Expenditure Monitor 2020-21: Q1

Publish date: September 29, 2020 ISSN 2562-9883
This report provides an update on the Province’s 2020-21 spending plan and reviews actual spending by the Province over the first three months of the 2020-21 fiscal year.
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About this Document

Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office of Ontario (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: Jacob Kim (Financial Analyst), under the direction of Jeffrey Novak (Chief Financial Analyst).

© Queen’s Printer for Ontario, 2020

Citation
Expenditure Monitor 2020-21: Q1, Financial Accountability Office of Ontario, 2020.
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Highlights

Introduction

This report provides information on spending by the Government of Ontario (the Province) over the first three months of the 2020-21 fiscal year, from April 1, 2020 to June 30, 2020. 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 2020-21 First Quarter Finances, and spending recorded in the Province’s Integrated Financial Information System (IFIS) as of June 30, 2020.

Changes to the 2020-21 Spending Plan

In the March 2020 Update and the 2020-21 Expenditure Estimates, the Province tabled a 2020-21 spending plan of $165.2 billion.[3] In the first quarter of 2020-21 (from April 1, 2020 to June 30, 2020), the Province made internal program budget reallocations that added $2.1 billion in planned spending to the health sector, $0.2 billion to the children’s and social services sector, and $1.0 billion to the other programs sector. The increases to these three sectors were largely offset by reductions in the Province’s three unallocated funds: the COVID-19 Health Sector Response Fund ($1.5 billion), the Support for People and Jobs Fund ($0.6 billion) and the Contingency Fund ($0.4 billion).

Overall, the Province’s spending plan of $165.2 billion increased by a net $759 million in the first quarter of 2020-21, to $166.0 billion. This increase is significantly less than the $12.4 billion spending plan increase announced by the Province in the 2020-21 First Quarter Finances. The net $759 million spending plan increase noted in this report represents transactions recorded by the Province in IFIS (the government’s expenditure management system) as of June 30, 2020. The $12.4 billion spending plan increase announced in the 2020-21 First Quarter Finances will be implemented by the Province in the second quarter.[4]

Table 1 Changes to the 2020-21 spending plan by sector, $ millions Note: Figures exclude planned spending on 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. Source: FAO analysis of the 2020-21 Expenditure Estimates, the March 2020 Update and information provided by Treasury Board Secretariat.
Sector 2020-21
Spending Plan
Q1 Budget
Reallocations
Revised
2020-21
Spending Plan
Health 61,753 2,083 63,835
Education 31,358 31,358
Postsecondary Education 6,984 6,984
Children’s and Social Services 17,944 158 18,102
Justice 4,948 4,948
Other Programs 24,734 1,010 25,745
Unallocated Funds:
COVID-19 Health Sector Response Fund 1,823 -1,505 318
Support for People and Jobs Fund 1,966 -629 1,337
Contingency Fund 1,300 -359 941
Interest on Debt 12,407 12,407
Total 165,217 759 165,976

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/3mCTGhs.

Health: $2,083 million increase, including:

Children’s and Social Services: $158 million increase, including:

Other Programs: $1,010 million increase, including:

First Quarter Spending

Actual First Quarter Spending vs. Planned Spending

Over the first three months of the 2020-21 fiscal year, the Province spent $37.9 billion. Overall, this is $0.7 billion, or 1.9 per cent, more than planned.[7] All sectors spent less than planned in the first quarter except for the education sector, which spent $2.3 billion more than planned. This was largely the result of the government’s decision, in response to the COVID-19 pandemic, to defer for 90 days Education Property Tax payments, which municipalities are required to submit to school boards.[8] In order to ensure that school boards did not experience any change in funding timing, the Province increased the pace of spending through the Ministry of Education’s School Board Operating Grants to cover the temporary shortfall. The government reports that this temporary excess funding will be recovered in the third quarter of 2020-21, when municipalities are expected to pay the remaining Education Property Tax balances to school boards.

Table 2 2020-21 spending by sector, as of June 30, 2020, $ millions Note: Figures exclude planned spending on 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. Source: FAO analysis of the 2020-21 Expenditure Estimates, the March 2020 Update and information provided by Treasury Board Secretariat.
Sector Revised
2020-21
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 63,835 16,085 15,906 -179 -1.1%
Education 31,358 4,998 7,253 2,256 45.1%
Postsecondary Education 6,984 1,605 1,587 -18 -1.1%
Children’s and Social Services 18,102 4,713 4,428 -284 -6.0%
Justice 4,948 1,155 1,098 -57 -5.0%
Other Programs 25,745 5,597 4,844 -753 -13.5%
Unallocated Funds:
COVID-19 Health Sector Response Fund 318 N/A
Support for People and Jobs Fund 1,337 N/A
Contingency Fund 941 N/A
Interest on Debt 12,407 3,053 2,813 -240 -7.8%
Total 165,976 37,206 37,930 724 1.9%

The rest of this section highlights key vote-item spending that was above and below plan in the first quarter of 2020-21. For information on spending by all of the Province’s transfer payment programs and ministries, visit the FAO’s website at: https://bit.ly/3mCTGhs.

Health sector spending: $179 million below plan through the first quarter, including:

Education sector spending: $2,256 million above plan through the first quarter, including:

Children’s and Social Services sector spending: $284 million below plan through the first quarter, including:

Other Programs sector spending: $753 million below plan through the first quarter, including:

2020-21 First Quarter Spending vs. 2019-20 First Quarter Spending

In the first quarter of 2020-21, the Province spent $37.9 billion, which was $4.0 billion, or 11.9 per cent, higher than in the first quarter of 2019-20. The vast majority of the year-over-year spending increase (94 per cent) occurred in two sectors: health ($1.5 billion) and education ($2.3 billion). The $1.5 billion increase in health sector spending in the first quarter of 2020-21, compared to the first quarter of 2019-20, is a 10.6 per cent year-over-year increase and reflects government spending in the health sector in response to the COVID-19 pandemic. In the education sector, the $2.3 billion spending increase in the first quarter of 2020-21, compared to the first quarter of last year, reflects the impact of the government’s decision to defer for 90 days Education Property Tax payments, which municipalities are required to submit to school boards. As noted in the previous section, in order to ensure that school boards did not experience any change in funding timing, the Province increased the pace of spending through the Ministry of Education’s School Board Operating Grants to cover the temporary shortfall. The government reports that this temporary excess funding will be recovered in the third quarter of 2020-21, when municipalities are expected to pay the remaining Education Property Tax balances to school boards.

Table 3 First quarter spending by sector, 2020-21 vs. 2019-20, $ millions Source: FAO analysis of the 2020-21 Expenditure Estimates, the March 2020 Update and information provided by Treasury Board Secretariat.
Sector 2020-21
Spending at
end of Q1
2019-20
Spending at
end of Q1
2020-21 vs.
2019-20
2020-21 vs.
2019-20
(%)
Health 15,906 14,388 1,518 10.6%
Education 7,253 4,981 2,272 45.6%
Postsecondary Education 1,587 1,507 80 5.3%
Children’s and Social Services 4,428 4,299 130 3.0%
Justice 1,098 1,178 -80 -6.8%
Other Programs 4,844 4,611 233 5.0%
Interest on Debt 2,813 2,944 -130 -4.4%
Total 37,930 33,908 4,023 11.9%

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, the Support for People and Jobs Fund, and the Contingency Fund. These funds cannot be spent directly but must be transferred to government programs through Treasury Board Orders. Through the first quarter of 2020-21, the Province transferred $2.5 billion to various programs leaving $2.6 billion in unallocated funds.[9]

The following three tables provide information on which programs received the $2.5 billion in funding transfers as of June 30, 2020.

Table 4 Transfers from the Contingency Fund as of June 30, 2020, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry/Program Transfers
Ministry of Energy, Northern Development and Mines
Energy Support, Engagement and Indigenous Partnership Programs 340
Ministry for Seniors and Accessibility
Seniors Affairs Transfer Payment 18
Ministry of Transportation
Transport Canada School Bus Seatbelt Guidelines Pilot 1
Total Transfers as of June 30, 2020 359
Table 5 Transfers from the COVID-19 Health Sector Response Fund as of June 30, 2020, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry/Program Transfers
Ministry of Children, Community and Social Services
Residential Services 12
Children and Youth at Risk 6
Child Protection Services 4
Supports to Individuals and Families 3
Children’s Treatment and Rehabilitation Services 1
Supports to Victims of Violence 1
Youth Justice Services 1
Complex Special Needs 1
Supports to Community Living 0
Ministry of Economic Development, Job Creation and Trade
Jobs and Prosperity Fund and Other Business Support Programs 50
Ministry of Health
Operation of Hospitals 591
Outbreaks of Diseases 225
Home Care 110
Population and Public Health 80
Payments for Ambulance and related Emergency Services: Municipal Ambulance 75
Teletriage Services 50
Payments made for services and for care provided by physicians and practitioners 26
Community Mental Health 12
Digital Health Strategy and Programs 19
Clinical Education 11
Ontario Drug Programs 10
Ministry of Long-Term Care
Long-Term Care Homes – Operations 218
Total Transfers as of June 30, 2020 1,505
Table 6 Transfers from the Support for People and Jobs Fund as of June 30, 2020, $ millions Source: FAO analysis of information provided by Treasury Board Secretariat.
Ministry/Program Transfers
Ministry of Agriculture, Food and Rural Affairs
COVID-19 Programming 15
AgriRecovery 10
Grassroots Growth Program and Better Public Health and Environment 1
Ministry of Children, Community and Social Services
Ontario Works – Financial Assistance 27
Child Welfare – Indigenous Community and Prevention Supports 10
Ministry of Economic Development, Job Creation and Trade
Sector Support Grants 8
Ministry of Energy, Northern Development and Mines
Energy Support, Engagement and Indigenous Partnership Programs 193
Northern Development Capital Assets 10
Ministry of Environment, Conservation and Parks
Environmental Planning and Action 5
Ministry of Finance
Guaranteed Annual Income System 75
Ministry of Health
Ontario Drug Programs 45
Community Mental Health 14
Assistive Devices and Supplies Program 5
Ministry of Indigenous Affairs
Indigenous Economic Development Fund 10
Participation Fund 4
Ministry of Municipal Affairs and Housing
Homelessness Programs 148
Ministry for Seniors and Accessibility
Seniors Affairs Transfer Payment 10
Ministry of Transportation
Municipal Transit 15
Transportation Infrastructure Assets 15
Connecting Links 10
Total Transfers as of June 30, 2020 629

Footnotes

[1] 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).

[2] In the 2020-21 First Quarter Finances, the Province announced its intention to top up the three unallocated funds by an additional $9.6 billion. However, as of June 30, 2020, the end of the first quarter, the $9.6 billion top-up was not reflected in the government’s expenditure management system and will be implemented by the Province in the second quarter of 2020-21.

[3] 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] The $12.4 billion spending plan increase also required Supplementary Estimates which were tabled in the legislature on September 17, 2020. There is typically a timing difference between what is announced in the Province’s Quarterly Finances (including Fall Economic Statements) and actual changes to IFIS, which records ministries’ legal spending authority against actual spending.

[5] Also includes the COVID-19 Energy Assistance Program for Small Business ($8 million) and the COVID-19 Low-income Emergency Assistance Program ($9 million). For more information, see FAO, “Federal and Provincial COVID-19 Response Measures,” 2020 and FAO, “A Financial Review: The Decision to Freeze Time-Of-Use Electricity Pricing,” 2020.

[6] Financial Administration Act, s. 11.2(1)(a). In the 2020-21 Expenditure Estimates, the purpose of vote 2205 is to develop Ontario’s energy policy framework, and to provide leadership and support to the energy sector to ensure clean, reliable, affordable and sustainable energy supply, transmission and distribution systems. In the first quarter, the Province transferred $615 million to the Energy Support, Engagement and Indigenous Partnership Programs transfer payment in vote 2205, which in the 2020-21 Expenditure Estimates has an allocation of $2 million.

[7] 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).

[8] For more information, see FAO, “Spending Plan Analysis: 2020-21,” 2020.

[9] In the 2020-21 First Quarter Finances, the Province announced its intention to top up the three unallocated funds by an additional $9.6 billion. However, as of June 30, 2020, the end of the first quarter, the $9.6 billion top-up was not reflected in IFIS (the government’s expenditure management system) and will be implemented by the Province in the second quarter of 2020-21.