Public Accounts of Ontario 2014-2015 - Consolidated Financial Statements

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Independent Auditor’s Report

To the Legislative Assembly of the Province of Ontario

I have audited the accompanying consolidated financial statements of the Province of Ontario, which comprise the consolidated statement of financial position as at March 31, 2015, and the consolidated statements of operations, change in net debt, change in accumulated deficit and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

The Government of Ontario is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as the Government determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express an opinion on these consolidated financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Government, as well as evaluating the overall presentation of the consolidated financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Opinion

In my opinion, these consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Province of Ontario as at March 31, 2015, and the consolidated results of its operations, change in its net debt, change in its accumulated deficit, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

  original signed by

Toronto, Ontario
August 21, 2015 
Bonnie Lysyk, MBA, CPA, CA, LPA
Auditor General
Province of Ontario
Consolidated Statement of Operations
($ Millions) 2014–15
Budget
2014–15
Actual
2013–14
Actual
Revenues (Schedules 1 and 2)
Personal Income Tax 29,172 29,313 26,929
Sales Tax 21,937 21,689 20,481
Corporations Tax 10,254 9,557 11,423
Education Property Tax 5,661 5,561 5,457
Employer Health Tax 5,551 5,415 5,283
Ontario Health Premium 3,321 3,366 3,128
Gasoline and Fuel Taxes 3,129 3,186 3,081
Other Taxes 4,340 4,188 4,184
Total Taxation 83,365 82,275 79,966
Transfers from Government of Canada 21,882 21,615 22,277
Income from Investment in Government Business Enterprises (Schedule 9) 5,026 5,615 5,337
Other 8,598 9,041 8,331
Total 118,871 118,546 115,911
Expenses (Schedules 3 and 4)      
Health 50,055 50,013 48,909
Education 25,347 25,192 24,517
Children's and Social Services 15,013 14,710 13,998
Environment, Resources and Economic Development 12,137 11,464 11,432
Interest on Debt 11,010 10,635 10,572
Post-Secondary Education and Training 7,839 7,672 7,581
Justice 4,253 4,326 4,165
General Government and Other 4,722 4,849 5,190
Total 130,376 128,861 126,364
Reserve 1,000
Annual Deficit (12,505) (10,315) (10,453)
See accompanying Notes and Schedules to the Financial Statements.
Province of Ontario
Consolidated Statement of Financial Position
As at March 31
($ Millions)
2015 2014
Liabilities    
Accounts Payable and Accrued Liabilities (Schedule 5) 21,074 19,691
Debt (Note 2) 314,960 295,758
Other Long-Term Financing (Note 4) 13,874 12,909
Deferred Revenue and Capital Contributions (Note 5) 10,110 9,481
Pensions and Other Employee Future Benefits (Note 6) 3,151 3,903
Other Liabilities (Note 7) 4,458 2,829
Total 367,627 344,571
Financial Assets    
Cash and Cash Equivalents 15,193 12,744
Investments (Note 8) 20,366 21,989
Accounts Receivable (Schedule 6) 10,317 8,524
Loans Receivable (Schedule 7) 11,777 11,778
Other Assets 1,896 1,616
Investment in Government Business Enterprises (Schedule 9) 23,502 20,730
Total 83,051 77,381
Net Debt (284,576) (267,190)
Non-Financial Assets    
Tangible Capital Assets (Note 9) 97,065 90,556
Accumulated Deficit (187,511) (176,634)
Contingent Liabilities (Note 11) and Contractual Obligations (Note 12).
See accompanying Notes and Schedules to the Financial Statements.
Province of Ontario
Consolidated Statement of Change in Net Debt
For the year ended March 31
($ Millions)
2015 2014
Annual Deficit   (10,315)   (10,453)
Acquisition of Tangible Capital Assets (Note 9) (11,183)   (10,322)  
Amortization of Tangible Capital Assets (Note 9) 4,544   4,373  
Proceeds on Sale of Tangible Capital Assets 140   377  
Gain on Sale of Tangible Capital Assets (10)   (28)  
Total   (6,509)   (5,600)
Increase in Fair Value of Ontario Nuclear Funds (Note 10) 1,121 951
Increase in Net Debt (15,703) (15,102)
Net Debt at Beginning of Year (267,190) (252,088)
PSAB Adjustment for Liabilities for Contaminated Sites (Note 1(f)) (1,683)
Restated Net Debt at Beginning of Year (268,873) (252,088)
Net Debt at End of Year (284,576) (267,190)
See accompanying Notes and Schedules to the Financial Statements.
Province of Ontario
Consolidated Statement of Change in Accumulated Deficit
For the year ended March 31
($ Millions)
2015 2014
Accumulated Deficit at Beginning of Year (176,634) (167,132)
PSAB Adjustment for Liabilities for Contaminated Sites (Note 1(f)) (1,683)
Restated Accumulated Deficit at Beginning of Year (178,317) (167,132)
Annual Deficit (10,315) (10,453)
Increase in Fair Value of Ontario Nuclear Funds (Note 10) 1,121 951
Accumulated Deficit at End of Year (187,511) (176,634)
See accompanying Notes and Schedules to the Financial Statements.
Province of Ontario
Consolidated Statement of Cash Flow
For the year ended March 31
($ Millions)
2015 2014
Operating Transactions
Annual Deficit (10,315) (10,453)
Non-Cash Items:    
Amortization of Tangible Capital Assets (Note 9) 4,544 4,373
Gain on Sale of Tangible Capital Assets (10) (28)
Income from Investment in Government Business Enterprises (Schedule 9) (5,615) (5,337)
PSAB Adjustment for Liabilities for Contaminated Sites (Note 1(f)) (1,683)
Cash Items:    
Increase in Accounts Receivable (Schedule 6) (1,793) (99)
Decrease/(Increase) in Loans Receivable (Schedule 7) 1 (668)
Increase/(Decrease) in Accounts Payable and Accrued Liabilities (Schedule 5) 1,383 (1,863)
Decrease in Liability for Pensions and Other Employee Future Benefits (Note 6) (752) (214)
Increase/(Decrease) in Other Liabilities (Note 7) 1,629 (139)
Increase in Deferred Revenue and Capital Contributions (Note 5) 629 364
Remittances from Investment in Government Business Enterprises (Schedule 9) 3,964 4,105
(Increase)/Decrease in Other Assets (280) 12
Cash Applied to Operating Transactions (8,298) (9,947)
Capital Transactions    
Acquisition of Tangible Capital Assets (Note 9) (11,183) (10,322)
Proceeds from Sale of Tangible Capital Assets 140 377
Cash Applied to Capital Transactions (11,043) (9,945)
Investing Transactions    
Decrease/(Increase) in Investments (Note 8) 1,623 (1,148)
Cash Applied to Investing Transactions 1,623 (1,148)
Financing Transactions    
Long-Term Debt Issued 41,543 38,157
Long-Term Debt Retired (22,322) (24,784)
Net Change in Short-Term Debt (19) 1,320
Increase in Other Long-Term Financing (Note 4) 965 594
Cash Provided by Financing Transactions 20,167 15,287
Net Increase/(Decrease) in Cash and Cash Equivalents 2,449 (5,753)
Cash and Cash Equivalents at Beginning of Year 12,744 18,497
Cash and Cash Equivalents at End of Year 15,193 12,744
See accompanying Notes and Schedules to the Financial Statements.

Notes to the Consolidated Financial Statements

1. Summary of Significant Accounting Policies

(a) Basis of Accounting

The Consolidated Financial Statements are prepared by the Government of Ontario in compliance with legislation and in accordance with the accounting principles for governments recommended by the Public Sector Accounting Board (PSAB) of the Chartered Professional Accountants of Canada (CPA Canada) and, where applicable, the recommendations of the Accounting Standards Board (AcSB) of CPA Canada.

(b) Reporting Entity

These financial statements report the activities of the Consolidated Revenue Fund combined with those organizations that are controlled by the Province.

Government business enterprises, significant broader public sector (BPS) organizations (i.e., hospitals, school boards and colleges) and other government organizations controlled by the Province are included in these financial statements. Controlled organizations are consolidated if they meet one of the following criteria: i) their revenues, expenses, assets or liabilities are greater than $50 million, or ii) their outside sources of revenue, deficit or surplus are greater than $10 million. However, in accordance with PSAB, the Province also applies the “benefit versus cost constraint” in determining which organizations should be consolidated in the Province’s financial statements. A listing of consolidated government organizations is provided in Schedule 8. For those organizations that do not meet the PSAB “benefit versus cost constraint” standard, such as Children’s Aid Societies and Community Care Access Centres, they are reflected as government transfer payment expense in these financial statements through the accounts of the ministries responsible for them.

Trusts administered by the Province on behalf of other parties are excluded from the reporting entity, but are disclosed in Note 13.

(c) Principles of Consolidation

Government business enterprises are defined as those government organizations that i) are separate legal entities with the power to contract in their own name and that can sue and be sued; ii) have the financial and operating authority to carry on a business; iii) have as their principal activity and source of revenue the selling of goods and services to individuals and non-government organizations; and iv) are able to maintain their operations and meet their obligations from revenues generated outside the government reporting entity. The activities of government business enterprises are recorded in the financial statements using the modified equity method. Under this method, government business enterprises are reported in accordance with the accounting principles generally accepted for business enterprises. Their combined net assets are included in the financial statements as Investment in Government Business Enterprises on the Consolidated Statement of Financial Position and their net income is shown as a separate item, Income from Investment in Government Business Enterprises, on the Consolidated Statement of Operations.

The assets and liabilities of the BPS organizations are consolidated with those of the Province on a line-by-line basis on the Consolidated Statement of Financial Position. As such, the net debt of hospitals, school boards and colleges is included in the consolidated net debt of the Province. The total annual expenses of these BPS organizations, net of revenues they receive directly from the public, such as tuition fees, patient fees, donations and other recoveries, are included in the consolidated expenses of the Province. The expenses of hospitals are included in Health expenses, school boards in Education expenses, and colleges in Post-Secondary Education and Training expenses on the Consolidated Statement of Operations. Where necessary, adjustments are made to present the accounts of these organizations on a basis consistent with the accounting policies of the Province to eliminate significant inter-organizational accounts on the Consolidated Statement of Financial Position and to remove inter-organizational gains/losses from the Consolidated Statement of Operations.

Other government organizations controlled by the Province are consolidated on a line-by-line basis with the assets, liabilities, revenues and expenses of the Province. Where necessary, adjustments are also made to present the accounts of these organizations on a basis consistent with the accounting policies of the Province, and to eliminate significant inter-organizational accounts and transactions.

(d) Measurement Uncertainty

The preparation of financial statements requires the Province to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses during the reporting period. Uncertainty in the determination of the amounts at which an item is recognized or disclosed in the financial statements is known as measurement uncertainty.

Measurement uncertainty that is material to these financial statements exists in the valuation of pensions and other employee future benefits obligations, the value of tangible capital assets, the estimation of personal income tax, corporations tax and harmonized sales tax revenue accruals, the valuation of the Canada Health Transfer and Canada Social Transfer entitlements, and the estimation of liabilities for contaminated sites.

Pensions and other employee future benefits liability of $3,151 million (2014, $3,903 million), see Note 6, is subject to measurement uncertainty because actual results may differ significantly from the Province’s best long-term estimate of expected results (for example, the difference between actual results and actuarial assumptions regarding return on investment of pension fund assets and health care cost trend rates for retiree benefits).

The net book value of tangible capital assets of $97,065 million (2014, $90,556 million), see Note 9, is subject to uncertainty because of differences between estimated useful lives of the assets and their actual useful lives.

Personal income tax revenue of $29,313 million (2014, $26,929 million), see Schedule 1, is subject to uncertainty due to possible subsequent revisions of estimates based on information available in the future related to past-year tax return processing. Corporations tax revenue of $9,557 million (2014, $11,423 million), see Schedule 1, and harmonized sales tax revenues of $21,689 million (2014, $20,481 million) are also subject to uncertainty for similar reasons.

The estimation of the Canada Health Transfer of $12,408 million (2014, $11,940 million) and Canada Social Transfer entitlements of $4,847 million (2014, $4,689 million), see Schedule 1, is subject to uncertainty because of variances between the estimated and actual Ontario shares of the Canada-wide personal income and corporations tax base and population.

There is measurement uncertainty surrounding the estimation of liabilities for contaminated sites of $1,792 million as at March 31, 2015 (2014, $107 million), see Note 7. The Province may be responsible for cleanup costs that cannot be reasonably estimated due to several factors including: insufficient information related to the nature and extent of contamination, timing of costs well into the future (e.g., unknown future technological advancements), challenges of remote locations and unique contaminations.

Estimates are based on the best information available at the time of preparation of the financial statements and are reviewed annually to reflect new information as it becomes available. By their very nature, estimates are subject to measurement uncertainty. Therefore, actual results may differ materially from the Province’s estimates.

(e) Significant Accounting Policies

Revenues

Revenues are recognized in the fiscal year that the events giving rise to the revenues occur and they are earned. Amounts received prior to the end of the year, which relate to revenues that will be earned in a subsequent fiscal year, are deferred and reported as liabilities.

Expenses

Expenses are recognized in the fiscal year that the events giving rise to the expenses occur and resources are consumed.

Transfer payments are recognized in the year that the transfer is authorized and all eligibility criteria have been met by the recipient. Any transfers paid in advance are deemed to have met all eligibility criteria.

Interest on debt includes: i) interest on outstanding debt net of interest income on investments and loans; ii) amortization of foreign exchange gains or losses; iii) amortization of debt discounts, premiums and commissions; iv) amortization of deferred hedging gains and losses; and v) debt servicing costs and other costs.

Employee future benefits such as pensions, other retirement benefits and entitlements upon termination are recognized as expenses over the years in which the benefits are earned by employees. These expenses are the government’s share of the current year’s cost of benefits, interest on the net benefits’ liability or asset, amortization of actuarial gains or losses, cost of or gain on plan amendment, and other adjustments.

Other employee future benefits are recognized in the period when the event that obligates the government occurs or in the period when the benefits are earned by employees.

The costs of buildings, transportation infrastructure, vehicles, aircraft, leased assets, machinery, equipment and information technology infrastructure and systems owned by the Province and its consolidated organizations are amortized and recognized as expenses over their estimated useful lives on a straight-line basis.

Liabilities

Liabilities are recorded to the extent that they represent present obligations of the government to outside parties as a result of events and transactions occurring prior to the end of the fiscal year. The settlement of liabilities will result in the sacrifice of economic benefits in the future.

Liabilities include obligations to make transfer payments to organizations and individuals, present obligations for environmental costs, probable losses on loan guarantees issued by the government, and contingencies when it is likely that a loss will be realized and the amount can be reasonably determined.

Liabilities also include obligations to government business enterprises.

Deferred revenue represents unspent externally restricted receipts from the federal government or other third parties. Amounts received prior to year-end that relate to funding for a subsequent fiscal year are reported as deferred revenue. Deferred revenues are recorded into revenue in the period in which the amounts received are used for the purposes specified or all external restrictions are satisfied. Deferred capital contributions represent the unamortized amount of contributions received from the federal government and other third parties to construct or acquire tangible capital assets. These contributions are recognized as deferred capital contributions and recorded into revenue over the useful life of the tangible capital assets based on the relevant stipulations of the contributions taken together with the actions and communications of the Province.

Alternative Financing and Procurement (AFP) refers to the Province using private-sector partners to procure and finance infrastructure assets. Assets procured via AFP are recognized as tangible capital assets and the related obligations are recognized as other long-term financing liabilities in these financial statements as the assets are constructed.

Debt

Debt consists of treasury bills, commercial paper, medium- and long-term notes, savings bonds, debentures and loans.

Debt denominated in foreign currencies that has been hedged is recorded at the Canadian dollar equivalent using the rates of exchange established by the terms of the hedge agreements. Other foreign currency denominated debt is translated to Canadian dollars at year-end rates of exchange and any exchange gains or losses are amortized over the remaining term to maturity.

Derivatives are financial contracts, the value of which is derived from underlying instruments. The Province uses derivatives for the purpose of managing risk associated with interest cost. The Province does not use derivatives for speculative purposes. Gains or losses arising from derivative transactions are deferred and amortized over the remaining life of the related debt issue.

Pensions and Other Employee Future Benefits

The liabilities for pensions and other employee future benefits are calculated on an actuarial basis using the government’s best estimates of future inflation rates, investment returns, employee salary levels and other underlying assumptions, and, where applicable, the government’s borrowing rate. When actual plan experience of pensions, other retirement benefits and termination pay differs from that expected, or when assumptions are revised, actuarial gains and losses arise. These gains and losses are amortized over the expected average remaining service life of plan members for each respective plan.

Liabilities for selected employee future benefits (such as pensions, other retirement benefits and termination pay) represent the government’s share of the actuarial present values of benefits attributed to services rendered by employees and former employees, less its share of the assets of the plans. In addition, the liability includes the Province’s share of the unamortized balance of actuarial gains or losses, and other adjustments primarily for differences between the fiscal year-end of the pension plans and that of the Province.

Assets

Assets are resources controlled by the government from which it has reasonable expectation of deriving future benefit. Assets are recognized in the year the events giving rise to the government’s control of the benefit occur.

Financial Assets

Financial assets are resources that can be used to discharge existing liabilities or finance future operations. They include cash and cash equivalents, investments, accounts receivable, loans receivable, advances, and investments in government business enterprises.

Investments include temporary investments, investments in the auto sector, asset-backed term notes and portfolio investments. Temporary investments are recorded at the lower of cost or market value. Investments in the auto sector, asset-backed term notes and portfolio investments are recorded at the lower of cost or their estimated net realizable value.

Accounts receivables are recorded at cost. A valuation allowance is recorded when collection of the receivable is considered doubtful.

Loans receivable include loans to government business enterprises and loans under the student loans program, advanced manufacturing investment program, and the automotive investment strategy fund. Loans receivable with significant concessionary terms are considered in part to be grants and are recorded on the date of issuance at face value discounted by the amount of the grant portion. The grant portion is recognized as an expense at the date of issuance of the loan or when the concession is provided. The amount of the loan discount is amortized to revenue over the term of the loan.

Investment in government business enterprises represents the net assets of government business enterprises recorded on the modified equity basis as described under Principles of Consolidation.

Tangible Capital Assets

Tangible capital assets are recorded at historical cost less accumulated amortization. Historical cost includes the costs directly related to the acquisition, design, construction, development, improvement or betterment of tangible capital assets. Cost includes overheads directly attributable to construction and development, as well as interest related to financing during construction. Estimated historical cost was used to record existing tangible capital assets if actual cost was unknown when the Province first implemented tangible capital assets accounting. Tangible capital assets, except land, are amortized over the estimated useful lives of the assets on a straight-line basis.

Maintenance and repair costs are recognized as an expense when incurred. Betterments or improvements that significantly increase or prolong the service life or capacity of a tangible capital asset are capitalized. External contributions for acquisition of tangible capital assets are recorded as deferred capital contributions and amortized to revenue consistent with the amortization to expense of the related tangible capital assets, reflecting the intent of the external contributors that the grants be used to construct or acquire assets that will provide public services over the useful lives of the underlying assets.

(f) Change in Accounting Policy

Liabilities for Contaminated Sites

In June 2010, the Public Sector Accounting Board issued the liabilities for contaminated sites standard effective for fiscal years beginning on or after April 1, 2014. Contaminated sites are a result of contamination being introduced into the air, soil, water or sediment of a chemical, organic or radioactive material or live organism that exceeds an environmental standard.

In the past, the Province has reported environmental liabilities based on its obligations resulting from federal legislation. The new PSAB standard requires that provincial legislation or regulation also be considered when reporting environmental liabilities even if no order for remediation has been issued but the contamination is in excess of the standard. Environmental cleanup is often linked to past industrial activities.

Incremental liabilities reportable under the new PSAB accounting standard are reflected in these financial statements. For 2014–15, the year of transition, the Province has reported $1,683 million as an increase in its accumulated deficit in the Consolidated Financial Statements.

2. Debt

The Province borrows in both domestic and international markets. Debt of $315.0 billion, as at March 31, 2015 (2014, $295.8 billion), is composed mainly of bonds and debentures issued in the short- and long-term domestic and international-public capital markets and non-public debt held by certain federal and provincial public-sector pension funds. Debt comprises Debt Issued for Provincial Purposes of $289.6 billion (2014, $269.6 billion) and Ontario Electricity Financial Corporation (OEFC) Debt of $25.3 billion (2014, $26.2 billion). The following table presents the maturity schedule of the Province’s outstanding debt, by currency of repayment, expressed in Canadian dollars, and reflects the effects of related derivative contracts.

Debt
As at March 31
($ Millions)
 2015 2014
Currency Canadian
Dollar
U.S.
Dollar
Japanese
Yen
Euro Other
Currencies1
Total Total
Maturing in:
2015             $43,324
2016 $23,094 16,913 1,007 1,805 $42,819 21,397
2017 11,202 9,887 494 21,583 21,485
2018 12,252 5,011 385 17,648 17,521
2019 11,416 5,598 75 594 17,683 16,004
2020 15,333 3,677 4,738 532 24,280
1–5 years 73,297 41,086 1,082 5,123 3,425 124,013 119,731
6–10 years 63,754 7,001 389 6,365 1,377 78,886 74,080
11–15 years 20,618 121 20,739 20,548
16–20 years 10,210 10,210 9,513
21–25 years 34,648 34,648 22,769
26–502 years 46,464 46,464 49,117
Total3, 4 $248,991 48,087 1,471 11,488 4,923 $314,960 $295,758
Debt Issued for Provincial Purposes5 224,932 47,718 1,471 11,309 4,189 289,619 269,612
OEFC Debt 24,059 369 179 734 25,341 26,146
Total $248,991 48,087 1,471 11,488 4,923 $314,960 $295,758
Effective Interest Rates (Weighted Average)
2015 4.03% 2.28% 1.99% 3.48% 3.80% 3.73%
2014 4.29% 2.52% 1.98% 4.12% 3.93% 3.94%
1 Other currencies comprise Australian dollar, New Zealand dollar, Norwegian krone, Swiss franc, Hong Kong dollar and South African rand.
2 The longest term to maturity is to June 2, 2062.
3 Total foreign currency denominated debt as at March 31, 2015, was $66.0 billion (2014, $67.8 billion). Of that, $65.0 billion or 98.6 per cent (2014, $66.4 billion or 98.0 per cent) was fully hedged to Canadian dollars. The remaining 1.4 per cent (2014, 2.0 per cent) of foreign debt was unhedged as follows: $389 million (2014, $424 million) Japanese yen denominated debt and $547 million (2014, $966 million) Swiss franc denominated debt.
4 Total debt includes issues totalling $0.50 billion (2014, $0.65 billion), which have embedded options exercisable by either the Province or the bondholder under specific conditions.
5 As at March 31, 2015, debt purchased and held by the Province denominated in Canadian and U.S. dollars at its Canadian dollar equivalent, includes long-term debt of $2.2 billion (2014, $3.6 billion) and $0.5 billion (2014, nil) and short-term debt of $1.2 billion (2014, $0.2 billion) and nil (2014, nil).
Debt
As at March 31
($ Millions)
2015 2014
Debt Payable to/of:    
Public Investors $302,644 $282,835
Canada Pension Plan Investment Board 10,233 10,233
Ontario Immigrant Investor Corporation 959 1,139
School Board Trust Debt 696 718
Canada Mortgage and Housing Corporation 428 501
Public Service Pension Fund Plan 225
Ontario Public Service Employees Union Pension Fund 107
Total $314,960 $295,758

Fair value of debt outstanding approximates amounts at which debt instruments could be exchanged in a current transaction between willing parties. In valuing the Province’s debt, fair value is estimated using discounted cash flows and other valuation techniques and is compared to public market quotations where available. These estimates are affected by the assumptions made concerning discount rates and the amount and timing of future cash flows.

The estimated fair value of debt as at March 31, 2015, was $374.8 billion (2014, $326.5 billion). This is higher than the book value of $315.0 billion (2014, $295.8 billion) because current interest rates are generally lower than the interest rates at which the debt was issued. The fair value of debt does not reflect the effect of related derivative contracts.

School Board Trust Debt

A School Board Trust was created in June 2003 to permanently refinance debt incurred by 55 school boards. The Trust issued 30-year sinking fund debentures amounting to $891 million, and provided $882 million of the proceeds to the 55 school boards in exchange for the irrevocable right to receive future transfer payments from the Province related to this debt. An annual transfer payment is made by the Ministry of Education to the Trust’s sinking fund under the School Board Operating Grant program to retire the debt over 30 years. This debt is recorded net of the sinking fund, which is reflected in the Province’s debt.

3. Risk Management and Derivative Financial Instruments

The Province employs various risk management strategies and operates within strict risk exposure limits to ensure exposure to risk is managed in a prudent and cost-effective manner. A variety of strategies are used, including the use of derivative financial instruments (“derivatives”).

Derivatives are financial contracts, the value of which is derived from underlying instruments. The Province uses derivatives to hedge and to minimize interest costs. Hedges are created primarily through swaps, which are legal contracts under which the Province agrees with another party to exchange cash flows based on one or more notional amounts using stipulated reference interest rates for a specified period. Swaps allow the Province to offset its existing obligations and thereby effectively convert them into obligations with more desirable characteristics. Other derivative instruments used by the Province include forward foreign exchange contracts, forward rate agreements, futures and options.

Foreign exchange or currency risk is the risk that foreign currency debt principal and interest payments and foreign currency transactions will vary in Canadian dollar terms due to fluctuations in foreign exchange rates. To manage currency risk, the Province uses derivative contracts including forward foreign exchange contracts, futures, options and swaps to convert foreign currency cash flows into Canadian dollar cash flows. Most of the derivative contracts hedge the underlying debt by matching all the critical terms to achieve effectiveness. In the instances where the term of forward foreign exchange contracts used for hedging is shorter than the term of the underlying debt, the effectiveness is maintained by continuously rolling the forward foreign exchange contract over the remaining term of the underlying debt, or until replaced with a long-term derivative contract.

The current market risk policy allows the amount of unhedged foreign currency debt principal net of foreign currency holdings to reach a maximum of 5 per cent of Total Debt Issued for Provincial Purposes and OEFC. At March 31, 2015, the respective unhedged levels were 0.3 and nil per cent (2014, 0.4 and nil per cent). A one Japanese yen appreciation of the Japanese currency, relative to the Canadian dollar, would result in unhedged debt denominated in Japanese yen increasing by $4.2 million (2014, $4.6 million) and a corresponding increase in interest on debt of $1.0 million (2014, $1.1 million). A one Swiss rappen appreciation of the Swiss currency, relative to the Canadian dollar, would result in unhedged debt denominated in Swiss franc increasing by $7.2 million (2014, $7.2 million) and a corresponding increase in interest on debt of $1.8 million (2014, $2.1 million). Total foreign exchange gains/losses recognized in the Statement of Operations for 2014–15 were gains of $63.9 million (2013–14, gains of $75.1 million).

Interest on debt expense may also vary as a result of changes in interest rates. In respect of Debt Issued for Provincial Purposes and OEFC debt, the risk is measured as interest rate resetting risk, which is the floating rate exposure and fixed rate debt maturing within the next 12-month period net of liquid reserves as a percentage of Debt Issued for Provincial Purposes and OEFC debt respectively. Depending on market conditions, the Province creates or reduces its exposure to interest rate changes by issuing or retiring short-term debt, or by entering into or closing out derivative positions.

The current market risk policy limits net interest rate resetting risk for Debt Issued for Provincial Purposes and OEFC debt to a maximum of 35 per cent. At March 31, 2015, the net interest rate resetting risk for Debt Issued for Provincial Purposes and OEFC debt was 11.0 per cent and 20.4 per cent respectively (2014, 11.0 per cent and 21.4 per cent). Based on floating rate interest-bearing financial instruments on hand at March 31, 2015, plus planned refinancing of maturing debt in the coming year, a one per cent (100 basis point) increase in interest rates would result in an increase in interest on debt of $377 million (2014, $358 million).

Liquidity risk is the risk that the Province will not be able to meet its current short-term financial obligations. To reduce liquidity risk, the Province maintains liquid reserves, that is, cash and temporary investments (Note 8), adjusted for collateral (Note 11), at levels that are expected to meet future cash requirements and give the Province flexibility in the timing of issuing debt. Pledged assets are considered encumbered for liquidity purposes while collateral held that can be sold or repledged is a source of liquidity. In addition, the Province has short-term note programs as alternative sources of liquidity.

The table below presents a maturity schedule of the Province’s derivatives, by type, outstanding as at March 31, 2015, based on the notional amounts of the contracts. Notional amounts represent the volume of outstanding derivative contracts and are not indicative of credit risk, market risk or actual cash flows.

Derivative Portfolio Notional Value
As at March 31
($ Millions)
2015 2014
Maturity in
Fiscal Year
2016 2017 2018 2019 2020 6–10
Years
Over 10 Years Total Total
Swaps:  
Interest Rate1 $23,415 $22,792 $11,988 $12,915 $13,291 $20,366 $7,699 $112,466 $117,489
Cross Currency 8,850 10,024 4,557 3,077 11,861 14,724 121 53,214 54,613
Forward Foreign
Exchange Contracts
31,958 31,958 27,666
Swaption2 500 500 650
Total $64,223 $33,316 $16,545 $15,992 $25,152 $35,090 $7,820 $198,138 $200,418
1 Includes $4.3 billion (2014, $4.1 billion) of interest rate swaps related to loans receivable held by a consolidated entity and $2.0 billion (2014, $0.3 billion) related to short-term investments held by the Province.
2 See glossary for definition.

The use of derivatives introduces credit risk, which is the risk of a counterparty defaulting on contractual derivative obligations in which the Province has an unrealized gain. The table below presents the credit risk associated with the derivative financial instrument portfolio, measured through the replacement value of derivative contracts, at March 31, 2015.

Credit Risk Exposure
As at March 31
($ Millions)
2015 2014
Gross Credit Risk Exposure $10,861 $6,086
Less: Netting (6,739) (4,040)
Net Credit Risk Exposure 4,122 2,046
Less: Collateral Received (Note 11) (3,277) (1,132)
Net Credit Risk Exposure (Net of Collateral) $845 $914

The Province manages its credit risk exposure from derivatives by, among other things, dealing only with high credit quality counterparties and regularly monitoring compliance to credit limits. In addition, the Province enters into contractual agreements (“master agreements”) that provide for termination netting and, if applicable, payment netting with most of its counterparties. Gross Credit Risk Exposure represents the loss that the Province would incur if every counterparty to which the Province had credit risk exposure were to default at the same time, and the contracted netting provisions were not exercised or could not be enforced. Net Credit Risk Exposure is the loss including the mitigating impact of these netting provisions. Net Credit Risk Exposure (Net of Collateral) is the potential loss to the Province further mitigated by the collateral received from counterparties.

4. Other Long-Term Financing

Other long-term financing comprises the total debt of the Broader Public Sector (BPS) and obligations under Alternative Financing and Procurement (AFP) arrangements.

Other Long-Term Financing of $13.9 billion, as at March 31, 2015 (2014, $12.9 billion) includes BPS Debt of $5.5 billion (2014, $5.4 billion), BPS AFP obligations of $5.5 billion (2014, $4.4 billion) and direct provincial AFP obligations of $2.9 billion (2014, $3.1 billion).

5. Deferred Revenue and Capital Contributions

In 2010–11, the Province renewed its long-standing business partnership with Teranet Inc. by extending Teranet’s exclusive licences to provide electronic land registration and writs services in Ontario for an additional 50 years. The Province received approximately a $1 billion upfront payment for the transaction, which is amortized into revenue over the life of the contract.

The Province provides a two-year vehicle licence plate renewal option and multi-year driver licence renewals (two years for seniors and five years for all others). Amounts received under these multi-year renewals are recognized as revenue over the periods covered by the licences.

Deferred capital contributions represent the unamortized portion of tangible capital assets or liabilities to construct or acquire tangible capital assets from specific-purpose funding received from the Government of Canada, municipalities or third parties. Deferred capital contributions are recorded in revenue over the estimated useful life of the underlying tangible capital asset once constructed or acquired by the Province.

Deferred Revenue and Capital Contributions
As at March 31
($ Millions)
2015 2014
Deferred Revenue:    
Teranet $956 $989
Vehicle and Driver Licences 908 836
Other 1,917 1,825
Total Deferred Revenue 3,781 3,650
Deferred Capital Contributions1 6,329 5,831
Total $10,110 $9,481
1 Most federal transfers have been reclassified to deferred capital contributions.

6. Pensions and Other Employee Future Benefits

Pensions and Other Employee Future Benefits Liability (Asset)
As at March 31
($ Millions) 
2015 2015 2015 2014
  Pensions Other Employee
Future Benefits
Total Total
Obligation for benefits $113,340 $11,386 $124,726 $119,432
Less: plan fund assets (129,344) (536) (129,880) (118,748)
Unamortized actuarial gains 6,111 (27) 6,084 1,056
Adjustments1 2,214 7 2,221 2,163
Total (7,679) $10,830 $3,151 $3,903
1 Adjustments for pensions consist of:
  i) differences for amounts reported by the pension plans at December 31, instead of the Province's year-end of March 31
  ii) unamortized difference between employer and employee contributions for jointly sponsored pension plans
  iii) unamortized employee contribution reductions for solely sponsored plans
  iv) amounts payable by the Province that are reflected as contributions in the pension plan assets.
Pensions and Other Employee Future Benefits Expense
For the year ended March 31
($ Millions)
2015 2015 2015 2014
  Pensions Other Employee
Future Benefits
Total Total
Cost of benefits $2,230 $312 $2,542 $2,376
Amortization of actuarial losses 140 (34) 106 392
Employee contributions (310) (310) (299)
Gain on plan amendment or curtailment (39) (39) (1,151)
Recognition of unamortized experience gains (5) (5) 1,110
Interest (income) expense (584) 251 (333) (95)
Adjustments1 (125) (1) (126) (124)
Total2,3 $1,351 $484 $1,835 $2,209
1 Adjustments for pensions consist of amortization of:
  i) the difference between employer and employee contributions for jointly sponsored pension plans
  ii) employee contribution reductions for solely sponsored plans.
2 Total Pensions and Other Employee Future Benefits Expense is reported in Schedule 3. The Teachers' Pension expense of $564 million (2013–14, $873 million) is included in the Education expense in the Consolidated Statement of Operations and is disclosed separately in Schedule 4. The Public Service and OPSEU Pension expense of $787 million (2013–14, $820 million) and Other Employee Future Benefits — Retirement Benefits expense of $319 million (2013–14, $445 million) are included in the General Government and Other expense in the Consolidated Statement of Operations. The combined total of Public Service and OPSEU Pension and Other Employee Future Benefits — Retirement Benefits expense of $1,106 million (2013–14, $1,265 million) is disclosed separately in Schedule 4. The remainder of Other Employee Future Benefits expense is included in the relevant ministries' expenses in Schedule 4.
3 The Pensions and Other Employee Future Benefits Expenses for the hospitals, school boards and colleges sectors (except for the Ontario Teachers' Pension Plan) are not included in the table above. The expenses for HOOPP of $843 million (2013–14, $1,000 million) and CAATPP of $199 million (2013–14, $201 million) are included in the Salaries, Wages and Benefits expenses of the hospitals and colleges sectors respectively (Schedule 10) and in the expenses of the BPS ministries (Education, Health and Long-Term Care, and Training, Colleges and Universities) in Schedule 4.

Pensions

The Province sponsors several pension plans. It is the sole sponsor of the Public Service Pension Plan (PSPP) and joint sponsor of the Ontario Public Service Employees Union (OPSEU) Pension Plan and the Ontario Teachers’ Pension Plan (OTPP).

These three plans are contributory defined benefit plans that provide Ontario government employees and elementary and secondary school teachers and administrators with a guaranteed amount of retirement income. Benefits are based primarily on the best five-year average salary of members and their length of service, and are indexed to changes in the Consumer Price Index to provide protection against inflation. Plan members normally contribute seven to eleven per cent of their salaries to these plans. The Province matches these contributions.

The Province is also responsible for sponsoring the Public Service Supplementary Benefits Plan and the Ontario Teachers’ Retirement Compensation Arrangement. Expenses and liabilities of these plans are included in the Pensions Expense and Pensions Liability reported in the above tables.

In addition to the Provincial sponsored plans, pension benefits for employees in the hospital and colleges sectors are provided by the Healthcare of Ontario Pension Plan (HOOPP) and the Colleges of Applied Arts and Technology Pension Plan (CAATPP) respectively and are included in these financial statements.

HOOPP is a multi-employer pension plan covering employees of Ontario’s health care community. CAATPP is a multi-employer pension plan covering employees of the Colleges of Applied Arts and Technology in Ontario, the Board of Trustees, the Ontario College Application Services and the Ontario College Library Services. Both of these plans are accounted for as joint contributory defined benefit plans that provide eligible members with a retirement income based on a formula that takes into account a member’s earnings history and length of service in the plan. The plans are financed by contributions from participating members and employers, and by investment earnings. As organizations covered under these plans are in the government’s reporting entity, the Province includes 56 per cent of BPS organizations’ portion1 of the net obligation of HOOPP and includes 50 per cent of the net obligation of CAATPP.

The obligation for benefits and plan fund assets of the above plans is based on actuarial accounting valuations that are performed annually. Funding of these plans is based on statutory actuarial funding valuations undertaken at least once every three years.

Information on contributory defined benefit plans is as follows:

  OTPP PSPP OPSEU HOOPP1 CAATPP
Government's Best Estimates as of December 31, 2014
Inflation rate 2.25% 2.25% 2.25% 2.25% 2.25%
Salary escalation rate2 3.25% 3.25% 3.25% 4.50% 3.25%
Discount rate and expected rate of return on pension assets 6.50% 6.25% 6.50% 6.00% 6.25%
Accounting Actuarial Valuation as of December 31, 2014
Employer contributions3 ($ millions) 1,531 355 218 899 196
Employee contributions4 ($ millions) 1,578 310 248 889 202
Benefit Payments (including transfers to other plans) ($ millions) 5,315 1,083 798 1,702 372
Number of active members (approximately) 182,000 42,102 44,008 187,800 24,665
Average age of active members 42.0 45.6 46.3 44.8 48.5
Expected remaining service life of the employees (years) 14.4 10.9 12.1 12.3 12.2
Number of pensioners including survivors (approximately) 129,000 35,855 31,946 86,100 13,537
Government's Best Estimates as of December 31, 2013
Inflation rate 2.50% 2.50% 2.50% 2.50% 2.50%
Salary escalation rate 3.50% 3.50% 3.50% 4.75% 3.50%
Discount rate and expected rate of return on pension assets 6.75% 6.50% 6.75% 6.25% 6.50%
Accounting Actuarial Valuation as of December 31, 2013
Employer contributions3 ($ millions) 1,466 360 219 896 184
Employee contributions4 ($ millions) 1,511 299 237 856 181
Benefit Payments (including transfers to other plans) ($ millions) 5,157 1,080 884 1,587 346
Number of active members (approximately) 180,000 41,925 43,827 184,500 21,971
Average age of active members 42.0 45.6 46.5 44.8 48.6
Expected remaining service life of the employees (years) 14.5 11.1 12.3 12.3 12.3
Number of pensioners including survivors (approximately) 127,000 35,707 30,426 82,100 13,146
1 HOOPP employer contributions only include the BPS organizations. The benefit payments (including transfers to other plans), employee contributions, number of active members, average age of active members, and number of pensioners including survivors, represent the entire HOOPP plan including non-BPS organizations.
2 Short-term salary escalation for the years 2015 to 2019 is 2.25% for OTPP, PSPP, OPSEU, CAATPP and 3.50% for HOOPP.
3 Employer contributions paid during the Province's fiscal year. Employer contributions excludes other employers' contributions made by agencies participating in PSPP and OPSEU, and excludes other employers' contributions to OTPP. PSPP employer contributions include special payments of $99 million (2013–14, $127 million).
4 Employee contributions paid during the calendar year.

Other Employee Future Benefits

Other Employee Future Benefits are non-pension retirement benefits, post-employment benefits, compensated absences and termination benefits.

Non-Pension Retirement Benefits

The Province provides dental, basic life insurance, supplementary health and hospital benefits to retired employees through a self-insured, unfunded defined benefit plan. Public Service Pension plan and OPSEU Pension plan members who do not meet the 10-year eligibility criteria by January 1, 2017, would be required to have 20 years of pension service and retire to an immediate unreduced pension. Any eligible members who commence receipt of a pension on or after January 1, 2017, would be required to pay 50 per cent of the premium costs in order to participate in the post-retirement insured benefits plan.

The liability for non-pension retirement benefits of $8.1 billion as at March 31, 2015 (2014, $8.0 billion) is included in the Other Employee Future Benefits Liability. The expense for 2014–15 of $319 million (2013–14, $445 million) (excluding the expense for BPS organizations) is included in the Other Employee Future Benefits Expense. The BPS expense of $41 million in 2014–15 (2013–14, $33 million) is included in the Salaries, Wages and Benefits expense of BPS organizations (Schedule 10) and in the expenses of the related ministries (Schedule 4).

The discount rate used in the non-pension retirement benefits calculation for 2014–15 is 3.70 per cent (2013–14, 3.75 per cent). The discount rate used by BPS organizations in the non-pension retirement benefits calculation for 2014–15 ranges from 2.80 per cent to 5.75 per cent (2013–14, 3.00 per cent to 6.00 per cent).

Post-Employment Benefits, Compensated Absences and Termination Benefits

The Province provides, on a self-insured basis, workers’ compensation benefits, long-term disability benefits and regular benefits to employees who are on long-term disability.

In 2015, the Province eliminated severance entitlement upon retirement for the Association of Management, Administrative and Professional Crown Employees of Ontario (AMAPCEO) employees hired on or after April 1, 2014. For current AMAPCEO employees who retire after January 1, 2016, service accrued will be capped up to December 31, 2015, and any termination payments on retirement after January 1, 2016, will be paid based on salary in effect on December 31, 2015. A plan curtailment gain of $39 million and recognition of net unamortized gains of $5 million is included in fiscal year 2014–15 Other Employee Future Benefits.

For all other employees subject to terms set out in collective agreements, with the exception of management-excluded staff, who have completed five years of service, the Province provides termination pay equal to one week’s salary for each year of service up to a maximum of 50 per cent of their annual salary. Employees who have completed one year of service but less than five years are also entitled to termination pay in the event of death, retirement or release from employment. All employees who resign are not eligible for any severance pay in respect to service after December 2011.

The total post-employment benefits liability of $2.7 billion as at March 31, 2015 (2014, $2.8 billion) is included in the Other Employee Future Benefits Liability. The total post-employment benefits expense for 2014–15 of $165 million (2013–14, $71 million) (excluding the expense for BPS organizations) is included in the Other Employee Future Benefits Expense. The BPS post-employment benefits expense of $527 million in 2014–15 (2013–14, $462 million) is included in the Salaries, Wages and Benefits expense of BPS organizations (Schedule 10) and in the expenses of the related ministries (Schedule 4).

The discount rate used in the post-employment benefits, compensated absences and termination benefits calculations for 2014–15 is 3.15 per cent (2013–14, 3.15 per cent). The discount rate used by BPS organizations in the post-employment benefits for 2014–15 ranges from 2.75 per cent to 8.00 per cent (2013–14, 2.70 per cent to 7.50 per cent).

7. Other Liabilities

Other Liabilities
As at March 31
($ Millions)
2015 2014
Power Purchase Contracts $479 $696
Liabilities for Contaminated Sites 1,792 107
Other Funds and Liabilities 2,187 2,026
Total $4,458 $2,829

Power Purchase Contracts

Power supply contracts include both power purchase contracts and power supply support agreements. Power purchase contracts and related loan agreements were entered into by Ontario Hydro with non-utility generators (NUGs) located in Ontario. As the legal continuation of Ontario Hydro, Ontario Electricity Financial Corporation (OEFC), a consolidated government organization, is the counterparty to these contracts. The contracts, expiring on various dates to 2048, provided for the purchase of power at prices that were expected to be in excess of the future market price. Accordingly, a liability was recorded at $4.3 billion on a discounted cash-flow basis when Ontario Hydro was continued as OEFC on April 1, 1999.

Under legislated reforms to the electricity market, OEFC began receiving actual contract prices for power from ratepayers effective January 1, 2005, and no longer incurs losses on these contracts. At that time, the Ministry of Finance estimated the bulk of the liability to be eliminated over 12 years as existing electricity contracts expire. As a result, the OEFC is amortizing the bulk of the liability to revenue over that period. The decrease in the liability for power purchase contracts was $217 million (2013–14, $243 million), resulting in a liability of $0.5 billion as at March 31, 2015 (2014, $0.7 billion).

In addition, effective January 1, 2009, OEFC entered into a support contract, the Contingency Support Agreement (CSA), with Ontario Power Generation Inc. (OPG) whereby OPG agreed to maintain the reliability and availability of Lambton and Nanticoke coal-fired stations following implementation of a greenhouse gas emissions-reduction strategy. Under the contract, OEFC agreed to ensure OPG would recover the actual costs of operating the stations after implementing this strategy. Any costs to OEFC under this agreement are fully recovered from electricity ratepayers. As at December 31, 2013, OEFC triggered an early termination clause in the CSA to reflect the advanced closure of these plants by one year to the end of 2013. OPG is allowed to recover actual costs that cannot reasonably be avoided or mitigated, during the period from the early shutdown date until December 31, 2014, consistent with the original end date of the CSA.

During the year ended March 31, 2015, OEFC’s cost under power supply contracts totalled $950 million (2013–14, $1,296 million), including purchases of power from NUGs of $902 million (2013–14, $997 million) and OPG support contract costs of $48 million (2013–14, $299 million). These costs were recovered from electricity ratepayers (as shown in Schedules 1, 3 and 4).

Liabilities for Contaminated Sites

The Province reports environmental liabilities related to the management and remediation of contaminated sites where the Province is obligated or likely obligated to incur such costs. A contaminated sites liability of $1,792 million has been recorded based on environmental assessments or estimations for those sites where an assessment has not been conducted.

The Province’s ongoing efforts to assess contaminated sites may result in additional environmental remediation liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites, including mine sites. Any changes to the Province’s liabilities for contaminated sites will be accrued in the year in which they are assessed as likely and reasonably estimable.

Other Funds and Liabilities

Other funds and liabilities include pension and benefit funds related to the Provincial Judges’ Pension Fund, the Public Service and the Deputy Ministers’ Supplementary Benefit Accounts, externally restricted funds and other long-term liabilities.

8. Investments

Investments
As at March 31
($ Millions)
2015 2014
Temporary Investments $14,743 $16,738
Add: Assets Purchased under Resale Agreements 5,942 3,639
Less: Assets Sold under Repurchase Agreements (1,994) (1,037)
Total Temporary Investments $18,691 $19,340
Auto Sector Investments at Net Realizable Value 608
Other Investments 1,675 1,618
Asset-Backed Term Notes 423
Total Investments $20,366 $21,989

Temporary Investments

Temporary investments primarily consist of investments in government bonds. The fair value of temporary investments, including assets purchased and sold under resale and repurchase agreements at March 31, 2015, is $18.7 billion (2014, $19.3 billion). Fair value is determined using quoted market prices.

A resale agreement is an agreement between two parties where the Province purchases and subsequently resells a security at a specified price on a specified date. A repurchase agreement is an agreement between two parties where the Province sells and subsequently repurchases a security at a specified price on a specified date.

Investments in the Auto Sector

In 2009, the Province committed to provide one-third of the total Canadian financial assistance, to a maximum of $4.8 billion, as part of a co-ordinated response with the Canadian and U.S. federal governments to support the restructuring of the North American automotive industry. The Province’s one-third contribution was initiated through a Loan Participation Agreement with Export Development Canada (EDC), a federal Crown corporation. The Province contributed $4.6 billion of the total $13.7 billion in loans that were issued by the Canadian government through EDC.

During 2010, EDC agreed to transfer $9.1 billion of the $13.7 billion of outstanding loans to the Canada Development Investment Corporation (CDEV), another federal Crown corporation, through a transfer agreement for nominal consideration. These loans were exchanged by CDEV for common and preferred shares of the borrower. The rights of the Province to a one-third interest in the proceeds of these shares are governed under a Memoranda of Understanding between the Canadian government and the Province.

On December 31, 2014, the preferred shares were redeemed and the Province’s portion of the common shares were transferred from CDEV to the Province. The Province subsequently sold the common shares in January and February 2015 and recorded a total gain of $1.1 billion on both the common and preferred shares. The Province has accounted for its participative interests in the auto sector as investments in these financial statements. The balance as at March 31, 2015, is nil (2014, $608 million).

Asset-Backed Term Notes

On January 21, 2009, the restructuring of the frozen Canadian third-party asset-backed commercial paper (ABCP) was completed. Upon completion, the Province received long-term notes issued by the Master Asset Vehicle (MAV). In May 2014, the Province participated in the optional redemption unwind process for Canadian dollar-denominated MAV notes. Long-term notes totalling $511 million at par with a net book value of $402 million were exchanged for notes in the Liquidation Trust. The remaining MAV notes of $31 million at par with a net book value of $21 million were sold for $28 million in June 2014. The Province received $436 million in July 2014, $35 million in September 2014, and may also receive $16 million by 2017 as distributions from the Liquidation Trust. As at March 31, 2015, the net book value of the Liquidation Trust notes held by the Province was nil (2014, $423 million).

Other Investments

Other investments represent the investments of BPS organizations. These investments primarily consist of fixed income securities. The fair value of these investments approximates book value.

9. Tangible Capital Assets

Tangible Capital Assets
As at March 31
($ Millions)
  Land Buildings Transportation
Infrastructure
Machinery
and
Equipment
Information
Technology
Other Total
Cost
Opening Balance 12,960 69,319 27,813 10,996 4,991 5,220 131,299
Additions Net of Write-downs 861 4,484 3,689 826 679 644 11,183
Disposals 20 182 762 192 187 83 1,426
Closing Balance 13,801 73,621 30,740 11,630 5,483 5,781 141,056
Accumulated Amortization
Opening Balance 19,612 8,720 8,224 2,692 1,495 40,743
Additions 2,011 1,102 727 486 218 4,544
Disposals 127 722 180 186 81 1,296
Closing Balance 21,496 9,100 8,771 2,992 1,632 43,991
Net Book Value
2015 13,801 52,125 21,640 2,859 2,491 4,149 97,065
2014 12,960 49,707 19,093 2,772 2,299 3,725 90,556

Land includes land acquired for transportation infrastructure, parks, buildings and other program use, and land improvements that have an indefinite life and are not being amortized. Land excludes Crown lands acquired by right.

Buildings include administrative and service structures, and dams and engineering structures.

Transportation Infrastructure includes provincial highways, railways, bridges and related structures and facilities, but excludes land and buildings.

Machinery and Equipment consists mainly of hospital equipment.

Information Technology consists of computer hardware and software.

Other includes leased assets, vehicles, aircraft and other miscellaneous tangible capital assets owned by the government and its consolidated organizations.

Works of art and historical treasures are excluded from tangible capital assets.

Assets under construction have been included within the various asset categories presented above. The total value of assets under construction as at March 31, 2015, is $14.2 billion (2013–14, $13.5 billion).

All tangible capital assets, except assets under construction, land and land improvements with an indefinite life, are being amortized on a straight-line basis over their estimated useful lives. Amortization expense for the fiscal year 2014–15 totalled $4.5 billion, of which $1.8 billion (2013–14, $1.8 billion) relates to the Province and $2.7 billion (2013–14, $2.6 billion) relates to the BPS. The latter expense is included under the BPS expense reported on Schedule 10. The useful lives of the Province’s tangible capital assets have been estimated as:

Buildings 20 to 40 years
Dams and Engineering Structures  20 to 80 years
Transportation Infrastructure  10 to 75 years
Machinery and Equipment 3 to 20 years
Information Technology 3 to 15 years
Other   3 to 30 years

10. Changes in the Fair Value of Ontario Nuclear Funds

The Ontario Nuclear Funds Agreement (ONFA) Funds were established by Ontario Power Generation Inc. (OPG) and the Province to ensure that sufficient funds will be available to pay for the costs of nuclear station decommissioning and nuclear used fuel waste management. Effective January 1, 2007, OPG has adopted the accounting standards issued by the AcSB of CPA Canada on the recognition and measurement of financial instruments. As a result, the ONFA Funds are carried at fair value in OPG’s financial statements.

Since April 1, 2007, the fair value of ONFA Funds has been reflected in the Province’s Consolidated Financial Statements. Unrealized gains and losses of ONFA Funds are included in Investment in Government Business Enterprises and recorded as an Increase (Decrease) in Fair Value of Ontario Nuclear Funds in the Consolidated Statement of Change in Net Debt and the Consolidated Statement of Change in Accumulated Deficit. Realized gains and losses of ONFA Funds are included in Income from Investment in Government Business Enterprises. Inter-organizational balances related to ONFA Funds are eliminated.

ONFA Funds incurred unrealized gains in 2014–15 of $1,121 million (2013–14, $951 million) that resulted in an increase in Investment in Government Business Enterprises, and a corresponding decrease in Net Debt and Accumulated Deficit.

11. Contingent Liabilities

Obligations Guaranteed by the Province

The authorized limit for loans guaranteed by the Province as at March 31, 2015, was $2.0 billion (2014, $2.0 billion). The outstanding loans guaranteed and other contingencies amounted to $1.4 billion as at March 31, 2015 (2014, $1.5 billion). A provision of $4 million (2014, $5 million) based on an estimate of the likely loss arising from guarantees under the Student Support Programs has been reflected in these financial statements.

Ontario Nuclear Funds Agreement (ONFA)

Under ONFA, the Province is liable to make payments should the cost estimate for nuclear used fuel waste management rise above specified thresholds, for a fixed volume of used fuel. The likelihood and amount by which the cost estimate could rise above these thresholds cannot be determined at this time. The cost estimate will be updated periodically to reflect new developments in the management of nuclear used fuel waste.

As well, under ONFA, the Province guarantees a return of 3.25 per cent over the Ontario Consumer Price Index for the portion of the nuclear used fuel waste management segregated fund related to the fixed volume of used fuel. If the earnings on assets in that fund related to the fixed volume exceed the guaranteed rate, the Province is entitled to the excess.

Two agreements are in place to satisfy the Canadian Nuclear Safety Commission (CNSC) licensing requirements for financial guarantees in respect of OPG’s nuclear station decommissioning and nuclear waste management obligations. One agreement gives the CNSC access (in prescribed circumstances) to the segregated funds established under ONFA. The other agreement between the Province and the CNSC provides a direct provincial guarantee to the CNSC on behalf of OPG. This guarantee relates to the portion of the decommissioning and waste management obligations not funded by the estimated value of ONFA funds as at January 1, 2013. In return, the Province receives from OPG an annual fee equal to 0.5 per cent of the value of the guarantee. The provincial guarantee, for up to $1,551 million, is in effect from January 1, 2013, through the end of 2017, when the next reference plan for the CNSC is planned to be approved. In each of January 2014 and 2015, OPG paid a guarantee fee of $8 million to the Province based on the guarantee amount of $1,551 million.

Social Housing — Loan Insurance Agreements

For all non-profit housing projects in the provincial portfolio, the Province is liable to indemnify and reimburse the Canada Mortgage and Housing Corporation (CMHC) for any net costs, including any environmental liabilities, incurred as a result of project defaults through the Ministry of Municipal Affairs and Housing or the Ontario Mortgage and Housing Corporation.

At March 31, 2015, there were $5.4 billion (2014, $5.8 billion) of mortgage loans outstanding. As operating subsidies provided by the Province are sufficient to ensure that all mortgage payments can be made when due, default is unlikely. To date, there have been no claims for defaults on insured mortgage loans.

Claims Against the Crown

There are claims outstanding against the Crown, of which 58 (2014, 59) are for amounts over $50 million. These claims arise from legal action, either in progress or threatened, in respect of aboriginal land claims, breach of contract, damages to persons and property, and like items. The cost to the Province, if any, cannot be determined because the financial outcome of these actions is uncertain. For a detailed listing of claims against the Ministries, refer to Public Accounts Volume 1 – Claims against the Crown.

Canadian Blood Services

The provincial and territorial governments of Canada have entered into a Canadian Blood Services Excess Insurance Captive Support Agreement (the “Captive Support Agreement”) with Canadian Blood Services (CBS) and Canadian Blood Services Captive Insurance Company Limited (CBSI), a wholly owned subsidiary of CBS. Under the Captive Support Agreement, each government indemnifies CBSI for its pro-rata share of any payments that CBSI becomes obliged to make under a comprehensive blood risks insurance policy it provides to CBS. The policy has an overall limit of $750 million, which may cover settlements, judgments and defence costs. The policy is in excess of, and secondary to, a $250 million comprehensive insurance policy underwritten by CBS Insurance Company Limited, a subsidiary of CBS. Given current populations, Ontario’s maximum potential liability under the Captive Support Agreement is approximately $376 million. The Province is not aware of any proceedings that could lead to a claim against it under the Captive Support Agreement.

Legal Aid Ontario – Certificates

Legal Aid Ontario (LAO) issues certificates to individuals seeking legal aid assistance. Each certificate issued authorizes legal services to be performed within the tariff guidelines. At March 31, 2015, a potential $55.6 million (2014, $59.4 million) could still be incurred on certificates issued on or before March 31, 2015, over and above the billings received to date.

Contaminated Sites

The Province has identified as contingent liabilities 76 sites that may have potential liabilities of $383 million. A liability has not been recorded for these sites because either the likelihood of the government becoming responsible for the site is not determinable, the amount of the liability cannot be estimated, or both.

TO2015 – Pan/Parapan American Games

On November 6, 2009, Pan American Sports Organization (PASO) members voted to award Toronto and the Golden Horseshoe region the hosting rights of the 2015 Pan/Parapan American Games. Under the Ontario Support Agreement (OSA), the Province has agreed to financially support TO2015 if spending on Pan American-related commitments exceeds TO2015’s approved budget. The agreement stipulates that payments of any approved expenses in excess of the aggregate agreed contribution to the Games by all parties are the responsibility of the Province, provided that such expenses have been incurred in an agreed manner and approved by the Province in accordance with the terms and conditions of the OSA. As at March 31, 2015, an estimate of the possibility and amount of payments associated with the Province’s commitment, if any, is undeterminable and this continues to be the case as of August 2015.

Note 12 of these financial statements provides additional details on Pan/Parapan American Games obligations.

General Real Estate Portfolio — Lease Obligation

Prior to the amalgamation of Stadium Corporation of Ontario Limited (STADCO) with Infrastructure Ontario and the Ontario Realty Corporation on June 6, 2011, all assets, liabilities and operations of STADCO were transferred to the General Real Estate Portfolio (GREP), including ground leases dated June 3, 1989, with Canada Lands Company (CLC) for the SkyDome Lands and the sublease to Rogers Stadium Limited Partnership (sub-tenant). Under the terms of the ground lease, GREP is responsible for base rent, realty taxes, utilities and certain operating costs, which are assumed by the sub-tenant under the terms of the sub-lease. In the event of a default by the sub-tenant, the potential financial impact to GREP is estimated to be the base rent, in the range of $300 million to $400 million annually, plus realty taxes, utilities and certain operating costs.

Collateral

The Province has entered into securities repurchase agreements and collateralized swap agreements with certain counterparties. Under the terms of those agreements, the Province may be required to pledge and/or receive assets relating to obligations to the counterparties. In the normal course of business, these pledged securities will be returned to the pledgor when there are no longer any outstanding obligations.

As at March 31, 2015, the Province pledged assets in the carrying amount of $35 million (2014, no assets pledged to counterparties), which would be included in Investments and/or Cash and Cash Equivalents.

12. Contractual Obligations

Contractual Obligations

as at March 31
($ Millions)
  Minimum Payments to be made in:
2015 2014 2016 2017 2018 2019 2020 2021 and
thereafter
Transfer Payments $7,872 $10,726 $4,785 $1,874 $468 $228 $236 $281
Alternative Financing Contracts 24,210 20,081 6,006 1,170 1,246 1,349 1,051 13,388
Ontario Power Generation 5,286 6,141 1,136 387 369 363 430 2,601
Leases 4,139 4,184 635 542 466 396 332 1,768
Construction Contracts 4,654 4,552 1,882 669 379 238 200 1,286
Other 7,204 7,528 1,570 988 850 761 672 2,363
Total Contractual Obligations $53,365 $53,212 $16,014 $5,630 $3,778 $3,335 $2,921 $21,687

Ontario Power Generation Inc.’s contractual obligations include future contributions under ONFA of $3.4 billion and fuel supply agreements of $813 million.

In November 2009, the Pan American Sports Organization selected the City of Toronto and the Golden Horseshoe region to host the 2015 Pan/Parapan American Games. The Government of Ontario invested funds to help plan and stage the Games, and to support the construction of the Athletes’ Village. Transfer payments and alternative financing contracts in the table above include $836 million in commitments that are still to be provided for the Games and the Athletes’ Village project.

The Province has entered into a number of multiple-year alternative financing contracts for the construction of assets and delivery of services. The contractual obligations represent the unperformed capital and operating portion of the contracts and will become liabilities in the future when the terms of the contracts are met.

13. Trust Funds Under Administration

Summary financial information from the most recent financial statements of trust funds under administration is provided below.

Workplace Safety and Insurance Board (WSIB)1
As at December 31
($ Millions)
2014 2013
Assets $25,571 $22,510
Liabilities 31,025 30,754
Deficiency of Assets (5,454) (8,244)
Unfunded Liability attributable to WSIB stakeholders (8,098) (10,638)
1 The financial statements have been prepared in accordance with IFRS.
Other Trust Funds
As at March
31 ($ Millions)
2015 2014
  Assets Liabilities Fund Balance
(Unfunded
Liability)
Fund Balance
(Unfunded
Liability)
The Public Guardian and Trustee for Province of Ontario $1,676 $53 $1,623 $1,568
Motor Vehicle Accident Claims Fund 67 228 (161) (155)
Pension Benefits Guarantee Fund 543 171 372 375
As at December 31 Assets Liabilities
2014
Fund Balance
2013
Fund Balance
Deposit Insurance Corporation of Ontario $198 $13 $185 $165

Unfunded liabilities of trusts under administration are not included in the Province’s consolidated financial statements as it is intended that they will be discharged by external parties. The most recent financial statements of these trusts are reproduced in Volume 2 of the Public Accounts of Ontario.

14. Future Changes in Accounting Standards

PSAB 3450 – Financial Instruments and PSAB 2601 – Foreign Currency Translation

PSAB has introduced new sections on Financial Instruments and Foreign Currency Translation that categorize items to be accounted for at either fair value, cost or amortized cost. Fair value measurement applies to derivatives and portfolio investments in equity instruments that are quoted in an active market. Other financial assets and financial liabilities will generally be measured at cost or amortized cost. Until an item is derecognized (for example, through disposition), any gains and losses arising due to changes in fair value (remeasurements) will be reported in the Statement of Remeasurement Gains and Losses. PSAB has agreed to further explore the views of the stakeholders in the areas of hedge accounting and linkage to the Concepts Underlying Financial Performance project. PSAB has extended the effective date of the two standards to April 1, 2019, for senior governments to allow time to fully consider the issues.

PSAB 2200 – Related Party Disclosures

PSAB has issued a new standard on Related Party Disclosures. This standard requires disclosure of related party transactions if they have or could have a material financial effect on the Consolidated Financial Statements and only if those transactions occur at a value different from what would have been arrived at if the parties were unrelated. Transactions involving key management personnel and their close family members may be required to be disclosed if they meet certain criteria. The standard is effective in fiscal year 2017–18 or earlier. The Province is currently assessing the impact of this standard on its Consolidated Financial Statements.

PSAB 3420 – Inter-Entity Transactions

PSAB has issued a new standard on Inter-Entity Transactions. It establishes standards on how to account for and report transactions between public-sector entities that comprise a government’s reporting entity from both a provider and recipient perspective. This standard covers recognition and measurement and references disclosure of information about Inter-Entity Transactions, in accordance with the Related Party Disclosure, Section PS 2200. Senior governments are required to adopt these standards in fiscal year 2017–18 or earlier. The impact of this standard on the Consolidated Financial Statements is being assessed at this time by the Province.

Future Standards on Rate-Regulated Entities

The financial results of Ontario Power Generation Inc. and Hydro One Inc. are prepared on a U.S. GAAP basis as directed by the Province, but are consolidated on a modified equity basis in the Province’s financial statements under Canadian GAAP. To date, both U.S. and Canadian GAAP have been aligned in accounting treatment for rate-regulated activities. In December 2009, AcSB approved a standard requiring that publicly accountable enterprises adopt International Financial Reporting Standards (IFRS) for fiscal years beginning on or after January 1, 2011. Under PSAB, government business enterprises are directed to follow accounting standards applicable for publicly accountable enterprises. However, as a result of concerns raised by the rate-regulated sector, the IFRS implementation date for entities with qualifying rate-regulated activities was extended by AcSB to January 1, 2015, in light of ongoing uncertainties regarding the International Accounting Standard Board’s (IASB) future decisions on rate-regulated accounting. Because the reporting periods of Hydro One and Ontario Power Generation differ from that of the Province, any change in their reporting as a result of having to adopt the new standard would need to be reflected in the 2015–16 Public Accounts.

The IASB issued an interim limited-scope standard IFRS 14, Regulatory Deferral Accounts, in 2014 that is effective for fiscal years beginning on or after January 1, 2016. The transitionary standard grandfathers rate-regulated accounting for entities adopting IFRS for the first time until the IASB completes its comprehensive project on rate-regulated activities. Despite the deferred effective date for the new IFRS standard, the AcSB has decided not to extend its deferral for rate-regulated entities to align with the implementation date of IFRS 14. In addition, the outcome of the IASB’s deliberations on the future of rate-regulated accounting remains uncertain. Given this uncertainty, the Province will continue to monitor and assess any changes to IFRS standards that could have a material impact on the Province’s Consolidated Financial Statements.

PSAB/AcSB Statement of Principles on Not-for-Profit Accounting

In December 2010, not-for-profit accounting standards were incorporated into PSAB standards for use by government not-for-profit organizations for fiscal years beginning on or after January 1, 2012. In April 2013, AcSB and the Public Sector Accounting Board issued a joint Statement of Principles on Improvements to the Not-for-Profit Standards that proposes to change the way not-for-profit organizations recognize revenue, report controlled organizations, and record other activities. The Province’s Consolidated Financial Statements may be affected by any changes in the standards to the extent that government organizations are impacted by any final changes. The Province will continue to consult with consolidated entities and their respective ministries to ensure that financial reporting by Ontario’s public-sector not-for-profit organizations best meets users’ needs.

Concepts Underlying Financial Performance

PSAB is currently in the process of revisiting its conceptual framework. The conceptual framework establishes principles for the development of standards used for financial reporting by governments. The conceptual framework is important to ensure public–sector standards appropriately reflect the economic substance of government transactions and to support transparency and accountability in public-sector reporting. PSAB continues with stakeholder communication activities and a third consultation paper was issued in the first quarter of 2015 to which the Province will be responding.

15. Subsequent Event

Subsequent to year-end, on April 16, 2015, the Province announced its intentions to broaden ownership of Hydro One, a government business enterprise consolidated in these financial statements, through a public offering of shares. This would involve an initial sale of approximately 15 per cent of the common shares of Hydro One followed by potential additional share sales in subsequent years, up to a maximum sale of 60 per cent of the Province’s current interest in Hydro One. The Province would continue to retain oversight of Hydro One by retaining a minimum of 40 per cent ownership. In addition, the Province announced plans to enter an agreement to sell Hydro One Brampton to several electricity entities in the near future.

16. Comparative Figures

The comparative figures have been reclassified as necessary to conform to the 2015 presentation.

Schedules to the Consolidated Financial Statements

Schedule 1 Revenues by Source
Schedule 2 Revenues by Sector
Schedule 3 Expenses by Sector
Schedule 4 Expenses by Ministry
Schedule 5 Accounts Payable and Accrued Liabilities
Schedule 6 Accounts Receivable
Schedule 7 Loans Receivable
Schedule 8 Government Organizations
Schedule 9 Government Business Enterprises
Schedule 10 Broader Public Sector Organizations

Province of Ontario
Schedule 1: Revenues by Source
($ Millions) 2014–15
Budget
2014–15
Actual
2013–14
Actual
Taxation      
Personal Income Tax 29,172 29,313 26,929
Sales Tax 21,937 21,689 20,481
Corporations Tax 10,254 9,557 11,423
Education Property Tax 5,661 5,561 5,457
Employer Health Tax 5,551 5,415 5,283
Ontario Health Premium 3,321 3,366 3,128
Gasoline Tax 2,395 2,447 2,363
Land Transfer Tax 1,604 1,778 1,614
Tobacco Tax 1,300 1,163 1,110
Fuel Tax 734 739 718
Beer and Wine Tax 572 560 557
Electricity Payments-In-Lieu of Taxes 329 180 543
Other Taxes 535 507 360
Total 83,365 82,275 79,966
Transfers from Government of Canada      
Canada Health Transfer 12,350 12,408 11,940
Canada Social Transfer 4,841 4,847 4,689
Equalization Payments 1,988 1,988 3,169
Labour Market Development Agreement 628 628 623
Social Housing 458 465 474
Indian Welfare Services Agreement 239 246 227
Job Fund Agreement 179
Infrastructure Programs 296 137 123
Bilingualism Development 80 86 85
Labour Market Agreement for Persons with Disabilities 76 76 76
Legal Aid Criminal 51 53 51
Youth Criminal Justice 52 52 52
Labour Market Agreement 193 193
Wait Times Reduction Fund 96
Other 630 450 479
Total 21,882 21,615 22,277
Income from Investment in Government Business Enterprises (Schedule 9) 5,026 5,615 5,337
Other      
Sales and Rentals 2,058 2,336 1,409
Vehicle and Driver Registration Fees 1,442 1,433 1,248
Electricity Debt Retirement Charge 940 956 954
Power Supply Contract Recoveries (Note 7) 959 950 1,296
Other Fees and Licenses 795 693 759
Royalties 274 275 242
Independent Electricity System Operation Revenue 174 240 160
Net Reduction of Power Purchase Contracts (Note 7) 217 217 243
Local Services Realignment 94 106 92
Miscellaneous 1,645 1,835 1,928
Total 8,598 9,041 8,331
Total Revenues 118,871 118,546 115,911
Province of Ontario
Schedule 2: Revenues by Sector
Sectors Health1 Education2 Children's and Social Services3 Environment, Resources and Economic Development4
For the year ended March 31
($ Millions)
 2015 2014 2015 2014 2015 2014 2015 2014
Revenues                
Taxation (Schedule 1) 2 2
Transfers from Government of Canada (Schedule 1) 55 64 80 79 346 303 904 939
Income from Investment in Government Business Enterprises 1,789 1,605
Other (Schedule 1) 229 401 26 27 64 47 3,756 3,364
Total 284 465 106 106 410 350 6,451 5,910
Province of Ontario
Schedule 2: Revenues by Sector (cont'd)
Sectors Post-Secondary Education and Training5 Justice6 General Government and Other7 Total
For the year ended March 31
($ Millions)
 2015 2014 2015 2014 2015 2014 2015 2014
Revenues                
Taxation (Schedule 1) 82,273 79,964 82,275 79,966
Transfers from Government of Canada (Schedule 1) 868 884 100 100 19,262 19,908 21,615 22,277
Income from Investment in Government Business Enterprises 3,826 3,732 5,615 5,337
Other (Schedule 1) 54 78 727 727 4,185 3,687 9,041 8,331
Total 922 962 827 827 109,546 107,291 118,546 115,911
1 Includes the activities of the Ministry of Health and Long-Term Care.
2 Includes the activities of the Ministry of Education.
3 Includes the activities of the Ministries of Children and Youth Services, and Community and Social Services.
4 Includes the activities of the Ministries of Aboriginal Affairs, Agriculture and Food/Rural Affairs, Citizenship and Immigration, Consumer Services, Economic Development, Trade, and Employment/Research and Innovation, Energy, Environment, Labour, Municipal Affairs and Housing, Natural Resources, Northern Development and Mines, Tourism, Culture and Sport, and Transportation.
5 Includes the activities of the Ministry of Training, Colleges and Universities.
6 Includes the activities of the Ministries of Attorney General, and Community Safety and Correctional Services.
7 Includes the activities of the Ministries of Government Services, Infrastructure, Finance, the Board of Internal Economy, Executive Offices, and the Office of Francophone Affairs.
Province of Ontario
Schedule 3: Expenses by Sector1
Sectors Health2 Education3 Children's
and
Social
Services4
Environment,
Resources
and
Economic
Development5
For the year ended March 31
($ Millions)
2015 2014 2015 2014 2015 2014 2015 2014
Expenses                
Transfer Payments 47,88610 46,083 24,909 24,071 13,92611 13,237 5,400 5,668
Interest on Debt
Salaries and Wages 639 613 204 204 429 426 1,753 1,734
Services 1,740 1,422 136 127 186 169 1,379 1,240
Pensions and Employee Future Benefits (Note 6) 6 7 565 873 7 7 11 11
Power Supply Contract Costs
Amortization of Tangible Capital Assets 54 85 9 8 23 7 1,456 1,429
Employee Benefits 120 116 33 33 69 72 338 316
Supplies and Equipment 396 393 8 9 9 9 217 193
Transportation and Communication 60 67 15 14 20 20 116 105
Net Impact of Broader Public Sector Organizations on
Provincial Expenses (Schedule 10)
(1,042) 78 (717) (855)
Other 154 45 30 33 41 51 794 736
Total12 50,013 48,909 25,192 24,517 14,710 13,998 11,464 11,432
Province of Ontario
Schedule 3: Expenses by Sector (cont'd)
Sectors Post-Secondary Education and Training6 Justice7 General
Government
and Other8
Interest on
Debt9
Total
For the year ended March 31
($ Millions)
 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Expenses                    
Transfer Payments 7,531 7,382 391 368 814 920 100,857 97,729
Interest on Debt 10,635 10,572 10,635 10,572
Salaries and Wages 91 95 2,244 2,164 968 980 6,328 6,216
Services 67 65 961 866 226 121 4,695 4,010
Pensions and Employee Future Benefits (Note 6) 18 17 1,228 1,294 1,835 2,209
Power Supply Contract Costs 950 1,296 950 1,296
Amortization of Tangible Capital Assets 2 2 12 11 285 266 1,841 1,808
Employee Benefits 14 15 299 289 112 134 985 975
Supplies and Equipment 1 1 171 159 51 53 853 817
Transportation and Communication 4 4 71 70 66 73 352 353
Net Impact of Broader Public Sector Organizations on Provincial Expenses (Schedule 10) (102) (43) (1,861) (820)
Other 64 60 159 221 149 53 1,391 1,199
Total12 7,672 7,581 4,326 4,165 4,849 5,190 10,635 10,572 128,861 126,364
1 The information in the sectors' columns represents activities of ministries and consolidated agencies after adjustments to eliminate transactions between sectors.
2 Includes the activities of the Ministry of Health and Long-Term Care.
3 Includes the activities of the Ministry of Education.
4 Includes the activities of the Ministries of Children and Youth Services, and Community and Social Services.
5 Includes the activities of the Ministries of Aboriginal Affairs, Agriculture and Food/Rural Affairs, Citizenship and Immigration, Consumer Services, Economic Development, Trade, and Employment/Research and Innovation, Energy, Environment, Labour, Municipal Affairs and Housing, Natural Resources, Northern Development and Mines, Tourism, Culture and Sport, and Transportation.
6 Includes the activities of the Ministry of Training, Colleges and Universities.
7 Includes the activities of the Ministries of Attorney General, and Community Safety and Correctional Services.
8 Includes the activities of the Ministries of Government Services, Infrastructure, Finance, the Board of Internal Economy, Executive Offices, and the Office of Francophone Affairs.
9 Includes the activities related to the management of the debt of the Province.
10 Includes transfers of $2,495 million to Community Care Access Centres.
11 Includes transfers of $1,490 million to Children's Aid Societies.
12 The comparative figures have been reclassified to conform to the 2014–2015 presentation.
Province of Ontario
Schedule 4: Expenses by Ministry
($ Millions) 2014–15
Budget
2014–15
Actual
2013–14
Actual
Aboriginal Affairs 71 71 75
Agriculture and Food/Rural Affairs 1,191 943 1,013
Attorney General 1,774 1,783 1,813
Board of Internal Economy 205 264 199
Children and Youth Services 4,222 4,132 3,997
Citizenship and Immigration 121 127 120
Community and Social Services 10,791 10,577 10,001
Community Safety and Correctional Services 2,479 2,543 2,352
Consumer Services 25 27 24
Economic Development, Trade and Employment/Research and Innovation 1,062 867 872
Education 24,840 24,628 23,644
Teachers' Pension (Note 6) 507 564 873
Energy 1,433 1,405 1,318
Environment 490 486 481
Executive Offices 33 43 30
Finance 1,014 876 889
Contingency Fund1 415
Interest on Debt 11,010 10,635 10,572
Municipal Partnership Fund 542 542 569
Power Supply Contract Costs 959 950 1,296
Transition Fund 80
Government Services 1,029 823 785
Public Service/OPSEU Pension and Other Employee Future Benefits (Note 6) 1,170 1,106 1,265
Health and Long-Term Care 50,055 50,013 48,909
Infrastructure 521 240 152
Contingency Fund1 100
Labour 311 305 303
Municipal Affairs and Housing 1,035 1,044 1,203
Natural Resources 783 792 812
Northern Development and Mines 754 804 719
Office of Francophone Affairs 4 5 5
Tourism, Culture and Sport 1,836 1,650 1,669
Training, Colleges and Universities 7,839 7,672 7,581
Transportation 3,025 2,944 2,823
Program Review Savings Target2 (250)
Year-End Savings2 (1,100)
Total Expenses 130,376 128,861 126,364
1 See glossary for definition.
2 For Budget purposes, these items were not allocated to individual ministries.
Province of Ontario
Schedule 5: Accounts Payable and Accrued Liabilities
As at March 31
($ Millions)
2015 2014
Transfer Payments 5,864 5,764
Interest on Debt 3,874 3,646
Salaries, Wages and Benefits 2,788 2,640
Other 8,548 7,641
Total Accounts Payable and Accrued Liabilities 21,074 19,691
Province of Ontario
Schedule 6: Accounts Receivable
As at March 31
($ Millions)
2015 2014
Taxes 5,552 4,435
Transfer Payments1 667 684
Other Accounts Receivable2 3,785 3,531
Total 10,004 8,650
Less: Allowance for Doubtful Accounts3 (831) (1,021)
Total 9,173 7,629
Government of Canada 1,144 895
Total Accounts Receivable 10,317 8,524
1 The Transfer Payment receivable consists primarily of recoverables of $612 million (2014, $578 million) for the Ontario Disability Support Program – Financial Assistance.
2 Other Accounts Receivable includes trade receivables.
3 The Allowance for Doubtful Accounts includes a provision of $532 million (2014, $505 million) for the Ontario Disability Support Program – Financial Assistance.
Province of Ontario
Schedule 7: Loans Receivable
As at March 31
($ Millions)
2015 2014
Government Business Enterprises1 3,695 3,997
Municipalities2 5,067 5,090
Students3 3,173 3,052
Industrial and Commercial4 492 518
Pension Benefit Guarantee Fund5 209 220
Universities6 22 31
Other 402 115
Total 13,060 13,023
Unamortized Concession Discounts7 (277) (308)
Allowance for Doubtful Accounts8 (1,006) (937)
Total Loans Receivable 11,777 11,778
1 Loans to government business enterprises bear interest at rates of 2.32 per cent to 6.33 per cent (2014, 2.32 per cent to 6.33 per cent).
2 Loans to municipalities bear interest at rates of up to 10.52 per cent (2014, 10.25 per cent).
3 Loans to students bear interest at rates of 1.23 per cent to 4.00 per cent (2014, 1.47 per cent to 4.00 per cent).
4 Loans to industrial and commercial enterprises bear interest at rates of up to 6.56 per cent (2014, 6.74 per cent).
5 The loan to the Pension Benefit Guarantee Fund is interest-free.
6 Loans to universities are mortgages bearing interest at rates of 2.77 per cent to 7.00 per cent (2014, 2.77 per cent to 7.13 per cent).
7 Unamortized concession discounts related to loans made to municipalities of $71 million (2014, $82 million), loans to the Pension Benefit Guarantee Fund of $102 million (2014, $108 million), and loans to industrial and commercial enterprises and other of $104 million (2014, $118 million).
8 Allowance for doubtful accounts related to loans made to students of $604 million (2014, $595 million), municipalities of $158 million (2014, $158 million), industrial and commercial enterprises and other of $137 million (2014, $72 million), and the Pension Benefit Guarantee Fund of $107 million (2014, $112 million).
Repayment Terms
As at March 31
($ Millions)
Principal Repayment
Years to Maturity 2015 2014
1 year 1,324 1,294
2 years 850 698
3 years 1,652 821
4 years 812 1,630
5 years 1,215 765
1–5 years 5,853 5,208
6–10 years 3,086 3,558
11–15 years 1,458 1,451
16–20 years 513 515
21–25 years 282 288
Over 25 years 1,618 1,739
Subtotal 12,810 12,759
No fixed maturity 250 264
Total 13,060 13,023
Province of Ontario
Schedule 8: Government Organizations1
Government Business Enterprises2 Responsible Ministry
Hydro One Inc. Energy
Liquor Control Board of Ontario Finance
Ontario Lottery and Gaming Corporation Finance
Ontario Power Generation Inc. Energy
Other Government Organizations2 Responsible Ministry
Agricorp Agriculture and Food/Rural Affairs
Agricultural Research Institute of Ontario Agriculture and Food/Rural Affairs
Algonquin Forestry Authority Natural Resources
Cancer Care Ontario Health and Long-Term Care
Education Quality and Accountability Office Education
eHealth Ontario Health and Long-Term Care
Forest Renewal Trust Natural Resources
General Real Estate Portfolio Infrastructure
Independent Electricity System Operator Energy
Legal Aid Ontario Attorney General
Local Health Integration Networks  
Central East Local Health Integration Network Health and Long-Term Care
Central Local Health Integration Network Health and Long-Term Care
Central West Local Health Integration Network Health and Long-Term Care
Champlain Local Health Integration Network Health and Long-Term Care
Erie St. Clair Local Health Integration Network Health and Long-Term Care
Hamilton Niagara Haldimand Brant Local Health Integration Network Health and Long-Term Care
Mississauga Halton Local Health Integration Network Health and Long-Term Care
North East Local Health Integration Network Health and Long-Term Care
North Simcoe Muskoka Local Health Integration Network Health and Long-Term Care
North West Local Health Integration Network Health and Long-Term Care
South East Local Health Integration Network Health and Long-Term Care
South West Local Health Integration Network Health and Long-Term Care
Toronto Central Local Health Integration Network Health and Long-Term Care
Waterloo Wellington Local Health Integration Network Health and Long-Term Care
Metrolinx Transportation
Metropolitan Toronto Convention Centre Corporation Tourism, Culture and Sport
Niagara Parks Commission Tourism, Culture and Sport
Northern Ontario Heritage Fund Corporation Northern Development and Mines
Ontario Agency for Health Protection and Promotion (Public Health Ontario) Health and Long-Term Care
Ontario Capital Growth Corporation Economic Development, Trade and Employment/Research and Innovation
Ontario Clean Water Agency Environment
Ontario Educational Communications Authority (TVO) Education
Ontario Electricity Financial Corporation Finance
Ontario Energy Board Energy
Ontario Financing Authority Finance
Ontario French-Language Educational Communications Authority (TFO) Education
Ontario Immigrant Investor Corporation Economic Development, Trade and Employment/Research and Innovation
Ontario Infrastructure and Lands Corporation (Infrastructure Ontario) Infrastructure
Ontario Mortgage and Housing Corporation Municipal Affairs and Housing
Ontario Northland Transportation Commission Northern Development and Mines
Ontario Place Corporation Tourism, Culture and Sport
Ontario Racing Commission Agriculture and Food/Rural Affairs
Ontario Securities Commission Finance
Ontario Student Loan Trust Training, Colleges and Universities
Ontario Tourism Marketing Partnership Corporation Tourism, Culture and Sport
Ontario Trillium Foundation Tourism, Culture and Sport
Ornge Health and Long-Term Care
Ottawa Convention Centre Corporation Tourism, Culture and Sport
Province of Ontario Council for the Arts (Ontario Arts Council) Tourism, Culture and Sport
The Centennial Centre of Science and Technology (Ontario Science Centre) Tourism, Culture and Sport
The Royal Ontario Museum Tourism, Culture and Sport
Toronto Organizing Committee for the 2015 Pan American and Parapan American Games (Toronto 2015) Tourism, Culture and Sport
Toronto Waterfront Revitalization Corporation (Waterfront Toronto) Infrastructure
Transmission Corridor Program Infrastructure
Broader Public Sector Organizations
Public Hospitals – Ministry of Health and Long-Term Care
Alexandra Hospital Ingersoll Groves Memorial Community Hospital
Alexandra Marine & General Hospital Guelph General Hospital
Almonte General Hospital Haldimand War Memorial Hospital
Anson General Hospital Haliburton Highlands Health Services Corporation
Arnprior Regional Health Halton Healthcare Services Corporation
Atikokan General Hospital Hamilton Health Sciences Corporation
Baycrest Centre for Geriatric Care Hanover & District Hospital
Bingham Memorial Hospital Headwaters Health Care Centre
Blind River District Health Centre Health Sciences North
Bluewater Health Holland Bloorview Kids Rehabilitation Hospital
Brant Community Healthcare System Hôpital Général de Hawkesbury and District General Hospital Inc.
Brockville General Hospital Hôpital Glengarry Memorial Hospital
Bruyère Continuing Care Inc. Hôpital Montfort
Cambridge Memorial Hospital Hôpital Notre Dame Hospital (Hearst)
Campbellford Memorial Hospital Hornepayne Community Hospital
Carleton Place and District Memorial Hospital Hospital for Sick Children
Casey House Hospice Hôtel-Dieu Grace Healthcare
Chatham-Kent Health Alliance Hôtel-Dieu Hospital, Cornwall
Children's Hospital of Eastern Ontario Humber River Regional Hospital
Clinton Public Hospital Joseph Brant Hospital
Collingwood General and Marine Hospital Kemptville District Hospital
Cornwall Community Hospital Kingston General Hospital
Deep River and District Hospital Corporation Kirkland and District Hospital
Dryden Regional Health Centre Lady Dunn Health Centre
Englehart and District Hospital Inc. Lady Minto Hospital at Cochrane
Espanola General Hospital Lake of the Woods District Hospital
Four Counties Health Services Lakeridge Health
Georgian Bay General Hospital Leamington District Memorial Hospital
Geraldton District Hospital Lennox and Addington County General Hospital
Grand River Hospital Listowel Memorial Hospital
Grey Bruce Health Services London Health Sciences Centre
Mackenzie Health South Bruce Grey Health Centre
Manitoulin Health Centre South Huron Hospital Association
Manitouwadge General Hospital Southlake Regional Health Centre
Markham Stouffville Hospital St. Francis Memorial Hospital
Mattawa General Hospital St. Joseph's Care Group
McCausland Hospital St. Joseph's Continuing Care Centre of Sudbury
Muskoka Algonquin Healthcare St. Joseph's General Hospital, Elliot Lake
Niagara Health System St. Joseph's Health Care, London
Nipigon District Memorial Hospital St. Joseph's Health Centre (Guelph)
Norfolk General Hospital St. Joseph's Health Centre (Toronto)
North Bay Regional Health Centre St. Joseph's Healthcare Hamilton
North Wellington Health Care Corporation St. Mary's General Hospital
North York General Hospital St. Mary's Memorial Hospital
Northumberland Hills Hospital St. Michael's Hospital
Orillia Soldiers' Memorial Hospital St. Thomas - Elgin General Hospital
Ottawa Hospital Stevenson Memorial Hospital
Pembroke Regional Hospital Inc. Stratford General Hospital
Perth and Smiths Falls District Hospital Strathroy Middlesex General Hospital
Peterborough Regional Health Centre Sunnybrook Health Sciences Centre
Providence Care Centre (Kingston) Temiskaming Hospital
Providence Healthcare Thunder Bay Regional Health Sciences Centre
Queensway-Carleton Hospital Tillsonburg District Memorial Hospital
Quinte Healthcare Corporation Timmins and District Hospital
Red Lake Margaret Cochenour Memorial Hospital Corporation Toronto East General Hospital
Religious Hospitallers of St. Joseph of the Hôtel Dieu of Kingston Trillium Health Partners
Religious Hospitallers of St. Joseph of the Hotel Dieu of St. Catharines University Health Network
Renfrew Victoria Hospital University of Ottawa Heart Institute
Riverside Health Care Facilities Inc. Weeneebayko Area Health Authority
Ross Memorial Hospital West Haldimand General Hospital
Rouge Valley Health System West Nipissing General Hospital
Royal Victoria Regional Health Centre West Park Healthcare Centre
Runnymede Healthcare Centre West Parry Sound Health Centre
Salvation Army Toronto Grace Health Centre William Osler Health System
Sault Area Hospital Wilson Memorial General Hospital
Scarborough Hospital Winchester District Memorial Hospital
Seaforth Community Hospital Windsor Regional Hospital
Sensenbrenner Hospital Wingham and District Hospital
Services de santé de Chapleau Health Services Women's College Hospital
Sinai Health System Woodstock General Hospital Trust
Sioux Lookout Meno-Ya-Win Health Centre  
Smooth Rock Falls Hospital  
Specialty Psychiatric Hospitals – Ministry of Health and Long-Term Care
Centre for Addiction and Mental Health Royal Ottawa Health Care Group
Ontario Shores Centre for Mental Health Sciences Waypoint Centre for Mental Health Care
School Boards – Ministry of Education
Algoma District School Board Lambton Kent District School Board
Algonquin and Lakeshore Catholic District School Board Limestone District School Board
Avon Maitland District School Board London District Catholic School Board
Bloorview MacMillan School Authority Moose Factory Island District School Area Board
Bluewater District School Board Moosonee District School Area Board
Brant Haldimand Norfolk Catholic District School Board Near North District School Board
Bruce-Grey Catholic District School Board Niagara Catholic District School Board
Campbell Children's School Authority Niagara Peninsula Children's Centre School Authority
Catholic District School Board of Eastern Ontario Nipissing-Parry Sound Catholic District School Board
Conseil des écoles publiques de l'Est de l'Ontario Northeastern Catholic District School Board
Conseil scolaire catholique Providence Northwest Catholic District School Board
Conseil scolaire de district catholique Centre-Sud Ottawa Catholic District School Board
Conseil scolaire de district catholique de l'Est ontarien Ottawa Children's Treatment Centre School Authority
Conseil scolaire de district catholique des Aurores boréales Ottawa-Carleton District School Board
Conseil scolaire de district catholique des Grandes Rivières Peel District School Board
Conseil scolaire de district catholique du Centre-Est de l'Ontario Penetanguishene Protestant Separate School Board
Conseil scolaire de district catholique du Nouvel-Ontario Peterborough Victoria Northumberland and
Conseil scolaire de district catholique Franco-Nord Clarington Catholic District School Board
Conseil scolaire de district du Grand Nord de l'Ontario Rainbow District School Board
Conseil scolaire de district du Nord-Est de l'Ontario Rainy River District School Board
Conseil scolaire Viamonde Renfrew County Catholic District School Board
District School Board of Niagara Renfrew County District School Board
District School Board Ontario North East Simcoe County District School Board
Dufferin-Peel Catholic District School Board Simcoe Muskoka Catholic District School Board
Durham Catholic District School Board St. Clair Catholic District School Board
Durham District School Board Sudbury Catholic District School Board
Grand Erie District School Board Superior North Catholic District School Board
Greater Essex County District School Board Superior-Greenstone District School Board
Halton Catholic District School Board Thames Valley District School Board
Halton District School Board Thunder Bay Catholic District School Board
Hamilton-Wentworth Catholic District School Board Toronto Catholic District School Board
Hamilton-Wentworth District School Board Toronto District School Board
Hastings and Prince Edward District School Board Trillium Lakelands District School Board
Huron-Perth Catholic District School Board Upper Canada District School Board
Huron-Superior Catholic District School Board Upper Grand District School Board
James Bay Lowlands Secondary School Board Waterloo Catholic District School Board
John McGivney Children's Centre School Authority Waterloo Region District School Board
Kawartha Pine Ridge District School Board Wellington Catholic District School Board
Keewatin-Patricia District School Board Windsor-Essex Catholic District School Board
Kenora Catholic District School Board York Catholic District School Board
KidsAbility School Authority York Region District School Board
Lakehead District School Board  
Colleges – Ministry of Training, Colleges and Universities
Algonquin College of Applied Arts and Technology Humber College Institute of Technology and Advanced Learning
Cambrian College of Applied Arts and Technology Lambton College of Applied Arts and Technology
Canadore College of Applied Arts and Technology Loyalist College of Applied Arts and Technology
Centennial College of Applied Arts and Technology Mohawk College of Applied Arts and Technology
Collège Boréal d'arts appliqués et de technologie Niagara College of Applied Arts and Technology
Collège d'arts appliqués et de technologie La Cité collégiale Northern College of Applied Arts and Technology
Conestoga College Institute of Technology and Advanced Learning Sault College of Applied Arts and Technology
Confederation College of Applied Arts and Technology Seneca College of Applied Arts and Technology
Durham College of Applied Arts and Technology Sheridan College Institute of Technology and Advanced Learning
Fanshawe College of Applied Arts and Technology Sir Sandford Fleming College of Applied Arts and Technology
George Brown College of Applied Arts and Technology St. Clair College of Applied Arts and Technology
Georgian College of Applied Arts and Technology St. Lawrence College of Applied Arts and Technology
1 The schedule of government organizations is updated on an annual basis to reflect any amalgamations or dissolutions of consolidated organizations in the year. This listing represents all consolidated organizations included in the Province's financial statements as at March 31, 2015. Other controlled organizations that do not meet the consolidation threshold of materiality and cost-benefit (per PSAB standards), such as Children's Aid Societies and Community Care Access Centres, are instead reflected as government transfer payment expense in these financial statements through the accounts of the ministries responsible for them.
2 The most recent audited financial statements of these organizations are included in Volume 2, Public Accounts of Ontario.
Province of Ontario
Schedule 9: Government Business Enterprises
Summary financial information of Government Business Enterprises is provided below.
For the year ended
March 31, 2015
($ Millions)
Hydro One Inc.1 Liquor
Control
Board of
Ontario2
Ontario Lottery
and Gaming Corporation2
Ontario Power
Generation
Inc.1
Total
Assets  
Cash and Temporary Investments 146 257 497 547 1,447
Accounts Receivable 1,279 45 100 529 1,953
Inventories 24 414 26 415 879
Prepaid Expenses 10 46 60 116
Fixed Assets 17,567 378 1,293 18,041 37,279
Other Assets 2,316 9 2 22,523 24,850
Total Assets 21,332 1,113 1,964 42,115 66,524
Liabilities
Accounts Payable 156 584 319 1,732 2,791
Deferred Revenue 14 282 296
Long-Term Debt 7,925 116 67 5,556 13,664
Other Liabilities 5,180 (3) 95 20,999 26,271
Total Liabilities 13,261 697 495 28,569 43,022
Net Assets (liabilities) 8,071 416 1,469 13,546 23,502
Revenue 6,584 5,227 6,693 5,311 23,815
Expenses 5,851 3,396 4,698 4,255 18,200
Net Income (loss) 733 1,831 1,995 1,0563 5,615
Net Assets at Beginning of Year 7,456 390 1,516 11,368 20,730
Increase in Fair Value of Ontario Nuclear Funds (Note 10) 1,121 1,121
Remittances (to) Consolidated Revenue Fund (117) (1,805) (2,042) (3,964)
Net Assets 8,072 416 1,469 13,545 23,502
1 Amounts reported using Part V of the CPA Canada Handbook.
2 Amounts reported using IFRS.
3 Existing policy and practice is to have the hydro sector's net income remain in the hydro sector to pay down the debt of Ontario Electricity Financial Corporation, an agency of the Province responsible for managing the stranded debt and other liabilities of the former Ontario Hydro.

Province of Ontario
Schedule 9: Government Business Enterprises

Hydro One Inc.

The principal business of Hydro One Inc. is the transmission and distribution of electricity to customers within Ontario. It is regulated by the Ontario Energy Board.

Liquor Control Board of Ontario

The Liquor Control Board of Ontario regulates the purchase, sale and distribution of liquor for home consumption and liquor sales to licensed establishments through Liquor Control Board stores, Brewers’ Retail stores and winery retail stores throughout Ontario. The Board buys wine and liquor products for resale to the public, tests all products sold and establishes prices for beer, wine and spirits.

Ontario Lottery and Gaming Corporation

The Corporation conducts lottery games and operates commercial casinos, charity casinos, and slot machines at Ontario racetracks.

Ontario Power Generation Inc.

The principal business of Ontario Power Generation Inc. is the generation and sale of electricity in the Ontario wholesale market and in the interconnected markets of Quebec, Manitoba and the northeast and midwest United States.

Province of Ontario
Schedule 10: Broader Public Sector Organizations
Summary financial information of Broader Public Sector Organizations is provided below.
For the year ended March 31, 2015
($ Millions)
Hospitals School Boards Colleges Total
Expense  
Salaries, Wages and Benefits 17,470 19,127 2,400 38,997
Amortization Expense 1,440 1,006 258 2,704
Interest Expense1 165 407 14 586
Other Expense 7,128 3,652 1,155 11,935
Fees, Donations and Other Revenues (4,217) (1,283) (2,117) (7,617)
Total Sector Expense 21,986 22,909 1,710 46,605
Transfers from the Province (23,028) (23,625) (1,813) (48,466)
Net Impact on Provincial Expense – (Decrease) (1,042) (716) (103) (1,861)
1 Interest Revenue is netted with Interest Expense.

Glossary

Note: The descriptions of the terms in the glossary are provided for the purpose of assisting readers of the 2014–15 Public Accounts. The descriptions do not affect or alter the meaning of any term under law. The glossary does not form part of the audited consolidated financial statements.

Accumulated Amortization: the total amortization that has been recorded over the life of an asset to date. The asset’s total cost less the accumulated amortization gives the asset’s net book value.

Accumulated Deficit: the difference between liabilities and assets. It represents the total of all past annual deficits minus all past annual surpluses, including prior-period adjustments.

Amortization: expensing a portion of an asset’s cost in an accounting period by allocating its cost over its estimated useful life. This is applicable to tangible capital assets and items such as expenses relating to a debt issue.

Appropriation: an authority of the Legislative Assembly to pay money out of the Consolidated Revenue Fund or to incur a non-cash expense.

Broader Public Sector (BPS): public hospitals, specialty psychiatric hospitals, school boards and colleges. For financial statement purposes, universities and other organizations such as municipalities are excluded because they do not meet the criteria of government organizations as recommended by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada.

Canada Health Transfer (CHT): a federal transfer provided to each province and territory in support of health care.

Canada Social Transfer (CST): a federal transfer provided to each province and territory in support of post-secondary education, social assistance and social services, including early childhood development, early learning and child care.

Capital Gain: the profit arising from the sale or transfer of capital assets or investments. For accounting purposes, it is the proceeds or market value received less the net book value of the capital asset or investment.

Capital Lease: a lease that, from the point of view of the lessee, transfers substantially all the benefits and risks incident to ownership of property to the lessee.

Cash and Cash Equivalents: cash or other short-term liquid low-risk instruments that are readily convertible to cash, typically within three months or less.

Consolidated Revenue Fund (CRF): the aggregate of all public monies on deposit to the credit of the Minister of Finance or in the name of any agency of the Crown approved by the Lieutenant Governor in Council. Payments made from the CRF must be appropriated by a statute. See Appropriation.

Consolidation: the inclusion of the financial results of government-controlled organizations in the Province’s consolidated financial statements.

Consumer Price Index (CPI): a broad measure of the cost of living. Through the monthly CPI, Statistics Canada tracks the retail price of a representative shopping basket of goods and services from an average household’s expenditure: food, housing, transportation, furniture, clothing, and recreation. The percentage of the total basket that any item occupies is termed the “weight” and reflects typical consumer spending patterns. Since people tend to spend more on food than clothing, changes in the price of food have a bigger impact on the index than, for example, changes in the price of clothing and footwear.

Contingency Fund: an amount of expense that is approved by the Legislative Assembly at the beginning of the year to cover higher spending due to unforeseen events. This approved spending limit is allocated during the year to ministries for their programs and activities. The actual costs incurred are charged to the respective programs and activities and not to the contingency fund. Therefore, the contingency fund as at the end of the Province’s fiscal year is nil. See Reserve.

Contingent Liabilities: possible obligations that may result in the future sacrifice of economic benefits arising from existing conditions or situations involving uncertainty, which will ultimately be resolved when one or more future events not wholly within the government’s control occur or fail to occur. Resolution of the uncertainty will confirm the incurrence or non-incurrence of a liability.

Contractual Obligations: obligations of a government to others that will become liabilities when the terms of any contract or agreement, which the government had entered into, are met.

Debenture: a debt instrument where the issuer promises to pay interest and repay the principal by the maturity date. It is unsecured, meaning there is no lien on any specific asset.

Debt: an obligation resulting from the borrowing of money.

Deferred Capital Contribution: the unamortized portion of tangible capital assets or liabilities to construct or acquire tangible capital assets from specific funding received from other levels of government or third parties. Deferred capital contribution is recorded in revenue over the estimated useful life of the underlying tangible capital assets once constructed or acquired by the Province.

Deferred Revenue: unspent externally restricted grants from other levels of government and third parties for operating activities. Deferred revenues are recorded into revenue in the period in which the amount received is used for the purposes specified.

Deficit: the amount by which government expenses exceed revenues in any given year. On a forecast basis, a reserve may be included.

Derivatives: financial contracts that derive their value from other underlying instruments. The Province uses derivatives including swaps, forward foreign exchange contracts, forward rate agreements, futures and options to hedge and minimize interest costs.

Expected Average Remaining Service Life: total number of years of future services expected to be rendered by that group of employees divided by the number of employees in the group.

Fair Value: the price that would be agreed upon in an arm’s length transaction and in an open market between knowledgeable, willing parties who are under no compulsion to act. It is not the effect of a forced or liquidation sale.

Financial Assets: assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal course of operations. Financial assets include cash; an asset that is convertible to cash; a contractual right to receive cash or another financial asset from another party; a temporary or portfolio investment; a financial claim on an outside organization or individual; and inventory.

Financial Instrument: liquid asset, equity security in an entity, or a contract that gives rise to a financial asset of one contracting party and a financial liability or equity instrument of the other contracting party.

Fiscal Plan: an outline of the government’s consolidated revenue and expense plan for the upcoming fiscal year and the medium term, including information on the projected surplus/deficit. The plan is formally presented in the Budget, which the government presents in the spring of each year and is updated, as required, during the year. The fiscal plan numbers can be different from the expenditures outlined in the Printed Estimates.

Fiscal Year: the Province of Ontario’s fiscal year runs from April 1 of a year to March 31 of the following year.

Floating Rate Notes (FRNs): debt instruments that bear a variable rate of interest.

Forgivable Loan: advances where the terms and conditions of the loan agreement allow for the non-repayment of the principal or accrued interest when certain conditions are met.

Forward Contract: a contract that obligates one party to buy, and another party to sell, a specified amount of a particular asset at a specified price, on a given date in the future.

Forward Rate Agreement: a forward contract that specifies the rate of interest, usually short term, to be paid or received on an obligation beginning at a future start date.

Fund: fiscal and accounting entity segregated for the purpose of carrying on specific activities, or attaining certain objectives in accordance with special regulations, restrictions or limitations.

Futures: an exchange-traded contract that confers an obligation to buy or sell a physical or financial commodity at a specified price and amount on a future date.

Gross Domestic Product (GDP): the total unduplicated value of the goods and services produced in the economy of a country or region during a given period such as a quarter or a year. Gross domestic product can be measured three ways: as total income earned in current production, as total final expenditures, or as total net value added in current production.

Hedging: a strategy to minimize the risk of loss on an asset (or a liability) from market fluctuations such as interest rate or foreign exchange rate changes. This is accomplished by entering into offsetting commitments with the expectation that a future change in the value of the hedging instrument will offset the change in the value of the asset (or the liability).

Indemnity: an agreement whereby one party agrees to compensate another party for any loss suffered by that party. The Province can either seek or provide indemnification. 

Infrastructure: the facilities, systems and equipment required to provide public services and support private-sector economic activity including network infrastructure (e.g., roads, bridges, water and wastewater systems, large information technology systems), buildings (e.g., hospitals, schools, courts), and machinery and equipment (e.g., medical equipment, research equipment).

Loan Guarantee: an agreement to pay all or part of the amount due on a debt obligation in the event of default by the borrower.

Net Book Value of Tangible Capital Assets: historical cost of tangible capital assets less both the accumulated amortization and the amount of any write-downs.

Net Debt: the difference between the Province’s total liabilities and financial assets. It represents the Province’s future revenue requirements to pay for past transactions and events.

Nominal: an amount expressed in dollar terms without adjusting for changes in prices due to inflation or deflation. It is not a good basis for comparing values of GDP in different years, for which a “real” value expressed in constant dollars (i.e., adjusted for price changes) is needed. See Real GDP.

Non-Financial Assets: assets that normally do not generate cash capable of being used to repay existing debts. The non-financial assets of the Province are tangible capital assets.

Non-Tax Revenue: revenue received by the government from external sources. This also includes revenues from the sale of goods and services, fines and penalties associated with the enforcement of government regulations and laws; fees and licences; royalties; profits from a self-sustaining Crown agency; and asset sales.

Ontario Disability Support Program (ODSP): a program designed to meet the unique needs of people with disabilities who are in financial need, or who want and are able to work and need support. Ontarians aged 65 years or older who are ineligible for Old Age Security may also qualify for ODSP supports if they are in financial need.

Option: a contract that confers the right, but not the obligation, to buy or sell a specific amount of a commodity, currency or security at a specific price, on a certain future date.

Pension Actuarial Accounting Valuation: a valuation performed by an actuary to measure the pension benefit obligations at the end of the period or a point in time. The valuation attributes the cost of the pension benefit obligations to the period the related services are rendered by the members.

Pension Statutory Actuarial Funding Valuation: a valuation performed by an actuary to determine whether a pension plan has sufficient money to pay for its obligations when they become due. The valuation determines the contributions required to meet the pension benefit obligations.

Present Value: the current worth of one or more future cash payments, determined by discounting the payments using a given rate of interest.

Program Expense: total expense excluding interest on debt.

Public Accounts: the Consolidated Financial Statements of the Province along with supporting statements and schedules as required by the Financial Administration Act.

Real GDP: gross domestic product measured to exclude the impact of changing prices.

Recognition: the process of including an item in the financial statements of an entity.

Reserve: an amount included in the fiscal plan to protect the plan against unforeseen adverse changes in the economic outlook, or in the Provincial revenue and expense. Actual costs incurred by the ministry, which pertains to the reserve, are recorded as expenses of that ministry. See Contingency Fund.

Segment: a distinguishable activity or group of activities of a government for which it is appropriate to separately report financial information to help users of the financial statements identify the resources allocated to support the major activities of the government.

Sinking Fund Debenture: a debenture that is secured by periodic payments into a fund established to retire long-term debt.

Straight-Line Basis of Amortization: a method whereby the annual amortization expense is computed by dividing i) the historical cost of the asset by ii) the number of years the asset is expected to be used.

Surplus: the amount by which revenues exceed government expenses in any given year. On a forecast basis, a reserve may be included.

Swaption: an option granting its owner the right but not the obligation to enter into an underlying swap. Although options can be traded on a variety of swaps, the term swaption typically refers to options on interest rate swaps.

Tangible Capital Assets: physical assets including land, buildings, transportation infrastructure, vehicles, leased assets, machinery, furniture, equipment and information technology infrastructure and systems, and construction in progress.

Temporary Investments: investments that are transitional or current in nature and generally capable of reasonably prompt liquidation.

Total Debt: the Province’s total borrowings outstanding.

Total Expense: sum of program expense and interest on debt expense.

Transfer Payments: grants to individuals, organizations or other levels of government for which the government making the transfer does not:

  • receive any goods or services directly in return, as would occur in a purchase or sale transaction;
  • expect to be repaid, as would be expected in a loan; or
  • expect a financial return, as would be expected in an investment.

Treasury Bills: short-term debt instrument issued by governments on a discount basis.

Unrealized Gain or Loss: an increase or decrease in the fair value of an asset accruing to the holder. Once the asset is disposed of or written off, the gain or loss is realized.

Sources of Additional Information

The Ontario Budget

The Ontario government presents a Budget each year, usually in the early spring. This document outlines expected expense and revenue for the upcoming fiscal year. For an electronic copy of the Ontario Budget, visit the Ministry of Finance website at www.fin.gov.on.ca.

The Estimates of the Province of Ontario

The government’s spending Estimates for the fiscal year commencing April 1 are presented to members of the Legislative Assembly following the presentation of the Ontario Budget by the Minister of Finance. The Estimates outline the spending plans of each ministry and are submitted for approval to the Legislative Assembly according to the Supply Act. For electronic access, go to: www.fin.gov.on.ca.

Ontario Finances

This is a quarterly report on the performance of the government’s Budget for the fiscal year. It covers developments during a quarter and provides a revised outlook for the remainder of the year. For electronic access, go to: www.fin.gov.on.ca.

Ontario Economic Accounts

This quarterly report contains data on Ontario’s economic activity. For electronic access, go to: www.fin.gov.on.ca.

Footnote:

[1] BPS organizations are represented in HOOPP at 84 per cent in 2014–15 (2013–14, 85 per cent).