.7 billion higher than forecast by the Province in the 2021 budget, as the outlook for the Ontario economy has improved since the preparation of the 2021 budget.

In terms of spending, the FAO projection for total expense is $6.5 billion lower than the expense forecast in the 2021 budget. The difference in the two spending forecasts reflects the more up-to-date information available to the FAO (as of April 22, 2021) compared to the Province’s spending forecast in the 2021 budget.   

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 and in the fourth quarter the Province topped up the Contingency Fund by another $4.0 billion. Overall, the Province added $14.7 billion to the three unallocated funds during the year, bringing the total funds available to $19.8 billion.

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, $1.6 billion in the second quarter, $7.1 billion in the third quarter and $5.2 billion in the fourth quarter. After accounting for these transfers, the remaining year-end balances in the Health Fund and SPJF were zero, while the remaining balance in the Contingency Fund was $3.4 billion.

Table 5 Status of unallocated funds in 2020-21, $ 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 Q2 Top-Ups Q4 Top-Ups Q1 Transfers Q2 Transfers Q3 Transfers Q4 Transfers Balance at Year-End
Health Fund 1,823 4,344 -1,505 -197 -4,237 -229
SPJF 1,966 3,000 -629 -1,301 -1,330 -1,706
Contingency Fund 1,300 3,394 3,988 -359 -54 -1,549 -3,285 3,436
Total 5,089 10,738 3,988 -2,493 -1,551 -7,115 -5,220 3,436

The following three tables provide information on transfers from the SPJF, Health Fund and Contingency Fund during the fourth quarter of 2020-21.[8] 

Table 6 Fourth 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 Economic Development, Job Creation and Trade
Ontario Small Business Support Grant 1,559
Ministry of Energy, Northern Development and Mines
Energy Support, Engagement and Indigenous Partnership Programs 105
Ministry of Municipal Affairs and Housing
Homelessness Programs 42 42
Total Fourth Quarter Transfers 1,706
Table 7 Fourth 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 the Attorney General
Justice Centre – Community Partnerships 3
Victim Crisis Assistance Ontario 2
Supervised Access 2
Ministry of Children, Community and Social Services
Complex Special Needs 4
Child Protection Services 4
Supportive Services 1
Child Welfare – Community and Prevention Supports 1
Supports to Victims of Violence 1
Residential Services < 1
Financial and Employment Supports < 1
Supports to Individuals and Families (operating) < 1
Ministry of Colleges and Universities
Grants for College Operating Costs 4
Grants for University Operating Costs 4
Ministry of Education
Priority and Partnerships Funding – Third Parties 7
Ministry of Government and Consumer Services
Ontario Shared Services 100
Ministry of Indigenous Affairs
Participation Fund 4
Ministry of Long-Term Care
Long-Term Care Homes – Operations 84
Ministry of Municipal Affairs and Housing
Homelessness Programs 2
Ministry of the Solicitor General
Correctional Services Operational Support 8
Total Fourth Quarter Transfers 229
Table 8 Fourth quarter transfers / to the Contingency Fund, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry/Program $ millions
Ministry of Agriculture, Food and Rural Affairs
Agricultural Drainage Infrastructure Program 7
Ministry of the Attorney General
Agency and Tribunal Relations 32
Ministry of Children, Community and Social Services
Indigenous Healing and Wellness Strategy 2
Citizenship and Immigration Initiatives 2
Economic Empowerment Initiatives 2
Ontario Works – Financial Assistance < 1
Child Welfare – Community and Prevention Supports < 1
Youth Justice Services < 1
Children’s Activity Tax Credit < 1
Ontario Disability Support Program – Employment Assistance < 1
Ministry of Economic Development, Job Creation and Trade
Ontario Small Business Support Grant 1,841
Ontario Innovation Tax Credit 16
Regional Opportunities Investment Tax Credit 6
Business Research Institution Tax Credit 2
Ministry of Education
Priorities and Partnerships Funding – Third Parties 980
Childcare Access and Relief from Expenses Tax Credit 20
Ministry of Government and Consumer Services
Ontario Shared Services 307
Realty Transactions (Operating) < 1
Ministry of Health
Healthy Homes Renovation Tax Credit < 1
Ministry of Heritage, Sport, Tourism and Culture Industries
Ontario Computer Animation and Special Effects Tax Credit 25
Ontario Film and Television Tax Credit 24
Ontario Production Services Tax Credit 11
Sport 8
Grants in Support for Tourism Regions 6
Agencies and Attractions Sector Support 5
Ontario Trillium Foundation 4
Heritage Sector Support 2
Ontario Book Publishing Tax Credit 1
Ontario Sound Recording Tax Credit < 1
Ministry of Indigenous Affairs
Land Claim Settlements 135
Indigenous Economic Development Fund 6
Ministry Administration Program 2
Ministry of Labour, Training and Skills Development
Employment and Training 181
Ontario Jobs Training Tax Credit 65
Ontario Co-operative Education Tax Credit 12
Ontario Apprenticeship Training Tax Credit 4
Ministry of Long-Term Care
Long-Term Care Homes – Operations 52
Ministry of Municipal Affairs and Housing
COVID-19 Recovery Funding for Municipalities 500
Homelessness Programs 255
Ministry of Natural Resources and Forestry
Public Protection 21
Ministry of Seniors and Accessibility
Seniors Affairs Transfer Payment 35
Seniors’ Home Safety Tax Credit 10
Ministry of the Solicitor General
Other Programs 14
Ministry of Transportation
Municipal Transit 150
Net transfers to the Contingency Fund -1,462
Net Total Fourth Quarter Transfers 3,285

Footnotes

[1] 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.

[2] For example, in 2019-20, there was a net spending increase of $323 million that was recorded between the year-end closing date and the release of the 2019-20 Public Accounts of Ontario. In the 2017-18 fiscal year, significant spending changes were recorded from July to September of 2018 that were reflected in the 2017-18 Public Accounts of Ontario. These changes included $713 million for an anticipated settlement agreement with physicians and $981 million for First Nations land claim settlements and anticipated settlements.

[3] 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.

[4] 2020 Ontario Budget, p. 176.

[5] For analysis on the first three quarters of 2020-21, see FAO, “Expenditure Monitor 2020-21: Q3,” 2021; FAO, “Expenditure Monitor 2020-21: Q2,” 2020; and FAO, “Expenditure Monitor 2020-21: Q1,” 2020.

[6] For more information, see FAO, “Ministry of Health: Spending Plan Review,” 2021.

[7] For more information, see FAO, “Ministry of Education: Spending Plan Review,” 2021.

[8] For details on first quarter transfers see FAO, “Expenditure Monitor 2020-21: Q1,” 2020. For the second quarter, see FAO, “Expenditure Monitor 2020-21: Q2,” 2020. The second quarter transfer amount has been revised from the $1.3 billion stated in the FAO’s report 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. For the third quarter, see FAO, “Expenditure Monitor 2020-21: Q3,” 2021.