This document outlines the Ontario Municipal Partnership Fund (OMPF) that is being introduced for 2005 to replace the Community Reinvestment Fund. It is intended to provide a technical overview of the new funding model and the accompanying transition strategy.
The Ontario Municipal Partnership Fund is replacing the Community Reinvestment Fund (CRF) as the province's main transfer payment to municipalities. The new municipal funding model replaces a model with a number of shortcomings with a clear and understandable system of grants. The Ontario Municipal Partnership Fund will assist municipalities with their social program costs; include equalization measures; address the challenges faced by northern and rural communities; and respond to policing costs in rural communities.
The OMPF will provide $656 million to 386, or 87 per cent, of municipalities. This represents a $38 million, or 6.1 per cent, increase over CRF funding received in 2004. As part of implementing the OMPF, the province is providing municipalities with $233 million in one-time funding to meet the province's reconciliation obligations for 2003 and 2004 under the old CRF model and to ensure a manageable pace of change for municipalities.
Replacement of the CRF with a fairer funding model and the allocation of a transition fund to support its implementation are both part of the province's overall commitment to municipalities.
This commitment includes:
The Community Reinvestment Fund (CRF) was introduced in 1998. Eligibility was based on the property tax and program exchange undertaken as part of the Local Services Realignment in 1998. Over time, additional grant components were added to the CRF to accompany the partial or complete upload of several programs.
There have been longstanding concerns with the CRF associated with its complexity, inequity, and administrative burden. In an attempt to understand these concerns, the government invited its municipal partners to participate in a review of the CRF as part of the Strong Communities initiative.
The discussion of municipal concerns through the Strong Communities initiative assisted the government in the design of the new Ontario Municipal Partnership Fund.
The Ontario Municipal Partnership Fund will provide municipalities with $656 million in funding through four grants:
The province is addressing a key municipal concern in allocating $100 million to reconcile to 2003 program costs and $35 million to reconcile to estimated 2004 costs. Funding that municipalities receive will be final payments.
In addition, the province is providing $98 million in one-time transition assistance to ensure a manageable pace of change for municipalities in the move to the new Ontario Municipal Partnership Fund.
The Stable Funding Guarantee announced in January 2005 will ensure that municipalities receive, at a minimum, as much funding in 2005 as they received through the CRF in 2004. The specific details of each municipality's Stable Funding Guarantee were included as part of the January 12, 2005 memo to Treasurers and Clerk-Treasurers from the Deputy Ministers of Finance, and Municipal Affairs and Housing.
This grant provides funding to municipalities with limited property assessment to support the municipal share of eligible social program costs (for a definition of eligible costs see Appendix A). This grant provides funding to municipalities whose costs for these programs exceed the revenue that could be raised by levying a 0.2% property tax rate on their assessment base.
This grant assists municipalities in meeting the municipal portion their portion of the established cost-sharing arrangements for social programs. The province will continue to fund its portion of the cost-shared programs, as well as provide additional funding through the OMPF to help municipalities pay for their share of these arrangements.
Distribution: The Social Programs Grant is distributed to upper
and single tier municipalities.
Threshold amount: $25,000,000 x 0.2% = $50,000
Grant: $125,000 – $50,000 = $75,000
This grant provides funding to municipalities that have limited property assessment through two components:
|Farmland and Managed Forest Assessment Grant Component|
|Taxes generated by farmland & managed forest properties (%)||5||6||7||8||9||10||11||12||13||14||15||16||17||18||19||20 +|
|Taxes allocated as grant funding (%)||0||10||20||30||40||50||60||70||80||90||100||110||120||130||140||150|
This grant provides funding to northern and rural communities in recognition of the unique challenges they face.
In order to support this grant, a rural and small community measure has been calculated for each municipality to determine the proportion of its population living in rural areas or small communities (see Appendix A).
The grant has four components:
|Rural Communities Grant Component|
|Rural & small community measure||25%||30%||35%||40%||45%||50%||55%||60%||65%||70%||75% +|
|Per household amount||$0||$15||$30||$45||$60||$75||$90||$105||$120||$135||$150|
|Northern and Rural Social Programs Grant Component|
|Rural and small community measure||25%||30%||35%||40%||45%||50%||55%||60%||65%||70%||75%+|
|Residual social program costs funded||0%||10%||20%||30%||40%||50%||60%||70%||80%||90%||100%|
This grant provides funding to rural communities to support policing costs.
This grant provides funding equal to 50% of eligible police costs (for definition see Appendix A) above $150 per household for municipalities that have a rural and small community measure of 75% or more.
Municipalities with a rural and small community measure between 25% and 75% receive a portion of this funding on a sliding scale.
Every 5% increment in the rural and small community measure between 25% and 75% results in a 5% increase in funding for eligible costs above $150 per household:
|Police Services Grant|
|Rural and small community measure||25%||30%||35%||40%||45%||50%||55%||60%||65%||70%||75%+|
|Eligible costs above threshold allocated as funding||0%||5%||10%||15%||20%||25%||30%||35%||40%||45%||50%|
For municipalities with a rural and small community measure of less than 75%, the Police Services Grant will be calculated as 50% of their 2002 eligible per household policing costs above the $150 threshold - where this approach generates a greater amount than under the standard calculation detailed above. This is incorporated as a transitional measure that applies to only a small number of municipalities.
Distribution: The Police Services Grant Component is distributed to those municipalities that provide policing services.
As part of implementing the Ontario Municipal Partnership Fund, the province is providing municipalities with $233 million in one-time funding to meet the province's reconciliation obligations for 2003 and 2004 under the old CRF model and to ensure a manageable pace of change for municipalities.
The $233 million in one-time funding has two components:
Distribution: Transition funding is distributed to upper, lower and single tier municipalities.
The Stable Funding Gurantee announced in January 2005 will ensure that municipalities will receive, at a minimum, as much funding in 2005 as they received through the CRF in 2004. As noted, the specific details of each municipality's Stable Funding Guarantee were included as part of the January 12, 2005 memo to Treasurers and Clerk-Treasurers from the Deputy Minister of Finance, and Municipal Affairs and Housing.
The OMPF phase-in strategy will be supported, in part, through the $98 million one-time transition funding outlined above.
The phase-in will ensure that the revenue impacts of the transition to OMPF will be limited by the following parameters:
|Phase-In Parameters ($)||2005||2006||2007||2008|
|Maximum Per Household Decrease||$0||$10||$25||$50|
|Maximum Per Household Increase||$80||$90||$100||$150|
Revenue changes under the OMPF are compared to payments each municipality received in 2004 under the CRF and are expressed as the residential tax impact per household.
Total municipal reductions will be limited to: $250,000 in 2006, $500,000 in 2007, and $1,000,000 in 2008.
The Ontario Municipal Partnership Fund allocations will be announced annually in the fall and flowed in quarterly payments to municipalities. All OMPF allocations will be provided to municipalities as unconditional grants. One-time funding will also be provided to municipalities as unconditional grants from the province's 2004-05 Change Fund.
Municipal allocations will be calculated by the Ministry of Finance based on a defined set of data elements (see Appendix B).
Data elements will be either stable or live. The “stable” data elements will be established prior to the annual fall release of allocations, e.g. assessment data, number of households. Stable data elements will be based on the most recent data sets available as of July 30 of the year prior to the allocation year.
A limited number of data elements will be “live” throughout the allocation year. Specifically, costs for police services, child care programs and administration, and social assistance income support and administration (Ontario Drug Benefit, Ontario Disability Supplement Program, and Ontario Works) will be live data elements.
Live data elements will be reconciled regularly to capture both
increases and decreases in costs. This will result in adjustments
to the Social Programs Grant, the Northern and Rural Social Programs
Grant Component, and the Police Services Grant.
Funding provided through the Ontario Municipal Partnership Fund is distributed to upper, lower, and single tier municipalities based on the level of government that is responsible for the service supported by the grant or grant component.
|Upper, Lower, and Single Tier Funding Distribution|
|Social Programs Grant||UT / ST|
|Assessment Equalization Grant Assessment Component||LT / ST|
|Farmland and Managed Forest Grant Assessment Component||LT / ST|
|Northern and Rural Communities Grant|
|Rural Communities Grant Component||LT / ST|
|Northern Communities Grant Component||ST|
|Northern and Rural Social Programs Grant Component||UT / ST|
|Stabilization Grant Component||UT / LT / ST|
|Police Services Grant||UT / LT / ST|
Phase-in adjustments will be calculated independently for upper, lower, and single tier municipalities.
Eligible Municipal Social Program Costs
Eligible municipal social program costs refer to the costs that municipalities are responsible for under existing cost-sharing arrangements with the province. Social programs that are eligible for inclusion in determining a municipality's total social program costs for the Ontario Municipal Partnership Fund include:
Eligible Police Costs
Eligible police costs include policing services provided by the Ontario Provincial Police (OPP) or a local force to meet the service standards defined in the Police Services Act.
Non-eligible police costs include bylaw enforcement and cases where service levels exceed those required by the Police Services Act.
Northern municipalities are those that lie within any of the following Districts: Algoma, Cochrane, Kenora, Manitoulin, Nipissing, Parry Sound, Rainy River, Sudbury, Thunder Bay, and Timiskaming.
Rural and Small Community Measure
The rural and small community measure represents the proportion
of a municipality's population that resides in rural areas or small
communities. This approach recognizes that some municipalities include
a mix of rural and non-rural areas.
The measure is based on Statistics Canada data and is calculated as follows:
Total municipal population = 1,000
Population in areas that are rural or in small communities = 700
Rural and small community measure = 700 / 1,000 = 70%
In this document assessment refers to the total assessment for a municipality weighted by the tax ratio for each class of property plus payments in lieu of property taxes (PILs) made by either the provincial or federal government. (An equivalent PIL assessment is calculated by dividing actual PIL revenues by tax rates in each municipality.)
|Live Program Cost Data
|Other Program Cost Data
|Taxation and Assessment Data
Copyright information: © Queen's
Printer for Ontario, 2005