Public Safety Canada Quarterly Financial Report For the quarter ended June 30, 2020

Table of Contents

• 1.0 Introduction
  • 1.1 Basis of Presentation
• 2.0 Highlights of Fiscal Quarter and Fiscal Year-to-Date (YTD) Results
  • 2.1 Significant Changes to Authorities
  • 2.2 Significant Variances from Previous Year Expenditures
• 3.0 Risks and Uncertainty
• 4.0 Significant Changes in Relation to Operations, Programs and Personnel
• 5.0 Approval by Senior Officials
• 6.0 Statement of Authorities (unaudited)
• 7.0 Departmental budgetary expenditures by Standard Object (unaudited)

1.0 Introduction

This quarterly financial report for the period ending June 30, 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 and Supplementary Estimates (A).

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 senior officials.

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 June 30, 2020 and June 30, 2019 for the Department’s combined:

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

Reduced supply of the 2020-21 Main Estimates

The department’s authorities as of June 30, 2020 reflect a reduced supply representing 9/12th of the 2020-21 Main Estimates for Votes 1 & 5 compared to the full supply for the same period in 2019-20. This is a result of parliament deferring the tabling of the 2020-21 Main Estimates in order to focus on funding high priority initiatives and primarily as a result of COVID-19.

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Note: (1) Public Safety Canada’s appropriations have decreased to $648,105K as of June 30, 2020. (2) The amount of $40.7M 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 June 30, 2020, the authorities provided to the Department include 9/12th of the 2020-21 Main Estimates, Supplementary Estimates (A) and a Statutory Contribution.  The 2019-20 authorities for the same period included the full 2019-20 Main Estimates supply and Budget 2019 approved items.  The Statement of Authorities table presents a net decrease of $264.4 million (29.0 percent) compared to those of the same period of the previous year (from $912.5 million to $648.1 million).

Operating Expenditures authorities have decreased by $29.4 million (21.4 percent) (from $137.3 million to $107.9 million) mainly due to:

• A decrease of $36.0 million for various initiatives due to the reduced supply of the  2020-21 Main Estimates.

Offset by the following increase:

• A net increase of $6.6 million for various initiatives of lesser value.

Grants and Contributions (G&C) authorities have decreased by $234.9 million (30.9 percent) (from $759.2 million to $524.3 million) mainly due to:

• A decrease of $199.6 million due to reduced funding levels for the Disaster Financial Assistance Arrangements (DFAA) program resulting from a reprofile amount of $98.4M into 2019-20, a $51.3M decrease due to the reduced supply of the 2020-21 Main Estimates and a $50M decrease related to a Budget 2019 item;
• A decrease of $78.6 million for various initiatives due to the reduced supply of the  2020-21 Main Estimates;
• A decrease of $57.1 million relating to the expiry of the National Disaster Mitigation Program (Budget 2014) in 2019-20; and
• A decrease of $25.0 million for a one-time endowment in 2019-20 to support Avalanche Canada.

These decreases are offset by the following increases:

• An increase of $59.3 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 $40.7 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 $13.8 million in funding level for the Take Action Against Gun and Gang Violence initiative (Budget 2018) (horizontal initiative) which includes an offsetting amount of $11.6M due to the reduced supply of the 2020-21 Main Estimates; and
• A net increase of $11.6 million for various initiatives of lesser value.

Budgetary Statutory authorities have decreased by $110.2 thousand (0.7 percent) in 2020-21 mostly due to the Minister’s salary and car allowance adjustment related to the departure of the Minister of Border Security and Organized Crime Reduction.

2.2 Significant Variances from Previous Year Expenditures

First Quarter Expenditures
Compared to the previous year, expenditures used during the quarter ended June 30, 2020 have increased by $43.9 million (47.7 percent) (from $92.0 million to $135.9 million) as reflected in the Departmental Budgetary Expenditures by Standard Object table.

• Personnel expenditures have increased by $0.1 million.
• Other operating expenditures have decreased by $0.1 million.
• Transfer payments expenditures have increased by $43.9 million (78.3 percent) mainly due to:
  • 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 $7.4 million in payments for the First Nations Policing Program;
  • An increase of $6.2 million in payments for the Take Action Against Gun and Gang Violence initiative; and
  • An increase of $2.2 million due to the timing of payments for the National Crime Prevention Strategy initiative.

Offset by the following decreases:

• • A decrease of $5.0 million due to the timing of payments for the Memorial Grant Program for First Responders;
  • A decrease of $2.5 million for a one-time payment in 2019-20 to the Canadian Red Cross to support 2019 floods recovery efforts across Canada;
  • A decrease of $1.8 million in payments for the First Nation and Inuit Policing Facilities initiative;
  • A decrease of $1.2 million in payments for the Human Trafficking Hotline initiative (Budget 2018); and
  • A net decrease of $0.9 million for other expenditures variances of lesser value.

3.0 Risks and Uncertainty

COVID-19

At the onset of the COVID-19 outbreak, with the majority of its employees transitioning to working remotely, Public Safety Canada (PS) turned its focus to supporting critical services. These disruptive but understandable changes have affected how the department delivers its services, and how quickly it delivers them. Interim measures have been taken to help ensure the Department can continue to deliver on its mandate. While the majority of PS employees are currently working from home, employees have demonstrated resiliency and adaptability as they continue to perform their regular work functions.  The department also established a Pandemic Management Committee to ensure proper actions are taken and communicated across the department to ensure staff remain well supported and provided with needed guidance and 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.

Updates to the DFAA liability are completed twice a year with the last one having been conducted in the Winter of 2019-20 and now reflected in the June 30, 2020 Quarterly Financial Report. As a result of this update, there are now currently 58 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 58 events is $2.6 billion, the majority of which is expected to be paid out over the next five years.

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

• Alberta 2013 June Flood ($600 million);
• Manitoba 2011 Spring Flood ($412 million);
• British Columbia 2017 July Wildfires ($213 million);
• Quebec 2019 Spring Flood ($178 million); and
• Quebec 2017 Spring Flood ($152 million).

Since the last update presented in the December 31, 2019 Quarterly Financial Report, the DFAA liability has increased by $300 million from $2.3 billion in the third quarter of 2019-20 to $2.6 billion in the first 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;
• Changes in the estimates of the existing natural disasters; and
• Changes for payments issued under the existing obligation.

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 April 15, 2020, Patrick Tanguy was appointed Senior Assistant Deputy Minister of Emergency Management and Programs Branch.

On April 20, 2020, Todd Cain was appointed Assistant Deputy Minister of Emergency Management and Programs Branch.

On June 15, 2020, Miranda Shepherd was appointed Director General of Internal Audit and Evaluation Directorate.

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: August 26, 2020

Patrick Amyot, CPA, CMA
Chief Financial Officer
Public Safety Canada
Ottawa (Canada)
Date: August 26, 2020

6.0 Statement of Authorities (unaudited)

Fiscal year 2020-21 (in dollars)

	Total available for use for the year ending March 31, 2021 (1)	Used during the quarter ended June 30, 2020	Year to date used at quarter-end
Vote 1 – Net Operating Expenditures	107,941,025	32,023,269	32,023,269
Vote 5 & Statutory- Grants and Contributions	524,311,796	99,990,588	99,990,588
Employee Benefit Plans (EBP)	15,763,245	3,940,811	3,940,811
Minister’s Salary and Motor Car Allowance	89,300	22,300	22,300
TOTAL AUTHORITIES	648,105,366	135,976,968	135,976,968
(1) Includes only authorities available for use and granted by Parliament at quarter end.

Fiscal year 2019-20 (in dollars)

	Total available for use for the year ended March 31, 2020 (1)	Used during the quarter ended June 30, 2019	Year to date used at quarter-end
Vote 1 – Net Operating Expenditures	137,337,483	32,148,999	32,148,999
Vote 5 – Grants and Contributions	759,205,353	56,081,861	56,081,861
Employee Benefit Plans (EBP)	15,787,393	3,757,718	3,757,718
Minister’s Salary and Motor Car Allowance	175,400	43,750	43,750
TOTAL AUTHORITIES	912,505,629	92,032,328	92,032,328
(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 2020-21 (in dollars)

	Planned expenditures for the year ending March 31, 2021 (1)	Expended during the quarter ended June 30 2020	Year to date used at quarter-end
Expenditures:
Personnel	94,500,695	32,326,849	32,326,849
Transportation and communications	2,897,515	24,634	24,634
Information	4,065,371	107,736	107,736
Professional and special services	15,106,457	3,406,622	3,406,622
Rentals	3,663,061	298,354	298,354
Repair and maintenance	2,020,812	15,857	15,857
Utilities, material and supplies	430,570	38,357	38,357
Acquisition of land, buildings and works	40,957	–	–
Acquisition of machinery and equipment	3,374,859	227,813	227,813
Transfer payments	524,311,796	99,990,588	99,990,588
Public debt charges	–	–	–
Other subsidies and payments	393,273	483,083	483,083
Total gross budgetary expenditures	650,805,366	136,919,893	136,919,893
Less Revenues netted against expenditures:
Interdepartmental Provision of Internal Support Services	2,700,000	942,925	942,925
Total net budgetary expenditures	648,105,366	135,976,968	135,976,968
(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.

Fiscal year 2019-20 (in dollars)

	Planned expenditures for the year ended March 31, 2020 (1)	Expended during the quarter ended June 30, 2019	Year to date used at quarter-end
Expenditures:
Personnel	117,005,722	32,451,363	32,451,363
Transportation and communications	3,167,178	660,779	660,779
Information	4,987,276	434,840	434,840
Professional and special services	18,403,693	2,213,213	2,213,213
Rentals	4,804,781	581,927	581,927
Repair and maintenance	928,815	7,644	7,644
Utilities, material and supplies	1,388,679	118,521	118,521
Acquisition of land, buildings and works	–	–	–
Acquisition of machinery and equipment	2,986,192	220,055	220,055
Transfer payments	759,205,353	56,081,861	56,081,861
Public debt charges	–	–	–
Other subsidies and payments	2,327,940	494,925	494,925
Total gross budgetary expenditures	915,205,629	93,265,128	93,265,128
Less Revenues netted against expenditures:
Interdepartmental Provision of Internal Support Services	2,700,000	1,232,800	1,232,800
Total net budgetary expenditures	912,505,629	92,032,328	92,032,328
(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.

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