Dollars & Sense P e r s p e c ti v e
Issue #115 • june 2021
Member Profile: Diana Lokken Fleet and Equipment Financing Small Communities’ Forum
p r es i d e nt ’ s m es s ag e in this issue President’s Message 2 Executive Director’s Message 4 Excellence in Local Government Finance Awards 7 Member Profile 8 Membership Survey 10 2021 Small Communities’ Forum 11 Collectors’ Corner 12 MFA’s Corner 13
Assessment Appeals: An Overview and Planning for Risk to the Roll 16 In Control: Why Monitor When We Know It Is Broken? 18 Construction Projects and the Benefits of an Owner-Controlled Insurance Program 19 Time to Renew: Understanding Group Benefit Renewals 21 Understanding Why Municipalities Are Paying More for WorkSafeBC Coverage 22 How Your Local Government Can Engage Citizens and Improve Budget Transparency 23 Quarterly Question 24 Thank You Exhibitors 25 Thank You Sponsors 26 2 | GFOABC.CA
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his year’s conference theme of “Response, Recovery, Resilience” was incredibly apropos, wouldn’t you say? Last year, when we all had to respond to the pandemic by pivoting on a dime (and then keep pivoting…), I expect many of us thought we’d be back to “normal” by now. Well, if we’ve learned anything over the past year it’s that normal is taking longer than expected to get back to and it’s likely to look different than we anticipated. We’re over a year into the pandemic and while recovery is still ongoing (definitely more of a marathon than a sprint), it is clearly showing us that local governments across BC are a resilient bunch. As an association, we quickly learned that although there are a lot of challenges, there are also surprising benefits to our new way of doing things. Our second virtual
Board of Directors Lorraine Coughlin President Nyla Attiana Vice President Rianna Lachance Secretary-Treasurer Trevor Thompson Past President
conference provided us, once again, the opportunity to reach out to our members and provide learning opportunities from the comfort of your desks, or maybe even dining room tables or couches for those working from home. This year, knowing everyone is pretty “zoomed-out”, we knew we had to keep the bar high and deliver sessions which would not only engage members from afar, but also provide networking and social opportunities we enjoy when we normally meet in person. And, as an extra bonus, once it’s over, it’s not completely over. One of the ongoing benefits of the virtual conference is that the sessions are recorded so if you missed one or need a refresher, you can go back and view it at any time. Given the terrific turnout and positive response we’ve had from
Directors at Large Julia Aspinall Jim Bauer Jeannie Bradburne Shelley Halm Kathy Humphrey Lenora Lee Talitha Soldera
Staff Kala Harris, Executive Director Erica Christie, Manager, Operations and Member Services Gerilee McBride, Graphic Design
attendees, I’d say we did ok! Kudos to GFOABC staff members Kala and Erica as well as the supporting technical teams and volunteers for working their magic to bring us a four-day event that not only educated and entertained, but gave us an opportunity to spend a bit of time to reconnect with our peers and gather new insights to help us continue to adapt as we ride out this third wave. Additional thanks go to our valued partners and sponsors - we couldn’t have done it without you. Our offerings don’t stop once the conference is over. GFOABC’s commitment to our Vision “To be the leading source for knowledge sharing
that empowers BC local government finance excellence” is ongoing, with Boot Camp, Quarterly Forums and Fall & Spring Pro-D programming. To enable us to maintain this high level of support to our members, the Board has committed additional resources to support our programming. Additional information will be provided over the upcoming months, but we are all very excited to be putting resources in place that will support our staff and members on an ongoing, sustainable basis. Speaking of our members, in addition to attending workshops, I encourage you to reach out to your peers
through the new and improved Online Forum. Sharing information on this platform will create a great resource for everyone. As our motto says, we are “Better Together” and the support we provide to each other and connections we have made continue. If you have any comments or suggestions on what you’d like to see from your Association, please feel free to reach out to any Board or staff member. We’d love to hear from you! Lorraine Coughlin, GFOABC President
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e x e c uti v e d i r e c t o r ’ s m es s ag e S
urviving and thriving while recovering from the impacts of the global pandemic feels a bit like one big collective stretch goal. For more than a year now, the pandemic has forced many to stretch way beyond their perceived limits, both professionally and personally. For the association, the first virtual annual conference last year was a huge stretch goal for this small two-person team. The monumental effort was rewarded on so many fronts. It supported our members early in the pandemic by providing the only opportunity that we had to come together at the time. We
As we close out another successful virtual conference, we want to say a big thank you to all of you who stretched past your perceived limits to attend, engage, and present in yet one more virtual event to make this year’s conference even more successful than last year’s. We know that we are still in precarious times, we hoped that the conference—for a moment or two—provided a reprieve from the “new normal”. We are incredibly grateful for the dedication of our members, sponsors, exhibitors, and speakers for their support of and engagement in the conference programming and social events.
From left to right: Best Cat Co-worker, Best Dog Co-worker, Best Work from Home Staging
were able to leverage what was learned to deliver virtual Boot Camp and Fall PD programs. For this year’s conference, the stretch goal was to deliver an even more engaging conference program and events. We added micro-learning sessions and social events to an already full program and upped our social media and marketing game to increase awareness and participation. 4 | GFOABC.CA
To the speakers, we are eternally grateful for your time and expertise. This year’s donation in lieu of speaker’s gifts went to the YMCA-YWCA Vancouver Island’s Camp Thunderbird. Thank you to Board members, Lenora Lee and Rianna Lachance, for presenting this year’s donation to the Y’s CEO, Derek Gent. We are happy for the opportunity to give back to the community.
As a team of two, Erica and I rely on a small army of event and communications support to stretch our ability to deliver our annual conferences. A big thank you to Lya Iglesias from Every Aspect Management, Shawn Lam and Rob Hunt from SLV Audio Visual, the team at EventMobi, Gerilee McBride for graphic design, Cindy Dale for communications support and Tara Clark from Social T for helping us build some social media muscle. Last, but not least, a big thank you to the of Board of Directors and Committee Members for their participation and support in delivering the conference program and for their leadership and support throughout the past year. We hope to see you all in-person in Penticton for the 2022 Annual Conference!
(Top) Team: The Dog ate my beans while camping in New York City! You had to be there! (Bottom) Team: Empress and the Royal Entourage
Kala Harris, Excutive Director
YMCA YWCA Vancouver Island’s Camp Thunderbird Donation in Lieu of Speaker Gifts Presentation
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THANK YOU! Thank you to our members who volunteered their time to help us deliver our programming and provide input to our various working groups. This is your Association without you our work would simply not be possible. Wayne Anderson, City of Merritt Nyla Attiana, Village of Tofino Komal Basatia, City of Abbotsford Sharon Beaudoin, District of Saanich Kevin Bertles, City of Armstrong (retired) Parissa Bhullar, City of New Westmister Sally Bhullar-Gill, City of Surrey Tammy Boulanger, District of 100 Mile House Jeannie Bradburne, Nanaimo Regional District Angela Brain, City of Delta Nelson Chan, Capital Regional District Nelson Chan, Capital Regiional District Kathy Chen, Town of Sidney Phoebe Cheng, City of Vancouver Stephanie Clarke, City of Whiterock Lorraine Coughlin, Town of Gibsons Rick Danyluk, District of North Vancouver Genelle Davidson, City of Kelowna Cara Dawson, City of Kamloops Carolina De Moura, City of Vancouver Mikaela DeBoer, City of Delta Alberto DeFoe, CAO for Lake Country Jackie Dueck, City of Kelowna Mark Ferguson, City of Kelowna Teri Fong, Alberni-Clayoquot Regional District Myriah Foort, Comox Valley Regional District Tanya Garost, District of Lake Country Dianna Gies, District of Tumbler Ridge Carolyn Gillis, Kootenay Boundary Regional District Kerry Hall, City of Colwood Elma Hamming, City of Rossland Andrew Hoge, Capital Regional District Kathy Humphrey, City of Kamloops
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Eva Juca, City of Burnaby Sharleen Karamanian, District of Saanich Leigh Kreitner, City of Chiliwack Rianna Lachance, Capital Regional District James Lawson, City of Kelowna Jennifer Lockhart, City of Victoria Mayor Lori Ackerman, Fort St. John Milo MacDonald, Fort St. John Marina Marzin, City of Vancouver Michelle McElroy, Village of Gold River Charlotte Osborne, City of Cranbrook Chris Paine, District of Oak Bay Ashley Palmer, Whistler resort Municipality Carolyne Perera, City of New Westminister Erick Peterson, City of Williams Lake Aaron Price, City of Surrey Doug Rae, Thompson-Nicola Regional District Marilyn Rilkoff, Central Okanagan Regional District Shelly Ryan, City of Coquitlam Andrew Samson, Village of Cumberland Angie Schumacher, City of Kelowna Karen Sharp, Village of Radium Hot Springs Lyle Smith, District of Peachland Talitha Soldera, District of North Cowichan Talitha Soldera, District of North Cowichan Doug Spindler, City of Burnaby Curtis Staniforth, City of Langford Ron Storie, Thompson-Nicola Regional District Sheila Thiessen, City of Merritt (Retired) Trevor Thompson, City of Maple Ridge Andy Wardell, District of North Vancouver Ken Yew, City of Kelowna Farouk Zaba, City of Port Coquitlam
Excellence in Local Government Finance Awards
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rom financial administrator to trusted financial advisor, finance officers and their teams play an extremely important role in the communities they serve and the organizations in which they work. The Excellence in Local Government Finance Awards recognize the many outstanding achievements and contributions that local government finance professionals make in building sustainable communities across the province. Congratulations to this year’s recipients of the Excellence in Local Government Finance Awards: Outstanding Achievement Chris Paine, District of Oak Bay Fifty-year Sustainable Infrastructure Replacement Plan, City of Colwood
Outstanding Achievement City of Campbell River, Finance Team Financial Stability and Resiliency Program
Outstanding Contribution Rick Danyluk, District of North Vancouver Past Board President, long-term financial planning education and continued champion of excellence in local government finance. Life Member Marilyn Rilkoff, Central Okanagan RD Past Board Director, stewardship of the regional district email forum & Regional District Day workshop and unwavering commitment to excellence in regional district finance.
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M e m b e r P r o f i le RIANNA LACHANCE interviews diana lokken
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n February 22, 2021 CPABC announced that Diana Lokken was awarded the CPA fellowship designation (Nov 25, 2020). I recently had the pleasure of connecting with her on this honour over a virtual lunch. As a finance professional, passionate and committed to local government, I jumped at the opportunity to hear firsthand what this award meant to Diana and to reflect with her on her career to date. Diana is a board director who is widely recognized for her financial, analytical and business development acumen. She brings invaluable experience gained as a leader in the Capital Regional District (CRD/CRHD) in Victoria to her community involvement today. Diana obtained her designation in 1981 and took on progressive leadership positions with CRD, including Director of Finance & Corporate Services, and General Manager of Finance and Technology. In 1984 she was appointed the CRD Treasurer, the first woman in BC to hold an officer position in a regional district, breaking new ground from the start. She was instrumental in expanding community services across the region, developing funding methodologies for initiatives & services with over 200 service entities. Among her achievements was a sustainable funding program for Arts Development and for the historic Royal and MacPherson theatres. “We were a high performing group with overwhelming commitment and dedication to the organization, we were responsive to the needs within the region many of which could not be delivered any other way.” Her work leading First Nations coordination with the CRD, included negotiating one of the first taxation
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agreements in BC with a First Nation. Diana also led a Federation of Canadian Municipalities partnership program in Ghana, improving revenue generation and financial systems. Beyond the CRD, she is an outstanding volunteer, Diana has contributed her time and skill to finance and accounting related organizations for over three decades. Diana served both GFOA of Western Canada and GFOABC including as president. In 2019, she received a Life Membership from the Canadian Association of Government Finance Officers, in recognition of her contributions at the provincial, national and international level. Diana represented local government as a trustee on the BC Municipal Pension Plan Board from October 2013 to December 31, 2019. For decades the plan had been in an actuarial deficit. “By 2019, when I left, the plan was actuarially fully funded, I am very proud of this achievement of the Board.” “This [fellowship] award has meant the world to me… when I received the call I could not stop smiling…I was grinning from ear to ear and could not stop for days!” Diana joins two other former CRD finance staff as CPA Fellows: Rita Estock (former CGA BC Board Chair) and Bob Strachan, (former CPA Canada Board Chair and co-chair of the National Steering Committee overseeing the formation of CPA Canada in 2012). Diana currently volunteers with Beacon Community Services (board member) and the Friends of Government House Garden Society. I thank Diana for her example and exemplary service; please join me in congratulating Diana on this outstanding accomplishment. We applaud you, Diana.
Considering A Reporting Automation Solution? Congratulations to Nelson Chan of the CRD for being awarded the CPA fellowship designation along side Diana. We will be recognizing his achievements in the September issue of Dollars and Sense.
RIANNA LACHANCE has been a GFOA BC Board Director since 2020 and currently serves on the Board’s Education Committee, External Relations Committee and the Joint Pension Committee adding to past volunteer role in co-chairing the member budget forum for several years. She is currently the Senior Manager of Financial Services for the Capital Regional District, Capital Regional Hospital District and the Capital Region Housing Corporation. She is a senior finance and accounting professional, with leadership experience in public practice with KPMG and industry experience in both private manufacturing and local government both in municipal and regional district environment. She brings a passion and commitment for innovation and education in local government finance.
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Membership survey online forum
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his past January we surveyed the membership on our communication tools to determine how we can best reach our members. Our goal is not only to share important information with our membership, but also to facilitate valuable collaboration opportunities between local government finance officers around British Columbia. Information sharing should not go in one direction, but rather be a dynamic two-way street. After all we are better together. We believe we can facilitate this give-and-take information sharing arrangement using the online forum, located on the GFOABC website. The forum is a place where finance professionals are encouraged to share best practices and post their questions, answers and comments so others working in local governments around the province can benefit from our collective knowledge.
forum. In order to address the remaining reasons we will identify opportunities to educate, inform and remind the membership that the forum is there and how to use it. It is clear that those who use the online forum find great value in it, so let’s get the message out! Since the survey was taken, we have launched three online forum Groups. The ARO Workshop Series attendees have a private group for participants to share documents and ask questions as they proceed through the ARO process. Additionally, regional districts and collectors have started online forum groups where they can ask questions and provide answers to their peers around the province.
SURVEY STATISTICS • 79% of survey respondents have used the online forum • Of the people that have used the forum: » 13% use it daily or weekly » 36% use it bi-weekly or monthly » 48% use it quarterly or annually » 2% used it once and never again • 43% post new discussion topics • 58% comment on existing discussions • 5% have created a poll • 8% have updated their profile to include a photo or custom signature • 30% have set up email notifications
When asked what prevented respondents from using the online forum, 35% indicated lack of knowledge, training or awareness. 20% didn’t like the concept of a public forum or preferred in-person discussion and 45% had been meaning to but hadn’t gotten around to using it. We have since made the online forum accessible to members only which should alleviate any concerns around a public 10 | GFOABC.CA
Great things are happening in the online forum and we hope to carry this momentum forward with the help and participation of the membership. To get started: • Bookmark the forum in your browser • Update your profile picture and signature • Input your notification preferences
And start engaging today! Erica Christie Manager, Operations and Member Services
2021 Small Communities’ Forum
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orking as a Finance Officer in a small community is a very rewarding and challenging career. Aside from a short commute, there are other benefits. As the finance officer you are a key part of the municipality’s management team and will gain experience and face challenges that you might not be exposed to in a larger municipality. This is a result of the large span of responsibilities that the finance officer takes on in a small community. Often finance officers in small communities are unable to have regular interactions with other financial professionals. Attending conferences and taking professional development can be difficult due to the financial cost and time limitations. GFOABC committed to providing additional support by holding a Small Communities’ Forum during the 2020 virtual conference. In May 2021, I was pleased to work with Nyla Attiana – District of Tofino and Lyle Smith – District of Peachland to present the second Small Communities’ Forum. The forum was well attended and extended past the scheduled time frame to address all the topics that were submitted. The forum was recorded and is included in the 2021 Conference APP and can be viewed by those who were unable to participate in the live forum.
It was an opportunity for finance officers to ask questions and to share solutions and resources with each other. The grant checklist Nyla Attiana mentioned during the forum, has been shared to the 2021 Conference APP under the agenda item for the Small Communities’ Forum. The discussion covered many items. Some of the key points were: • Ongoing communication with other departments is key, especially for asset management, controlling operating and capital costs and grant funding.
more often, possibly quarterly. LET US KNOW. This is a group of dedicated finance officers who are rising to the many challenges as they provide outstanding financial stewardship to the small communities of BC. The fact that they are willing to work together by sharing and supporting each other, is impressive. I am proud to have worked with this outstanding group and consider my experience in small municipalities one of the highlights of my career.
• IT support is often difficult for smaller communities due to cost and availability, and is a major consideration when considering software solutions. • Asset management and ARO’s are projects that require support of the whole organization, finding time to do the required work is challenging. • Managing expectations for service levels and taxation needs to involve both the public and the internal stakeholders. The participants appreciated the chance to ask questions and share their issues and successes. In order to provide this support on an ongoing basis, it has been suggested that the Small Communities’ Forum be held
SHEILA THIESSEN, CPA, CMA retired in 2020 after working in a variety of positions over her 20-year municipal finance career. Having worked at the Thompson Nicola Regional District and the City of Surrey she found her work at the small communities of Clearwater and Merritt as the Director of Finance the most rewarding.
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c o l le c t o r s ’ c o r n e r 2021 Conference Collectors’ Forum Session
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ver 80 finance officers attended the Collectors’ Forum session at the 2021 virtual annual GFOABC Conference. The session was facilitated by Doug Stein, GFOA facilitator. The guest speakers were Michael Moll, Young Anderson; Kally Khaira, Annual Property Tax, MOF; Joshua Craig, Local Government Finance, MAH; and Michael Spatharakis, Manager, BC Assessment. During the first presentation, Michael Moll discussed “Collections – Other Remedies”. Other than tax sale, Michael explained the other methods of tax collection that collectors have at their disposal. In addition to the requirement to issue tax notices, other collection methods are: civil claim for debt (a Council resolution is required), distress (goods and chattels such as rent due to a landlord), as a charge against land, and land in lieu of taxes. He recommended against using a collection agency and stated that if a collection agency is used, the agency fees/commission should be charged to general revenue and the full amount of outstanding taxes be applied as paid. He also reminded collectors that the write-off provision is designed for uncollectible (as opposed to uncollected) taxes and not writing off a tax levy.
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Next, Kally Khaira from the Ministry of Finance, Annual Property Tax reported on the implementation of home owner grant centralization and year 2 of the property tax deferment centralization. She stated that call volumes are way down compared to last year and the contact center is fully staffed. Over 72,000 grant applications from municipalities and the rural area have been received to date. She noted that ownership validation is done as part of the post-approval discovery audit. A special webinar is scheduled for early June to discuss PAT account issues, but an amendment to the legislation (coming soon) is required in order to do grant adjustments. Joshua Craig, from the Ministry of Municipal Affairs discussed three subjects. The results of the survey that was sent out to the collectors as to how the annual tax sale may be affecting vulnerable property owners. Joshua noted that municipal staff go beyond the legislated requirements to assist owners to understand the ramifications of tax sale. The ministry is gathering information and additional data in order to determine if legislation needs to be amended or have a best practices
guide. Joshua also outlined the changes to the LGDE reports. In conclusion, Michael Spatharakis from BC Assessment spoke on the subject of the assessment appeals process, including the roll of PARP and PAAB, the importance of the Risk to Roll report, and AssessmentLinkBC reporting. Thank you to GFOA for sponsoring the Collectors’ Form session at the Conference and the quarterly Collectors’ Forum webinar. The next Collectors’ Forum webinar will be July 28th.
DOUG STEIN has worked in municipal finance for over 30 years. In 2011 he retired from his position as Manager of Revenue Services for the District of Saanich. Doug leads the Collectors’ Forum, is a GFOABC Life Member, and a CPA, CMA.
M fa ’ s c o r n e r fleet and equipment financing
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hether you are planning to upgrade IT systems, replace a piece of heavy equipment, or purchase a fleet of vehicles, the Municipal Finance Authority of BC’s (MFA) Equipment Financing Program is a flexible, affordable financing option that can help you get the equipment you need, without breaking the bank. Unlike many private lenders, the MFA offers the same low interest rates to all clients, regardless of equipment type or value, and does not charge any fees. The program is available for both new or used equipment, you retain ownership of the assets and you may make extra principal payments or pay loans out at any time, with no penalties. If you are looking to finance multiple pieces of equipment at once, you may group them in one loan or set up individual loans, according to your preference. The Equipment Financing Program features a variable monthly interest rate (currently under 1%), and a fixed monthly payment schedule, which makes budgeting accurate and simple. If interest rates move down over the life of the loan, the loan will be paid off early or the final payment will be lower; conversely, if interest rates move up over the life of the loan, the final payment will be higher.
Of course, a major benefit of using borrowing to fund equipment purchases is the ability to spread costs out over the useful life of the assets. Equipment financing loans are authorized by a Council or Board resolution and have a maximum fiveyear term, however, they may be renewable, to a maximum of twenty-five years. No Ministry of Municipal Affairs approvals are required, but please note that loans over five years do require elector approval. With many local governments declaring a state of climate emergency we have seen increased interest from clients wishing to use the Equipment Financing Program to purchase fleets of electric vehicles. Replacing fossil fuel powered vehicles with electric vehicles demonstrates a commitment to lowering greenhouse gas emissions, but is a significant capital investment that cannot always be funded with existing reserves. The City of Victoria recently used the program to expedite the electrification of its fleet. This allowed them to advance the replacement of a number of pieces of equipment, in accordance with their Climate Leadership plan. Feedback from the City indicates that the process for obtaining an Equipment Financing loan was simple and that financing
multiple pieces of equipment under a single loan is working well for them. If you are interested in learning more about the program, there is a loan calculator and application form available in the secure client portal, which will generate cost estimates, based on current interest rates and there are sample Council or Board resolution templates available on our website (mfa.bc.ca/resources/ processes-templates). Should you have any questions about the Equipment Financing Program, or any of our other lending programs, please email finance@ mfa.bc.ca and I will be happy to help you work through the processes and requirements.
LAUREN KERR is the Credit & Compliance Officer at MFABC. She joined the organization in 2017, following eight years with the Ministry of Municipal Affairs.
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Understanding PSAB’s Conceptual Framework
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he deadline for comment on the Public Sector Accounting Board’s exposure drafts on conceptual framework, and financial statement presentation is fast approaching – June 30th, 2021. The conceptual framework project has been underway for more than 11 years and represents a once-in-a-generation opportunity to influence the principles that form the foundation of public sector accounting standard setting. To inform responses to these exposure drafts, certain significant areas of impact on public sector financial reporting should be considered: 1. Reporting of actual financial performance to budget – The proposed conceptual framework and reporting model recommends that budget information presented in the financial statements be prepared on the same basis of accounting, and follow the same accounting principles for the same scope of activities as the financial statements themselves. Where the budget presented is prepared based on other accounting principles (such as a cash-basis), a reconciliation must be provided to show the impact if accrual-based principles were applied. For many local governments, this will represent a significant challenge unless they are already using accrual-based budgeting. PSAB’s proposed reporting model also details circumstances where a public sector entity may present an amended approved budget. The permitted circumstances for presentation of an approved amended budget relate to when there has been a change in governance initiated by the primary financial statement users (either an election and the newly elected government prepares a new budget; or where the majority of the public sector entity’s governing body has been newly elected or appointed and it approves a new budget). Outside of these circumstances, only the original approved budget may be presented. This will be a departure in practice for many local governments, who favor presentation of a revised budget approved by Council during the fiscal year. 14 | GFOABC.CA
2. Disclosure of non-compliance with financial authorities – Public sector entities will be required to disclose whether their financial affairs were administered in compliance with appropriate financial authorities during the reporting period. While this is not a new requirement under the conceptual framework, local governments should consider whether their policies are consistent with financial authorities (such as those under the Local Government Act) in relation to revenue, borrowing, investing, expense and expenditure limits. 3. Disclosure of risks and uncertainties – The proposed conceptual framework and reporting model requires that financial statements provide information to describe the risks and uncertainties that could affect the public sector entity’s financial position or changes in financial position. Risks and uncertainties are currently addressed with the risk disclosures required in PS3450, Financial Instruments, and PS3300, Contingent Liabilities, though required disclosures could be expanded with future accounting standards. 4. Exclusions on inherited natural resources, Crown lands, art and historical treasures and developed intangibles will be moved out of the conceptual framework into PS1202, Financial Statement Presentation. This opens the door to future standard developments which may enable the recognition of natural assets, which remains a top priority for many local governments and their stakeholders. 5. Change in financial statement presentation. With PSAB’s proposed reporting model, the Statement of Financial Position will no longer present the net debt / net financial assets measure. This measure will instead be emphasized with its own separate statement. This presentation difference could impact several local government stakeholders. The presentation of net debt / net financial assets on the Statement of Financial Position made it much more transparent and accessible to users. This measure clearly informed local government taxation and financing policies, as it distinguished financial position with the significant
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BAILEY CHURCH leads the National Public Sector Accounting Advisory service line at KPMG. He has an extensive background serving the Government of Canada, provincial governments, crown corporations, municipalities, not-for-profit organizations and for-profit entities pursuing significant transactions with public sector entities. His over 17 years of experience includes substantial work in financial management, accounting, financial reporting and auditing matters within the public sector environment.
Delays in the WCB system causing you stress?
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Don’t miss this opportunity to influence the principles which will guide public sector accounting standard setting into the future. Provide your input to the exposure drafts by June 30th, and make your views heard. As you develop responses, analyze the impacts of the exposure drafts on your local government’s financial reporting and budgeting processes. This is an extremely exciting time for public sector accounting standard setting in Canada. Engage in the process, and make sure your local government and your stakeholders’ needs are considered by the Board in the approved conceptual framework and reporting model standards.
Weighed down by high WorkSafeBC costs?
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capital spend of many local governments. With PSAB’s proposed reporting model, most local governments will now report a significant accumulated surplus balance on the Statement of Financial Position, which will not be in context for users. The significant accumulated surplus is not representative of the true surpluses available for local governments to spend and use, as it includes amounts invested in Tangible Capital Assets. This could be misleading to many users of local government financial statements.
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Assessment Appeals: An Overview and Planning for Risk to the Roll
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rocedural fairness is demonstrated in property taxation systems when taxpayers have the ability to file an appeal before an independent arbiter. The following is an overview of British Columbia’s (BC) assessment appeal process and tools assisting local governments (LGs) in mitigating potential tax revenue loss. BC has two levels of formal review: (1) the Property Assessment Review Panel (PARP) and (2) the Property Assessment Appeal Board (PAAB). Both are provincially appointed, operate independent of BC Assessment (BCA) and LGs, and render decisions based on evidence presented during their proceedings. Evidence can include comparable sales, assessments, and/or income valuation inputs. A person may file a notice of complaint (appeal) by January 31st to the PARP against any assessment roll entry for the following grounds: • Errors or omissions respecting the name of person or the land and/or improvements; • Failure to assess at actual (market) value; • Failure to classify correctly; and • Improper granting or denial of an exemption. During PARP hearings, both BCA and the complainant present evidence supporting their position. The PARP renders their decision at the hearing, with the assessor delivering complainants a formal notice of decision by April 7th. BC’s Assessment Appeal Process
Over the past 10 years, 98.8% of Completed Roll assessments have been accepted without appeal to the PARP. Moreover, 99.8% of the Completed Roll assessed value has been maintained on the Revised Roll. A person may file a notice of complaint and pay the prescribed fee by April 30th to the PAAB if they are dissatisfied: • With a decision of the PARP; • With an omission or refusal of the PARP to adjudicate a complaint; or • With a PARP bypass amendment to assessment roll. PAAB appeals are typically heard via written submission, with the complainant and respondent presenting evidence supporting their position or a joint recommendation to alter an assessment. The PAAB delivers notices of decision to appeal parties and posts decisions on their website.
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PARP Statistics
Dobay N., Nicely, F., Sanderson, A., and Sanderson P. (2019). The Best (and Worst) of International Property Tax Administration. Retrieved from: ipti.org/ wp-content/uploads/2020/05/ COST-IPTI_Property-TaxScorecard_FINAL_June-2020.pdf
Over the past 10 years, 83.9% of Revised Roll assessments have been accepted without appeal to the PAAB. The average change in assessed value for folios appealed to PAAB is -4.5%. Providing over $8 billion in annual funding for community services, the stability of the assessment roll is critical to LGs. BCA maintains a high level of roll acceptance and stability by undertaking annual roll quality initiatives, communicating with LGs, and providing access to various tools and reports. Notwithstanding, sometimes appeals are successful; thus, it is important for LGs to allocate sufficient assessment appeal reserves to account for potential property tax refunds1. BCA supports this process by providing confidential risk to roll reporting. Risk to the roll is a statement of actual change, or an estimate of potential change to the Revised Roll due to Supplementary Roll entries. In early January and August, BCA provides LGs with comprehensive reporting including direct links to self-serve Roll Stability, PAAB Statistical Summary, and Supplementary Statistical Summary reports on Assessment LinkBC (ALBC). The ALBC reports, updated after each Supplementary Roll cycle, summarize resolved and unresolved appeals and non-PAAB supplementary assessments, thereby, assisting LGs in budgeting adequate appeal reserves.
Assessment LinkBC Risk to Roll Reporting
Manager, Local Government Relations, MICHAEL SPATHARAKIS has worked as an accredited appraiser and assessor (Appraisal Institute of Canada) for 16 years. He holds a Bachelors of Arts (VIU), a Certificate in Real Property Valuation (UBC), a Certificate in Local Government Administration (CapU), and a Masters in Public Administration (UVic). JUNE 2021 • DOLLARS & SENSE PERSPECTIVE | 17
In Control: Why Monitor When We Know It Is Broken?
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hen chatting with clients we hear “Listen, I know XYZ process is broken. Why waste time monitoring it when we could spend that time fixing it? Aren’t we checking the pulse of a dead patient?” While this may seem logical at first, it has misconstrued monitoring as a reactive process, when in actuality it is part of a proactive process. In the dire scenario above, monitoring is not checking the pulse; it is performing an autopsy. Its focus is not to confirm that, yes the process is broken, but is to gather information to implement changes. Monitoring is not in place of fixing the issue; it is part of resolving the issue. In today’s fast-paced world, information is often needed yesterday, transactions are far more complex, and it often feels like there are less resources available. In this environment, the ability to trust your processes and rely on the data is paramount. This begs the question: how do you know the control activities you are counting on are present and functioning? This is the role of monitoring. Risk exists, and the intent is not to eliminate all risk. Rather, when monitoring, the focus is to determine if controls are present and functioning at a level that reduces the risk to an acceptably low level. Monitoring controls do just that by examining what controls are failing and why. Further, through continuous monitoring, the process can go one step further by testing to see if the issue reoccurs or if any new issues arise. Unfortunately, this process is all-too-frequently overlooked, as historically it has been too time-consuming. Under more traditional methods, monitoring was largely manual and required far too many resources. This made monitoring infrequently done, if done at all. However, just like a smartwatch has made it easier to monitor your health in real-time, technology such as computer-assisted audit techniques have made continuous monitoring more accessible. This technology can significantly cut down on
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drudgery, and ultimately reduce the time it takes to fix or improve your processes. The demand for reliable data and processes will not slow down, as decisions need to be made, and operations will need to carry on. At the same time technology has made monitoring more accessible than ever. While monitoring is only one part of implementing a robust control framework, the question is this: do you want to continue to bury your head in the sand, or do you want (and need) to have processes and data that you could bet your bottom line on?
MEGAN SOLES, CPA, CA, is a Principal Consultant at F.H. Black & Company Incorporated. Megan brings her passion for streamlining information into automated financial reporting systems and year-end preparation processes. “There has to be a better way” has defined her career. Megan has over 16 years of combined experience in the municipal sector and public accounting firms.
Construction Projects and the Benefits of an Owner-Controlled Insurance Program
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f you are embarking on a construction project this summer, it is time to consider your options for insurance coverage. Options for Construction Project Coverage Typically, the general contractor arranges an insurance policy to cover the project. The contractor passes on the policy premium (plus an administrative markup) to the owner as part of their fee. Owner-controlled insurance programs (OCIPs) provide another option. The project owner arranges a single insurance policy which covers risks arising from the entire construction project. Typical coverages under such a policy include course of construction (builder’s risk) coverage and wrap-up liability coverage. Benefits of Owner-Controlled Insurance Programs While it may be tempting to download responsibility for insurance to your contractor, there are several benefits of an OCIP: • Cost savings – An OCIP should result in lower construction bids, since the contractor will not need to charge an administrative markup related to insurance. It also gives you the option of shopping around for the best value in insurance policies. Often, the cost of insurance is buried in the contractor’s bid, so it is difficult to discern whether you are paying a reasonable rate.
• Greater flexibility – An OCIP gives the owner the ability to easily make changes to coverage as required during the course of the project, such as increasing values or obtaining extensions. Tips for Arranging Coverage Thinking about proceeding with an OCIP? Here are a few things you should know: • Start early – Contact your broker to discuss construction project coverage before the requirements in the RFP document are developed. • Be prepared – Prior to applying, have the following information ready:
• Better coverage – Arranging your own policy will give you confidence about the breadth of coverage and applicable policy limits. In contrast, if insurance is left to the contractor, it might be difficult to determine whether their policy meets your requirements.
» Available site plans
• Control of claims process – In the event that something goes wrong, an OCIP provides the local government (the named insured) with control over the claims process.
» Five-year loss history for the contractor (though this can be provided after tendering)
» Geotechnical reports » Cost breakdowns » Fire protection information for the site
Continued next page.
JUNE 2021 • DOLLARS & SENSE PERSPECTIVE | 19
OPTION
PAY OP
PROVIDING ADDITIONAL PAYMENT OPTIONS
The landscape of payment acceptance is forever changed. The recent shift in the marketplace from in-person face to face transactions to online, non-contact is unprecedented and profound.
Your broker will ask you to complete an application form with construction information, fire protection information, and other details relating to the project. • Explore existing coverage – If you are undertaking a renovation, the property in question is likely already covered by an insurance policy. Talk to your broker about whether that policy applies during the course of construction, and the extent to which it should be supplemented. Need a Quote? The MIABC sources course of construction and wrap-up liability coverage through its brokerage arm, Civic Risk Insurance Solutions. For more information, contact the MIABC’s Insurance Programs Administrator, Erica Shi, at eshi@miabc.org.
With no costs to the municipality, OptionPay is able to process card payments for all your municipal services including Taxes, Utilities, Permits, Licenses, Fines, Accounts Receivable, Campgrounds, Recreation, Arenas, Landfill and Bulk Water all while maintaining full PCI compliance.
For Information on how OptionPay can serve the residents of your Municipality, contact... Shawn Lawler shawn@optionpay.ca. www.optionpay.ca (403) 617-2696 (888) 460-7771 20 | GFOABC.CA
NICOLE PURVES is the Deputy Director of Insurance at the MIABC. Nicole has worked in the insurance industry for 20 years, primarily involved in claims handling, specializing in casualty claims. She has been with the MIABC since 2008. She has also received her designation as a Chartered Insurance Professional.
ERICA SHI joined the MIABC’s Insurance Department as the Insurance Programs Administrator in May 2018. In this newly created position, Erica’s role is strongly member-focused. She is the in-house subject expert for ancillary policy placements. She assesses and responds to members’ calls for changes to insurance programs and assists members in interpreting policy language. She also processes renewals, responds to new business opportunities and assists in the development of the Insurance Department’s business infrastructure. With 15 years experience in the insurance industry, Erica held multiple roles in the insurance company and different insurance brokerages. Erica graduated with a Bachelor’s Degree in Civil Engineering from Tongji University in Shanghai and later obtained a Bachelor’s Degree in Business Administration from SFU. Erica currently holds a General Insurance Agent Level 2 Licence and Chartered Insurance Professional (CIP) designation.
Time to Renew: Understanding Group Benefit Renewals
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enefit Renewal Factors To understand how benefit premium rates are set and move over time, it is important to understand the factors that affect a group benefit renewal. Plans are generally underwritten on one-year renewable terms and the plan’s financial performance is reviewed. Rates are adjusted, as necessary, to ensure plan sustainability for the coming year. Factors that affect a renewal include: • Benefit Usage – Extended health and dental plans are mostly influenced by the “expected usage” of the plan. Past claiming patterns influence future expectations. • Delivery model – The principles of group benefits state: the larger the group, the more advantageous financial terms they can obtain. There are multiple reasons for this, but the main reason is that there are some fixed costs associated with group benefits plans, and when a group is larger the insurance carrier is able to spread out these fixed costs over a larger population base. • Demographic profile – Incomebased benefits such as life and disability insurance rely on a plan sponsor’s demographic profile that include age distribution, gender mix, occupational and industry risk, and insured coverage amounts. • Trend Factors – Group benefit costs are expected to increase
over time due to general inflation, cost shifting between provincial health coverage and private health coverage, plan usage and fee guides (e.g. dental fee guide). • Reserves – Insurers will hold an Incurred-But-Not-Reported reserve that is adjusted each year to account for claims incurred but not submitted. Reserves are also held for long term disability claims to cover future payments that can be significant depending on the age and benefit level of the claimant. • Large Amount Pooling – Plans typically have protection for large claims incurred both in and out of Canada that includes a threshold (e.g. $10,000, $25,000, etc.). • Credibility – The larger your plan is, the more weighting will be placed on your claims experience when setting your rates. • Prospective Analysis – A group benefit renewal is a prospective analysis, meaning that premium rates are set to fund your program for future periods. • External Market Factors – Other factors also have an impact such as interest rates, changes in government programs (e.g. EI, CPP), changes in claim patterns and changes in cultural norms (e.g. mental health, chronic health conditions, etc.) The Renewal Process Renewals are completed on an annual basis and can take
anywhere from one to three months. Organizations generally engage an actuarial consultant or have a broker that represents their interests in the renewal process. The actuary negotiates with the insurance provider to ensure that costs/premiums are distributed in a consistent, unbiased, transparent and accountable manner and provides an allocation of benefit premium costs, where required. Negotiated premium rates for a renewal are based on the renewal factors noted above and include any changes that have occurred during the renewal period. Understanding the factors that affect your renewal and the process will ensure that you can make informed decisions and have a sustainable plan into the future.
KATHLEEN SPALEK, CPA, CGA is an accomplished senior finance professional with over 25 years experience working in industry and government including federal, provincial, education and local government. She is currently the Chief Financial Officer for the Union of BC Municipalities and has oversight for the financial and administrative activities of the organization. JUNE 2021 • DOLLARS & SENSE PERSPECTIVE | 21
Understanding Why Municipalities Are Paying More for WorkSafeBC Coverage
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ike any organization or business employing individuals in British Columbia, municipalities and regional districts are required to insure their workers in the event of a workplace injury that leaves the worker unable to perform their regular duties. This insurance is paid for by the premiums that all employers pay into WorkSafeBC, reflected as a percentage of payroll. Each rate class (there are 524) is organized by the degree of risk and hazard associated within it to ensure parity. Office workers generally enjoy rates as low as $0.15 per $100 payroll (low risk), up to a maximum base premium of $13.05 for ambulatory paramedics (highest risk). But there’s more… Depending on the total cost of claims in the previous three years, poor performers can pay up to 100% MORE than the base rate if their claims costs are higher than average, while those that are able to minimize their claims or costs can receive a discounted rate of up to 50% below their base rate. This ensures that those industries and organizations that are using the insurance the most are the ones that are actually paying for it, similar to the new rate structure introduced by the Insurance Corporation of British Columbia for drivers with little or poor driving history. 22 | GFOABC.CA
How have municipal rates fared over the years? Not well, as the table below illustrates: Year 2021 2020 2019 2018
Rates as a % of assessable payroll 2.60 2.19 2.08 1.91
Max wage ($) per worker $100,000 $87,100 $84,800 $82,700
This staggering 36% increase in four years is due to a number of factors, including an overall increase in the volume of incidents, longer and more complicated claims, and claims reflecting issues relating to mental wellness, such as PTSD, discrimination and harassment. What’s worse, if your organization is forced to pay a surcharge on top of that increasing base premium, the impact to your budget can be substantial. Municipal payrolls in BC vary from <$1.0M to $450+M, so you can see just how much WSBC premiums affect your bottom line. All of this highlights the importance of reducing your total claims volume and costs. By eliminating them altogether you should reap the benefits of a discounted position. But you can also take steps to effectively manage them when they do occur, to reduce the length and severity of each claim. Each dollar that WSBC pays on your behalf affects you for the next three years! However, claims management can be a complicated, intimidating and time-consuming process. Many districts will not have the capability or internal resources required to include these tasks into their daily workloads. Fortunately, there are third party providers that specialize in this field. Third party providers bring greater experience, expertise and resources to this challenging area. The net ROI through reduced WorkSafeBC premiums can cover the costs of partnership multiple times over. If your WorkSafeBC premiums are negatively affecting your budget, perhaps this may be an option worth exploring.
Working for TeksMed Services Inc., for the last 7+ years. ANDREW ZABORSKI thrives on finding beneficial solutions for organizations. By taking a consultative approach to business development, he has been able to consistently meet or exceed client expectations by suggesting programs or products that produce results.
How Your Local Government Can Engage Citizens and Improve Budget Transparency
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ow more than ever, citizens want to trust government leaders and feel connected to their local governments. In an EY global research project, Connected Citizens, 24% of survey respondents said that they would like more of a say in how services are provided in their community. Another 13% responded that they would like to become actively involved. Knowing this, how can your local government improve trust and engagement with the community? The importance of budget transparency The annual budget is how local governments determine the most important priorities for the community. Inviting citizens to participate in the budgeting process promotes budget transparency and helps to foster trust. For governments, this participation isn’t necessarily about building a consensus, but about providing a better understanding of what your government is trying to achieve. This includes helping citizens understand the difficult choices and trade-offs you might have to make in response to the pandemic, such as staff furloughs or raising taxes. When citizens are included in the budgeting process, they’ll be more open to supporting tough budget decisions. More importantly, by participating in the decision-making process, citizens are more likely to take ownership of their contribution and be committed to the decisions that they supported. The Institute for Local Government’s Public Engagement in Budgeting fact sheet states that increased public understanding of budgets can lead to “greater support for budgetary decisions as well as for measures to increase effective use of local revenues.” Use cloud technology to engage citizens and increase budget transparency According to the EY survey, only 36% of respondents considered local government to be trustworthy. Even with the best of intentions, poor communication with the
community can lead to mistrust and confusion. Citizens need consistent and accurate information to not only make sense of the conflicting information that they hear in the news, but also to know they can count on their local governments. Before the pandemic, most local governments held in-person budget meetings or shared budget documents that were difficult for the average citizen to understand. Cloud technology can help you build a better connection to citizens and provide an easy way for them to participate in the budgeting process. Cloud technology — including data visualization or budget simulator tools – can help your local government simplify big ideas with visuals of budget data on an interactive website or give citizens hands-on experience balancing a simulated budget. In most cases, citizens can provide feedback or share information on social media. Ultimately, these tools help you provide consistent information that citizens can access online, learn about the issues they care about, and provide valuable feedback. Don’t wait for your citizens to speak up. Invite the community to participate in the budgeting process and start having meaningful conversations with citizens about the budget. Cloud technology makes it easy for you to improve budget transparency and earn the trust of citizens. To learn more about cloud technology for budgeting and transparency, visit www.questica.com.
Headquartered in Canada, Questica is the recognized leader in budget preparation and management software. Over 800 public sector and non-profit organizations across North America have opted for smarter planning, budgeting, management, transparency and engagement with our solutions. QUESTICA is part of the GTY Technology group of companies. A GovTech 100 company. JUNE 2021 • DOLLARS & SENSE PERSPECTIVE | 23
CIVICINFOBC CIVICINFOBC
q u a rte r ly q u estio n
property taxes…what is the trend?
P
rior to COVID19, two thirds of municipalities reported 2019 property tax increase that exceeded those in 2018. For many communities, the pandemic brought economic uncertainty. In early 2020, many municipalities adjusted tax rates and tax collection time frames. Two communities reported offering a tax break in 2020 that was reversed for 2021. In one instance, the tax cut for 2020 was 30%. Half of the municipalities reporting still reported a rate increase for 2020 while a third chose to move to zero increase for 2020.
?
quarterly question
BC Assessment reports that the average 2020 assessment increase for the province was 4.2% including all property types. The Village of Tahsis showing the largest average assessment roll increase at 36%. Despite some initial concerns over economic slowdowns and taxpayer’s ability to pay during the pandemic, according to responses of the most recent poll, there was little change in the number of citizens accessing property tax deferral programs, with some communities reporting a decrease for 2020.
the next Quarterly Question: Purchasing Cards & Corporate Cards in Local Government APLEASE USE THIS LINK TO BE A PART OF THE RESULTS OF THE NEXT QUARTERLY QUESTION. YOUR PEERS WILL THANK YOU!
The survey should only take about 2–3 minutes to complete. The responses to this question will be profiled in the next GFOABC Newsletter. If you have a topic for a future quarterly question, please contact the office at office@gfoabc.ca or (250) 382-6871
If you would like to learn more about this free service, contact CivicInfoBC at info@civicinfo.bc.ca
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