November 2021

Last year, Council allocated $38 million to support Calgarians and businesses with several capital initiatives funded by the estimated 2021 annual operating variance. As these were budget items for 2022, they did not impact the 2021 operating variance but reduced the amount available for future allocation.

March 2022

The 2021 Year-End Accountability Report, shared with Council, noted a preliminary annual operating variance of $147 million.

April 2022

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 variance, leaving $105 million uncommitted for Council. 

Operating variances are calculated throughout the year. It compares the amount of inflows of funding sources and outflows of expenditures. If the inflows of funding are greater than the outflows, a favourable variance arises. Inflows and outflows follow City Budget and Accounting Policies.

The City does not budget for an operating variance. 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. 

Favourable variances can occur due to several factors, including City service adjustments, salary and wage, and higher than anticipated investment income. When a favourable variance 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.

When the financial statements are finalized, and the year-end audit is completed in April, the final annual operating surplus is known and captured in the Annual Financial Report. The total amount is then transferred to the Fiscal Stability Reserve/Budget Savings Account (FSR).

There are three sources:

1. (Once confirmed by the Annual Financial Report in May) the annual operating surplus,  
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, contingency funds held for potential liabilities that resolve more favourable than anticipated.

The Year-End Performance Report is a City-specific report. It comes to Council in March for the previous year’s 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 variance 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 in March, the Year-End Performance report shows an estimated value of the operating variance 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 annual 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 in May.

The City continues to refine the operating variance as the external auditor conducts their work. With time, more information becomes known about the year-end. For example, invoices for goods and services consumed the previous year continue to be sent to Corporate Accounts Payable in March. Accrual accounting procedures would then adjust the favourable operating variance for those amounts. The City continues to adjust the operating variance 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 the financial statements are finalized and the year-end audit is completed in April, the final annual operating surplus is known and captured in the Annual Financial Report released in May.

The Annual Financial Report is made available at public libraries and on the Financial Reports webpage.