Financial update from the VP of Finance Robbie Peters

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Financial update from the VP of Finance Robbie Peters

07-Nov-2016

I missed the opportunity to update you with August financial results, so will give you a quick recap of August, as well as talk about September’s results. 

August 2016

The concerns I shared with you in July regarding the continuing deficit unfortunately did not change substantially in August.  The August results saw a slight surplus of $400K, bringing the YTD deficit to $4.7M.  It is not unusual to show small surpluses in the summer months due to high vacation usage and planned slowdowns.  Comparatively, the YTD deficit at August of last year was $2.9M (including the unexpected WCB rebate revenue of $4.3M) and I know I don’t have to remind you again that we ended last year with a $15.2M deficit.  As expected, the majority of the current year deficit is attributed to salaries and benefits with some small offsetting surpluses in medical supplies and other non-salary expenses, and some unbudgeted revenue.

September 2016

Our financial situation worsened in September, with the deficit growing by $1.9M in the month for a YTD total of $6.6M.  If our actions do not change, we will likely have a deficit of close to $14M by March 31, 2017.

What specific actions need to change?  Since the beginning of the fiscal year and even prior to that, the financial information has shown that over expenditures in people costs (salaries and benefits) is the main cause of our deficit.  If we are going to achieve financial success in a sustainable way, we must make changes to ensure staffing is aligned with our service demand, within the resources available.  In September, Keith Dewar, President & CEO, announced steps that were being taken to adjust staffing in certain areas to align with demand and available resources. 

Weekly, the Finance department sends information on paid hours.  The following chart shows our actual paid hours (black line) by week, as well as a projection (red line) of where we will end up at the end of the year.  It also shows the budget (green line); you can see there is a large gap between the two, and even more concerning, the gap is growing.

 

In his memo, Keith noted that on their own, none of these initiatives will achieve system sustainability.  Engagement and accountability from everyone in the Region is required to reach our goals, and it is expected that everyone will actively participate in actions required to create financial success. 

A reminder that all departments should be deferring expenditures where safe to do so, particularly discretionary expenditures such as travel, conferences, consulting, furniture, minor renovations, IT expenditures and office supplies.  When reviewing your financial situation, remember that the Region has a deficit – any favourable variances you may have need to be held to offset your colleague’s unfavourable variances.