Annual operating surplus timeline

Annual Operating Surplus Timeline

An annual operational surplus is the result of prudent financial management that aligns with the Municipal Government Act, City Charter and Council Policy. It reflects The City’s commitment to reducing costs, grow revenues and avoid financial shortfalls.

The City does not budget for an annual operating surplus. Council Budget Policy does not allow us to run an actual deficit, and we present Council with a balanced operating budget. Several factors might result in an annual operating surplus, including City service adjustments, salary and wage, and higher than anticipated investment income.

Surplus amounts are monitored and reported to Council throughout the year. The final amount of year-end surplus is shared with all Calgarians in the Annual Financial Report, which is finalized before May 1 each year.

2021 Annual operating surplus timeline and finalization


November

  • The City’s annual operating surplus projected as of September is shared with Council during The City’s One Calgary Plans & Budgets deliberation.
  • Council can choose to invest a portion of the annual operating surplus during the Budget Adjustment process.

March

  • The 2021 Year-End Accountability Report is prepared on the same basis as the budget and provides an update to citizens and Council of our progress towards delivering on our One Calgary Service Plans and Budgets. 
  • This report provides a second preliminary update of The City’s year-end annual operating surplus using preliminary year end data

April

  • The Annual Financial Report provides a comprehensive view of the 2021 consolidated financial statements including ENMAX, a wholly owned subsidiary and seven Related Authorities. This report is a 1 May legislative requirement in the Municipal Government Act. Public Sector Accounting Standards are used to prepare the report requiring an external audit opinion of the financial statements. The Annual Financial Report is shared with citizens and Council once finalized and made public at City libraries and on our Financial Reports on calgary.ca before 1 May. 

The final amount of the audited 2021 annual operating surplus was $143 million. In November 2021, Council allocated $38 million of the 2021 annual operating surplus, leaving $105 million of uncommitted surplus for future allocation at Council’s direction. 

Frequently Asked Questions


What is an annual operating surplus?

A surplus is calculated on an annual basis. It is a comparison between the amount of inflows of funding sources and outflows of expenditures. If the inflows of funding are greater than the outflows, a surplus arises. Inflows and outflows are in compliance with City Budget and Accounting Policies.

Do we budget for an annual operating surplus?

The City does not budget for an annual operating surplus. Council Budget Policy CFO004 Section 5.3(a) indicates that The City will not run an actual deficit and Section 1.2 indicates The City will present a balanced operating budget. 

How does an annual operating surplus happen?

An annual operating surplus can occur due to several factors, including City service adjustments, salary and wage, and higher than anticipated investment income. When a surplus occurs, it aligns with the Municipal Government Act, City Charter and Council Policy and reflects the commitment we made to reduce costs, grow revenues and avoid financial shortfalls. 

What happens with the annual operating surplus?

The annual operating surplus is transferred to the Fiscal Stability Reserve/Budget Savings Account (FSR) when the financial statements are finalized, and the year-end audit is completed in April.

What is the difference between the annual operating surplus and the Fascial Stability Reserve (FSR)?

The annual operating surplus is finalized every year and is a funding source of the FSR.

What are the funding sources of the Fascial Stability Reserve (FSR)?

There are three sources:

  1. Annual operating surplus once the external audit is finalized (i.e. The $143 million for 2021),
  2. Investment income earned on the balance of the FSR and;
  3. Previously committed one-time contingent funds that are no longer required. As an example, contingencies held for potential liabilities that resolve more favourably than anticipated.

What is the difference between the Year-End Accountability Report and the Consolidated Financial Statements?

The Year-End Accountability Report is a City specific report. It comes to Council in March for the previous year end, provides the status of the One Calgary Service Plans and Budgets and City efforts to deliver on citizen priorities. The report does include an estimated Operating Surplus value before it is finalized in the Annual Financial Report, using actual operating and capital financial figures based on the budget and as outlined in the Municipal Government Act. As presented to Executive Committee on March 15, the Year-End Accountability Report shows the value of the operating surplus was estimated at $147 million as of January 31.

The year-end consolidated financial statements follow all Canadian Public Sector Accounting Standards. This means the year-end figures are further reconciled. The report provides a comprehensive view of the 2021 consolidated financial statements as of 31 December, including ENMAX, a wholly-owned subsidiary and seven Related Authorities. This report is a 1 May legislative requirement in the Municipal Government Act. Public Sector Accounting Standards are used to prepare the report requiring an external audit opinion of the financial statements. The Annual Financial Report is shared with citizens and Council once finalized and made public at City libraries and on our Financial Reports on calgary.ca before 1 May.

What makes up the difference between the $147 million from the Year-End Accountability Report and the $143 million in the year-end Consolidated Financial Statements?

The City continues to refine the surplus as the external auditor conducts their work. With the passage of time, more information becomes known about the year-end. For example, invoices for goods and services that were consumed in 2021 continue to be sent to Corporate Accounts Payable. Accrual accounting procedures would then adjust the surplus for those amounts. The City continues to adjust the surplus for accuracy. In addition, there are small reconciling items between our budget reporting to Council in March and the final audited consolidated financial statement.  

When is the annual operating surplus finalized?

The annual operating surplus is confirmed at the end of April each year, after the finalization of The City’s Annual Financial Report. However, as shown in the next question Council has already committed (but not yet spent) $38 million of the 2021 annual operating surplus to specific investments.  Hence, the remaining 2021 annual operating surplus that is uncommitted is $105 million.

What is the final 2021 annual operating surplus?

The final 2021 Operating Surplus is $143 million, however as one-time funds were committed for the 2022 budget, the uncommitted amount is $105 million.

What is the difference between the $143 million and the $105 million?

During November 2021 Adjustments, the following were approved for the 2022 year and beyond (meaning neither the budget nor the actual expenditure occurred in 2021):

The amounts committed by Council in 2021 are a funding source.  The work begins in 2022 and beyond.  As such they will be budgeted in 2022 and become part of the annual inflows and outflows in 2022.

C2021-1436 attachment, Council proposed investments budget package: Funded from projected 2021 operating surplus Funded directly from the FSR

# filestream.ashx (escribemeetings.com)

Enhancing Investment in Affordable Housing $10,000,000  
Downtown Calgary Development Incentive Program   $55,000,000
Accelerating the Climate Strategy and Action Plans $300,000 $500,000
5B. Advancing Stream B of White Goose Flying. Spiritual Healing, Culture and Arts Commemoration $15,000,000  
Traffic Safety Improvements $2,000,000  
Improvements to Traffic Signal Timing / Traffic Flow and Critical Street Light Pole Replacement $6,000,000  
The Calgary Zoological Society – Canadian Wilds Redevelopment $4,250,000  

Subtotal

$37,550,000

$55,500,000

C2021-1436 Administrative recommendations, revised attachment 2 filestream.ashx (escribemeetings.com):

   
Equity Action and resourcing plan   $5,844,000
Additional year one investment in the Resilient Roofing Rebate Program   $3,250,000
Realignment   $591,000
Supporting our Relationship with Civic Partners, Wholly-Owned Subsidiaries (WOS) & Business Improvement Areas (BIAs)   $15,000
2022 Parks and Open Spaces Pandemic Recovery Program   $1,750,000
Executive Leadership Service Line Service Improvements   $12,000
Long Range Financial Plan (LRFP) Implementation Plan   $150,000
Privacy Program Strategic Plan - Reducing Implementation Time   $132,000
Energy Efficiency Retrofit ($250K/year for 4 years   $1,000,000
2020 Hailstorm Tree Replacement   $1,200,000
Accessibility Improvements - Sidewalks & Pathways & Facility Management   $250,000
Modernized Local Area Planning and Community Relations Resources (replaced with base funding)   ($3,500,000)

Total

$37,550,000 (c)

$66,194,000

The difference between the $143 million and the $105 million is noted in the table above as note c of $37,550,000.

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