Expenditure Monitor 2021-22: Q3

Expenditure Monitor 2021-22: Q3

Publish date: March 2, 2022 ISSN 2562-9883
This report provides information on spending by the Province over the first three 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, 2022

Citation
Expenditure Monitor 2021-22: Q3, Financial Accountability Office of Ontario, 2022.
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Highlights

Changes to the 2021-22 Spending Plan

Actual Spending vs. Planned Spending

Status of Unallocated Funds

Fourth Quarter Expectations

Introduction

This report provides information on spending by the Government of Ontario (the Province) over the first three quarters of the 2021-22 fiscal year, from April 1, 2021 to December 31, 2021. The report:

The information in this report is based on the FAO’s analysis of the 2021-22 Expenditure Estimates, the Supplementary Estimates, 2021-22 (1st and 2nd editions), and transactions recorded in the Province’s Integrated Financial Information System (IFIS) as of December 31, 2021.

Changes to the 2021-22 Spending Plan

Overview

The Province began the 2021-22 fiscal year with a spending plan of $178.3 billion.[4] As of the end of the third quarter, the spending plan was up $4.1 billion to $182.4 billion. During the first and second quarters, the spending plan decreased by a net $16 million; however, in the third quarter, the Province added $4,122 million in planned spending.[5]

By sector, through three quarters of the fiscal year, the largest spending plan increase went to ‘other programs,’ at $2,699 million, followed by a net $1,057 million increase to the Province’s unallocated funds. The remaining sectors received a combined $350 million in spending plan increases: health ($138 million), justice ($100 million), education ($88 million), postsecondary education ($12 million) and children’s and social services ($11 million).

Table 1 Changes to the 2021-22 spending plan by sector, as of December 31, 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 Q3 Changes Total Changes Revised
2021-22
Spending Plan
Health 71,184 5 15 118 138 71,322
Education 32,847 6 - 82 88 32,935
Postsecondary Education 6,987 - - 12 12 6,999
Children's and Social Services 18,108 - 1 9 11 18,119
Justice 5,192 10 1 89 100 5,292
Other Programs 29,472 445 209 2,045 2,699 32,171
Unallocated Funds:
Contingency Fund 2,080 -474 -235 -99 -808 1,272
Time-Limited COVID-19 Fund - - - 1,865 1,865 1,865
Interest on Debt 12,419 - - - - 12,419
Total 178,290 -7 -9 4,122 4,106 182,396

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. In the third quarter, the Province created the Time-Limited COVID-19 Fund, with a starting balance of $2.7 billion, and topped up the Contingency Fund by $0.3 billion, for total available unallocated funds of $5.1 billion. Through the first three quarters of the fiscal year, the Province transferred a net $2.0 billion from the two unallocated funds to various government programs, resulting in a combined remaining balance, as of December 31, 2021, of $3.1 billion in unallocated funds.[6]

In contrast, in the government’s 2021-22 Third Quarter Finances, the Province reported a combined remaining balance of $1.6 billion in unallocated funds ($500 million in the Time-Limited Covid-19 Fund and $1,099 million in the Contingency Fund). However, the 2021-22 Third Quarter Finances reflects government decisions on the use of unallocated funds through to February 2, 2022, while the FAO’s report reflects the status of unallocated funds as of December 31, 2021. This indicates that the Province transferred approximately $1.5 billion in unallocated funds to various government programs between January 1, 2022 and February 2, 2022. These transactions will be reviewed in the FAO’s fourth quarter report.

Third Quarter Analysis[7]

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://tinyurl.com/y8vy3jf9.

Health: $118 million increase. Notable changes include:

Education: $82 million increase. Notable changes include:

Justice: $89 million increase. Notable changes include:

Other Programs: $2,045 million increase. Notable changes include:

Actual Spending to Date

Unaudited Actual Spending vs. Planned Spending

Over the first three quarters of the 2021-22 fiscal year, the Province spent $119.9 billion. Overall, this is $5.5 billion (4.4 per cent) less than planned,[8] which is a slower pace of spending than over the same time period in the last two fiscal years.[9] Looking ahead to the fourth quarter, the FAO expects that the pace of spending will increase due to the impact of the Omicron wave of the COVID-19 pandemic on the health sector and the introduction of new fourth quarter spending programs.[10]

Table 2 2021-22 spending by sector, as of December 31, 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 Q3 Actual Spending at end of Q3 Actual vs. Planned at
end of Q3
Actual vs. Planned (%)
Health 71,322 52,799 51,507 -1,293 -2.4%
Education 32,935 18,556 18,344 -212 -1.1%
Postsecondary Education 6,999 5,334 4,943 -391 -7.3%
Children's and Social Services 18,119 14,039 12,833 -1,206 -8.6%
Justice 5,292 3,627 3,931 305 8.4%
Other Programs 32,171 21,850 19,565 -2,285 -10.5%
Unallocated Funds:
Contingency Fund 1,272 - - - N/A
Time-Limited COVID-19 Fund 1,865 - - - N/A
Interest on Debt 12,419 9,235 8,796 -438 -4.7%
Total 182,396 125,439 119,919 -5,521 -4.4%

Most sectors spent less than planned over the first three quarters of 2021-22, led by ‘other programs’ ($2,285 million), health ($1,293 million), children’s and social services ($1,206 million), interest on debt ($438 million), postsecondary education ($391 million) and education ($212 million). Only the justice sector spent more than planned over the first three quarters of 2021-22, at $305 million.

The rest of this section highlights key vote-item spending that was above and below plan through the third 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://tinyurl.com/y8vy3jf9.

Health sector spending: $1,293 million (2.4 per cent) below plan. Highlights include:

Education sector spending: $212 million (1.1 per cent) below plan. Highlights include:

Postsecondary Education sector spending: $391 million (7.3 per cent) below plan. Highlights include:

Children’s and Social Services sector spending: $1,206 million (8.6 per cent) below plan. Highlights include:

Other Programs sector spending: $2,285 million (10.5 per cent) below plan. Highlights include:

2021-22 Spending vs. 2020-21 Spending

In the first three quarters of 2021-22, the Province spent $119.9 billion, which was $3.2 billion (2.8 per cent) more than was spent in the first three quarters of 2020-21. Health ($2,195 million), ‘other programs’ ($1,789 million), justice ($447 million), interest on debt ($367 million) and postsecondary education ($269 million) all spent more in the first three quarters of the 2021-22 fiscal year compared to the first three quarters of 2020-21. Conversely, education (-$1,088 million) and children’s and social services (-$742 million) both spent less in the first three quarters of 2021-22 compared to 2020-21.

Table 3 Spending through the end of the third 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 Q3
2020-21 Spending
at end of Q3
2021-22 vs. 2020-21 2021-22 vs. 2020-21 (%)
Health 51,507 49,311 2,195 4.5%
Education 18,344 19,432 -1,088 -5.6%
Postsecondary Education 4,943 4,674 269 5.8%
Children's and Social Services 12,833 13,575 -742 -5.5%
Justice 3,931 3,484 447 12.8%
Other Programs 19,565 17,776 1,789 10.1%
Interest on Debt 8,796 8,430 367 4.4%
Total 119,919 116,681 3,238 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. In the third quarter, the Province created the Time-Limited COVID-19 Fund, with a balance of $2.7 billion, and topped up the Contingency Fund by $0.3 billion, for total available unallocated funds of $5.1 billion.

Unallocated funds cannot be spent directly by the Province but must be transferred to government programs through Treasury Board Orders. In the first and second quarters, the Province transferred a net $709 million from the Contingency Fund to various programs, while in the third quarter the Province transferred a net $419 million from the Contingency Fund and $835 million from the Time-Limited COVID-19 Fund to various programs. This results in remaining balances, as of December 31, 2021, of $1,272 million in the Contingency Fund and $1,865 million in the Time-Limited COVID-19 Fund.[14]

Table 4 Status of unallocated funds as of December 31, 2021, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Unallocated Fund Opening Balance Q1
Transfers
Q2 Transfers Q3
Top-Ups
Q3
Transfers
Balance at end of Q3
Contingency Fund 2,080 -474 -235 320 -419 1,272
Time-Limited COVID-19 Fund - - - 2,700 -835 1,865
Total 2,080 -474 -235 3,020 -1,254 3,138

The following tables provide information on third quarter transfers from the Time-Limited COVID-19 Fund and the Contingency Fund as of December 31, 2021.

Table 5 Time-Limited COVID-19 Fund status as of December 31, 2021, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry/Program $ millions
Opening Balance -
Less: First Quarter Transfers -
Less: Second Quarter Transfers -
Add: Third Quarter Top-Up 2,700
Less: Third Quarter Transfers
Ministry of Children, Community and Social Services
Ministry Administration 9
Ministry of Colleges and Universities
Grants for College Operating Costs 4
Grants for University Operating Costs 4
Grants for Indigenous Institute Operating Costs <1
Ministry of Economic Development, Job Creation and Trade
Futurepreneur 1
Ministry of Education
Priorities and Partnerships Funding – School Boards 78
Ministry of Energy, Northern Development and Mines
COVID-19 Response – Energy Rebate Grant 90
Ministry of Finance
COVID-19 Response – Business Property Tax Rebate Grant 210
Ministry of Francophone Affairs
Support for Long-Term Francophone Economic Development <1
Ministry of Health
Home Care 61
Community Mental Health 8
Digital Health Strategy and Programs 4
Ministry of Labour, Training and Skills Development
Employment and Training 5
Ministry Administration <1
Ministry for Seniors and Accessibility
Seniors Affairs Transfer Payment 11
Ministry of the Solicitor General
Anti-Racism Directorate 4
Ministry of Transportation
Municipal Transit (Operating) 345
Total Third Quarter Transfers -835
Balance as of December 31, 2021 1,865
Table 6 Contingency Fund status as of December 31, 2021, $ millions * Negative values represent transfers from ministry programs to the Contingency Fund. 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 -235
Add: Third Quarter Top-Up 320
Less: Third Quarter Transfers
Ministry of Agriculture, Food and Rural Affairs
Economic Development <1
Ministry of the Attorney General
Alcohol and Gaming Commission of Ontario 58
Criminal Law 1
Innovation Projects <1
Ministry of Economic Development, Job Creation and Trade
Sector Support Grants 2
Ministry of Energy, Northern Development and Mines
COVID-19 Response – Energy Rebate Grant* -40
Ontario Electricity Rebate* -80
Ministry of Health
Clinical Education 20
Community Mental Health 4
Ministry of Heritage, Sport, Tourism and Cultural Industries
Agencies and Attractions Sector Support 49
Tourism Recovery and Support* -80
Ministry of Indigenous Affairs
Support for Indian Residential School Burial Sites 4
Ministry of Infrastructure
Municipal Infrastructure 200
Municipal Infrastructure Investment Initiative* -3
Community, Culture and Recreation (Provincial Contribution)* -9
Community, Culture and Recreation (Federal Contribution)* -12
ICIP – COVID-19 Resilience (Provincial Contribution)* -16
Rural and Northern Infrastructure – Federal Contribution* -17
Rural and Northern Infrastructure – Provincial Contribution* -19
ICIP – COVID-19 Resilience (Federal Contribution)* -65
Broadband and Cellular Infrastructure* -207
Ministry of Labour, Training and Skills Development
Ontario Jobs Training Tax Credit Transfer Payment 70
Employment and Training 2
Ontario Immigrant Nominee Program 1
Ministry of Long-Term Care
Long-Term Care Homes – Operations 123
Ministry of Municipal Affairs and Housing
Wheatley Residents Assistance Program 2
One-Time Assistance for Wheatley Explosion 2
Ministry for Seniors and Accessibility
Seniors’ Home Safety Tax Credit 10
Ministry of the Solicitor General
OPP Investigations and Organized Crime 17
Anti-Racism Directorate <1
OPP Field and Traffic Services 4
Institutional Services 2
External Relations Branch 2
OPP Corporate and Strategic Services <1
Ministry of Transportation
Metrolinx Operating Subsidies 5
Treasury Board Secretariat
Employee and Pensioner Benefits (Employer Share) 385
Ontario Digital Service 5
Centre for People, Culture and Talent 2
Total Third Quarter Transfers -419
Balance as of December 31, 2021 1,272

Footnotes

[1] As detailed in the 2021 Ontario Budget and the 2021-22 Expenditure Estimates. 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.

[2] Third quarter spending plan increases in the ‘other programs’ sector include $1,355 million for Metrolinx transit infrastructure investments, $176 million for Metrolinx operating subsidies, $345 million for municipal transit operations, and $300 million for the Ontario Business Costs Rebate Program.

[3] For example, new fourth quarter programs include the Ontario Business Costs Rebate Program, the Ontario Small Business Relief Grant and the decision to set electricity prices 24 hours a day at the current off-peak rate of 8.2 cents per kilowatt-hour for residential, small business and farm ratepayers for 21 days starting on January 18, 2022.

[4] As detailed in the 2021 Ontario Budget and the 2021-22 Expenditure Estimates. 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] Through the tabling of two editions of supplementary estimates. In the government’s 2021-22 Third Quarter Finances, the Province reported a spending plan increase of $2.6 billion. The main difference between the $4.1 billion increase reported by the FAO and the Province’s $2.6 billion increase is an additional $1,355 million for Metrolinx transit infrastructure investments. The Province’s spending plan in the 2021-22 Third Quarter Finances is reported on a fully consolidated basis, so this additional investment will be expensed over the life of the asset.

[6] See tables 4, 5 and 6 for more details.

[7] For first and second quarter analysis, see FAO, “Expenditure Monitor 2021-22: Q1,” 2021, and FAO, “Expenditure Monitor 2021-22: Q2,” 2021.

[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). Analysis excludes the Contingency Fund and the Time-Limited COVID-19 Fund, as unallocated funds do not have planned spending until funding is transferred to program sectors.

[9] In 2019-20 and 2020-21, spending at the end of the third quarter was $2.0 billion (1.7 per cent) below plan and $3.1 billion (2.6 per cent) below plan, respectively.

[10] For example, new fourth quarter programs include the Ontario Business Costs Rebate Program, the Ontario Small Business Relief Grant and the decision to set electricity prices 24 hours a day at the current off-peak rate of 8.2 cents per kilowatt-hour for residential, small business and farm ratepayers for 21 days starting on January 18, 2022.

[11] 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.

[12] In the second quarter, the Province withdrew $107 million from the COVID-19 Response program and transferred the funding to the Ministry of Health, Information Technology Services – Health Cluster ($97 million) and to the Ministry of the Environment, Conservation and Parks, Wastewater Monitoring and Public Reporting ($11 million), to support COVID-19-related measures.

[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.

[14] In contrast, in the government’s 2021-22 Third Quarter Finances, the Province reported a combined remaining balance of $500 million in the Time-Limited Covid-19 Fund and $1,099 million in the Contingency Fund. However, the 2021-22 Third Quarter Finances reflects government decisions on the use of unallocated funds through to February 2, 2022, while the FAO’s report reflects the status of unallocated funds as of December 31, 2021. This indicates that the Province transferred approximately $1.5 billion in unallocated funds to various government programs between January 1, 2022 and February 2, 2022. These transactions will be reviewed in the FAO’s fourth quarter report.