Quarterly Financial Report, For the Quarter ended June 30, 2011

Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates. This report has not been subject to an external audit or review.

Correctional Service Canada (CSC), as part of the criminal justice system and respecting the rule of law, contributes to public safety by actively encouraging and assisting offenders to become law-abiding citizens, while exercising reasonable, safe, secure and humane control. It delivers its mandate under four major program activities. A summary description of CSC’s program activities can be found in Part II of the Main Estimates.

CSC contributes to public safety by administering court-imposed sentences for offenders sentenced to two years or more. This involves managing institutions of various security levels and supervising offenders on different forms of conditional release, while assisting them to become law-abiding citizens. CSC also administers post-sentence supervision of offenders with Long Term Supervision Orders for up to ten years.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the CSC’s spending authorities granted by Parliament and those used by the department, consistent with the Main Estimates and Supplementary Estimates A for the 2011-2012 fiscal year, for which full supply was released on June 27, 2011. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

CSC uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

CSC has an active Revolving Fund (CORCAN) that is included in the budgetary statutory authorities of the enclosed Statement of Authorities. CORCAN's purpose is to aid in the safe reintegration of offenders into Canadian society by providing employment and training opportunities to offenders incarcerated in federal penitentiaries and, for brief periods of time, after they are released into the community. CORCAN has a continuing, non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund (CRF) for working capital, capital acquisitions and temporary financing of accumulated operating deficits, the total of which is not to exceed $5.0 million at any time.

Highlights of Fiscal Quarter End and Fiscal Year to Date (YTD) Results

Authorities Analysis

As reflected in the attached Statement of Authorities, in 2011-2012, CSC has seen an increase in total authorities from the previous year (2010-2011) of 20.8% ($514.2 million).

The following table summarizes the variances:

(in millions of dollars)
Authorities Variances Total
Vote 25 – Operating Expenditures   290.0 

Truth in Sentencing Act

234.9   

National Capital, Accommodation and Operations Plan

33.7   

Tackling Violent Crime Act

19.6   

Other

1.8   
Vote 30 – Capital Expenditures   180.2 

Truth in Sentencing Act

223.1   

Strategic Review Capital Reallocation

(15.4)  

Reprofiling to future years

(27.3)  

Other

(0.2)  
Budgetary Statutory Authorities   44.0 
Total   514.2 

Of the net increase in total authorities reflected in the Statement of Authorities, $458.0 million ($234.9 million in operating funding and $223.1 million in capital funding) was received in relation to the implementation of the Truth in Sentencing Act, and $19.6 million for the Tackling Violent Crime Act, which will increase both individual sentence length and the number of federal offenders.

The Budgetary Statutory Authority increase of $44.0 million is related to CSC’s allocation of the employer’s share of the Employee Benefit Plan (EBP), due to employee growth, and the disposal of crown assets.

CSC received an increase of $33.7 million for the National Capital, Accommodation & Operations Plan. This increase is related to offender programs and specific accommodation measures, which are based on funding formulae driven by type and variations in the number of offenders (incarcerated and in the community).

Funding for capital expenditures has been reduced by $15.4 million as a result of the 2009 Strategic Review.

There was a $27.3 million decrease in CSC’s capital vote reference levels due to reprofiling of capital funds to future years.

Quarterly Expenditures Analysis

Compared to the first quarter of the previous fiscal year, total net budgetary expenditures have increased by $34.3 million (7.4%). The implementation of newly enacted legislation is the key driver of the growth.

Capital expenditures increased by $11.7 million, which is mainly attributable to improvements to and construction of infrastructure ($5.0 million in repair and maintenance and $6.7 million in the acquisition of land, buildings and works) to support the projected increase in the offender population.

The budgetary statutory authorities increase ($11.7 millionFootnote 1) is primarily related to the Employee Benefit Plan (EBP). This expenditure is charged monthly by the Treasury Board Secretariat based on an annual projection of personnel expenditures.

Although operating expenditures have decreased by $8.0 million, salaries and overtime expenditures increased by $11.3 millionFootnote 2, and were offset by a reduction in professional and special services of $20.2 million. This reduction is mostly due to a timing difference of a training fee transfer between CSC and CORCAN, which was partially processed in the first quarter of this fiscal year. This also explains the overall reduction in CORCAN’s gross revenue.

Risks and Uncertainties

As a result of legislative changes, the number of inmates in CSC’s custody has grown and is expected to significantly increase over the next few years. This growth will exert significant pressure on CSC’s already ageing infrastructure and requires the construction of new capacity. To mitigate this risk, CSC has established an Infrastructure Renewal Team. This team is working with operational sites, regions, and sectors at National Headquarters to ensure appropriate levels of staff, accommodation space and other resources are in place to allow for effective case management, program delivery, and community supervision as the population increases.

Separate from the increased funding noted under the Authorities Analysis section, Budget 2010 stipulated that the operating budgets of departments would remain frozen at their 2010-2011 levels for the fiscal years 2011-2012 and 2012-2013. In the last two years, CSC has implemented measures to address these constraints, such as:

  • introducing new staff deployment standards for Correctional Officers and computerized roster systems to ensure efficient staffing levels in federal institutions, resulting in significant reduction to overtime;
  • improving the integrated human resource and business planning methods to improve the accuracy of forecast future staffing, recruitment, and essential training needs;
  • implementing a more focused approach to reducing travel and hospitality expenditures; and,
  • piloting an innovative Integrated Correctional Program Model that will reduce redundancies and overlap between some of the programs offered to offenders, the preliminary findings of which are showing efficiencies in program delivery.

Further, in line with the objectives defined in Budget 2010, any increase in funding required as the result of a new collective agreement will be absorbed within current funding levels as part of the mitigation strategies outlined above. It should be noted that the collective agreement with the Union of Canadian Correctional Officers expired as of May 31, 2010. This group represents 41% of CSC’s employees, and therefore, a new collective agreement could result in a significant financial pressure on CSC.

Significant Changes in Relation to Operations, Personnel and Programs

CSC continues to adjust its operations to respond to the challenges that arise from recent and proposed legislation. CSC is working with internal and external partners to facilitate the expansion and renewal of human and technological resources, as well as physical infrastructure, and continues to build new relationships.

As outlined in the 2011-2012 Report on Plans and Priorities, CSC will focus its efforts on the following key areas:

  • safe transition to and management of eligible offenders in the community;
  • safety and security of staff and offenders in our institutions and in the community;
  • enhanced capacities to provide effective interventions for First Nations, Métis and Inuit offenders;
  • improved capacities to address mental health needs of offenders;
  • strengthening management practices; and
  • productive relationships with increasingly diverse partners, stakeholders, and others involved in public safety.

The effective alignment of these six priorities will ensure that CSC continues to play an active role, alongside our partners and key stakeholders, in ensuring the successful rehabilitation and reintegration of our offender population, in providing for safe and secure communities and institutions, and in respecting the financial constraints of the current economic environment.

Approvals by Senior Officials

 

Signed by_____________________

Liette Dumas-Sluyter, CMA,
Chief Financial Officer

Signed by_____________________

Don Head, Commissioner
Ottawa, Canada
August 29, 2011

 

Statement of Authorities (unaudited)

Fiscal Year 2011-2012
(in thousands of dollars)
  Total available for use for the year ending
March 31, 2012*
Used during the quarter ended
June 30, 2011
Year to date used at
quarter-end
Vote 25 – Operating Expenditures 2,207,946  410,141  410,141 
Vote 30 – Capital Expenditures 517,519  16,748  16,748 
Budgetary Statutory Authorities      
CORCAN Gross Expenditures 80,460  16,773  16,773 
CORCAN Gross Revenues (80,460) (12,821) (12,821)
CORCAN Net Expenditures (Revenues) - 3,952  3,952 
Other Budgetary Statutory Authorities 257,715  64,922  64,922 
Total Budgetary Authorities 2,983,180  495,763  495,763 
Non-Budgetary Authorities 49  - -
Total Authorities 2,983,229  495,763  495,763 

 

Fiscal Year 2010-2011
(in thousands of dollars)
  Total available for use for the year ending
March 31, 2011*
Used during the quarter ended
June 30, 2010
Year to date used at
quarter-end
Vote 30 – Operating Expenditures 1,917,993  418,122  418,122 
Vote 35 – Capital Expenditures 337,311  5,070  5,070 
Budgetary Statutory Authorities      
CORCAN Gross Expenditures 91,362  16,411  16,411 
CORCAN Gross Revenues (91,362) (31,371) (31,371)
CORCAN Net Expenditures (Revenues) - (14,960) (14,960)
Other Budgetary Statutory Authorities 213,709  53,210  53,210 
Total Budgetary Authorities 2,469,013  461,442  461,442 
Non-Budgetary Authorities 48  - -
Total Authorities 2,469,061  461,442  461,442 

More information is available in the attached table.
* Includes only Authorities available for use and granted by Parliament at quarter-end.

Departmental Budgetary Expenditures by Standard Object (unaudited)

Fiscal Year 2011-2012
(in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2012
Expended during the quarter ended
June 30, 2011
Year to date used at
quarter-end
Expenditures
Personnel 1,722,775  401,920  401,920 
Transportation and communications 74,757  8,424  8,424 
Information 2,509  180  180 
Professional and special services 402,963  46,459  46,459 
Rentals 15,307  1,440  1,440 
Repair and maintenance 62,138  6,785  6,785 
Utilities, materials and supplies 174,620  21,226  21,226 
Acquisition of land, buildings and works 323,309  10,420  10,420 
Acquisition of machinery and equipment 195,533  2,541  2,541 
Transfer payments 1,573  38  38 
Other subsidies and payments 88,156  9,151  9,151 
Total Gross Budgetary Expenditures 3,063,640  508,584  508,584 
Less Revenues Netted Against Expenditures
CORCAN (80,460) (12,821) (12,821)
Total Net Budgetary Expenditures 2,983,180  495,763  495,763 

 

Fiscal Year 2010-2011
(in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2011
Expended during the quarter ended
June 30, 2010
Year to date used at
quarter-end
Expenditures
Personnel 1,504,992  378,930  378,930 
Transportation and communications 69,826  8,799  8,799 
Information 2,433  133  133 
Professional and special services 322,332  66,638  66,638 
Rentals 12,072  1,601  1,601 
Repair and maintenance 62,510  1,747  1,747 
Utilities, materials and supplies 159,656  21,137  21,137 
Acquisition of land, buildings and works 220,463  3,751  3,751 
Acquisition of machinery and equipment 117,715  3,537  3,537 
Transfer payments 1,573  - -
Other subsidies and payments 86,803  6,540  6,540 
Total Gross Budgetary Expenditures 2,560,375  492,813  492,813 
Less Revenues Netted Against Expenditures
CORCAN (91,362) (31,371) (31,371)
Total Net Budgetary Expenditures 2,469,013  461,442  461,442 

Footnotes

Footnote 1

The variation in salaries, overtime and EBP ($23.0 million) represent the total variation in personnel expenditures.

Return to footnote 1

Footnote 2

The variation in salaries, overtime and EBP ($23.0 million) represent the total variation in personnel expenditures.

Return to footnote 2