The stuff the administration doesn’t want to talk about report

By Gerry Barker

November 17, 2016

The following are extracts from the city website regarding how, why and where public funds are used on your behalf. But why allocation of funds in the budget is important? The city administration does not want to talk about the basic overhead costs for which citizens are responsible.

What is overhead? It’s the costs of the city that can be controlled and are concealed by the administration, including council. It’s to avoid public participation in the details that could lead to the three dreaded “D’s” distrust, discontent and distraction. These financial details are usually fixed costs that grow exponentially with more public services and population growth.

For example, why don’t they inform us of the total cost of staff whose pay and benefits are paid by the citizens? Since 2007, the staff costs have escalated along with adding some 550 Full Time Equivalent (FTE) employees in the past ten years. Deputy Chief Administrative Officer (DCAO) Mark Amorosi has been in charge of Human Resources since 2008. His department is responsible for hiring and firing, employee performance and increases in remuneration of existing members of staff.

The HR department reported there were 1,440 FTE’s in 2015. But that’s only part of the story. It doesn’t include the Police, Fire or EMS staff that according to the 2015 city Financial Information Report, there are 1,944 Guelph FTE’s members of the Ontario Municipal Employee Retirement System (OMERS)

So why does HR each year not tell the total staff numbers story? One possible explanation is that the Police and Fire departments have their own HR staff.

Ask yourself why, when their pay and benefits come from the same public purse?

Lets now look at what the administration tells us how $216 million was spent in 2016.

From the city website:

Before we even looked at the numbers, we determined our four focus area—the things that will help ensure we build a budget that’s realistic and sustainable.

  • Establish a budget that builds stable foundation for the year and future years
  • Build a budget that is a realistic plan to take care of us today and tomorrow
  • Focus on delivering service and value to the community
  • Community participation—the more involvement from the community, the more reflective the budget will be of the community’s needs and value

Of every dollar the City collects in property taxes in 2016, $0.23 is provided to province for education, $0.27 helps funds the City’s local boards and shared services and $0.50 directly helps fund the services the City provides to you and your family.

The following shows where your $0.77 was directed.

City delivered services

  • Fire 11.7%                                                                        $25,272,000
  • General&capital financing 10.6%                        $22,896,000 (controllable overhead)
  •                                                                                              How was the money spent?
  • Administrative services 7.2%                                $15,552,000 (controllable overhead)
  •                                                                                              How much went to staff?
  • Roads and sidewalks 7.1%                                       $15,336,000
  •                                                                                             Where was the money spent?
  • Transit 6.8%                                                                  $14,688,000
  • Waste 4.9%                                                                    $10,584,000 (controllable overhead)
  •                                                                                             How much money is used to pay down
  •                                                                                             fixed costs debt?
  • Parks and forestry 4.2%                                          $9,072,000
  • Culture and tourism 2.8%                                      $5,048,000 (controllable overhead)
  •                                                                                             Does this include the Sleeman Centre
  •                                                                                             RiverRun Theatre, Civic Museum
  •                                                                                             Market Square, Wellbeing?
  • Emergency medical service (EMS) 2.5%         $5,400.000
  • Planning & economic development 2.3%        $4,968,000 (controllable overhead)
  •                                                                                            How much goes to staff and promotion?
  • Other services 1.8%                                                   $3,888,000 (controllable overhead)
  •                                                                                            What, why and where this was allocated?
  • Recreation 1.7%                                                          $3,672,000
  •                                                                                           Where did this money go and to whom?
  • Infrastructure 0.9%                                                $ 948,000
  •                                                                                           Which leaky pipe did this fix?
  • Mayor & Council 0.4%                                            $ 864,000

Local boards and shared services

  • Police 17.4%                                                               $37,584,000
  •                                                                                        Was any part of that used to pay for the HQ                                                                                                                renovation?
  • Social services 11.2%                                            $24,192,000
  • Library 3.9%                                                            $   8,424,000
  • Public health 1.8%                                                $   3,888,000
  • Long-term care (Elliot) 0.7%                           $   1,706,400

Now you know where your money was spent in 2016 according to the city’s own, and we presume audited, numbers.

What is the total debt owed by the city? What was it in 2013 and now in 2016?

What we don’t know is how each category used the money. How much of each of those allocations went to support the staff? What percentage?

There is no mention of Guelph Municipal Holdings Inc (GMHI) or the role of Guelph Hydro in one of the most expensive, poorly planned and poorly managed social engineering adventure in the city’s history. Why not tell the public about that $69 million note, listed on the books as an impaired asset? Why not tell them why Guelph Hydro is now another city department controlled by council? It was a loan that came from a Guelph Hydro subsidiary to GMHI. Trouble was there was no way it would ever be paid back and will eventually become a liability on the city books.

What is the travel and other job-related expenses and memberships received by council and administration staff in 2015/16?

How much money was allocated in 2015/16 in order to balance the city books to replenish the reserve funds that had been used to cover negative budget variances. How about the $5.7 million taken from three reserve funds to pay for the Urbacon lawsuit charges?

What was the capital budget spending in 2016 and where was it spent?

What does council consider as direct public services and not to be changed?

How much public money did the city give away in 2015 and 2016? And to whom and why?

Why is the city spending $300,000 a year developing bicycle lanes when only $948,000 was spent in 2016 on infrastructure having leaky water pipes?

Since Mark Amorosi took over Finance in November 2014, the city has had three general managers of Finance and Treasurer. The person in the job right now is temporary carrying the workload, knowing when Mr. Amorosi’s pick for the job returns next year from maternity leave. Do you believe this track record of four Finance GM’s delivers continuity and control of the city’s finances? The man responsible is now working on his third city budget with the predictable outcome of no cuts in overhead.

During the first year of Mr. Amortosi’s financial responsibility, the city changed external auditors without explanation. For many years Deloitte-Touche was the auditor for the city. Now that responsibility has been turned over to KPMG.

Guelph resident Pat Fung, CA, CPA, has used the city’s own audited Financial Information Reports going back four years to produce an eight-page analysis of the administration’s handling of the public money. He also used material from a city consultant’s report that compared similar-sized cities and management of their costs to that of Guelph. The consultant warned the city using the term “red flag” of deteriorating use of reserve funds.

Mr. Fung’s analysis included a plan of action to reduce costs and enable the city to conduct a robust infrastructure-rebuilding program that would not impact taxes. The staff is recommending a ten-year, .5 per cent special tax levy on property owners to pay for the infrastructure program.

I regret to report that staff management and some members of council has largely ignored Mr. Fung’s thorough and professional analysis.

If this is Cam Guthrie’s “Better Guelph” then I’m Ashcan Phil who can’t pay the bills.

I apologize for the formatting of the city chart. While still readable, it refused to conform when transfered fromm the city website to guelphspeaks.

Look for more guelphspeaks on Facebook and Twitter. It’s the blog that never sleeps!

 

 

 

 

 

 

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3 Comments

Filed under Between the Lines

3 responses to “The stuff the administration doesn’t want to talk about report

  1. gjmg

    Lots of good questions. Remember that 2016 is not over yet, and audited FS will not be available until early 2017. However, what are the City’s projected financials for 2016 ? There should be a recent report that shows that.

    • gjmg: There is information available to a point on the city website. We have to go back to December 2015 when council approved the 2016 budget to determine the base line. History shows that for five years, former CAO, Ann Pappert, created annual budget overages (negative variances) that had to be made up from reserves in order to meet the provincial requirement to produce a balanced budget.

      On the surface, that may be a good strategy, using reserves to balance the books. It’s not a good idea to drain reserves because of the consistent overspending now two administrations. As I have consistently commented the trouble lies in the management of city finances. In the past two years, the city has gone through three GM’s and treasurers in the city Finance department, the job is currently held by an employee who is labelled acting. Mark Amoros, the DCAO in charge of Finances, has already appointed a fourth individual to take over the job who is currently on maternity leave and not available until next year.

      For a guy with an HR background, it appears that he is having trouble keeping qualified staff running Finance. The early signs of planning the 2017 budget, in which Mr. Amorosi is a key player, indicates that the senior staff is not ready to reduce the city’s operating overhead. CAO Derrick Thomson has stated that the budget will not reduce public services. That’s not the issue. Reducing overhead is a management responsibility and will not affect public services. This city needs an independent. qualified Chief Financial Officer to take over Finance.

      Unfortunately, that would be a threat to the power structure currently running our city. Mayor Guthrie is part of retaining the status quo so don’t expect any changes at the senio5 management level. Ayyjis time the only opportunity to change the powers running out city, elected and civil servant management, comes in October 2018. There is movement already in motion to prepare for that election.

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