Expenditure Monitor 2021-22: Q1

Expenditure Monitor 2021-22: Q1

Publish date: September 15, 2021 ISSN 2562-9883
This report provides information on spending by the Province in the first quarter of the 2021-22 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 (Senior 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 2021-22: Q1, 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 first quarter of the 2021-22 fiscal year, from April 1, 2021 to June 30, 2021. The report:

The information in this report is based on the FAO’s analysis of the 2021-22 Expenditure Estimates and transactions recorded in the Province’s Integrated Financial Information System (IFIS) as of June 30, 2021.

Changes to the 2021-22 Spending Plan

In the 2021-22 Expenditure Estimates, the Province tabled a 2021-22 spending plan of $178.3 billion.[4] In the first quarter of 2021-22 (April 1, 2021 to June 30, 2021), the Province made internal program budget reallocations that added $445 million in planned spending to the ‘other programs’ sector, followed by justice ($10 million increase), education ($6 million increase) and health ($5 million increase). The net increase to the program sectors was offset by transfers from the Contingency Fund, which had a net drawdown of $474 million in the first quarter. Overall, the Province’s spending plan of $178.3 billion decreased by $7 million.[5]

The Province started the 2021-22 fiscal year with a total of $2.1 billion in unallocated funds in the Contingency Fund. After accounting for the $474 million in transfers from the Contingency Fund in the first quarter, the remaining balance in the Contingency Fund as of June 30, 2021 was $1.6 billion.

In the government’s 2021-22 First Quarter Finances, the Province announced that an additional $2.2 billion in unallocated funds would be made available through a new program called the Time-Limited COVID-19 Fund. As of the end of the first quarter, June 30, 2021, this new program was not included in the government’s financial accounts and so is not reflected in the 2021-22 spending plan. The FAO expects that the Time-Limited COVID-19 Fund will be available in the second quarter.

Table 1 Changes to the 2021-22 spending plan by sector, $ millions Note: Figures exclude planned spending on some assets and $7.8 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 2021-22 Expenditure Estimates and information provided by Treasury Board Secretariat.
Sector 2021-22 Spending Plan Q1 Changes Revised 2021-22 Spending Plan
Health 71,184 5 71,188
Education 32,847 6 32,853
Postsecondary Education 6,987 6,987
Children's and Social Services 18,108 18,108
Justice 5,192 10 5,203
Other Programs 29,472 445 29,917
Unallocated Funds:
Contingency Fund 2,080 -474 1,607
Interest on Debt 12,419 12,419
Total 178,290 -7 178,282

The rest of this section highlights key first 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/3zGVe06

Other Programs: $445 million increase, including:

First Quarter Spending

Unaudited Actual Spending vs. Planned Spending

Over the first three months of the 2021-22 fiscal year, the Province spent $36.9 billion. Overall, this is $2.6 billion, or 6.6 per cent, less than planned.[6] Most sectors spent less than planned, led by ‘other programs’ ($1.0 billion or 16.6 per cent under plan), health ($1.0 billion or 5.4 per cent under plan), children’s and social services ($0.5 billion or 11.6 per cent under plan), interest on debt ($0.1 billion or 4.6 per cent under plan) and postsecondary education ($33 million or 2.3 per cent under plan). Spending was above plan for two sectors: education ($17 million or 0.3 per cent above plan) and justice ($25 million or 2.2 per cent above plan).[7]

Table 2 2021-22 spending by sector, as of June 30, 2021, $ 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 2021-22 Expenditure Estimates and information provided by Treasury Board Secretariat.
Sector Revised 2021-22 Spending Plan Planned Spending at end of Q1 Actual Spending at end of Q1 Actual vs. Planned at end of Q1 Actual vs. Planned (%)
Health 71,188 17,776 16,824 -952 -5.4%
Education 32,853 5,489 5,506 17 0.3%
Postsecondary Education 6,987 1,447 1,414 -33 -2.3%
Children's and Social Services 18,108 4,566 4,034 -531 -11.6%
Justice 5,203 1,142 1,167 25 2.2%
Other Programs 29,917 6,074 5,067 -1,007 -16.6%
Unallocated Funds:
Contingency Fund 1,607
Interest on Debt 12,419 3,001 2,861 -139 -4.6%
Total 178,282 39,495 36,873 -2,622 -6.6%

The rest of this section highlights key vote-item spending that was above and below plan in the first quarter of2021-22. For information on spending by all of the Province’s transfer payment programs and ministries, visit the FAO’s website at: https://bit.ly/3zGVe06

Health sector spending: $952 million (5.4 per cent) below plan, including:

Children’s and Social Services sector spending: $531 million (11.6 per cent) below plan, including:

Other Programs sector spending: $1,007 million (16.6 per cent) below plan, including:

2021-22 Spending vs. 2020-21 Spending

In the first quarter of 2021-22, the Province spent $36.9 billion, which was $1.1 billion (2.8 per cent) less than was spent in the first quarter of 2020-21. Education (-$1.7 billion), children’s and social services (-$0.4 billion) and postsecondary education (-$0.2 billion) all spent less in the first quarter of 2021-22 compared to 2020-21. Conversely, spending on health ($0.9 billion), ‘other programs’ ($0.2 billion), justice ($0.1 billion) and interest on debt ($48 million) was higher in the first quarter of 2021-22 compared to 2020-21.

Table 3 First quarter spending by sector, 2021-22 vs. 2020-21, $ 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 2021-22 Expenditure Estimates and information provided by Treasury Board Secretariat.
Sector 2021-22 Spending at end of Q1 2020-21 Spending at end of Q1 2021-22 vs. 2020-21 2021-22 vs. 2020-21 (%)
Health 16,824 15,906 917 5.8%
Education 5,506 7,253 -1,747 -24.1%
Postsecondary Education 1,414 1,587 -174 -10.9%
Children's and Social Services 4,034 4,428 -394 -8.9%
Justice 1,167 1,098 69 6.3%
Other Programs 5,067 4,844 223 4.6%
Interest on Debt 2,861 2,813 48 1.7%
Total 36,873 37,930 -1,057 -2.8%

Status of Unallocated Funds

The Province started the 2021-22 fiscal year with a total of $2.1 billion in unallocated funds in the Contingency Fund. Unallocated funds cannot be spent directly by the Province but must be transferred to government programs through Treasury Board Orders. Through the first quarter of 2021-22, the Province transferred a net $474 million from the Contingency Fund to various programs, resulting in a remaining Contingency Fund balance as of June 30, 2021 of $1.6 billion.

In the government’s 2021-22 First Quarter Finances, the Province announced that an additional $2.2 billion in unallocated funds would be made available through a new program called the Time-Limited COVID-19 Fund. As of the end of the first quarter, June 30, 2021, this new program was not included in the government’s financial accounts and so is not reflected in the 2021-22 spending plan. The FAO expects that the Time-Limited COVID-19 Fund will be available in the second quarter.

The following table provides information on first quarter transfers from / to the Contingency Fund as of June 30, 2021.

Table 4 First quarter transfers from / 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
Farmers' Risk Management Premium Fund -30
Cabinet Office
International Disaster Relief 2
Main Office 1
Ministry of Energy, Northern Development and Mines
COVID-19 Response – Energy Rebate Grant 100
Remote Air Carrier Support Program 8
Ministry of Finance
COVID-19 Response – Business Property Tax Rebate Grant 135
Ministry of Government and Consumer Services
ServiceOntario – Capital Assets 7
Realty < 1
Ministry of Heritage, Sport, Tourism and Culture Industries
Agencies and Attractions Sector Support 33
Ministry of Labour, Training and Skills Development
Ontario COVID-19 Worker Income Protection Benefit 202
Employment Standards – Services 15
Net Total First Quarter Transfers 474

Footnotes

[1] The Province transferred $7 million from the Contingency Fund to a capital asset program which will be expensed over the life of the asset. See Table 4 for more information on the first quarter transfers from the Contingency Fund.

[2] The $554 million negative adjustment accounts for differences in the timing of the accrual expense and cash payments for the Ontario Small Business Support Grant and reflects total cash spending for the grant, as of June 30, 2021, of $2.9 billion. See next section for more information.

[3] In response to the COVID-19 pandemic, in 2020, 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 increased education spending in the first quarter of 2020-21.

[4] Excludes $7.8 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 $4.0 billion in additional planned spending on capital assets and $1.2 billion on operating assets.

[5] The Province transferred $7 million from the Contingency Fund to a capital asset program which will be expensed over the life of the asset. See Table 4 for more information on the first quarter transfers from the Contingency Fund.

[6] 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).

[7] Analysis excludes the Contingency Fund, as unallocated funds do not have planned spending until funding is transferred to program sectors.

[8] The $554 million negative adjustment accounts for differences in the timing of the accrual expense and cash payments for the Ontario Small Business Support Grant. The FAO estimates that cash spending for the Ontario Small Business Support Grant was approximately $1.3 billion in the fourth quarter of 2020-21 and $1.6 billion in the first quarter of 2021-22, for a total of $2.9 billion as of June 30, 2021.

[9] In response to the COVID-19 pandemic, in 2020, 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 increased education spending in the first quarter of 2020-21. For more information, see FAO, “Expenditure Monitor 2020-21: Q1,” 2020.

[10] In addition, there was a timing difference for recorded spending with the Ontario Teachers’ Pension Plan.

[12] The $554 million negative adjustment accounts for differences in the timing of the accrual expense and cash payments for the Ontario Small Business Support Grant. See previous section for more information.