Public Safety Canada Quarterly Financial Report for the quarter ended December 31, 2020

1.0 Introduction

This quarterly financial report for the period ending December 31, 2020 has been prepared by management as required by section 65.1 of the Financial Administration Act, in the form and manner prescribed by Treasury Board. The report should be read in conjunction with the Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B).

This quarterly financial report has not been subject to an external audit or review. However, it has been reviewed by the Departmental Audit Committee prior to approval by the Deputy Minister.

Information on the mandate, roles, responsibilities and programs of Public Safety Canada can be found in the 2020-21 Departmental Plan and the 2020-21 Main Estimates.

1.1 Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities table 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 for the 2020-21 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 annually approved limits through Appropriation Acts or through legislation in the form of statutory spending authority for specific purposes.

Public Safety Canada uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis, as do the expenditures presented in this report.

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

The following graph provides a comparison of the net budgetary authorities and expenditures as of December 31, 2020 and December 31, 2019 for the Department’s combined:

• Vote 1: Operating Expenditures;
• Vote 5 and Statutory: Grants and Contributions;
• Statutory Votes:
  • Employee Benefit Plans; and
  • Minister’s Salary and Car Allowance.

Comparison of Budgetary Authorities, Year to Date Expenditures and Quarterly Expenditures as of December 31, 2020 and December 31, 2019

Note: (1) The 2020-21 Treasury Board (TB) Central Votes include $5.5M for the Operating Budget Carry Forward and $400 for Compensation Adjustments. (2) The amount of $39.5M included in the authorities column is for a statutory contribution in support of the readiness of the Canadian Red Cross for urgent relief efforts related to COVID-19 pursuant to the Public Health Events of National Concern Payments Act.

2.1 Significant Changes to Authorities

For the period ending December 31, 2020, the authorities provided to the Department include Main Estimates, Supplementary Estimates (A), Supplementary Estimates (B), TB Central Vote transfers and a Statutory Contribution. The 2019-20 authorities for the same period included Main Estimates, Budget 2019 approved items, Supplementary Estimates (A), TB Central Vote transfers and a Statutory Grant. The Statement of Authorities table presents a net decrease of $232.6 million (22.9 percent) compared to those of the same period of the previous year (from $1,016.4 million to $783.8 million).

Operating Expenditures authorities have increased by $1.1 million (0.7 percent) (from $152.1 million to $153.2 million).

Grants and Contributions (G&C) authorities have decreased by $233.3 million (27.5 percent) (from $847.9 million to $614.6 million) primarily attributable to:

• A decrease of $148.4 million for the Disaster Financial Assistance Arrangements (DFAA) program due to a reprofile of funds from a previous fiscal year into 2019-20 and a reduction in funding from a Budget 2019 item;
• A decrease of $65.0 million for a one-time grant to Shock Trauma Air Rescue Service (STARS) to fund the purchase of five new emergency medical helicopters in Western Canada;
• A decrease of $57.1 million relating to the expiry of the National Disaster Mitigation Program in 2019-20;
• A decrease of $49.0 million for the First Nations Policing Program, mainly due to the timing of a transfer to the Royal Canadian Mounted Police (RCMP) through the Supplementary Estimates;
• A decrease of $25.0 million for a one-time endowment in 2019-20 to support Avalanche Canada; and
• A decrease of $12.3 million for an initiative to build capacity to address drug impaired driving in Canada primarily resulting from a reprofile of funds from a previous fiscal year into 2019-20 and a transfer to the RCMP through the Supplementary Estimates.

These decreases are primarily offset by the following increases:

• An increase of $60.5 million in new funding in support of the Canadian Red Cross’s urgent relief efforts related to COVID-19, floods and wildfires;
• An increase of $39.5 million for a one-time statutory contribution to the Canadian Red Cross pursuant to the Public Health Events of National Concern Payments Act; and
• An increase of $15.7 million in funding levels for the Take Action Against Gun and Gang Violence initiative.

Budgetary Statutory authorities have decreased by $423.3 thousand (2.6 percent) in 2020-21 primarily attributable to the Minister’s salary and car allowance adjustment related to the departure of Minister Goodale and to the Employee Benefits Plan associated with variances in salary funding levels.

2.2 Significant Variances from Previous Year Expenditures

Year-to-Date Expenditures

For the period ending December 31, 2020, the Departmental Budgetary Expenditures by Standard Object table presents a net increase of $80.9 million (22.4 percent) in Public Safety’s year-to-date (YTD) expenditures compared to the previous year (from $362.0 million to $443.0 million). This increase is primarily attributable to:

• An increase of $118.6 million due to the timing of payments relating to the Disaster Financial Assistance Arrangements (DFAA) program;
• An increase of $39.5 million for a one-time statutory contribution to the Canadian Red Cross pursuant to the Public Health Events of National Concern Payments Act;
• An increase of $14.4 million in payments for the Take Action Against Gun and Gang Violence initiative;
• An increase of $11.2 million in payments in support of the Canadian Red Cross’s urgent relief efforts related to COVID-19, floods and wildfires; and
• An increase of $6.0 million due to the timing of payments relating to the National Crime Prevention Strategy initiative.

These increases are primarily offset by the following decreases:

• A decrease of $65.0 million for a one-time payment of a statutory grant to Shock Trauma Air Rescue Service (STARS);
• A decrease of $25.0 million for a one-time payment to Avalanche Canada;
• A decrease of $3.8 million in payments for personnel;
• A decrease of $3.5 relating to ex-gratia payments in support of the surge in policing costs in Toronto and emergency management measures in Burnaby; and
• A decrease of $3.5 million due to the timing of payments for the Biology Casework Analysis program.

Third Quarter Expenditures

Compared to the previous year, expenditures used during the quarter ended December 31, 2020 have increased by $149.8 million (201.3 percent) (from $74.4 million to $224.2 million) as reflected in the Departmental Budgetary Expenditures by Standard Object table.

• Personnel expenditures have decreased by $4.3 million.
• Other operating expenditures have increased by $0.4 million.
• Transfer payments expenditures have increased by $153.3 million (484.3 percent) primarily attributable to:
  • An increase of $108.9 million due to the timing of payments relating to the Disaster Financial Assistance Arrangements (DFAA) program;
  • An increase of $13.0 million due to the timing of payments relating to the First Nations Policing Program;
  • An increase of $11.2 million in payments to in support of the Canadian Red Cross’s urgent relief efforts related to COVID-19, floods and wildfires;
  • An increase of $7.5 million in payments for the Take Action Against Gun and Gang Violence initiative;
  • An increase of $5.9 million due to the timing of payments relating to the National Crime Prevention Strategy initiative; and
  • An increase of $4.8 million due to the timing of payments for the Memorial Grant Program for First Responders.

3.0 Risks and Uncertainty

COVID-19

At the onset of the COVID-19 outbreak in March 2020, with the majority of its employees transitioning to working remotely, Public Safety Canada’s (PS) primary focus was to ensure its critical services continued to be delivered. That being said, as time progresses, it has become clear that this disruptive event has not affected the department’s operations and its capacity to continue to deliver on its mandate. While the majority of PS employees are currently working from home, they have demonstrated resiliency and adaptability as they continue to perform their regular work functions. The department established a Pandemic Management Committee to ensure that timely actions are taken, that employees remain well supported, and that decisions are communicated effectively to all staff as the situation continues to evolve.

Disaster Financial Assistance Arrangements

The Disaster Financial Assistance Arrangements (DFAA) contribution program presents a greater level of uncertainty than other PS grants and contributions programs given that it represents a significant portion of the PS budget and that it is subject to unforeseen events. The 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 60 natural disasters for which Orders-in-Council have been approved, authorizing the provision of federal financial assistance under the DFAA, and for which final payments have not yet been made. Public Safety’s total outstanding share of liability under the DFAA in regards to these 60 events is $2.71 billion, the majority of which is expected to be paid out over the next five years.

DFAA liability has increased by $30 million from $2.68 billion in the second of 2020-21 to $2.71 billion in the third quarter of 2020-21. Variations in the DFAA liability are mainly attributable to:

• Changes for newly approved Orders in Council, which authorize funding related to recent natural disasters for which Provinces and Territories require federal sharing of costs; and
• Changes for payments issued under the existing obligation.

The following are the most significant events within Public Safety Canada’s DFAA liability:

• Alberta 2013 June Flood ($600 million);
• Manitoba 2011 Spring Flood ($367 million);
• British Columbia 2017 July Wildfires ($211 million);
• Quebec 2019 Spring Flood ($195 million); and
• British Columbia 2018 Spring Flood ($168 million).

Updates to the DFAA liability in result to changes in the estimates of the existing natural disasters are completed and approved twice a year with the last one having been conducted in Summer 2020-21 and reflected in the December 31, 2020 Quarterly Financial Report. The next semi-annual updates will be available and presented in the June 30, 2021 Quarterly Financial Report.

Phoenix Pay Modernization Project

In April 2016, PS moved to the new Phoenix federal public service pay system. In transitioning to the new pay system, large backlogs and delays at the centralized Pay Centre have led to a significant increase in pay-related issues reported by employees.

To support employees at highest risk, the Department continues to work on a range of issues that falls within the department’s scope of control to support employees who are experiencing difficulties with their pay, including: providing emergency salary advances, analyzing and resolving integration issues between the department’s Human Resource Management System and the Phoenix pay system. Issues affecting PS employees and the measures the Department is able to take to help mitigate them have been discussed with the unions at local and national level management consultation committees. At these meetings, union representatives have been engaged to ensure that employees’ perspectives are shared with Management.

The Department is closely monitoring pay transactions to identify and address pay issues in a timely manner, continues to apply mitigation measures which were implemented in 2016, and is currently assessing the design and operating effectiveness of key payroll controls.

4.0 Significant Changes in Relation to Operations, Programs and Personnel

On November 30, 2020, Talal Dakalbab was appointed Assistant Deputy Minister for the Community Safety and Countering Crime Branch.

On November 30, 2020, Trevor Bhupsingh was appointed Assistant Deputy Minister for the Emergency Management and Programs Branch

On December 7, 2020, the Deputy Minister of Public Safety announced the departure of Todd Cain, Acting Assistant Deputy Minister for the Emergency Management and Programs Branch, effective December 14, 2020.

5.0 Approval by Senior Officials

Approved as required by the Policy on Financial Resource Management, Information and Reporting:

Rob Stewart
Deputy Minister
Public Safety Canada
Ottawa (Canada)

Date: February 18, 2021

Patrick Amyot, CPA, CMA
Chief Financial Officer
Public Safety Canada
Ottawa (Canada)

Read More: https://www.publicsafety.gc.ca/cnt/rsrcs/pblctns/qrtrl-fnncl-rprt-20201231/index-en.aspx

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