Public Safety Canada Quarterly Financial Report
For the quarter ended December 31, 2015

Table of Contents

1.0 Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act, in the form and manner prescribed by the Treasury Board Accounting Standard 1.3.  This quarterly financial report should be read in conjunction with the Main Estimates, Supplementary Estimates (A), as well as Canada’s Economic Action Plan 2013 (Budget 2013), Canada’s Economic Action Plan 2014 (Budget 2014) and Canada’s Economic Action Plan 2015 (Budget 2015). 

This quarterly financial report has not been subject to an audit.  However, it has been reviewed by the Departmental Audit Committee prior to approval by senior officials.

1.1 Authority, Mandate and Program

Public Safety Canada plays a key role in discharging the Government's fundamental responsibility for the safety and security of its citizens. The Department of Public Safety and Emergency Preparedness Act 2005 and the Emergency Management Act 2007 set out three fundamental roles for the Department: (i) support the Minister's responsibility for all matters related to public safety and emergency management, except those assigned to another federal minister, (ii) exercise national leadership for national security and emergency preparedness; and (iii) coordinate the efforts of Public Safety Portfolio agencies, as well as provide guidance on their strategic priorities.

The Department provides strategic policy advice and support to the Minister of Public Safety and Emergency Preparedness on a range of issues, including: national security, border strategies, countering crime and emergency management. The Department also delivers a number of grant and contribution programs related to emergency management, national security and community safety.

Further information on the mandate, roles, responsibilities and program of Public Safety can be found in the 2015-16 Report on Plans and Priorities and the 2015-16 Main Estimates.

1.2 Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting.  The accompanying Statement of Authorities includes the Department’s spending authorities granted by Parliament, or received from Treasury Board Central Votes, and those used by the Department consistent with the Main Estimates and the Supplementary Estimates (A) for the 2015-16 fiscal year.  This quarterly report has been prepared using a special purpose financial reporting framework designed to meet the information needs concerning the use of spending authorities.

The authority of Parliament is required before funds can be spent by the Government.  Approvals are given in the form of annual limits provided through Appropriation Acts or through legislation in the form of statutory spending authority for specific purposes.

As part of the departmental performance reporting process, Public Safety prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector.  However, the spending authorities voted by Parliament remain on an expenditure basis, as do the expenditures presented in this report. 

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1st, preceding the new fiscal year.

1.3 Public Safety Canada Financial Structure

Public Safety has a financial structure composed mainly of voted budgetary authorities that include Vote 1 – Operating Expenditures, Vote Netted Revenues and Vote 5 – Grants and Contributions.  The Department’s statutory authorities consist of Contributions to Employee Benefit Plans (EBP) and Minister of Public Safety and Emergency Preparedness – Salary and motor car allowance.

About 87.7 percent of the Department’s budget is devoted to delivering transfer payment programs related to emergency management, national security and community safety.  The largest programs include payments made pursuant to the Disaster Financial Assistance Arrangements (DFAA), the First Nations Policing Program (FNPP), the National Crime Prevention Strategy (NCPS) as well as the National Disaster Mitigation Program (NDMP).

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

The numbers presented in the report are in accordance with the government-wide chart of accounts for Canada for 2015-16 and Treasury Board Accounting Standard 1.3.

The following graph provides a comparison of the net budgetary authorities and expenditures as of December 31, 2015 and December 31, 2014 for the Department’s combined Vote 1, Vote 5 and Statutory Votes. 

Comparison of Budgetary Authorities and Expenditures
Image Description

Budgetary Authorities and Expenditures Comparison

Starting from the left hand side, the “first” column in the graph indicates that the Department authorities are at $1,143.9 million for fiscal year 2015-16. The year-to-date expenditures of $170.1 million reported at the end of the third quarter of the 2015-16 fiscal year are shown under the “second” column.   The expenditures of $66.9 million for the period ended December 31, 2015 (i.e. third quarter) are presented under the “third” column.  The fourth column in the graph depicts the 2014-15 authorities which were at $1,184.5 million at the end of December 2014.  The 2014-15 year-to-date expenditures of $163.3 million are shown under the “fifth” column.  The Departments’ actual expenditures incurred in the third quarter of 2014-15 were $62.9 million and are shown under the “sixth” column of the graph.

Note: (1) The 2015-16 Supplementary Estimates ‘‘A’’ (SEA) resulted in a net total amount of ($17,903K).  The Department’s appropriations have decreased by $41,492K for a transfer to the Royal Canadian Mounted Police for the First Nations Community Policing Service which is partially offset by increases of $23,589K for other items included in SEA. (2) The 2014-15 Supplementary Estimates “B” (SEB) resulted in a net total amount of ($38,107K).  The Department’s appropriations have decreased by $41,854K for a transfer to the Royal Canadian Mounted Police for the First Nations Community Policing Service which is partially offset by increases of $3,747K for other items included in SEB. (3) The 2015-16 TB Central Vote ($11,343K) includes Carry-Forward from 2014-15 ($5,684K) and allotments transfer from DND for National Search and Rescue Secretariat ($5,659K).    

2.1 Significant Changes to Authorities

For the period ending December 31, 2015, the authorities provided to the Department included Main Estimates, Supplementary Estimates (A), a Treasury Board Central Vote transfer for the Operating Budget Carry-Forward, and an interdepartmental vote transfer from National Defence to Public Safety Canada for funding requirements related to the National Search & Rescue Secretariat (NSS).  The 2014-15 authorities for the same period included Main Estimates, Supplementary Estimates (A) and (B), and the Treasury Board Central Vote transfers for the Operating Budget Carry-Forward and for the Compensation Adjustment.  The Statement of Authorities presents a net decrease of $40.6 million or a decrease of 3.4 percent  in Public Safety’s total authorities as at December 31, 2015 compared to those of the previous year for the same period (from $1,184.5 million to $1,143.9 million).

This change in authorities is comprised of an increase in Vote 1 – Operating Expenditures ($2.1 million), a decrease in Vote 5 – Grants and Contributions ($43.2 million) and an increase in Budgetary Statutory Authorities ($0.4 million).     

Vote 1 - Operating Expenditures

The Department’s Vote 1 increased by $2.1 million or 1.7 percent, mainly due to:

Vote 5 - Grants and Contributions (G&C)

The Department’s Vote 5 decreased by $43.2 million or 4.1 percent, mainly due to:

Budgetary Statutory Authorities

The increase of $0.4 million or 3.0 percent in 2015-16 is in most part related to the Employee Benefit Plan (EBP) costs associated with the change in the Department budgetary requirements for salary and EBP rate.  

2.2 Explanation of Significant Variances from Previous Year Expenditures

The total year-to-date (YTD) expenditures increased by $6.7 million, or 4.1 percent, in 2015-16, compared to 2014-15, from $163.3 million to $170.1 million.  This increase is due to higher spending in Transfer Payments, which increased by $14.1 million or 20.9 percent from $67.6 million in 2014-15 to $81.7 million in 2015-16.  The increase is offset by a decreased spending in Operating Expenditures, which decreased by $7.5 million or 8.8 percent from $84.8 million in 2014-15 to $77.3 million in 2015-16.  For a detailed explanation of variances in expenditures in the first and second quarters, please refer to the Quarterly Financial Report for the quarter ended June 30, 2015 and the quarter ended September 30, 2015. The cumulative effect of these variances, as well as the variances in the second quarter detailed below, explain the increase in YTD expenditures.

Compared to the previous year, the total expenditures in the third quarter, ending December 31, 2015, have increased by $3.9 million, from $62.9 million to $66.9 million as per the table of Departmental Budgetary Expenditures by Standard Object. This represents an increase of 6.2 percent against expenditures recorded for the same period in 2014-15.

This overall increase in spending in the third quarter is a combination of an increase in Vote 1 – Operating Expenditures of $0.3 million (from $28.8 million to $29.1 million), and an increase in Vote 5 – Grants and Contributions of $3.6 million (from $30.5 million to $34.1 million).

Personnel expenditures, which include expenditures related to EBP and the Minister’s salary and motor car allowance, have increased by $1.5 million, compared to those of the previous year for the same period (from $23.7 million to $25.1 million).  Expenses under Personnel are higher than those incurred at the same period last year due to higher expenditures in acting pay (increase of $0.8 million), pay at risk (increase of $0.3 million), and overtime and meal allowance mainly incurred by the Government Operations Centre (increase of $0.2 million).   

Other operating expenditures have decreased by $1.6 million, compared to those of the previous year for the same period (from $9.4 million to $7.8 million).  The decrease is mainly due to expenditures related to Information mostly for payments related to advertising services ($1.5 million) incurred in the third quarter of 2014-15 dedicated to a national advertising campaign to combat cyberbullying.  

Transfer payments expenses increased by $3.6 million or 11.7 percent in the third quarter of 2015-16 compared to those of the previous year for the same period (from $30.5 million to   $34.1 million). This variance is due mainly to higher expenditures for the First Nations Policing Program (increase of $3.7 million) offset by lower expenditures for the Aboriginal Community Safety Development Program (decrease of $0.1 million) incurred in the third quarter of 2015-16.       

Lastly, revenues netted against expenditures collected for interdepartmental provision of internal support services decreased by $0.5 million in the third quarter of 2015-16 compared to the same period of 2014-15.

3.0 Risks and Uncertainty

The Department’s mandate spans from public safety and security, intelligence and national security functions, social interventions for youth-at-risk, to readiness for all manner of emergencies.  Public Safety is called to rapidly respond to emerging threats and ensure the safety and security of Canadians.  The Department ability to deliver its programs and services is subject to several risk sources, such as, the rapidly changing asymmetrical threat environment, its ability to respond to natural or man-made disasters, government priorities, and government-wide or central agency initiatives. To deliver this mandate effectively, the collaboration of many departments and agencies, provincial and territorial governments, international partners, private sector and first responders is required.  Without the collaboration of all these partners, the Department is at risk in the delivery of its mandate and objectives, making the effectiveness of these relationships crucial.

Fiscal Restraint

Public Safety continues to face pressures that have been previously identified.  Collectively these pressures have reduced the Department’s funding base and its flexibility to reallocate funding to achieve expected results.   

In recognition of this tightening fiscal environment, Public Safety examined all of its departmental program spending, balancing resource allocations against identified priorities by shifting from lower to higher priorities.  The Department continues to explore actions to mitigate and manage the impact of the changing fiscal environment on the organization.  As such, the Department announced in December 2013 a realignment of departmental functions (of note, details on the realignment of departmental functions are found in the Significant Changes in Relation to Operations section).

2013 Operating Budget Freeze

In keeping with the Government’s commitment to implement measures to return to balanced budgets in 2015, Economic Action Plan 2014 (Budget 2014) announced a number of whole-of government initiatives to control the size and cost of government operations.

The November 2013 Update of Economic and Fiscal Projections reintroduced a freeze on departmental operating budgets. This freeze applies for two years beginning in 2014–15. The operating budget freeze is expected to generate government-wide savings of roughly $550 million in 2014–15 and $1.1 billion in 2015–16, by introducing a number of whole-of government initiatives to contain costs and increase efficiencies.  One of these initiatives is related to compensation adjustments.

Compensation Adjustment

These savings will be mainly managed by requiring organizations to absorb the ongoing impact of wage and salary increases that take effect during the freeze period.

2014-15 marked the beginning of a new round of collective bargaining between the Government of Canada and federal public service bargaining agents. The Government continues to work with these bargaining agents to renew all 27 of its collective agreements. 

As the outcome of these negotiations is unsure, Public Safety’s share of the impact has been estimated at $1.6 million.

To mitigate this risk, the Department was able to create a Frozen Allotment of $934K from its 2014-15 surpluses for the 2014-15 incremental compensation adjustment amounts. This surplus will be used to fund partially the 2015-16 costs of collective agreement renewals.

4.0 Significant Changes in Relation to Operations, Programs and Personnel

4.1 Significant Changes in Relation to Operations

There have been three significant changes in relation to operations in the third quarter of 2015-16.

National Search and Rescue Secretariat

Effective July 24, 2015, the National Search and Rescue Secretariat (NSS) has been transferred from the Department of National Defence (DND) to Public Safety Canada.  The employees of NSS became part of the Emergency Management and Programs Branch.

The NSS plays an important role in policy and program development and horizontal management of Canada’s National Search and Rescue Program. The Secretariat works closely with the Search and Rescue community, all levels of government as well as first responders to coordinate and improve search and rescue activities across Canada.

Under the responsibility of Public Safety Canada, the NSS will continue its role as a central coordinator for the National Search and Rescue Program. DND will keep its lead role for the delivery of airborne search and rescue operations, just as the Canadian Coast Guard will remain responsible for maritime search and rescue.

The move of the Secretariat to Public Safety Canada is an opportunity to leverage the Department’s expertise and leadership in coordinating with government institutions and cooperating with non-government stakeholders on emergency management matters.

During the third quarter of 2015-16, Public Safety received NSS financial authorities from DND by means of a Treasury Board Secretariat allotment transfer.  The funds were transferred from DND’s Operating Vote (Vote 1) and Grants and Contributions (Vote 10).  The remaining amount of NSS authorities to be transferred from DND’s Capital Vote (Vote 5) will be received through 2015-16 Supplementary Estimates C.  Expenditures incurred by DND since July 24, 2015 have not yet been received.

Syrian Refugee Resettlement

On November 24, 2015, the Government of Canada announced its intentions in taking immediate action to welcome 25,000 Syrian refugees to Canada as quickly as possible.  Resettling the refugees to Canada is a national effort requiring significant coordination and support between other orders of government, stakeholders and partners from across the country.

The Government Operations Centre (GOC), housed within Public Safety Canada, is the central coordinating body ensuring a whole-of-government approach to the resettlement of 25,000 Syrian refugees. The role of the GOC is to lead and support response coordination on behalf of the Government of Canada for events affecting the national interest. To harmonize federal emergency response efforts with those of provinces and territories, non-government organizations, and the private sector, the GOC provides a hub where all partners can work together in a common environment to ensure a coordinated, integrated, whole-of-government response. 

Over 20 federal departments and agencies, as well as non-government organizations such as the Red Cross, have representatives working together at the GOC to coordinate response efforts for the Syrian Refugee Operation. Additionally, provinces and territories continue to work closely with the GOC and in many cases have a Liaison Officer embedded directly within the GOC to ensure efficient planning and coordination between federal and provincial operations.

Public Safety Canada has not received any additional authorities to coordinate response efforts for the Syrian Refugee Operation.  GOC is utilizing internal resources to fulfill its role within the context of this Operation.

Departmental Realignment

As of December 16, 2015, the majority of executive placements related to the realignment have been carried out.

Implementation of the non-executive realignment is well underway. The latest update indicates that significant progress was made to find placements/solutions for employees occupying positions impacted by the departmental realignment of functions; 77% of impacted employees had been matched or placed indeterminately in an end state position, had found employment elsewhere, or had plans to retire in the next three years.  This is well ahead of schedule. Through branch management committees, the Resource Management Committee (RMC) and the departmental Realignment Committee, regular discussions, options and strategies are reviewed to continue placing the remainder of the impacted employees.

While reviewing the structure, the department was able to reallocate existing resources to create additional junior level positions. As of December 16, 2015, 54% of new or vacant end-state positions had been matched with existing employees or staffed. This clearly illustrates the need to recruit new employees within PS, over and above the placement of impacted employees. The Department is running multiple collective staffing processes for various groups and levels to fill those gaps.

The RMC continued to act as a forum for departmental consultation and deliberation on the realignment in order to coordinate approaches across the department, engage with employees and share successful practices. Unions are at the table to discuss concerns raised by their members. The RMC meetings, along with the regular Labour Management Consultation Committee (LMCC) meetings, ensure ongoing communication with the unions, thus enabling the department to understand and address issues and concerns as they arise.

4.2 Significant Changes in Relation to Programs

Disaster Financial Assistance Arrangements

The Disaster Financial Assistance Arrangements (DFAA) contribution program was established in 1970 to provide a consistent and equitable mechanism for federal sharing of provincial and territorial costs for natural disaster response and recovery where such costs would place an undue burden on a provincial or territorial economy.

There are currently 68 natural disasters for which Orders-in-Council (OiCs) have been approved, authorizing the provision of federal financial assistance under DFAA, and for which final payments have not yet been made. Taking into account all the expected DFAA final payments, the total estimated outstanding federal liability at the end of the third quarter is $1.7 billion, the majority of which is expected to be paid out over the next five years.

The five most significant events represent 71 percent of Public Safety’s current liabilities under the DFAA. They are the Alberta 2013 June Flood estimated at $659 million, the Manitoba 2011 Spring Flood at $174 million, the Saskatchewan 2011 Spring Flood at $145 million, the Ontario 2013 December Ice Storm at $120 million and the Saskatchewan 2007 Spring/Summer Rainstorm at $72 million.

4.3 Significant Changes in Relation to Personnel

On November 4, 2015, Prime Minister Justin Trudeau appointed a new federal Cabinet, naming the Honourable Ralph Goodale as the new Minister of Public Safety and Emergency Preparedness.  Minister Goodale is the Member of Parliament for Regina – Wascana. 

On October 22, 2015, Ms. Gina Wilson, Associate Deputy Minister, has been appointed by the Clerk of the Privy Council as the Deputy Minister Champion for Aboriginal Federal Employees, in replacement of Mr. Alan Latourelle, former Chief Executive Officer for Parks Canada.

On January 18, 2016, Ms. Monik Beauregard joined Public Safety as the new Senior Assistant Deputy Minister of National and Cyber Security.

5.0 Approval by Senior Officials

Approved by:

Original signed by

François Guimont, Deputy Minister
Public Safety Canada 
Ottawa (Canada)
Date: February 12, 2016

Original signed by

Mark Perlman, CPA, CMA, Chief Financial Officer and Assistant Deputy Minister of the Corporate Management Branch
Public Safety Canada
Ottawa (Canada)
Date: February 11, 2016

6.0 Statement of Authorities (unaudited)

Fiscal year 2015-2016 (in dollars)
  Total available for
use for the year
ending March 31, 2016 (1, 2)		 Used during the
quarter ended
December 31, 2015 (2)		 Year to date used
at quarter-end (2)
       

Vote 1 - Net Operating Expenditures

 125,853,233 29,110,924 77,303,748
       
Vote 5 - Grants and Contributions 1,002,988,545 34,067,677 81,691,054
       
Employee Benefit Plans (EBP) 14,952,248 3,672,329 11,016,989
       
Minister's Salary and Motor Car Allowance 82,100 13,850 54,900
TOTAL AUTHORITIES 1,143,876,126 66,864,780 170,066,691

(1) Includes only authorities available for use and granted by Parliament at quarter end.

(2) National Search and Rescue Secretariat (NSS) deemed authorities have been transferred in P9 from the Department of National Defence. Corresponding expenditures will be transferred in P10.

Fiscal year 2014-2015 (in dollars)
  Total available for
use for the year
ending March 31, 2015 (1)		 Used during the
quarter ended
December 31, 2014    		Year to date
 used at quarter-end  
       
Vote 1 - Net Operating expenditures 123,741,582 28,786,060 84,795,959
       
Vote 5 - Grants and contributions 1,046,154,424 30,502,707 67,584,936
       
Employee Benefit Plans (EBP) 14,519,955 3,629,989 10,889,966
       
Minister's Salary and Motor Car Allowance 80,300 20,075 60,225
TOTAL AUTHORITIES 1,184,496,261 62,938,831
163,331,086

(1) Includes only authorities available for use and granted by Parliament at quarter end.

7.0 Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2015-2016 (in dollars)
 

Planned expenditures
for the year ending
March 31, 2016 (1, 2) 

 Expended
during the
quarter ended
December 31, 2015(2)

Year to date
used
at quarter-end(2)
Expenditures:      
Personnel 105,345,537 25,142,467 73,622,532
Transportation and communications 3,307,433 919,698 2,068,087
Information 5,968,759 234,771 714,367
Professional and special services 18,854,464 4,865,194 9,574,149
Rentals 2,862,983 1,054,782 2,133,447
Repair and maintenance 1,356,679 69,270 190,459
Utilities, material and supplies 1,116,431 144,113 400,474
Acquisition of land, buildings and works 1,599,536 - -
Acquisition of machinery and equipment 3,089,685 505,163 1,026,366
Transfer payments 1,002,988,545 34,067,677 81,691,054
Public debt charges - - -
Other subsidies and payments 86,074 22,377 92,815
Total gross budgetary expenditures 1,146,576,126 67,025,511 171,513,750
Less Revenues netted against expenditures: Interdepartmental Provision of Internal Support Services 2,700,000 160,731 1,447,059
Total net budgetary expenditures 1,143,876,126 66,864,780 170,066,691

(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.

(2) National Search and Rescue Secretariat (NSS) deemed authorities have been transferred in P9 from the Department of National Defence. Corresponding expenditures will be transferred in P10.

Fiscal year 2014-2015 (in dollars)
 

Planned expenditures
for the year ending
March 31, 2015 (1)

Expended
during the
quarter ended
December 31, 2014    		 Year to date used
at quarter-end      
Expenditures:      
Personnel 102,829,099 23,692,126 75,214,371
Transportation and communications 3,997,582 784,041 1,736,873
Information 5,706,061 2,382,852 3,007,171
Professional and special services 16,364,104 4,984,530 11,098,106
Rentals 3,852,477 663,857 1,761,006
Repair and maintenance 1,010,215 215,582 743,151
Utilities, material and supplies 551,918 186,864 430,847
Acquisition of land, buildings and works 2,546,092 - -
Acquisition of machinery and equipment 4,135,127 165,368 507,478
Transfer payments 1,046,154,424 30,502,707 67,584,936
Public debt charges - - -
Other subsidies and payments 49,162 29,434 3,303,393
Total gross budgetary expenditures 1,187,196,261 63,607,361 165,387,332

Less Revenues netted against expenditures: Interdepartmental Provision of Internal Support Services

 2,700,000 668,530 2,056,246
Total net budgetary expenditures 1,184,496,261 62,938,831 163,331,086

(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.

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