Winnipeg Police Service FINANCIAL REPORT 2015 Third November 5, 2015 Table of Contents Highlights of Quarter and Fiscal Year to Date (YTD) Results .................................. 2 Q3 Financial Highlights – Revenues .......................................................................... 3 Revenues Overview .................................................................................................... 4 Q3 Financial Highlights – Expenses ............................................................................ 6 Expenses…………………………………………………………………………………...…7 Capital Expenditures …………………………………………………………………….10 Overtime ................................................................................................................... 111 Risks .............................................................................................................................. 12 Complement ............................................................................................................ 133 Financial Outlook/Forecast……………………………………………………………..13 Revenues ………………………………………………………………………………..…14 Salary and Wages ..................................................................................................... 14 Other Expenditures .................................................................................................... 15 This Quarterly Financial Report has been prepared by the Winnipeg Police Service as required by section 76(2) of the Winnipeg Police Board Rules of Practice and Procedure. This quarterly report has not been subject to an external audit or review. Winnipeg Police Service… 1 Highlights of Quarter and Fiscal Year to Date (YTD) Results Year to date for the third quarter of 2015, the Winnipeg Police Service overall revenues have exceeded last year’s revenue by 5.58%.  Photo enforcement is the biggest contributor to this increase, with school zone enforcement being a significant factor. An increase in the number of school zones in 2015 led to broader enforcement. Despite significant construction occurring this summer little enforcement occurred as to the limited opportunities where enforcement could be conducted.  Traditional enforcement tickets issued decreased slightly to 41,063 tickets  Criminal record check revenues increased 11.97% due to additional fee increases that occurred on January 1, 2015, and April 1, 2015.  Contract and police services revenues were 49.79% of last year’s total due to the expiration of the contract with the Winnipeg Airports Authority Inc. in Oct, 2014. Overall, expenses only increased by 1.34% compared to Sept. 30, 2014 primarily due to Collective Agreements increases (2%) occurring in the beginning of this fiscal year. Another 1% increase occurs beginning third quarter 2015. A $3.3M credit for facility costs due to the delayed move-in helped reduce our overall expense increases.  Salary and benefit costs increased 4.64% due to Collective Agreement increases. Regular overtime increased by 16.51% due to additional overtime incurred by a number of specialty units working on specific projects and investigations. Pension costs on police also increased due to statutory requirements. Sick leave and retirement cash outs saw an increase of $1.3M over last year.  Non-professional services increased by 15.1% due to the increase of photo enforcement tickets being issued. The Service pays a fee per ticket, and revenue being generated by broader school zone enforcement has also increased this cost.  With a firm move-in date established occurring Jan 1, 2016, an additional adjustment for facility cost was made, bringing the overall credit to $3.3M. This will bring our expected facility costs in line to costs from last year as any impact of the new HQ has now been removed from our actual and projected numbers. The 2015 budget was originally set with a move-in date of June 1, 2015.  Materials, parts and supplies are down 10.41% primarily due to lower fuel costs; with the volatility in fuel costs it is hard to predict where the yearend figure will wind up, but it is anticipated that fuel costs will be under budget by year end. Automobile parts expenses are also down considerably but this is primarily due to inventory management as purchases have been deferred with the hope of having them shipped directly to the new HQ late in the year as Vehicle Services will be moving in January 2016.  Asset purchases are only 21.44% of last year as last year there were significant purchase of pistols and Conducted Energy Weapons in 2014. As well, asset purchases can be better planned now as we have a move-in date and new Headquarter purchases will be made late in the year to be shipped directly to the Headquarters building. Winnipeg Police Service… 2 Q3 Financial Highlights – Revenues 2015 Revenue Budget by Source Total Traffic Enforcement 44.11% Other Revenues 1.45% Contracted Services 11.03% Government Grants 43.41% Actual YTD Revenues Comparison 2015 to 2014 Revenues (000's) Sept. 30, 2015 Sept. 30, 2014 % Total Revenue Total Government Grants Police Fines Traffic Enforcement Initiative Other Regulation Fees Total Regulation Fees Police Services Record Searches Other Total Sale of Goods & Services Total Revenue (8,378) (1,523) (12,457) (144) (14,124) (2,757) (1,656) (261) (4,674) (27,176) (6,942) (1,873) (9,377) (451) (11,701) (5,537) (1,479) (80) (7,096) (25,739) 121% 81% 132.85% 32% 121% 50% 112% 326% 66% 106% Winnipeg Police Service… 3 Revenues Overview Revenues Year to Date: Revenues are up significantly due to broader school zone enforcement. Enforcement of this type, with the increase in school zones, resulted in a considerable increase in tickets. Construction ticketing for the summer was almost non-existent as constructions sites were not able to have construction enforcement due to the nature of the sites not being conducive to enforcement. Forecast: Revenue overall will be significantly ahead of budget, and higher than last year even taking into account the loss of the Airport contract in this fiscal year. This is primarily due to increases in photo enforcement revenues. Government grants Year to Date: Increased compared to last year as a result of the early receipt of the remaining payout of the 40 officer funding. Forecast: Overall provincial grants are expected to be slightly higher than budget. Photo enforcement Year to Date: Photo enforcement revenues are much greater than last year due to the introduction of school zone ticketing occurring late Fall 2014. Revenues in this category are $3.08M ahead of last year. Forecast: These new revenue levels are expected to decrease as drivers adjust their driving habits. School zone enforcement ceases during the summer months of July and August. Although construction zone enforcement occurred, construction enforcement was limited as sites were not conducive to photo enforcement. The rate of driving habit change is difficult to estimate although the forecast at this time is an increase of $2.854M over budget for the year as driver behavior is changing. Criminal record checks Year to Date: Fee and volume increases related to criminal record checks have increased revenues. Forecast: Forecasting revenues to exceed budget by $298,400 Alarm permits Year to Date: A pilot project for an on-line payment system for the renewal of alarm permits began with a small mail out in early May. Once the pilot period is over, mailing will continue until correct renewal times are caught up. The early renewal conducted in 2014 caused revenues to increase considerably compared to activity YTD 2015. There will be a significant renewal occurring in November. Winnipeg Police Service… 4 Forecast: Overall, new alarm permits and renewal revenues are forecast to be close to budget, and higher than last year by about $149,000 Traffic Fines Year to Date: Traditional enforcement has decreased slightly YTD, although revenue is down significantly. Anecdotal evidence indicates that revenues are down due to two factors: an increased number of drivers are contesting tickets in court, leading to delays in received revenue and potential of reduced or eliminated fines; and some drivers are pleading guilty to offences, anticipating a reduced fine, leading to dispositions being potentially paid at less than the full fine, thus reducing anticipated revenue. While the Service provides an allowance for uncollectible fines it may be that this allowance may need to be revised upward. As this process is entirely the purview of the Manitoba justice system, the analysis and evaluation of this is extremely time consuming and can only occur after payments are received. Forecast: Revenues are anticipated to be less than budget and last year, being $610,000 under budget. Winnipeg Police Service… 5 Q3 Financial Highlights – Expenses 2015 Expense Budget by Source Assets .6% Materials 2.0% Debt & Financing 2.2% Facility & other 4.0% Services 6.4% Salaries and Benefits 84.8% Actual Expenses Comparison 2015 to 2014 Sept. 30, 2015 Expenses (000's) Sept. 30, 2014 % Total Expenditures Total Salaries & Benefits Salaries-Permanent Overtime Other Salaries and Benefits Total Salaries & Benefits Total Services Total Materials Parts Supplies Total Assets & Purchases Total Debt & Finance Charges Tsf to Civic Accommodations Other Transfers Tsf to GCF-cash to capital Total Grants, Transfers and Other Total Recoveries Total Expenditures 127,171 6,642 35,014 168,827 11,303 3,211 340 3,033 3,203 575 3,741 7,519 123,016 5,701 32,619 161,336 10,064 3,584 1,586 342 11,103 544 3,107 14,754 103% 117% 107% 105% 112% 90% 21% 887% 29% 106% 120% 51% (487) 193,746 (475) 191,191 103% 101% Winnipeg Police Service… 6 Expenses Overview Expenses Year to Date: Overall expenses are 1.34% higher than last year, with salaries and benefits being the significant contributor to this increase. Collective Agreement increases of 1.5% in June 2014, 2% increase at the beginning of this fiscal year, and a further 1% increase in June of 2015 comprised the major increase. Additionally, regular increments will add to the total costs of salaries with the resultant impact on benefits. As well, a further unbudgeted increase to the City’s contribution to the police pension plan has driven up benefit costs. However, offsetting these increases are significant savings in vacancy management of about $800,000 which are due to vacancies in the Cadet program and in the Communications Centre. A number of civilian vacancies also existed during the course of the year. Many of these vacancies are now being filled with the expectation that by the end of fiscal year 2015 very few vacancies will exist. Additionally, with a firm movein date now established, the Police Service received a full credit of $3.258M for the new HQ facility costs that were not applicable for fiscal year 2015. Forecast: Higher costs in overtime will be incurred, primarily as a result of a number of unique programs in a few areas where specific results were targeted. While overtime is comparable to last year for most areas, there are a small number of areas that make up this increase. Overall forecast is for salary and benefit expenses to be over budget by $1.3M with increases in pensions and overtime contributing the majority of this. Vacancy management savings offset some of the overtime increase, especially in the Communications Division. Special Duty salaries have also increased by $300,000 but this is offset with an increase in equivalent revenues. Salaries Year to Date: Total salaries and benefits comprise 84.8% of the total budget, and within this area are a number of accounts that, while indirectly tied to salaries and benefits, are also impacted by other external factors, such as vacancy management and attrition. The latter item will be further discussed in the complement section. In the 2015 budget a vacancy management number of $1,016,328 was included. This was an opportunity for savings due to the high volume of vacancies existing. A large number of vacancies existed in the Cadet program for most of the year. These and other vacancies are presently being filled, and by the end of the year only ongoing systemic vacancies will be needed to be addressed. Rigorous processes in hiring qualified staff does impact the time required to fill vacant positions. Winnipeg Police Service… 7 Forecast: Attrition is expected to be under budget, potentially around the 52 person mark, which is under the budgeted number of 56. Currently vacancies are higher than expected, and the Service is working on the filling those where the current needs exist, especially in Cadets and the Communication Division. Processes are in place to fill these required vacancies. Vacancies that are new Headquarters related are pending, until the actual need arises in early 2016. Overtime Year to Date: The trend is showing an increase in overtime. Analysis indicates that while the majority of costs centres are showing comparable or slightly lower hours than last year, there are a small number of units that show significant increases over last year. The majority of these have had targeted, ongoing projects that were addressing specific issues. Another issue driving overtime costs are staff shortages in the Communications Centre where requirements for minimum strength are necessitating callouts, thus increasing overtime. This is more than offset by having lower salary expenses because of vacant positions. Court overtime YTD is trending slightly higher than last year due to collective agreement increases. A number of high profile, significant events led to higher than anticipated overtime costs. As well a noticeable increase in calls for service, and call volumes peaking at significantly high numbers has led to higher overtime costs, especially in the area of continuing overtime. Forecast: Regular overtime is expected to be $.9M over budget, which will be over $1.2M higher than last year. Court overtime will be slightly higher than budget by the end of the year. Fuel Budget Year to Date: Low fuel prices early in the first quarter contributed to YTD costs being 25.58% lower than last year. Fuel prices have been quite volatile but have declined recently. Every penny increase costs the Service an extra $16,000.00 for a full budget year. Noticeable increases in mileage have occurred in the new districts with the centralized district stations, which has increased fuel costs and related vehicle expenses. Forecast: With the volatility seen in fuel prices, it is difficult to predict what will occur by year end but, barring any significant increases in the last quarter, we should come in under budget. Winnipeg Police Service… 8 Cash to capital Year to Date: Cash to capital costs are on budget, but costs will still be 20.3% higher than last year. Forecast: On budget Facility costs/Debt to Finance Year to Date: The original 2015 budget determined the costs using an expected Headquarters start of the move-in date of June 1, 2015. The new projected date is tentatively scheduled for January 1, 2016. An adjustment to both the facility accommodation account and the debt and financing account was made this quarter since a firm move-in date was established. Forecast: Facility and debt and financing costs will be under budget by an estimated $3.258M dollars. Winnipeg Police Service… 9 - 11 North District Police Station - 6,486 16 Automated Fingerprint Identification System (AFIS) 17 Technology Upgrades - Information Systems 18 In Car Computing 19 Bomb Unit Truck Replacement 20 Fire Suppression System 21 Next Generation 911 22 Communication Centre Back Up Site Upgrade 23 Mobile Radio Replacement 24 River Patrol Building - TOTAL CAPITAL FINANCING Land Operating Reserve 6,486 - 1,500 Interim Financing (Repayment) Transfer from Prior Year Authorization - (990) External Debt Public Private Partnership Lease Payments Cash to Capital 5,976 9,068 - 15 WPS Data Integration, Auditing and Quality Solution Tool Financed by: - - - 9,068 18,967 - (18,967) - (990) 10,058 - - - - - - - - - - - 14 Intelligence Led Reporting (Phase 2) - - - 13 Building Video Surveillance Systems 12 Winnipeg Police Headquarters Redevelopment - 10 East District Police Station 9 Electronic Ticketing - - 7 Officer Mobile Video System 1,158 500 - 6 Major Case Management System Expansion 250 - - 5 Mobile and Transient Users 490 1,400 490 5,280 2016 1,000 - 4 Radio Upgrade for Districts 3 and 4 8 Police Headquarters Building Systems Safeguards 2,986 - 2,000 3 Police Division's Systems upgrades 2 North Station IT requirements 1 Trunk Radio System List of Capital Projects: 2015 Estimate - 21,188 - - - 20,188 (990) 1,990 21,188 - - - - - - - - - - - - 20,188 - - - 1,000 - - - - - - - 5,872 - - - - (1,012) 6,884 5,872 - - - - - - - - - 662 1,050 4,160 - - - - - - - - - - - Forecast 2017 2018 Capital Investment Plan - Authorization ($000's) - 4,467 - - - - (1,056) 5,523 4,467 - - - - 767 300 1,200 1,200 500 - - - - - - - - 500 - - - - - 2019 - - - - - - - - - - - - - - - - - - - N/A N/A N/A N/A N/A N/A N/A N/A - N/A N/A 9,420 - - - - (1,056) 10,476 9,420 1,820 6,400 N/A N/A 400 N/A - 1.04 - 3.28 0.71 2.16 0.53 47.49 1.04 4.95 Cost / Benefit Ratio 800 N/A 2020 Authorization WINNIPEG POLICE SERVICE - GENERAL CAPITAL FUND 22 21 19 20 14 17 15 16 18 12 10 13 23 3 24 5 4 6 7 9 8 1 11 2 Priority 56,501 18,967 1,500 (18,967) 20,188 (6,094) 40,907 56,501 - 1,820 6,400 400 800 767 300 1,200 1,200 500 662 1,050 4,160 - 20,188 - 500 1,000 1,000 1,658 250 490 4,386 490 7,280 6-Year Total Class Estimate 3 3 3 3 3 3 3 3 3 3 3 3 1 3 1 3 3 3 3 3 3 3 3 3 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 5.00% 10.00% 5.00% 10.00% 10.00% 5.00% 5.00% 0.00% 0.00% 5.00% 10.00% 5.00% 10.00% 5.00% 5.00% 5.00% 5.00% 10.00% 4.00% 4.00% % % Construction Contingency Inflation Capital Expenditures Winnipeg Police Service… 10 The majority of Winnipeg Police Service Capital Projects are for the replacement of Information Technology systems, or specialty equipment replacement. When building capital projects are listed, these are managed by the City of Winnipeg Municipal Accommodations Branch. One major City-wide undertaking is the replacement of portable and mobile radio infrastructure. The City of Winnipeg will now own and maintain this infrastructure that will be jointly used by the Winnipeg Police Service and the Winnipeg Fire Paramedic Service. A number of current projects relate to the new Headquarters building. Significant expenditures and investments directly related to information technology are currently within budget targets. The most significant budget risk relates to funding general office furniture and equipment. The delayed move-in made it a prudent decision to defer purchases until an actual move-in date had been determined, to minimize moving costs. A number of significant events occurred in the third quarter that has now created activity on a number of capital projects. Having a firm date now established for move-in, and having access to the new Headquarters building has allowed a number of Headquarters related capital projects to begin. Projects related to the Building Safeguards, Security and Card Access, Police Division Computer Upgrades, the Automated Fingerprint System, are all being worked on to assist in the move into the new Headquarters. Additional projects of Computer Assisted Dispatch and In Car Computing are in the last stages of completion. Activity will also soon begin on the Radio Infrastructure project in conjunction with Corporate Services and the Winnipeg Fire Paramedic Service. All projects so far are projected to be within budget. Finding human resources to work on these projects has also been challenging due to the number of projects concentrated around the move to the new Headquarters. Overtime Quarterly Converted Overtime Hours1 for Third Quarter Ending Sept. 30, 2015 For the Third Quarter Ending Winnipeg Police Service 2015 Total Converted Hours 2014 Total Converted Hours 2013 Total Converted Hours 215,088 206,441 217,552 Converted overtime hours - is the actual amount of hours (straight time) awarded pursuant to the provisions of the Collective Bargaining Agreement with the Winnipeg Police Association. In most cases this compensation can be provided as time or pay as elected by the member. Statistics are based on a calendar year starting Jan 1 to the end of the given quarter. 1 Winnipeg Police Service… 11 Overtime hours have increased by 4.19% compared to 2014, but is still 1.13% lower than 2014. The trend over the last few years has seen decreases and this is the first year in some time that the Service has seen an increase in total hours. As previously noted in the report these increases have occurred in a small number of areas where specific projects were initiated. Also it may appear that 2014 may have been a very good year in lower requirements for overtime and that an absolute department minimum of overtime may have been reached. The analysis of results indicated that while most areas showed consistency in their hours, there were a small number of units that showed significant increase from last year. In almost all cases the increase was a result of planned strategies targeting certain needs. For the two that weren’t, one was a result of consistent shortages in complement resulting in callouts, (also results in lower salary costs) and the other was related to timing differences in recoveries of overtime for funded projects. A number of significant events and increased call volumes have also impacted this area. The Service’s budget management strategy is working and will continue the course. The Service has advised through its management that all discretionary overtime is to be avoided to minimize YTD variances for the balance of 2015. This has helped as we have been able to reduce our forecasted amount for overtime. Court overtime is slightly higher than last year, due to Collective Agreement increases. The Service anticipates that legislated changes to the requirement for police attending court will yield further savings, but as this process is being managed by the Province, no expected implementation date has yet been provided. Risk The major goal for the Service, outside of general operations, is the effort and resources required to move into the new Headquarters. This is the largest undertaking that the Service has seen in recent history and will result in significant changes in some areas as to how the Service conducts business. A firm date of December 15, 2015 has been set for the start of the move. There is still much work to be done to ensure the building is police-ready. Some last minute structural and backup equipment is being tested to ensure it is working as required, before the Service begins the move into to the new building. While moving staff and materials to Headquarters, some of the remaining facilities will also have to be maintained until the move is fully complete. While the end result of the move will be efficiencies in many areas, the duplication of services mid-move is a risk. With the move to the new Headquarters some processes will be reviewed to ensure that services to our customers are only minimally disrupted as some services, and payments of such may expect to be conducted at two different sites during transition. We have tried to minimize this by coordinating moves where possible. As well contracts with vendors and suppliers will be reviewed to ensure that services provided transition to Headquarters from the Public Safety Building, and those no longer required are cancelled. Winnipeg Police Service… 12 Complement As previously outlined, 2015 budget salary costs are already 84.8% of total costs and will over time comprise a larger percentage of the overall budget as increases in this area tend to be larger than increases in non-salary costs. As a result, a great deal of focus relates to maximizing these resources. In the previous year a recruit class of 14 was budgeted to start in the fall of 2015. With the requirement to find additional savings, this class was deferred until the spring of 2016 with an increase in number of recruits required to 48. Along with this, a higher forecasted attrition rate of 56 in 2015 was made due to: 1) cancellation of the Airport contract which would generate extra retirements 2) the move to the new Headquarters which could generate additional retirements At the end of the third quarter, it appears that retirements will be slightly under budget. Due to the delay to the new Headquarters, retirements that could have occurred earlier, were also likely delayed in conjunction with the deferred move-in date. The cancellation of the fall 2015 class will have an impact on the ability for the Service to support general patrol activities during the Christmas season, as normally the field training recruits assist during this busier time. Incremental overtime costs incurred, however, will fall into the 2016 budget year. Maintaining the complement of Cadets continues to remain a risk as attracting and retaining qualified applicants has been a challenge. It is anticipated that recent increases to the Cadet salary will be an incentive in attracting new recruits. A decrease in the requirement for police officer recruit classes has also reduced the opportunity for some Cadets to achieve their goal of becoming a police officer. This may have hindered hiring targets. A large Cadet class was hired in the third quarter to bring staffing to the authorized funded provincial complement. A perennial risk is the number of officers eligible for retirement at 25 years. Should a number of officers retire within a short time span, recruiting, training and general patrol operations will be impacted. In the staff sector considerable progress has been made in filling civilian vacancies. The only significant vacancy remaining is in the Communications Centre; a class in early 2016 will make considerable strides to bring staffing up to complement. Winnipeg Police Service… 13 Financial Outlook/Summary Third Quarter Forecast as of September 30, 2015 Year to Date Actual Total Revenue $ 2015 2014 27,176 $ 25,739 $ Adopted Budget 2015 44,870 $ Dec. 31 Forecast Current Variance From Budget 47,852 $ 2,982 EXPENDITURES Salaries and other earnings Debt and financing charges Other expenditures Recoveries 168,827 3,032 22,374 (487) 161,336 342 29,988 (475) 224,208 5,873 34,303 (406) 225,513 2,773 35,363 (756) (1,305) 3,100 (1,060) 350 Total Expenditures 193,746 191,191 263,978 262,893 1,085 166,570 165,452 219,108 215,041 4,067 Mill Rate Support/(contribution) $ Revenues As of the end of the third quarter, it is forecasted that revenues will come in significantly better than budget by $2.982M, with photo enforcement contributing to this additional revenue. The trend seems to indicate that drivers are getting the message about slowing down, especially in school zone areas. It is anticipated that revenues will begin to decline. Further work will continue to occur on traditional enforcement to determine what disposition trends are occurring on payments. Other revenues are as expected. . Salary and Wages The Collective Agreements, now in place until late 2016, will increase wages and benefit costs. The greatest risk to this budget area is attrition and predicting the actual rate and timing of departure. Staff vacancy amounts and positions are high for this year, and these will have an impact Service-wide on the ability to handle a number of workloads. By the end of the fiscal year the majority of vacancies will be filled. Vacancies are being filled, which will assist in the overtime area, especially in the Communication Centre. The overtime management strategy has been working well and we will continue to scrutinize overtime costs. The Service has seen a number of increases on funding changes for the police pension plan over the last three years; there is always a risk of further increases. Salaries and benefits are expected to be over by $1.305M due to $800,000 in pension costs and $300,000 additional Special Duty expenses (the latter being offset by revenue increases.) Winnipeg Police Service… 14 Other Expenditures While all costs are ultimately controllable, many of the Service’s yearly costs are either collective agreement driven, or under a contract of some type. Expenditure control on non-salary costs, where possible, has resulted in good financial results in this area and kept them under CPI and within budget. Most account forecasts are within acceptable variance at this point of time. The additional photo enforcement revenue has also increased expenses for the issuance of tickets. Expenses have increased by $949,000 for this category. Due to the move being deferred to December 15, 2015 the Service received a full facility credit which more than offset salary, pension, overtime, and photo enforcement expenses, resulting in the Service showing a favourable variance on expenses by $1.085M with an overall positive net mill rate contribution of $4.067M. Winnipeg Police Service… 15