Expenditure Monitor 2021-22: Q2

Publish date: November 29, 2021 ISSN 2562-9883
This report provides information on spending by the Province over the first two quarters 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: Q2, 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 six months of the 2021-22 fiscal year, from April 1, 2021 to September 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 September 30, 2021.

Changes to the 2021-22 Spending Plan

Overview

In the 2021-22 Expenditure Estimates, the Province tabled a 2021-22 spending plan of $178.3 billion.[4] Over the first six months of 2021-22, the Province made internal program budget reallocations that added a net $692 million in planned spending to various programs, offset by a net drawdown of $709 million from the Contingency Fund. Most of the new planned program spending went to the ‘other programs’ sector ($654 million), followed by health ($20 million), justice ($11 million), education ($6 million), and children’s and social services ($1 million). Overall, as of the end of the second quarter, the Province’s 2021-22 spending plan had decreased by $16 million.[5]

In contrast, in the government’s 2021 Ontario Economic Outlook and Fiscal Review (released on November 4, 2021), the Province reported a net spending plan increase of $3.0 billion.[6] This spending plan increase was not included in the government’s financial accounts as of September 30, 2021 and so is not reflected in the spending plan changes detailed in this report. Instead, the $3.0 billion spending plan increase will be reflected in the government’s financial accounts in the third quarter.[7]

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. After accounting for the $709 million in transfers from the Contingency Fund in the first and second quarters, the remaining balance in the Contingency Fund as of September 30, 2021 was $1.4 billion.[8]

In the government’s 2021-22 First Quarter Finances (released on August 12), 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. Subsequently, in the 2021 Ontario Economic Outlook and Fiscal Review, the Province added an additional $0.5 billion to the Time-Limited COVID-19 Fund. However, as of the end of the second quarter, September 30, 2021, this new program was not included in the government’s financial accounts and so is not reflected in the spending plan changes detailed in this report. Instead, the Time-Limited COVID-19 Fund will be reflected in the government’s financial accounts in the third quarter. [9]

Table 1 Changes to the 2021-22 spending plan by sector, as of September 30, 2021, $ 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 Q2 Changes Total Changes Revised 2021-22 Spending Plan
Health 71,184 5 15 20 71,204
Education 32,847 6 - 6 32,853
Postsecondary Education 6,987 - - - 6,987
Children's and Social Services 18,108 - 1 1 18,110
Justice 5,192 10 1 11 5,203
Other Programs 29,472 445 209 654 30,126
Unallocated Funds:
Contingency Fund 2,080 -474 -235 -709 1,372
Interest on Debt 12,419 - - - 12,419
Total 178,290 -7 -9 -16 178,274

Second Quarter Analysis[10]

During the second quarter of 2021-22 (July 1, 2021 to September 30, 2021), the Province made internal program budget reallocations that added a net $226 million in planned spending to various programs, offset by transfers from the Contingency Fund. The rest of this section highlights key second 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/3p1C0yd.

Health: $15 million increase, including:

Other Programs: $209 million increase, including:

Actual Spending to Date

Unaudited Actual Spending vs. Planned Spending

Over the first half of the 2021-22 fiscal year, the Province spent $76.9 billion. Overall, this is $4.3 billion (5.3 per cent) less than planned.[11] For context, in 2019-20 and 2020-21, spending at the end of the second quarter was $0.2 billion (0.2 per cent) above plan and $2.0 billion (2.6 per cent) below plan, respectively. For 2021-22, if the current pace of spending continues, the Province will end the fiscal year with significant program spending savings, which will result in a material improvement to the Province’s current budget deficit projection of $21.5 billion from the 2021 Ontario Economic Outlook and Fiscal Review.

Most sectors spent less than planned over the first six months of 2021-22, led by ‘other programs’ ($1,476 million), health ($974 million), children’s and social services ($838 million), education ($688 million), interest on debt ($278 million) and postsecondary education ($251 million). Only the justice sector spent more than planned over the first half of 2021-22, at $204 million.

Table 2 2021-22 spending by sector, as of September 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 Q2 Actual Spending at end of Q2 Actual vs. Planned at end of Q2 Actual vs. Planned (%)
Health 71,204 35,033 34,059 -974 -2.8%
Education 32,853 11,852 11,165 -688 -5.8%
Postsecondary Education 6,987 3,352 3,101 -251 -7.5%
Children's and Social Services 18,110 9,331 8,492 -838 -9.0%
Justice 5,203 2,394 2,598 204 8.5%
Other Programs 30,126 13,164 11,689 -1,476 -11.2%
Unallocated Funds:
Contingency Fund 1,372 - - - -
Interest on Debt 12,419 6,094 5,816 -278 -4.6%
Total 178,274 81,222 76,920 -4,302 -5.3%

The rest of this section highlights key vote-item spending that was above and below plan through the second quarter of 2021-22. For information on spending by all of the Province’s transfer payment programs and ministries, visit the FAO’s website at: https://bit.ly/3p1C0yd.

Health sector spending: $974 million (2.8 per cent) below plan, including:

Education sector spending: $688 million (5.8 per cent) below plan, including:

Postsecondary Education sector spending: $251 million (7.5 per cent) below plan, including:

Children’s and Social Services sector spending: $838 million (9.0 per cent) below plan, including:

Other Programs sector spending: $1,476 million (11.2 per cent) below plan, including:

2021-22 Spending vs. 2020-21 Spending

Over the first six months of 2021-22, the Province spent $76.9 billion, which was $2.6 billion (3.5 per cent) more than was spent in the first six months of 2020-21. Health ($3,051 million), ‘other programs’ ($870 million), justice ($270 million), interest on debt ($170 million) and postsecondary education ($122 million) all spent more in the first half of the 2021-22 fiscal year compared to the first half of 2020-21. Conversely, education (-$1,294 million) and children’s and social services (-$584 million) both spent less in the first six months of 2021-22 compared to 2020-21.

Table 3 Spending through the end of the second quarter 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 Q2 2020-21 Spending at end of Q2 2021-22 vs. 2020-21 2021-22 vs. 2020-21 (%)
Health 34,059 31,009 3,051 9.8%
Education 11,165 12,459 -1,294 -10.4%
Postsecondary Education 3,101 2,978 122 4.1%
Children's and Social Services 8,492 9,077 -584 -6.4%
Justice 2,598 2,328 270 11.6%
Other Programs 11,689 10,819 870 8.0%
Interest on Debt 5,816 5,646 170 3.0%
Total 76,920 74,315 2,604 3.5%

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 two quarters of 2021-22, the Province transferred a net $709 million from the Contingency Fund to various programs, resulting in a remaining Contingency Fund balance as of September 30, 2021 of $1.4 billion.

In the government’s 2021-22 First Quarter Finances (released on August 12), 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. Subsequently, in the 2021 Ontario Economic Outlook and Fiscal Review, the Province added an additional $0.5 billion to the Time-Limited COVID-19 Fund. However, as of the end of the second quarter, September 30, 2021, this new program was not included in the government’s financial accounts and so is not reflected in the spending plan information detailed in this report.

In the third quarter, on November 4, 2021, the Province tabled Supplementary Estimates, which created the Time-Limited COVID-19 Fund, with a starting balance of $2.7 billion, and also topped up the Contingency Fund with an additional $0.3 billion. These changes, along with any third quarter transfers from the Contingency Fund and the Time-Limited COVID-19 Fund, will be reflected in the FAO’s Q3 Expenditure Monitor report.

The following table provides information on second quarter transfers from the Contingency Fund as of September 30, 2021.

Table 4 Contingency Fund status as of September 30, 2021, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry / Program $ millions
Opening Balance 2,080
Less: First Quarter Transfers -474
Less: Second Quarter Transfers:
Ministry of Economic Development, Job Creation and Trade
Ontario Small Business Support Grant 50
Ministry of Heritage, Sport, Tourism and Culture Industries
Grants in Support of the Festival and Events Attractions and Support Program 30
Tourism and Culture Capital 12
Ministry of Labour, Training and Skills Development
Employment Ontario System 13
Ministry of Long-Term Care
Long-Term Care Homes - Operations 21
Ministry of Natural Resources and Forestry
Public Protection 100
Ministry of the Solicitor General
Ontario Provincial Police (Capital Assets) 9
Total Second Quarter Transfers -235
Balance as of September 30, 2021 1,372

Footnotes

[1] The Province transferred $16 million from the Contingency Fund to capital asset programs which will be expensed over the life of the assets.

[2] The FAO estimates the cost of the Ontario Small Business Support Grant will total $3.0 billion, recorded over two fiscal years.

[3] As reported in the government’s 2021 Ontario Economic Outlook and Fiscal Review.

[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] In the first and second quarters, the Province transferred $7 million and $9 million, respectively, from the Contingency Fund to capital asset programs which will be expensed over the life of the assets.

[6] The Province reported a net spending plan increase of $2.2 billion in the 2021-22 First Quarter Finances (released on August 12) and an additional spending plan increase of $0.8 billion in the 2021 Ontario Economic Outlook and Fiscal Review.

[7] On November 4, 2021, the Province tabled Supplementary Estimates for $3.0 billion in additional planned spending, which will be reflected in the government’s financial accounts in the third quarter.

[8] See Table 4 for more information on transfers from the Contingency Fund.

[9] In the third quarter, the Province tabled Supplementary Estimates which created the Time-Limited COVID-19 Fund, with a starting balance of $2.7 billion, and also topped up the Contingency Fund with an additional $0.3 billion. These changes, along with any third quarter transfers from the Contingency Fund and the Time-Limited COVID-19 Fund, will be reflected in the FAO’s Q3 Expenditure Monitor report.

[10] For first quarter analysis, see FAO, “Expenditure Monitor 2021-22: Q1,” 2021.

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

[12] The COVID-19 Response program, which is a distinct program from the $2.7 billion Time-Limited COVID-19 Fund, provides funding for population and public health measures related to the COVID-19 pandemic.

[13] 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. 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.