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	Corporate Report
DEPARTMENT/	CAO's Office
DIVISION	Emergency Medical Services	REPORT NO.	2006.029
DATE PREPARED	January 19, 2006	FILE NO.
MEETING DATE	March 13, 2006
SUBJECT	Emergency Medical Services (EMS) Vehicle & Equipment and Facility Reserve Fund

RECOMMENDATION

THAT with respect to Report No. 2006.029 (Emergency Medical Services), we recommend that City Council By-law No 136-2003 be amended by removing clause 1 which states:

1. That the balance remaining in the EMS operating accounts at the end of each year be deposited into a reserve fund to be known as the EMS Vehicle, Equipment and Facility Reserve Fund.

AND THAT any necessary by-laws be presented to Council for ratification.

This report is presented in support of amending By-law 136-2003 to eliminate the practice of transferring Emergency Medical Services operating surpluses at the end of the fiscal year into the Emergency Medical Services (EMS) Vehicle, Equipment and Facilities Reserve Fund. Because of the way the EMS Division is established within the City accounting structure, a change introduced in 2003 had an unfavourable impact on the City of Thunder Bay’s share of EMS funding when a surplus was generated. Any
surplus transferred to the reserve fund was paid for 100% by the City of Thunder Bay instead of approximately 79% as per the cost sharing formula with other district municipalities. Conversely, prior to 2003, when a surplus was generated, the City of Thunder Bay kept 100% of the funding including the 21% contribution from other district municipalities.

By invoicing other district municipalities on actual costs versus budgeted costs and having any surplus retained by the City of Thunder Bay all municipalities will be making their fair and equitable contribution to operating costs, capital costs and necessary reserve funds. In the event an unfavourable variance should occur at year’s end, all municipalities would share in the extra cost as per the current weighted assessment formula.

The current practice of transferring any favourable variance at the end of the fiscal year from the EMS operational account to the EMS Vehicle, Equipment and Facilities Reserve Fund was intended to ensure that the City of Thunder Bay did not benefit from any surplus contributed to by all district municipalities. Since all municipalities contributed their share to any surplus, it seemed logical that any surplus would be placed in the reserve fund and thus benefit all municipalities in accordance with their share when funds were used from the reserve fund.

The practice of invoicing based on budgeted costs was changed to invoicing based on actual costs for the other municipalities in 2003. As a result, the City of Thunder Bay was adversely affected. The City’s share of EMS funding is not invoiced but is determined as the actual remaining costs after all other revenues have been received. In 2003 and 2004, the differences between the City’s budgeted contribution and the actual costs were contributed to the Reserve Fund in accordance with By-law 136-2003. The City was the only municipality to make this contribution, resulting in the City contributing about 19% ($92,059) more than necessary for those years.

In 2002, prior to the implementation of the by-law, a surplus of $421,397, which included the other municipalities’ portion of $80,065, was returned to the City. In 2001, an EMS deficit of $26,489 was paid for solely by the City of Thunder Bay. This prompted the first change to invoice municipalities on actual costs in situations of deficits. From 2001 through 2004, the City has contributed $38,483 more to the reserve fund than it should have based on the weighted assessment formula. To place this amount in perspective, the total amount transferred to reserves from 2001-2004 from operational accounts and operational surpluses is about $3.2 million.

The City of Thunder Bay would keep any surplus generated from EMS operating accounts while the other municipalities would only be invoiced for actual costs thus returning any EMS surplus to each municipal partner in accordance with the weighted assessment formula.

It is concluded that By-law 136-2003 should be amended to eliminate the transfer of any balance remaining in the EMS operating accounts at the end of each year to the Emergency Medical Services (EMS) Vehicle, Equipment and Facilities Reserve Fund effective December 31st, 2005.

The initial accounting structure established for Superior North EMS in 2001 fully incorporated the Division as part of the City of Thunder Bay budgeting process. The original invoicing to other municipalities was based on budgeted costs. By the end of the year, a small deficit of $26,489 was absorbed by the City. In 2002, an EMS surplus of $421,397 was kept by the City of Thunder Bay. This approach resulted in any over budget amounts to be paid for only by the City of Thunder Bay and any surplus being kept only by the City. To rectify this situation Report No. 2002.043 (Emergency Medical Services) prepared by Management Studies was presented to Council requesting the establishment of an EMS reserve fund with a clause stipulating that any surplus be allocated to the Vehicle, Equipment and Facilities Reserve Fund. The resulting by-law No 136-2003 was enacted on June 23, 2003.

None.