GUIDE TO LOCAL SERVICES REALIGNMENT 1998 YEAR-END COMMUNITY REINVESTMENT FUND ADJUSTMENTS AND 1999 COMMUNITY REINVESTMENT FUND ALLOCATIONS

March 26, 1999

TABLE OF CONTENTS

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INTRODUCTION


The purpose of this guide is to provide an explanation of the data and methodology underlying the Local Services Realignment (LSR) and Community Reinvestment Fund (CRF) tables: ”1999 CRF Allocation“ and ”Summary of 1998 Year-End Adjustments“.

The following is a list of Ministry of Municipal Affairs and Housing's Municipal Service Offices. Please contact the nearest office if you have questions about this guide.



Name Office Tel. No. Toll Free No.
Roger Moyer Municipal Service Office
Southwestern London
(519) 873-4028 1-800-265-4736
Ruth Melady Municipal Service Office
North York
(416) 327-0975
Ext. 28
1-800-668-0230
Tom
Gutfreund
Municipal Service Office
North York
(416) 327-0975
Ext. 27
1-800-668-0230
Warren Sleeth Municipal Service Office
Eastern Kingston
(613) 548-4304
Ext. 26
1-800-267-9438
Sue
Hefferman
Municipal Service Office
Northeastern Sudbury
(705) 564-6855 1-800-461-1193
Reg Lake Municipal Service Office
Northwestern Thunder
Bay
(807) 475-1190 1-800-465-5027

CHILD CARE


Key Changes from 1998 LSR Guidelines:

  • Effective July 1, 1999, upon designation, municipalities will cost share 50% of the administrative costs for fee subsidies, wage subsidies, special needs resourcing and resource centres.
  • Child care fee subsidies in approved corporations, prorated based on anticipated designation dates, have been included in costs used for determining 1999 CRF.

The estimates are based on anticipated 1999 annualized amounts in service contracts entered into by Ministry of Community and Social Services (MCSS) Area Offices. At year-end, a reconciliation against actuals will be conducted and municipalities will be notified of any resulting adjustments.

1999 Municipal Child Care Costs Include:

MCSS recovery from municipalities of 20% of the cost of child care wage subsidy, special needs resourcing and resource centres. Amounts are deducted from monthly Ontario Works payments to municipalities only until designation.

Child care fee subsidies in approved corporations are also included in the figures. Approved corporations will pay the municipal 20% share until delivery agents are designated.

By July 1, 1999, it is anticipated that many municipalities will be designated as child care delivery agents. Upon designation, the municipalities and the Province will cost share, on a 50/50 basis, the costs incurred by delivery agents in administering prescribed child care services. This is consistent with the way that the Province and municipalities share Ontario Works cost of administration. These costs will be assumed on the date of designation of each child care delivery agent. With respect to the increase in administrative cost sharing for fee subsidies, only the 30% incremental increase from 20 to 50% has been included. Where the designation is before July 1, 1999 municipalities will pay:

  • the administration costs associated with wage subsidies, special needs resourcing and resource centres; and

  • 20% of the administrative costs associated with fee subsidies incurred between April 1 and June 30, 1999 inclusive.

The costs have been prorated in the CRF figures based upon the designation dates and apportioned to the municipal partners in the consolidated service area in accordance with the cost sharing agreements.

Relevant sections of the Day Nurseries Act, R.S.O. 1990, Chapter D, as amended by Schedule "C" of the Services Improvement Act, S.O. 1997, Chapter 30 and Regulation 262 made under the Day Nurseries Act as amended are:

Cost sharing Between Province and the Municipality:

Section 7.3 of the Day Nurseries Act provides that the prescribed costs incurred under this Act shall be shared by Ontario, municipalities, and persons living in territories without municipal organization in accordance with the regulations.

Section 66.1 (reg. 262) prescribes services which must be cost shared.

Section 67.1 (reg. 262) provides that the delivery agent's costs of administration attributable to prescribed services will be cost shared at 50% by the Province, 50% by municipalities.

Section 68.1 and 68.2 (reg. 262) provide that the cost of prescribed services under agreements with a municipality or DSSAB are to be cost shared at 80% by the Province, 20% by the municipality. (Until the child care designation date, this does not apply to fee subsidies provided by an approved corporation.)

Apportionment of costs:

In Southern Ontario, regulations made under the Day Nurseries Act provide rules for voluntary agreements for the apportionment of costs among municipalities in a consolidated area. Where agreements cannot be reached, the Regulations set out a framework for the arbitration of disputes regarding the division of costs:

  • before a delivery agent is designated (clause 18(1) (1.5) and subsections 18(3), (4), (5) and (6)); and

  • after a delivery agent is designated (clause 18(1) (1.3) and subsections 18(3), (4), (5) and (6))

In Northern Ontario, the regulation made under the District Social Services Administration Boards Act, 1997 provides that the costs of service to municipalities be apportioned by ”weighted taxable assessment“. The Regulation also provides that the cost of service be determined separately for municipalities and for territories without municipal organization. The attribution of these costs will be approved by the Director of Ontario Works.

DSSABs may decide to apportion costs in a manner other than "weighted taxable assessment" through a double majority vote (i.e. majority of the municipalities in the geographic area of the Board and members of the Board from territory without municipal organization, representing the majority of the electorate). The Province will fund 100% of the costs attributed to territory without municipal organization in 1999.

Apportionments Used For Purposes of Determining 1999 CRF Allocation

The municipal 20% share of wage subsidies, special needs resourcing and resource centres is apportioned based on the Ontario Works designation dates of February 1 and April 1, 1999. February 1 designation dates reflect a full year's apportionment for the new CMSM. April 1 designation dates reflect apportionment to the new CMSMs st from April 1 to December 31, 1999. January 1 to March 31, 1999 costs have been apportioned to municipalities based on the cost sharing agreements under the previous billing agent.

The municipal 50% share of administration costs will be effective July 1, 1999 and is apportioned based on the child care designation dates of the delivery agent. If the designation date is before July 1 , municipalities will be responsible for the st administration costs for special needs resourcing, wage subsidies and resource centres from April 1 to June 30, 1999.

The municipal 20% share of fee subsidies in approved corporations will be apportioned based on the child care designation date of each delivery agent:

  • In the South,apportionment among the parties of the consolidated area is based upon the cost sharing agreements at the time of this release.

  • In the North,apportionment among the parties of the DSSAB is based upon weighted taxable assessment.

CHILDREN'S AID SOCIETIES (CAS)


Key Changes From 1998 LSR Guidelines:

  • There are no key changes from 1998.

Child Welfare is a part of a larger system of services which until January 1, 1998 was 80% provincially funded and 20% municipally funded. The Province assumed full responsibility for Children's Aid Societies as of January 1, 1998.

The estimated municipal savings are based on 1996 estimated municipal subsidies as submitted by agencies and Area Offices.

Apportionments Used For Purposes of Determining 1998 CRF Allocation

Estimated savings for Children's Aid Societies was split between counties and separated municipalities based on their proportional contribution to program costs as reported in the 1996 Financial Information Return (FIR).

In the North, where there were District Welfare Administration Boards (DWABS), CAS contributions were apportioned based on weighted taxable assessment. For cities that are not part of a DWAB, amounts reflect their own contributions.

Where there are no DWABs, the contribution was apportioned on the basis of each municipality's proportional contribution (relative to the total for all the municipalities in that geographic district), as reported in the 1996 Financial Information Return.

Apportionments Used For Purposes of Determining 1999 CRF Allocation

In most situations, the municipal savings amounts identified for 1998 were carried forward for determining 1999 CRF allocations. In some situations, the following modifications have been made:

  • Apportionments were updated to reflect information from the 1996 FIR. These changes were made as in-year technical adjustments during 1998 and have been carried forward into 1999.

  • For amalgamated municipalities, savings identified for the former municipalities have been summed and applied to the newly amalgamated municipality.

FARM TAX REBATE


Key Changes from 1998 LSR Guidelines:

  • Rebate has been adjusted to reflect updated assessment data and assessment changes between 1998 and 1999.

Under the Ontario Fair Assessment System, taxing eligible farmlands at 25% of the residential tax rate put an end to the cumbersome process of the rebate program.

Estimate Calculation

The March 31, 1998 release determined the municipal portion of the rebate by taking 75% of the 1997 taxes for municipal purposes for properties classified as farmlands.

The portion of the rebate in respect of school board taxes was included in the calculation of the transferred residential education tax room. That is, 1997 education taxes from farmland properties were reduced by 75%. More information is provided in the Residential Education Tax Room Section in the Guide.

Updates

For the purposes of determining year-end 1998 CRF adjustments, the “Farm Tax Rebate” amounts have been updated based on final 1997 assessment data.

For the purposes of determining 1999 CRF allocations, the “Farm Tax Rebate” has been adjusted to take into account either growth, or decline, in farmland property assessment between 1998 and 1999.

GO TRANSIT


Key Changes from 1998 LSR Guidelines:

  • Responsibility for GO Transit to be transferred to the Greater Toronto Services Board (GTSB) in 1999.
  • 1998 costs $38.9 million lower than forecast March 31, 1998.
  • Municipalities will be reimbursed for any excess billings.

The GTA municipalities and Hamilton-Wentworth became financially responsible for GO Transit as of January 1, 1998. Recognizing that the Greater Toronto Services Board would not be in place until a later date, the government established an interim cost allocation formula. This funding arrangement is described in the Toronto Area Transit Operating Authority Act (TATOA) and its regulations, as amended by the Services Improvement Act (effective January 1, 1998).

The municipal cost sharing approach specified in the TATOA regulations is based on consideration of the upper tier municipality's ability to pay, level of service available to each municipality, as well as use of the system by each municipality. This approach was developed based on consultations with the affected municipalities.

APPORTIONMENT OF COSTS:

According to Ontario Regulation 481/97 made under TATOA, 1998 GO Transit subsidy cost allocation is apportioned to the respective municipalities as follows:

Durham 10.6%
Halton 9.6%
Hamilton-Wentworth 3.1%
Peel 15.6%
York 11.2%
City of Toronto 49.9%

1998 Year-End Adjustments

The GTA regional municipalities, the City of Toronto and the Region of Hamilton-Wentworth were billed $106.4 million for GO Transit in 1998 by the Province. This amount was to recover the subsidy the Province provided to GO Transit to cover its operating deficit.

The Ministry of Transportation identifies that GO Transit actual operating and capital expenditures reported for 1998, amount to $67.5 million. This results in a net operating deficit that is lower by an estimated $38.9 million. The lower deficit is due primarily to revenue from increased ridership and the sale of assets, as well as reduced expenses.

The Province will reimburse municipalities for any excess GO Transit billings under the provisions of the Service Improvement Act. Reduced GO Transit costs are reflected in the year-end adjustments.

GTA EQUALIZATION


Key Changes from 1998 LSR Guidelines:

  • 1999 Shares updated for 1999 assessment.

GTA equalization was introduced in order to recognize the social and economic interdependence within the GTA.

Social Assistance and Social Housing costs are equalized across the Greater Toronto Area (GTA) based on a formula that measures each municipality's capacity to contribute. Each municipality's share of program costs is determined by its share of GTA-wide average weighted taxable assessment.

Equalization takes into account differences in the tax rates that GTA municipalities apply to different property classes by weighting each municipality's taxable assessment base using GTA-wide averaged transition ratios.

The GTA-wide weighted taxable assessment for each of the GTA regions and the City of Toronto is determined by applying the weighted average transition ratios to the taxable assessment in the appropriate property class. The formula for this calculation is shown on the following page.

Equalization Shares For 1999

Equalization shares in 1998 were based on the Preliminary Assessment Data and preliminary transition ratios released in January 1998. Since that time, both these elements have been updated.

Equalization shares for 1999 will be updated to take into account the 1999 assessment roll returned in December 1998 and regulated transition ratios.

City Per Cent Share
Durham 7.07124%
Halton 7.40060%
Peel 18.75660%
York 15.20054%
City of Toronto 51.57102%

Each municipality's equalization share is used to determine its allocation of Social Assistance and Social Housing Costs.

Part A: Determine GTA-wide Weighted Ratios For Each Property Class

Set GTA-wide weighted ratios for Residential, Farm and Managed Forest Classes as follows:

GTA-wide Weighted RatioResidential Class = 1.0 Residential Class

GTA-wide Weighted RatioFarm Class = 0.25

GTA-wide Weighted RatioManaged Forest Class = 0.25

Determine GTA-wide weighted transition ratios for other property classes as follows:

GTA-wide Weighted RatioClass Y = GTAClass Y * ( Transition RatioClass Y * Taxable AssessmentClass Y ) / [ GTAClass Y * ( Taxable Assessment Class Y ) ]

Where "Class Y" means the property classes: Multi-residential, Commercial Occupied, Commercial Vacant, Industrial Occupied, Industrial Vacant and Pipelines.

Where “GTA” means the sum for the City of Toronto and Regions of Durham, Halton, York and Peel.

Where “Assessment” means the total value of taxable assessment within property class Y.

Part B: Determine Share Of GTA Weighted Assessment

GTA Weighted AssessmentMunicipality X = ( GTA-wide Weighted RatioClass Y * Taxable AssessmentClass Y )

Share of GTA Weighted AssessmentMunicipality X = GTA Weighted AssessmentMunicipality X

Where “Class Y” means the property classes: Residential, Multi-residential, Commercial Occupied, Commercial Vacant, Industrial Occupied, Industrial Vacant, Pipelines, Managed Forests and Farm.

Where “GTA-weighted Ratio” is the ratio for each property class determined in Part A.

Where “GTA” means the sum for the City of Toronto and Regions of Durham, Halton, York and Peel.

Where “Assessment” means the total value of taxable assessment within property class Y.

INTER-MUNICIPAL COST SHARING ARRANGEMENTS


Key Changes from 1998 LSR Guidelines:

  • New Section.

Inter-Municipal Cost Sharing Arrangements

There are a number of situations where municipalities share costs for certain services. These arise when there is a single delivery agent for a program, for example, social assistance and child care, but the costs are shared among counties and separated municipalities or among municipalities in a District Social Services Administration Board (DSSAB).

The number of municipalities affected by cost sharing arrangements will increase significantly in 1999 with the designation of Consolidated Municipal Service Managers (CMSM) in the south and DSSABs or Area Services Boards(ASB) in the north.

Cost Sharing Arrangements for 1998 Year-End Adjustments

Prior to the March, 1998 release, municipalities participating in local cost sharing arrangements were asked to identify how LSR program costs should be shared among municipal partners in 1998. The percentage shares identified by affected municipalities were used to determine the distribution of LSR costs and CRF allocations released on March 31, 1998.

For purposes of determining the 1998 year-end adjustments, the percentage shares for LSR costs have not been changed. The Province has indicated that it is a local responsibility to redistribute CRF allocations, where required, as a result of changes during 1998 in municipalities' share of costs under local cost sharing agreements.

The Province anticipates that where municipalities have cooperated to make adjustments to their cost sharing arrangements, they will also cooperate and make any CRF adjustments amongst themselves that they deem appropriate, based on the final 1998 LSR costs released by the Province.

Cost Sharing Arrangements in 1999

With the designation of CMSMs in the south and DSSABs or ASBs in the north during 1999, a large number of municipalities will be entering new cost sharing arrangements or will be making changes to previous arrangements.

In determining 1999 CRF allocations, the Province will be taking these cost sharing arrangements into account wherever possible. To this end, we have requested that municipalities provide details on their cost sharing arrangements. In some cases, these arrangements have not yet been finalized, or are pending arbitration. Where information on 1999 cost sharing arrangements is not available by the time of the release, the following assumptions have been made:

CMSMs:

  • 1998 cost shares between the county and separated municipalities were used for Social Assistance and Child Care.

  • For Social Housing, weighted taxable assessment was used.

DSSABs:

  • The ”default” arrangement was used. The regulation made under the District Social Services Administration Board Act stipulates that the default is weighted taxable assessment.

The Province intends to maintain these cost sharing percentages throughout the year for determining 1999 CRF allocations.

The Province anticipates that where municipalities have cooperated to make adjustments to their cost sharing arrangements during 1999, they will also cooperate and redistribute any CRF as they deem appropriate, amongst themselves, based on any revised cost sharing arrangements.

Where cost sharing percentages differ from those used to allocate the 1999 CRF allocation due to completion of an arbitration process or updates to assessment data used to apportion costs, the Province will undertake to adjust CRF allocations to take into account these changes. Adjustments made in these situations may result in a CRF increase for those municipalities whose costs are higher than those used in the initial CRF allocation and CRF reductions for those municipalities whose costs are lower than assumed in the initial CRF allocation.

LAND AMBULANCE


Key Changes from 1998 LSR Guidelines:

  • Year-End 1998 costs include adjustments to take into account cross-boundary calls.
  • Effective January 1, 1999, the Province will share 50% of municipal costs for land ambulance approved by the Ministry of Health.
  • LSR interim billings will be adjusted retroactively to January 1, 1999 to reflect 50/50 provincial/municipal cost sharing and cross-boundary apportionment of costs among municipalities.

1999

In 1999, the estimated costs of land ambulance are based on call location. Land ambulance for First Nations and unorganized territories will continue to be the responsibility of the Province. The Province will cost share with municipalities, on a 50% basis, the approved costs of land ambulance services retroactive to January 1, 1999. The date of the final transfer has been changed to January 1, 2001. Those who wish to assume full responsibility earlier may do so.

1998 Year End Adjustments

Interim final 1998 municipal costs for Land Ambulance services are, Province-wide, $5.5 million below the March 31, 1998 estimate of $228.2 million. The March 31, 1998 forecast was based on estimates of the annual costs of maintaining all ambulance stations within the boundaries of an upper tier municipality, that is, within the boundaries of a county, regional government, or a northern district, excluding the portion of costs to unorganized territories and First Nations. The resulting estimated costs were then apportioned among the municipalities in the upper tier area.

Year-end actual costs reflect updated ambulance station costs and the ”net costs” of an upper tier's cross-boundary activity during 1998. Cross-boundary net costs are the costs owing to municipality ”X” whose ambulances answer calls in another municipality minus the cost of calls done in municipality ”X” by ambulances from other municipalities.

MANAGED FOREST AND CONSERVATION LANDS REBATE


Key Changes from 1998 LSR Guidelines:

  • The rebate has been adjusted to reflect updated assessment data and assessment changes between 1998 and 1999.

Under the Ontario Fair Assessment System, assessing eligible Managed Forest Lands and Conservation Lands based on current use, and taxing eligible Managed Forest Lands at 25% of the residential tax rate and exempting eligible Conservation Lands from property taxes, will put an end to the cumbersome process of the rebate program.

Estimate Calculation

The March 31, 1998 release determined the municipal portion of the rebate by taking 75% of the 1997 taxes for municipal purposes for Managed Forest and Conservation Lands.

The portion of the rebate in respect of school board taxes was taken into account in the calculation of the transferred residential education tax room. That is, 1997 education taxes from Managed Forest and Conservation Lands were reduced by 75%. For more information, see the section on Residential Education Tax Room in this Guide.

Updates

For the purposes of determining year-end 1998 CRF adjustments, the “Managed Forest/Conservation Lands Rebate amounts have been updated based on final 1997 assessment data.

For the purposes of determining 1999 CRF allocations, the ”Managed Forest/Conservation Lands Rebate” has been adjusted to take into account changes in 1999 assessment classified as Managed Forest or Conservation Lands between 1998 and 1999.

MUNICIPAL AIRPORTS


Key Changes from 1998 LSR Guidelines:

  • There are no key changes from 1998.

As of January 1, 1998, municipalities assumed responsibility for full funding of municipal airports. There will be ongoing provincial support for airports in communities in northern Ontario that have no year-round road access.

Operating costs are allocated based on 1996-97 fiscal year provincial operating subsidies.

Provincial share of capital needs are based on annualized capital replacement needs from 5-10 year planning studies (excluding expansion needs).

Costs are assigned on the basis of local cost sharing arrangements.

MUNICIPAL GROSS RECEIPTS TAXES (GRT)


Key Changes from 1998 LSR Guidelines:

  • There are no key changes from 1998.

Municipal GRT revenues are now directed to the Province.

For purposes of determining the 1999 CRF allocation, the exchange is based on 1996 amounts reported in 1996 Financial Information Return (FIR).

MUNICIPAL SAVINGS


Key Changes from 1998 LSR Guidelines:

  • Municipalities are not required to find additional savings beyond those identified in 1998.

Municipal savings are the same as those identified in the 1998 CRF allocation sheet sent to each municipality March 31,1998. Municipalities are not required to find additional savings beyond those identified in 1998.

Municipal own purpose expenditures were used to determine the 1998 savings amounts. Please refer to the 1998 ”LSR - A Guide to Financial Information“ for details on how the methodology was used to calculate the municipal own purpose expenditures base.

MUNICIPAL TRANSIT


Key Changes from 1998 LSR Guidelines:

  • There are no key changes from 1998.

As of January 1, 1998, municipalities assumed full responsibility for transit funding. Costs were assigned only to those municipalities that formerly received grants for transit purposes.

Operating costs are based on 1996-97 fiscal year provincial subsidies.

Capital costs are based on annualized historical five-year capital subsidy requirements (to level out the uneven nature of annual transit capital funding).

The Province continues to fulfil its contractual capital funding obligations of financial assistance to purchase approximately 800 new buses (since January 1, 1998) for transit systems across the Province.

The annual TTC capital subsidy is excluded, as a five-year agreement was in place between the Province, the TTC and the former Metro Toronto to fund capital programs. This agreement has since been terminated, with a payment from the Province to the City of Toronto of $829.2 million.

POLICING SERVICES


Key Changes from 1998 LSR Guidelines:

  • Province-wide policing costs will be lower for many non-contract municipalities. The costing methodology for OPP non-contract policing has been improved and efficiencies have been found and, as a result, lower costs are being passed along to municipalities. The Province also pays all costs arising from provincial services for emergencies, disasters, major investigations.
  • Due to improved tracking capacity, the OPP is able to more accurately allocate costs between the Province and municipalities.
  • Policing costs will be more stable in 1999. Costs of non-contract municipal policing provided by OPP detachments will be distributed among municipalities on the basis of 23 months of incident data, rather than 11 months as used for 1998.

Details of the cost allocation methodology are set out in Regulation 420/97 pursuant to the Police Services Act.

How 1999 Cost Estimates Were Determined

The estimated number of officers and civilian members providing field services was used to prepare the 1999 estimates. The number of officers and civilians in each detachment is based on approved funding with all costs updated.

The 1999 estimates are obtained using the number of officers and civilian personnel in each detachment and reflect the municipal portion of services provided by the OPP (excluding the costs of provincial responsibilities such as traffic patrol on King's Highways, waterways policing, policing in provincial parks and unincorporated territories).

Individual municipality estimates for 1999 are determined by apportioning municipal detachment costs to each municipality based on its proportion of the detachment workload. Estimates for 1999 are based on 23 months' workload data in each municipality to reduce the size of fluctuations in workload over short periods of time.

Cost estimates for all individual municipalities have been reduced by 10% provincial services usage (PSU) to compensate municipalities for the deployment of officers from the municipality to other areas in the province in response to emergencies, disasters (such as the ice storm in Eastern Ontario), major investigations or other occurrences deemed provincial responsibilities. 1999 year-end municipal costs will be updated to reflect actual use of municipal officers for provincial purposes. For 1998 year-end municipal costs were reduced by a minimum of 10 percent for PSU or the amount actually experienced, whichever was greater.

Types of costs include:

  • direct costs (e.g., salaries, wages and benefits of uniform and civilian members);
  • equipment costs (e.g., vehicles, uniforms, supplies, radio equipment, computers);
  • additional support personnel (e.g., communication operators and prisoner guards); and
  • administrative support costs of the Regional and General Headquarters required to provide municipal services (e.g., Professional Standards, finance, budgeting, and human resources).

The estimates exclude:

  • the cost of provincial responsibilities such as traffic patrol on King's Highways, waterways policing, policing in provincial parks, unincorporated territories, First Nations Territories, and municipalities providing their own policing services; and
  • mandated special services such as criminal investigations and investigative support services.

Year-End 1998 Adjustments

Province-wide municipal policing costs above $90 per household, which are eligible for CRF assistance, were about 14% lower than the March 31, 1998 forecast. Lower costs result from savings from temporarily unfilled vacancies, secondments of municipal policing officers, and the payment of salaries and benefits below the maximum rates that were incorporated into the March estimates.

During 1998 a number of municipalities with ”non-contract” OPP service switched to an OPP contract for police services. Often the annualized OPP contract costs were significantly different from the March estimated costs. In these cases, year-end police costs include the costs of the OPP contract but only for the number of months that the OPP contract was in effect during 1998. In other words, total year-end costs represent a mix of the OPP contract costs for the latter part of the year plus actual non-contract OPP costs for the period up to the effective starting date of the OPP contract.

Changes in individual municipalities' costs from March 1998 estimates will vary widely around the 14% reduction in year-end police costs. Policing costs depend heavily upon the amount of time that OPP officers expend dealing with the number of criminal and other incidents in a municipality over the course of the year. The numbers of incidents and time expended on incidents vary from year-to-year in a community. Consequently, a municipality's year-end 1998 costs, which are based on time expended on incidents in the municipality for the first eleven months of 1998 may vary widely from the March 1998 cost estimates which are based on time expended on incidents in the municipality during the first seven months of 1997.

PROPERTY ASSESSMENT COSTS


Key Changes from 1998 LSR Guidelines:

  • The Ontario Property Assessment Corporation (OPAC), established on December 31, 1998, is responsible for the provision and billing of assessment services directly to municipalities.
  • Actual OPAC 1998 invoices to municipalities have been taken into account in determining year-end 1998 CRF adjustments and 1999 CRF allocations.

The determination of the costs of providing assessment services in 1999 and future years, and the communication of this information to municipalities, is the sole responsibility of OPAC. OPAC will determine its billing schedule.

OPAC will recover its costs from upper- and single tier municipalities, based on a formula prescribed by legislation, that takes into consideration each municipality's proportion of:

  • the total assessment on all property in the municipality, to the total assessment of all property set out in all assessment roles; and
  • the total number of properties in the municipality, to the total number of properties set out in all assessment rolls.

The basis for this calculation is the current assessment roll as returned.

As part of the transfer agreement, the Ministry of Finance provided OPAC with a one-time payment in recognition of a number of financial issues raised during the negotiation process. Included in this payment was the funding committed by the Ministry for the costs associated with the defence of appeals filed in respect of the 1998 reassessment and appeals commenced prior to December 31, 1997.

Amounts Used for Purposes of Determining 1999 CRF Allocations

During the negotiations with OPAC, the Ministry of Finance agreed to ensure that the CRF calculation reflects the municipal costs of providing assessment services as invoiced by OPAC in 1998 (less cost to unorganized municipalities), and for all subsequent years the CRF is in place.

Year-End 1998 Adjustments

Higher than forecast actual Property Assessment charges to municipalities have been taken into account for the purpose of determining 1998 year-end CRF adjustments.

The 1998 OPAC billings of $128.4 million to municipalities (which excludes unincorporated areas in the north) are $6.9 million higher than the estimate of $121.5 million contained in the March 31, 1998 release. At the time of the March forecast, the Ministry of Finance advised municipalities that the estimate was subject to change since the final budgetary requirements, and subsequently the amounts billed to municipalities, would be determined by OPAC.

PROVINCIAL OFFENCES NET REVENUES


Key Changes from 1998 LSR Guidelines:

  • The Province will provide one-time grants to municipalities in accordance with the amounts and distribution of Provincial Offences Act net revenues that were used to determine municipalities' 1998 CRF allocations.

1998 CRF POA Net Revenues

The Province will make one-time grants to municipalities in April, in accordance with the amounts and distribution of POA net revenues that were used to determine the 1998 Community Reinvestment Fund entitlements. As a result, most municipalities will receive the grant before they have signed the POA transfer agreements.

1999 CRF POA Net Revenues

POA net revenue from January 1,1999 to the date of transfer will be paid when the transfer agreements are signed.

1998 CRF POA net revenue distribution and amounts will be used in the determination of the 1999 CRF entitlements.

At the Point of the Transfer of POA Responsibilities

When the POA transfer agreements are signed and the external exit audits are completed and, if the total actual net revenues from January 1, 1998 to December 31, 1998 are higher than the total of the one-time grants paid to the municipalities within the court catchment area, then the Province will flow the additional amount to the POA municipal partner in accordance with the revenue and cost sharing agreements.

Where municipalities' POA revenue and cost sharing arrangements differ from the distribution of the 1998 grant that is paid, then those municipalities must reach an agreement on how they will redistribute the 1998 CRF entitlements and grants.

The Province will also pay a grant to the affected municipalities in respect of the total actual net revenues from January 1, 1999 to the effective date of the transfer.

General

Revenue under the Provincial Offences Act (POA), net of costs of administration, court support, facilities, adjudication and prosecutions costs will be retained by municipalities taking on new POA responsibilities.

The Provincial Offences Act sets out how costs will be shared between the Province and municipalities.

Upon transfer of POA responsibilities from the Province to municipalities, the Ministry of the Attorney General will perform exit audits to verify net revenues retroactive to January 1, 1998.

The POA administration and record keeping are done by court catchment area (these are roughly comparable to the upper levels of municipal government). The transfers will be by site, and phased in over a two-year period.

Gross revenue assumptions exclude dedicated fines to be retained by the Province, such as Victim Fine Surcharge and Game and Fish Act.

When all of the transfer agreements are signed, total program costs are estimated at $29 million annually, based on 1997-98 data:

  • $11 million of costs to be recovered by the Ministry of the Attorney General for prosecution of Part III offences, adjudication costs for justices of the peace and monitoring standard compliance; and
  • municipalities will assume $18 million in costs for prosecuting Part I offences and for court administration support and facilities.

CRF Allocation

Where POA responsibilities have not been transferred, revenue sharing between counties and separated municipalities and within geographic districts is based on 1997 enumerated population.

PUBLIC HEALTH


Key Changes from 1998 LSR Guidelines:

  • The Province will cost share ministry approved mandatory Public Health program budgets on a 50% basis effective January 1, 1999.
  • Exceptions to this funding formula are the Healthy Babies/Healthy Children program, vaccine purchases, Genetics Counselling, Speech and Language Services, Sexual Health Resources that will continue to receive 100% provincial funding. This provincial funding is ongoing, except for Sexual Health Resources which will receive funding to March 31, 2000.
  • Effective April 1, 1999, the Province will provide funding on a 50% cost shared basis towards a renewed PHRED (Public Health Research Education Development) program. A new governance and management structure will be developed to ensure that provincial goals, objectives and targets are addressed.
  • Public Health programs cost shared include mandatory programs such as: tobacco, Hepatitis B, children's dental, AIDS prevention and control, general programs (such as chronic disease prevention, safe water, tuberculosis, child health, and food safety), and sexual health.

  • Estimates are based on 1997 Ministry base budget approvals to boards of health for total funding (all components).

APPORTIONMENT OF COSTS:

General

Where the boundary of a public health unit includes more than one upper tier municipality, costs were allocated to the upper tiers on a population basis.

The Services Improvement Act, 1997, specifies that health unit costs would be shared between constituent municipalities based on local agreement; in the absence of a local agreement, cost sharing would be determined by regulation.

Regulation 489/97 specifies that apportionment, in the absence of an agreement will be on a population basis.

Ontario Regulation 489/97 made under the Health Protection and Promotion Act

    1. If the obligated municipalities in a health unit fail to agree on the proportion of the expenses referred to in subsection 72(1) of the Act to be paid by each of them, each obligated municipality in the health unit shall pay the proportion of the expenses that is determined by dividing its population by the sum of the populations of all the obligated municipalities in the health unit.

    2. In this section, ”population” means, with respect to an obligated municipality, the population of the obligated municipality as determined from the most recent enumeration conducted under section 15 of the Assessment Act.

CRF Allocation

Costs were apportioned between counties, separated municipalities, and within geographic districts in the North, based on population. 1997 enumerated population data were used.

RESIDENTIAL EDUCATION TAX ROOM


Key Changes from 1998 LSR Guidelines:

  • Residential Education Tax Room has been updated for 1999 in order to take into account final 1997 and 1998 assessment information and assessment changes between 1998 and 1999.

As part of Local Services Realignment municipalities were provided with additional revenue in the form of transferred Residential Education Property Tax Room. This ”Tax Room” is the result of the Province reducing residential education taxes by 50% province-wide and introducing a uniform education tax rate of 0.46% for residential properties (0.115% on farm land and managed forest).

The Residential Education Property Tax Room that was reported in the March 31, 1998 forecast of the 1998 CRF allocation was based on preliminary assessment data that had been released in January of 1998.

Following the March 31, 1998 release, final 1997 and 1998 assessment data was released in June 1998.

The 1999 Residential Education Tax Room has been updated to take into account final 1997 and 1998 assessment data and to reflect assessment changes between 1998 and 1999. The table below illustrates how the tax room was updated for 1999 in a sample municipality.

Calculation of Residential Education Property Tax Room in a Sample
Municipality
($ thousands)
Line   Single
Residential
Multi-
Residential
Farmland Manage
d Forest
PILS Total
1 Calculation of Change in Residential Assessment Between 1998 and 1999.  
i. 1998 CVA assessment (June Roll) 1,980,800.0 18,600.0 142,200.0 2,200.0 - 2,143,800.0
ii. 1999 CVA assessment (Dec Roll) 1,987,600.0 18,300.0 149,800.0 149,800.0 - 2,158,600.0
iii. Per cent change in assessment
between 1998 and 1999.
0.343% -1.613% 5.345% 31.818% - -
2 Calculation of 1997 Residential Education Taxes  
i. 1997 Residential Education Taxes 15,839.0 474.0 1,319.0 23.0 17.0  
ii. Less: Farm lands, managed forests
conservation lands tax rebate
    989.0 18.0    
iii. Net 1997 Residential Education Taxes
(Lines 2i - 2ii)
15,839.0 474.0 330.0 6.0 17.0 16,666.0
3 Calculation of 1998 Residential Education Taxes  
i. 1998 Residential Education Taxes 9,111.0 86.0 164.0 3.0 8.5 9,370.5
4 Calculation of 1998 Residential Education Tax Room  
i. 1998 Residential Education Tax
Room

(Line 2 iii minus 3 i.)
6,728.0 389.0 166.0 3.0 8.5 7,294.5
5 Calculation of 1999 Residential Education Tax Room  
i. Change in tax room due to change in
assessment between 1998 and 1999.
(Line 1 iii multiplied by Line 4 i)
23.1 (6.3) 8.9 1.0 - 26.7
ii. 1999 Residential Education Tax
Room
(Line 4(i) plus Line 5(i)
6,751.1 382.7 174.9 4.0 8.5 7,321.2

Note: Numbers have been rounded.

Notes:

Line 2: 1997 Residential Education Taxes

  • 1997 education taxes were determined by applying the 1997 education mill rates of each school board tothe 1997 assessment as of December 31, 1997.
  • Taxes on farmland, managed forests were reduced 75% to take into account the tax rebate program.
  • PIL's are as reported by municipalities in the 1996 Financial Information Return.

Line 3: 1998 Residential Education Taxes:

  • 0.46% of 1998 assessment (June 1998 roll) for the single family and multi-residential classes.
  • (25% x 0.46%) of 1998 assessment for farmlands and managed forecasts/conservation lands.
  • 50% x 1997 PILS

Residential Education Tax Room Sharing Between Upper and Lower Tier Municipalities

(see sample calculation table below)

Step 1 - Upper tiers:

The total residential tax room in all lower tier municipalities is first applied to upper tier net LSR costs after savings. Any remaining tax room is used for lower tier purposes.

The upper tier net LSR costs (line i) are compared to the total tax room (line ii). If the costs exceed the total tax room, the upper tier receives a CRF entitlement (line iii).

Step 2 - Lower tiers:

the total contribution of lower tiers to upper tier net LSR costs is the lesser of: a) upper tier net LSR costs and b) total tax room. In each lower tier, the portion of tax room used for upper tier purposes is based on the lower tier's percentage share of weighted taxable assessment (i.e., equivalent to a uniform upper tier tax rate -column 1).

This share is added to lower tier net LSR costs (column 2). This total in column 3 is compared to the residential education tax room in column 4. The lower tier receives CRF if total net LSR costs (column 3) are greater than column 4.

Note that if the lower tier municipality's share of upper tier net LSR costs exceeds the amount of residential education tax room available, the lower tier municipality receives a CRF allocation in respect of the difference. This funding can be used to reduce other lower tier taxes.

SAMPLE CALCULATION OF RESIDENTIAL EDUCATION TAX ROOM SHARING BETWEEN UPPER TIER AND LOWER TIER MUNICIPALITIES ($ THOUSANDS)
STEP 1: CALCULATION OF TAX ROOM REQUIRED BY UPPER TIER AND UPPER TIER CRF ALLOCATION
(i) Upper tier net LSR costs after savings 5,928 lesser amount =
upper tier share of
tax room (Step 2, col.
1 Total)
(ii) Total residential education tax room in all lower tier municipalities 4,590
(iii) CRF allocation for the Upper Tier
(line (i) minus line (ii); zero if negative)
1,338  


STEP 2: CALCULATION OF TAX ROOM AND CRF ALLOCATION FOR LOWER TIER MUNICIPALITIES
Lower tier (LT)
municipality
Share of
upper tier net
LSR costs1
Lower tier net LSR
costs after savings
Total net LSR
costs
Residential
education tax
room
CRF Allocation
  1 2 3=
col 1 + col 2
4 5=
col 3 - col 4; zero if neg.
LT Municipality 1 1232 539 1772 1,051 721
LT Municipality 2 1253 1115 2368 1,188 1,180
LT Municipality 3 757 1276 2033 853 1,181
LT Municipality 4 960 570 1530 1,043 488
LT Municipality 5 171 220 391 169 222
LT Municipality 6 216 289 504 286 218
Subtotal 4590 4009 8599 4,590 4,009

¹  Lesser of (i) and (ii) from Step 1, distributed to each lower tier by weighted taxable assessment



SEPTIC SYSTEMS INSPECTIONS


Key Changes from 1998 LSR Guidelines:

  • There are no key changes from 1998.

The responsibility for regulating small on-site septic systems in the Environmental Protection Act was transferred to the Building Code Act, streamlining the process for home owners and businesses when the legislation came into force April 6, 1998.

Municipalities are responsible for the approval and inspection of small on-site systems and will assume the associated costs. Delivery in northern Ontario will continue to be carried out by the existing delivery agents such as Boards of Health or Conservation Authorities, on an interim basis.

Apportionments Used For Purposes of Determining 1998 CRF Allocation

The costs have been based on the subsidies from the Ministry of the Environment which total $5.1 million. Where more than one upper tier was covered by a former delivery agent, the costs have been prorated on the basis of population.

Former delivery agents also generated about $5 million in service fees.

The administrative and capital costs of operating the program were covered through a combination of grants and fees. Estimates were also based on the assumption that municipalities have the ability to charge fees to cover costs.

The enabling legislation is Schedule B of the Services Improvement Act.

Where data was available, costs were apportioned between counties and separated municipalities and within upper tier municipalities and geographic districts based on the total number of households not connected to the municipal sewage system.

This was achieved by taking the total number of households, as reported in the year-end Assessment Summary Report compiled by the Ministry of Finance, and deducting from this the total number of households receiving municipal sewage service (Schedule 12, line 44, column 1 plus Schedule 12, line 66, column 2).

Apportionments Used For Purposes of Determining 1999 CRF Allocation

In most situations the same amounts identified for 1998 were carried forward for determining 1999 CRF allocations. In some situations, the March 31, 1998 costs have been assigned to the upper tier where it has responsibility for this program. For amalgamated municipalities, costs identified for the former municipalities have been summed and applied to the newly amalgamated municipality.

SOCIAL ASSISTANCE


Key Changes from 1998 LSR Guidelines:

  • Municipalities save $15.2 million as a result of the Province taking responsibility for funding Domiciliary Hostels, formerly part of municipal LSR social assistance costs.

General

  • Social assistance expenditures are affected by many factors including employment conditions, demographic trends, and government policy initiatives.

  • Social assistance expenditures are forecast at the provincial level and do not reflect possible fluctuations due to local circumstances.

  • The January 1999 Social Assistance Forecast shows for the 1999-2000:

    • a decline in the Sole Support Parent (SSP) caseload and expenditures;
    • an increase in the Ontario Disability Support Program (ODSP) caseload and expenditures;
    • an increase in the Ontario Drug Benefits (ODB) expenditures; and,
    • a decline in the Ontario Works (OW) Employables caseload and expenditures.

  • Overall, social assistance expenditures are expected to decline.

  • As of January 1, 1998, the Province began paying 80% of all allowances and benefits and Municipalities pay 20%. Administration costs are shared at 50% provincial and 50% municipal.

Annual LSR Estimates for 1999 include:

  • The 20% share of municipalities from the total expenditures on ODSP allowances and benefits as well as Family Benefits (FBA)-SSP's. The distribution for each municipality is based on its proportional share of the 1998 total expenditures on ODSP and Family Benefits-SSP allowances and benefits.

  • The 20% share of forecast Ontario Drug Benefits (ODB) expenditures, and the 50% of Direct Operating Expenditures (DOE) were apportioned using each municipality's share of the 1998 total expenditures on ODSP and FBA-SSP allowances and benefits.

  • The 20% share of Ontario Works Sole Support Parents' allowances and benefits were apportioned using each municipality's share of the total 1998 Ontario Works allowances and benefits.

  • For the GTA equalization, the expenditures include the unequalized municipal share of the LSR costs described above plus OW allowances and benefits, OW costs of administration, and Employment Program expenditures including Learning Earning and Parenting (LEAP).

  • The LSR calculations exclude: First Nations; Unincorporated Areas; Assistance for Children with Severe Disabilities (formerly the Handicapped Children's Benefits); and Vocational Rehabilitation Services (VRS) allowances (now incorporated into ODSP Employment Assistance).

Apportionment of Costs in Southern Ontario

In Southern Ontario, Regulations under the Ontario Works Act, 1997, the Ontario Disability Support Program Act, 1997, the Social Assistance Reform Act, 1997 and the Day Nurseries Act provide rules for voluntary agreements for the apportionment of costs among the parties in a consolidated area. Where agreements cannot be reached, the Regulations set out a framework for the arbitration of disputes regarding the division of costs.

Apportionment of Costs in Northern Ontario

Weighted Taxable Assessment
  • In Northern Ontario, the Regulation under the District Social Services Administration Boards (DSSAB) Act, 1997 provides that:

    1. The cost of social services be determined separately for municipalities and for territories without municipal organization;

    2. The attribution of these costs will be approved by the Director of Ontario Works; and

    3. The costs of service to municipalities will be apportioned across municipalities by ‘weighted taxable assessment';

  • Amendments to cost sharing regulations under the Ontario Works Act, 1997, the Ontario Disability Support Program Act, 1997, the Social Assistance Reform Act, 1997 and the Day Nurseries Act provide authority for the Province to fund 100% of the costs attributed to territories without municipal organization.

Alternative Method for Cost Apportionment
  • DSSABs may decide through a double majority vote1 , to apportion costs across the district (including municipalities and territories without municipal organization) in an alternative manner.

  • In 1999, the Province will fund 100% of the costs apportioned to a territory without municipal organization.

Apportionment of Costs in the Greater Toronto Area (GTA)

  • The apportionment of social assistance costs in the Greater Toronto Area (GTA) occurs through an equalization process.

  • GTA equalization involves a redistribution of the municipal share of social assistance spending across the City of Toronto and the Regional Municipalities of Durham, Halton, Peel and York. The provincial payment for social assistance is adjusted so that municipal contributions toward social assistance spending reflect percentages established by regulations. Equalized shares are provided in the GTA equalization section.

  • The Ministry calculates equalized amounts by applying the percentages to actual social assistance expenditures for the five GTA municipalities. These equalized amounts are reported to the four Area Offices responsible for the GTA and Area Offices share this information with the municipalities.


1. A 'double majority vote' refers to the majority of the municipalities in the geographic area of the Board and members of the Board from territory without municipal organization, representing the majority of the electorate.



Determination of LSR social assistance costs for CRF purposes

1999 CRF Allocation

For CRF purposes, municipal Social Assistance LSR costs are determined as the total of:

  • Estimated 1999 municipal costs for LSR programs delivered by the Province and charged to municipalities including:

    • 20% of the forecasted costs for ODSP/FBA allowances and benefits;
    • 20% of the forecasted costs for Ontario Drug Benefits (ODB);
    • 50% of the forecasted administrative costs.

  • Estimated 1999 municipal costs for LSR programs consisting of 20% of forecasted costs for Ontario Works Sole Support Parents allowances and benefits.
1998 Year-End CRF Adjustments
  • Year-end 1998 municipal LSR social assistance expenditures, as defined above, have been taken into account in determining year-end CRF adjustments.

SOCIAL HOUSING


Key Changes from 1998 LSR Guidelines:

  • There are no key changes from 1998.
  • Municipalities save approximately $40 million as a result of the Province retaining responsibility for Supportive Housing.

Responsibility for funding social housing was transferred to municipalities effective January 1, 1998. Once the new federal-provincial agreement is in place, the transfer of administrative responsibilities for social housing is expected to occur over the next two to three years.

Until administrative responsibilities are transferred, the Ministry of Municipal Affairs and Housing will continue to administer the housing programs. The ministry will provide subsidies to the housing providers and then will invoice the municipalities for their share of these subsidies. However, the Province reinstated its 100% funding for Supportive Housing in June, 1998, retroactive to January 1, 1998, and is transferring the responsibility for these units to the Ministry of Health and the Ministry of Community and Social Services. This change reduced municipalities' LSR costs by approximately $40 million.

The legislative authority is provided in the Social Housing Act, 1997 and associated regulations. Highlights of this arrangement are:

  • The total amount to be recovered from municipalities for social housing costs includes the provincial share of all payments incurred subsequent to January 1, 1998 which have been made to social housing providers. The federal share of subsidies in cost-shared programs is subtracted from the total as are costs incurred in unorganized territories and payments made to specified supportive housing providers.

  • Costs are calculated by ”upper tier” with the exception of the Greater Toronto Area. These include regional municipalities, counties (including separated municipalities), and northern districts. The Greater Toronto Area is considered as a single area when calculating costs.

  • Where a single government entity or board with social service responsibilities covers the entire area, this entity is billed for all of the costs incurred in the area. Otherwise, the amount is split between the relevant government entities or boards and separate bills are sent.

This splitting and setting of separate bills occurs within the following cases/situations:

  • the Greater Toronto Area;
  • wherever there is a separated municipality in a county;
  • in northern districts where there is not a District Social Services Administration Board (DSSAB); or
  • in northern districts with municipalities which do not participate in the DSSAB.

Until now, the split between the billing entities has been calculated based upon weighted taxable assessment. The percentage factors used for this calculation are specified in the regulations.

During 1999, this will change as Consolidated Municipal Service Managers (CMSM) are designated as delivery agents for social services, including social housing. Some were designated on February 1 and the remainder will be designated on April 1. Once a CMSM is designated for an area, the ministry will begin to bill the CMSM for the social housing costs within the geographic area over which it has jurisdiction as a delivery agent. The CMSM, in turn, will recover funds from its member municipalities based upon the sharing of cost agreements which they have negotiated. In the Greater Toronto Area, costs will continue to be aggregated and then allocated between municipalities.

Entities are billed monthly as part of the coordinated LSR bill from the Ministry of Finance. The bills are to be based upon estimates of expenditures, with subsequent bills adjusted once the actual expenditures are known.

1999 Estimate

The costs estimates for 1999 reflect estimates of the subsidies which will be paid by the ministry to the housing providers, and which will be recovered from the municipalities. Highlights of these estimates are:

  • The estimates related to non-profit housing are based on the housing provider's 1998 budgets as at mid-October 1998. These have been adjusted to reflect 1999 forecasts based on economic assumptions, mainly mortgage renewals occurring at an interest rate of 6.5%. Final 1999 results will be affected by these economic factors, including the effect of inflation on operating costs and rents.

  • The estimates related to public housing are based on an initial 1999 budget for the Ontario Housing Corporation.

  • This is an estimate of 1999 expenditures. Municipalities will be billed on a monthly basis, based on actual expenditures which will be incurred. The ministry has already included in the forecast the effect of expected interest rate savings.

  • The cost estimates for 1999 have been done based on an assumption that the new CMSMs would be in place for the full calendar year. In certain instances, such as where the designation of the CMSM is not expected until April 1, supplementary calculations have been done in order to assist in the calculation of CRF allocations. These supplementary calculations have provided a simplified approximation of the amounts to be billed to municipalities prior to the designation of the CMSM.

1998 Year-End Adjustments

Entities will be provided with their final 1998 billed amounts which include year-end adjustments. The decline in 1998 costs is primarily attributable to the Province's decision to retain responsibility for Supportive Housing and to reduced mortgage renewal costs resulting from lower financing costs.

Actual 1998 costs have been taken into account in determining year-end 1998 CRF adjustments.

YEAR-END 1998 CRF ADJUSTMENTS


Key Changes from 1998 LSR Guidelines:

  • 1998 year-end CRF adjustments are based on net LSR cost changes.
  • No municipality's CRF entitlement would be reduced from the March 31, 1998 Release.

After the release of the LSR forecasts on March 31, 1998 municipalities were advised that LSR cost forecasts and the CRF allocations contained in the release could be used for budgeting purposes.

The Province committed not to reduce any municipality's CRF allocation below the level announced in March. Many municipalities' LSR costs declined since the March estimate. Therefore, CRF allocations are adjusted only where there was an increase in recognized LSR costs.

In a July 23, 1998 letter to Heads of Council, the Minister of Finance indicated that the Ministry of Finance would review variances between forecast and year-end final costs for LSR programs. Consideration would be given to adjusting municipalities' 1998 CRF entitlements where total net actual costs vary significantly from the forecast amounts announced in March, 1998. This commitment was reiterated at the AMO Annual Conference in August and in subsequent communications to municipalities.

Method For Determining 1998 Year-End Net Adjustment

Each municipality has been provided with a ”Summary of 1998 Year-End Adjustments“ table which shows changes to LSR costs and, where applicable, CRF Year-End Net Adjustments.

The following methodology outlines how year-end adjustments to CRF are calculated for 1998.

Step 1 - Calculation of Net LSR Cost Changes

The change for each LSR program costs was determined as the difference between the Year-End 1998 recognized costs and the forecasts released March 31, 1998.

The change for each LSR program cost is then added to determine the Net Change in LSR costs for 1998.

LSR Program 'A' Cost Change

.
.
.

LSR Program 'Z' Cost Change

SIGMA ( ∑ ) LSR Cost Change = Net Change in LSR Costs

A NEGATIVE net change indicates that year-end net LSR costs are less than forecast. In many cases, this represents a benefit to the municipality since 1998 CRF allocation will not be reduced.

A POSITIVE net change in LSR Costs indicates that the municipality had a net increase in LSR costs compared to the March forecast. This results in a net increase in the municipality's 1998 CRF allocation.

Step 2 - Calculation of 1998 CRF Year-End Net Adjustment and Net Benefit from reductions in the 1998 LSR costs.

The 1998 CRF Year-End Net Adjustment or Benefit is calculated as follows:

Net Change in LSR Costs - CRF Adjustments Already Paid Out in 1998 = CRF Year-End Net Adjustment.

In some cases, in-year CRF adjustments have already been paid out to municipalities as a result of technical adjustments made during 1998. In order not to double count these amounts, the in-year adjustments costs are subtracted in order to determine the CRF Year-End Net Adjustment.

1999 CRF ALLOCATIONS


Key Changes from 1998 LSR Guidelines:

  • New section.

1999 CRF Formula

The 1999 formula for determining the CRF allocation will be the same as in 1998.

1999 CRF Allocation = Net LSR Costs (net of 1998 savings) - Residential Education Tax Room

The 1999 CRF allocation and 1999 LSR program costs forecast is shown on each municipality's 1999 CRF Allocation table.

Reduced Lower Land Ambulance and Public Health LSR Costs

Effective January 1, 1999 the Province will share 50% of the municipal costs for Public Health and Land Ambulance services approved by the Ministry of Health. This measure will reduce LSR costs to municipalities by $290 million, resulting in overall net savings to municipalities of $150 million.

Prior to LSR, municipalities (with the exception of Toronto) did not contribute to Land Ambulance costs. In 1998, municipalities became responsible for 100% of program costs and these costs were recognized for the purposes of determining 1998 CRF. In 1999, with the introduction of 50:50 cost sharing for approved Land Ambulance costs, recognized municipal LSR costs for Land Ambulance are reduced to 50% of approved program costs.

Prior to LSR, municipalities (with the exception of Toronto) contributed 25% of approved Public Health costs. For 1998, municipalities became responsible for 100% of program costs and the additional costs -- 75% of approved costs -- were recognized for the purposes of determining 1998 CRF.

In 1999, the Province will share 50% of municipal Public Health approved costs. It is important to note that total municipal contributions for Public Health differ from the municipalities' Public Health LSR costs since pre-LSR municipal 25% contributions for Public Health are excluded from the CRF calculation. The following table illustrates how the change to 50% cost sharing affects the determination of the municipal LSR Public Health costs for purposes of CRF.

Calculation of Municipal Share of Approved Public Health Costs For Purposes of CRF -- Illustrative Example
  Total Municipal
Cost
Municipal
Pre-LSR
Cost
Municipal LSR Cost
Recognized For CRF
Purposes
  A B C = A - B
1998 $1,000 (100%) $250 (25%) $750 (75%)
1999 $500 (50%) $250 (25%) $250 (25%)
1999 Provincial
Contribution
$500 (50%)    

Benefits From 50:50 Cost Sharing Land Ambulance and Public Health

This section of the CRF Allocation table identifies the direct and indirect benefits to property taxpayers resulting from the reduced costs related to the Province sharing 50% of municipal costs for Public Health and Land Ambulance approved by the Ministry of Health.

The benefit represents the net change in the municipality's 1999 net LSR costs and CRF allocation before and after 50:50 cost sharing.

Note that the benefits accruing to the property taxpayers will vary between municipalities depending on whether the municipality is a single tier or part of the two tier system and whether it qualifies for a CRF Allocation before and after 50:50 cost sharing.

CRF Bonus

To ensure that all property taxpayers benefit from the change in cost sharing for Public Health and Land Ambulance, municipalities will receive a CRF Bonus payment equivalent to 15% of the CRF that would otherwise have been reduced due to lower LSR costs for Land Ambulance and Public Health. The CRF Bonus payments will total $20 million province-wide. The CRF Bonus will benefit municipalities by allowing for lower LSR program costs to be passed on to taxpayers.

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