Quarterly Financial Report, For the Quarter ended December 31, 2011
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, Supplementary Estimates and the Quarterly Financial Reports as of June 30, 2011 and September 30, 2011. This report has not been subjected 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 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 Footnote 1, and Supplementary Estimates B, for which full supply was released on December 19, 2011 Footnote 2. 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
As reflected in the attached Statement of Authorities, as of December 31, 2011, CSC has seen an increase in total authorities of $648.9 million (25.6%) for the current fiscal year compared to the previous fiscal year.
The following table summarizes the variances:
|Vote 25 – Operating Expenditures||370.1|
Truth in Sentencing Act
National Capital, Accommodation and Operations Plan
Tackling Violent Crime Act
Operating Budget Carry-forward
Paylist Requirement (December 2011)
Supplementary Estimates B
|Vote 30 – Capital Expenditures||234.7|
Truth in Sentencing Act
Strategic Review Capital Reallocation
Reprofiling to future years
|Capital Budget Carry-forward||54.5|
|Budgetary Statutory Authorities||44.1|
Employee Benefit Plan (EBP)
Disposal of Crown Assets
Of the $648.9 million overall increase, $588.8 million was reflected in the second quarterly report of 2011-2012. The additional items since September 2011 have been highlighted in the table above.
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 numbers of federal offenders. These changes will result in CSC accommodating and supervising an increase to the current offender population.
The year-to-date Budgetary Statutory Authority increase of $44.1 million is due to an increase in the Employee Benefit Plan of $43.6 million and an increase in proceeds from the Disposal of Crown Assets of $0.5 million. The $0.3 million increase over the $43.8 million reported last quarter is due to the increase in the proceeds from the Disposal of Crown Assets in the same quarter last year.
CSC received an increase of $33.7 millionfor the National Capital, Accommodation & Operations Plan. Theincrease is related to offender programs and specific accommodation measures, which are based on funding formulae driven by variations in population levels both incarcerated and in the community, as well as changes to the types of offenders.
Funding for capital expenditures was 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.
The other increases in the second quarter included the Operating Budget Carry-forward, the Capital Budget Carry-forward, and adjustments related to personnel costs identified as Paylist Requirements.
In September 2011, CSC received notification that the requested Operating Budget Carry-forward of $49.7 million had been approved. This represented an increase of $12.0 million over the Operating Budget Carry-forward received last year. The Operating Budget Carry-forward included $17.2 million of personnel related expenses such as severance pay and parental benefits that were cash-managed by CSC when Parliament was prorogued and for which Treasury Board subsequently provided funding.
CSC also received a Capital Budget Carry-forward of $54.5 million. No Capital Budget Carry-forward was requested last year.
CSC received $8.3 million in the second quarter and $89.8 million in the third quarter of 2011-2012 for Paylist Requirements. The latter represents a $67.9 million increase over the same period last year. The majority of this funding relates to the voluntary liquidation of severance pay as negotiated by Treasury Board during the collective bargaining process.
In the third quarter of 2010-2011, CSC received $8.7 million for Collective Agreement renewals prior to the Expenditure Restraint Act. In 2011-2012, CSC received $0.2 million, an $8.5 million decrease from the previous year.
CSC had a net increase of $0.4 million in funding authorities from Supplementary Estimates B over the same period last year. In 2010-2011, CSC’s total authorities decreased by $0.4 million; in 2011-2012, there was no increase to CSC’s total authorities through Supplementary Estimates B.
Finally, it is important to note that $67.3 million of funding related to the National Capital, Accommodation & Operations Plan was frozen by Treasury Board in October 2011. Frozen allotments are used to prohibit the spending of funds previously appropriated by Parliament; while it does not reduce the department’s approved authorities. This overfunding is the cumulative result of a number of fiscal years, whereby CSC through its National Capital, Accommodation and Operations Plan and the Annual Reference Level Updates, had over accumulated funds for accommodation measures which were delayed and/or cancelled.
Subsequently, CSC was granted the authority to access $2.7 million of the frozen allotments for the National Victims Services Program and $1.2 million for the assessment, management and remediation of federal contaminated sites.
Quarterly Expenditures Analysis
Compared to the third quarter of the previous fiscal year, total net budgetary expenditures have increased by $112.6 million (20.0%), resulting in a total year-to-date increase of $246.8 million. The implementation of the Truth in Sentencing Act and the Tackling Violent Crime Act resulted in an increase of $134.1 million in the first two quarters of 2011-2012 over the same period in 2010-2011, primarily due to increased expenditures in personnel and acquisition of land, buildings and works. This trend continued in the third quarter of 2011-2012.
Operating expenditures in the third quarter have increased by $74.8 million over the same period last year. Salaries and overtime expenditures increased by $62.0 million3 and is mainly the result of the increased staffing relating to the implementation of the legislation.
The $6.9 million increase in the year to date expenditures in other subsidies and payments is primarily due to a growth in CORCAN inventories to respond to an increased demand for CORCAN products.
Capital expenditures increased by $29.9 million, which is mainly attributable to improvements to and construction of infrastructure ($29.7 million in the acquisition of land, buildings and works) to support the increase in the offender population.
The Budgetary Statutory Authority increase is primarily related to the Employee Benefit Plan (EBP) ($10.8 millionFootnote 3). This expenditure is charged monthly by the Treasury Board Secretariat based on an annual projection of personnel expenditures.
Risks and Uncertainties
As a result of legislative changes, the number of inmates in CSC’s custody has grown and is expected to continue to increase over the next few years. However, the inmate population increases anticipated from the implementation of both the Truth in Sentencing Act and the Tackling Violent Crime Act have not materialized as originally predicted. CSC is working with central agencies to determine the financial impact; and as a result, funding may be returned or frozen within its existing reference levels. Furthermore, CSC hires staff based on actual inmate population and will not hire any new staff beyond what is required to effectively manage realized population growth while ensuring public safety results for all Canadians. As noted in the previous quarterly report, 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 operational resources are available 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 fiscal years 2011-2012 and 2012-2013.
It should be noted that the collective agreement with the Union of Canadian Correctional Officers expired on May 31, 2010. This group represent 41% of CSC’s workforce, and therefore, a new collective agreement could result in a significant financial pressure for CSC.
As a result of the Expenditure Restraint Act, in 2011-2012 CSC has absorbed $7.6 million related to salary increases.
In the last two years, CSC has and is continuing to implement measures to address these budgetary constraints, including:
- introducing new staff deployment standards for Correctional Officers and computerized roster systems to ensure efficient staffing levels in federal institutions, resulting in a significant reduction in overtime expenditures;
- improving integrated human resource and business planning methods to improve the accuracy of forecasts for 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, leading to efficiencies in program delivery.
Significant Changes in Relation to Operations, Personnel and Programs
Although CSC has received additional funding due to legislation changes, there have been no significant changes in relation to mandated operations, personnel, and programs over the same period last year.
On November 15, 2011, through Orders-in-Council, Shared Services Canada (SSC) assumed responsibility for providing email, network and data centre services to 44 federal organizations across the federal government, including CSC.
As part of the reallocation of resources for services transferred to SSC, CSC is transferring $20.8M ($16.4 million in Operating funding and $4.4 million in Capital funding) for 2011-2012. In addition to CSC personnel moving to SSC, starting next fiscal year, $43.3M in operating and capital funding will be permanently transferred to SSC.
Approvals by Senior Officials
Liette Dumas-Sluyter, CMA, CIA
Chief Financial Officer
Don Head, Commissioner
February 16, 2012
Statement of Authorities (unaudited)
|Fiscal Year 2011-2012||Fiscal Year 2010-2011|
|Authorities1||Total available for use for the year ending
March 31, 2012**
|Used during the quarter ended December 31, 2011||Year to date used at quarter-end||Total available for use for the year ending
March 31, 2011*
|Used during the quarter ended December 31, 2010||Year to date used at quarter-end|
|Vote 25 (30) – Operating Expenditures||2,356,032||530,394||1,477,558||1,985,891||455,612||1,346,134|
|Vote 30 (35) – Capital Expenditures||571,981||77,969||152,985||337,311||48,114||83,442|
|Budgetary Statutory Authorities|
|CORCAN Gross Expenditures||80,460||25,633||64,640||91,362||19,878||53,410|
|CORCAN Gross Revenues||(80,460)||(22,709)||(53,442)||(91,362)||(14,023)||(55,362)|
|CORCAN Net Expenditures (Revenues)||-||2,924||11,198||-||5,855||(1,952)|
|Other Budgetary Statutory Authorities||258,513||64,130||192,329||214,405||53,211||159,666|
|Total Budgetary Authorities||3,186,526||675,417||1,834,070||2,537,607||562,792||1,587,290|
Note 1: Pursuant to s. 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011, $16.4 million is deemed to have been appropriated to Shared Services Canada (SSC) Operating Expenditures and $4.4 million is deemed to have been appropriated to SSC Capital Expenditures, which results in a reduction for the same amounts in CSC, Vote 25 (Operating Expenditures) and Vote 30 (Capital Expenditures), Appropriation Act No.1, 2011-2012. To date, sufficient financial details are not known to publish the exact amount of expenditures that have been incurred on behalf of SSC by CSC.
More information is available on the following page.
* Includes only Authorities that were available for use and granted by Parliament as of December 31, 2010.
** Includes only Authorities that were available for use and granted by Parliament as of December 31, 2011.
Departmental Budgetary Expenditures by Standard Object (unaudited)
|Fiscal Year 2011-2012||Fiscal Year 2010-2011|
|Budgetary Expenditures||Planned expenditures for the year ending
March 31, 2012
|Expended during the quarter ended
December 31, 2011
|Year to date used at quarter-end||Planned expenditures for the year ending
March 31, 2011
|Expended during the quarter ended
December 31, 2010
|Year to date used at quarter-end|
|Transportation and communications||74,757||15,334||37,422||70,480||13,229||34,095|
|Professional and special services||452,685||81,804||200,476||360,743||67,621||198,607|
|Repair and maintenance||62,138||8,410||24,991||62,615||9,485||24,164|
|Utilities, materials and supplies||174,620||31,930||81,762||160,046||31,954||81,565|
|Acquisition of land, buildings and works||371,276||65,422||119,388||220,463||35,684||55,748|
|Acquisition of machinery and equipment||202,826||13,866||27,722||118,412||10,869||24,486|
|Other subsidies and payments||88,156||12,797||51,615||86,926||10,929||44,676|
|Total Gross Budgetary Expenditures||3,266,986||698,126||1,887,512||2,628,969||576,815||1,642,652|
|Less Revenues Netted Against Expenditures|
|Total Net Budgetary Expenditures||3,186,526||675,417||1,834,070||2,537,607||562,792||1,587,290|
- Footnote 1
- Footnote 2
Released through Order in Council P.C. 2011-1705.
- Footnote 3
The variances in salaries and overtime ($62.0M) and in EBP ($10.8M) represent the total variation in personnel expenditures ($72.8M).
- Date modified :