Expenditure Monitor 2022-23: Q2

Expenditure Monitor 2022-23: Q2

Publish date: November 29, 2022 ISSN 2562-9883
This report provides information on spending by the Government of Ontario through the first two quarters of the 2022-23 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 (Senior Financial Analyst) under the direction of Luan Ngo (Director, Financial Analysis) and Jeffrey Novak (Chief Financial Analyst).

© Queen's Printer for Ontario, 2022

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Expenditure Monitor 2022-23: Q2, Financial Accountability Office of Ontario, 2022.
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Highlights

2022-23 Spending Plan

Changes to the 2022-23 Spending Plan

First and Second Quarter Spending: Actual Unaudited Spending vs. Expected Spending[3]

First and Second Quarter Spending: 2022-23 Spending vs. 2021-22 Spending

Unallocated Funds

Introduction

This report provides information on spending by the Government of Ontario (the Province) through the first two quarters of the 2022-23 fiscal year, from April 1, 2022 to September 30, 2022. The report:

The information in this report is based on the FAO’s analysis of transactions recorded in the Province’s Integrated Financial Information System (IFIS) as of September 30, 2022. All figures are unaudited, as final audited figures are not available until the release of the Public Accounts of Ontario after the end of the fiscal year.

2022-23 Spending Plan

The Province’s yearly spending plan represents the legal spending authority for ministries as granted by the Legislature through the process of supply.[5] The Province started the 2022-23 fiscal year with a spending plan of $193.0 billion.[6]

Changes to the 2022-23 Spending Plan

The Province may change its spending plan throughout the year, either by requesting additional spending authority from the Legislature or by reallocating spending among different programs through Treasury Board Orders. As of the end of the second quarter, September 30, 2022, the Province had made internal budget reallocations that transferred $373 million from the Contingency Fund and $382 million from the Ministry of Health’s Clinical Education program to various programs.

Overall, there was no change to the Province’s total 2022-23 spending plan. However, by sector, the education spending plan increased by $371 million, followed by ‘other programs’ ($13 million), justice ($2 million) and children’s and social services ($1 million). This was offset by a $14 million reduction in the health sector spending plan and a $373 million transfer from the Contingency Fund.

Table 1 Changes to the 2022-23 spending plan by sector, as of September 30, 2022, $ millions Note: Figures exclude planned spending on some assets and $5.7 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 information provided by Treasury Board Secretariat.
Sector 2022-23 Spending Plan Q1 Changes Q2 Changes Revised 2022-23 Spending Plan
Health 75,643 - -14 75,629
Education 34,748 - 371 35,120
Postsecondary Education 7,061 - - 7,061
Children's and Social Services 18,562 - 1 18,563
Justice 5,781 - 2 5,782
Other Programs 33,658 - 13 33,671
Unallocated Funds:
Contingency Fund 4,550 - -373 4,177
Interest on Debt 12,988 - - 12,988
Total 192,992 0 0 192,992

Second Quarter Analysis

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://tinyurl.com/yc7rn4nz.

Health: $14 million decrease. Notable changes include:

Education: $371 million increase for Elementary and Secondary Education Program – Policy and Program Delivery (Vote-Item 1002-1) for the Catch Up Payments program, which provides a one-time payment to parents of $200 or $250 per child enrolled in kindergarten to Grade 12.

Actual Unaudited Spending to Date

Actual Unaudited Spending vs. Expected Spending[7]

In order to manage and monitor its program spending during the fiscal year, the Province divides its spending plan into expected spending by quarter, which reflects historical spending patterns, seasonality and other factors. For 2022-23, the Province expects to spend $40.7 billion in the first quarter, $43.3 billion in the second quarter, $45.0 billion in the third quarter, and $64.1 billion in the fourth quarter.[8]

Although the Province expected to spend $40.7 billion and $43.3 billion, respectively, in the first and second quarters of 2022-23, actual unaudited spending was $39.9 billion and $40.6 billion. In total, this was $3.5 billion (4.1 per cent) less than expected.

Figure 1 2022-23 actual unaudited spending vs. expected spending, by quarter, $ 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. Expected spending has been adjusted to reflect second quarter changes to the spending plan. Fourth quarter expected spending is significantly higher than expected spending in each of the first three quarters due to year-end accrual adjustments.

Source: FAO analysis of information provided by Treasury Board Secretariat.

Accessible Version
Figure 1: 2022-23 actual unaudited spending vs. expected spending, by quarter, $ millions 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. Expected spending has been adjusted to reflect second quarter changes to the spending plan. Fourth quarter expected spending is significantly higher than expected spending in each of the first three quarters due to year-end accrual adjustments Source: FAO analysis of information provided by Treasury Board Secretariat. Back to image
Q1 Q2 Q3 Q4
Expected Spending 40,704 43,250 44,988 64,051
Actual Unaudited Spending 39,928 40,575 - -

As of September 30, all sectors spent less than expected. By sector, lower-than-expected spending was led by ‘other programs’ (-$1,748 million), health (-$859 million), education (-$413 million), children’s and social services (-$244 million), postsecondary education (-$99 million), justice (-$59 million) and interest on debt (‑$28 million).

Table 2 2022-23 actual unaudited spending by sector, as of September 30, 2022, $ 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 information provided by Treasury Board Secretariat.
Sector Revised 2022-23 Spending Plan Expected Spending at end of Q2 Actual Spending at end of Q2 Actual vs. Expected at end of Q2 Actual vs. Expected (%)
Health 75,629 35,932 35,073 -859 -2.4%
Education 35,120 12,457 12,044 -413 -3.3%
Postsecondary Education 7,061 3,349 3,250 -99 -3.0%
Children's and Social Services 18,563 9,152 8,908 -244 -2.7%
Justice 5,782 2,675 2,616 -59 -2.2%
Other Programs 33,671 14,027 12,279 -1,748 -12.5%
Unallocated Funds:
Contingency Fund 4,177 - - - N/A
Interest on Debt 12,988 6,361 6,334 -28 -0.4%
Total 192,992 83,953 80,503 -3,450 -4.1%

The rest of this section highlights key vote-item spending that was above and below expectations in the first two quarters of 2022-23. For information on spending by all of the Province’s programs and ministries, visit the FAO’s website at: https://tinyurl.com/yc7rn4nz.

Health sector spending: $859 million (2.4 per cent) less than expected. Highlights include:

Education sector spending: $413 million (3.3 per cent) less than expected. Highlights include:

Postsecondary education sector spending: $99 million (3.0 per cent) less than expected. Highlights include:

Children’s and social services sector spending: $244 million (2.7 per cent) less than expected. Highlights include:

Justice sector spending: $59 million (2.2 per cent) less than expected. Highlights include:

Other programs sector spending: $1,748 million (12.5 per cent) less than expected. Highlights include:

2022-23 Spending vs. 2021-22 Spending

This report also compares spending in the current fiscal year against spending in the previous fiscal year to provide context for provincial spending trends and to identify significant year-over-year spending changes.

As noted above, through the first half of the 2022-23 fiscal year, the Province spent $80.5 billion. This was $3.6 billion (4.7 per cent) more than was spent in the same period in 2021-22. All sectors spent more in the first half of 2022-23 compared to the first half of 2021-22. The largest year-over-year spending increase was in health ($1,014 million), followed by education ($879 million), other programs ($590 million), interest on debt ($518 million), children’s and social services ($415 million), postsecondary education ($150 million) and justice ($18 million).

Table 3 Actual unaudited spending by sector, first half of 2022-23 vs. first half of 2021-22, $ 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 information provided by Treasury Board Secretariat.
Sector 2022-23 Spending at end of Q2 2021-22 Spending at end of Q2 2022-23 vs. 2021-22 2022-23 vs. 2021-22 (%)
Health 35,073 34,059 1,014 3.0%
Education 12,044 11,165 879 7.9%
Postsecondary Education 3,250 3,101 150 4.8%
Children's and Social Services 8,908 8,492 415 4.9%
Justice 2,616 2,598 18 0.7%
Other Programs 12,279 11,689 590 5.0%
Interest on Debt 6,334 5,816 518 8.9%
Total 80,503 76,920 3,584 4.7%

Status of Unallocated Funds

Unallocated funds are used to address spending pressures or fund program changes during the fiscal year. Unallocated funds cannot be spent directly by the Province but must be transferred to government programs through Treasury Board Orders.

The Province started the 2022-23 fiscal year with a total of $4.6 billion in unallocated funds in the Contingency Fund. In the second quarter, the Province transferred $373 million from the Contingency Fund to the Ministry of Education ($371 million) and Cabinet Office ($1 million). This results in a remaining balance in the Contingency Fund, as of September 30, of $4.2 billion.[14]

Table 4 First and second quarter transfers from the Contingency Fund, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry/Program $ millions
Opening Balance 4,550
Less: First Quarter Transfers 0
Less: Second Quarter Transfers
Cabinet Office
Main Office – Services 1
Ministry of Education
Priority and Partnerships Funding – Third Parties 365
Policy and Program Delivery – Services 6
Total Second Quarter Transfers -373
Balance as of September 30, 2022 4,177

Footnotes

[1] Temporary spending authority is first granted by the Legislature through the Interim Appropriation Act, with final spending authority then granted through the Supply Act. Permanent spending authority is also granted through other legislation for a limited number of programs.

[2] The $193.0 billion spending plan excludes $5.7 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 $5.7 billion in additional planned spending is not reviewed in this report as the Province does not actively monitor or control this spending. As well, the $193.0 billion spending plan excludes $1.3 billion in planned spending on operating assets and $4.3 billion in planned spending on capital assets.

[3] “Expected spending” is also referred to as “planned spending” in Expenditure Monitor reports.

[4] In the 2022 Ontario Economic Outlook and Fiscal Review (also referred to as the Fall Economic Statement or FES), the Province reported that the remaining balance in the Contingency Fund was $3.5 billion. This indicates that, between October 1 and the release of the FES on November 14, the Province transferred an additional $0.7 billion from the Contingency Fund to various programs. The FAO will provide updates on the status of the Contingency Fund in its Q3 and Q4 Expenditure Monitor reports.

[5] Temporary spending authority is first granted by the Legislature through the Interim Appropriation Act, with final spending authority then granted through the Supply Act. Permanent spending authority is also granted through other legislation for a limited number of programs.

[6] The $193.0 billion spending plan excludes $5.7 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 $5.7 billion in additional planned spending is not reviewed in this report as the Province does not actively monitor or control this spending. As well, the $193.0 billion spending plan excludes $1.3 billion in planned spending on operating assets and $4.3 billion in planned spending on capital assets.

[7] “Expected spending” is also referred to as “planned spending” in Expenditure Monitor reports.

[8] Expected spending has been adjusted to reflect second quarter changes to the spending plan. Fourth quarter expected spending is significantly higher than expected spending in each of the first three quarters due to year-end accrual adjustments and the Contingency Fund.

[9] For more analysis see FAO, “Ministry of Education: Spending Plan Review,” 2022.

[10] Higher than expected spending is due to timing differences in the recording of tax credit spending. The Province recorded approximately $890 million in spending across all tax credits in the second quarter rather than in the third quarter as expected. This variance will be offset in the third quarter.

[11] For more analysis see FAO, “Ministry of Education: Spending Plan Review,” 2022.

[12] Also known as the Ontario Childcare Access and Relief from Expenses (CARE) tax credit.

[13] Higher year-over-year spending is due to timing differences in the recording of tax credit spending. The Province recorded approximately $890 million in spending across all tax credits in the second quarter of 2022-23 compared to the third quarter of 2021-22. This variance will be offset in the third quarter.

[14] In the 2022 Ontario Economic Outlook and Fiscal Review (also referred to as the Fall Economic Statement or FES), the Province reported that the remaining balance in the Contingency Fund was $3.5 billion. This indicates that, between October 1 and the release of the FES on November 14, the Province transferred an additional $0.7 billion from the Contingency Fund to various programs. The FAO will provide updates on the status of the Contingency Fund in its Q3 and Q4 Expenditure Monitor reports.