2010-11 Estimates Forms

1. 2010-11 Estimates Forms March 2010 Ministry of Education Training Sessions

2. Purpose: Training Methodology To explain what is changing in the forms/budgeting process • Provide a high level view of each new transaction, including rationale of why changes are being made. • Briefly, to the extent the policy has been discussed in previous presentations. • More detailed if concepts are new. • Describe which forms are changing and how, as they relate to each transaction. • This will form the bulk of the training. • Walk through the transactions using the new forms. • Sample EFIS forms have been provided in excel, into which boards can enter data. • The combination of the sample forms (which include detailed notes), power point package and instruction document provide comprehensive details of the changes. • Final EFIS forms will be issued with a detailed set of instructions.

3. Purpose: Budget Compliance To show the implementation of the new section 231.(1) of the Education Act (effective September 1, 2010). A board will be deemed to have a balanced budget if its expenses do not exceed its revenues for the fiscal year by an amount greater than the lesser of: • 1% of the board’s operating revenue for the school board fiscal year • the board’s accumulated surplus for the immediately preceding fiscal year This is often called the ‘1% provision’.

4. Overview The training session is divided into two main categories: • Setting up the September 1, 2010 opening balances • Budgeting for the 2010-11 in-year transactions

5. Overview – Opening Balances • Setting up the September 1, 2010 opening balances • Set-up opening TCA balance (Sch 3C) • Move funds / ATBR to accumulated surplus (Sch 5) • Appropriation for supported capital debt (Sec 12) • Implementation of DCC

6. Overview – In-Year Transactions • Budgeting for the 2010-11 in-year transactions • Relationship of transactions • Capital budgeting (Sch 3B) • Deferred revenue (Sch 5.1) • Deferred capital contributions (Sch 5.3) • Account receivable from / payable to province (Sch 5.2) • Allocations (Sec 1A) • Transfer payments (Sec 1B) • Adjustments to expenses for compliance (Sch 10 ADJ) • Revenues (Sch 9) • Statement of operations (Sch 1.1) • Checking for compliance (Compliance Form)

7. 1a) Opening Balances – Tangible Capital Assets (TCA) Purpose • To record Tangible Capital Assets (TCA) to be in compliance with PS3150 • Entry is to include TCA in accumulated surplus • This J/E reverses the amounts that have been expensed in the past for TCA expenditures and records the amortization that would have been incurred on these assets up to Sept 1 2009 JE – September 1, 2009 DR -Tangible Capital Asset (TCA) 763,022,895 CR - Accumulated Amortization – TCA 94,883,517 CR - Accumulated Surplus / (Deficit) - Unavailable for Compliance 668,139,378 {Amounts are from Opening TCA balances on tab S3C-PY (pg 16) and Net TCA balance on tab Work4 (pg 10) of Estimate Forms example provided} 6

8. 1a) Schedule 3C Opening Balance - Walkthrough • Start with Sch. 3C (prior year, 2009-10) – pg 16 of Estimate Forms • For Costs • Enter the September 1, 2009 opening balances which would be the August 31, 2009 closing balance (from 2008-09 schedule 3C) • Enter all expected additions/betterments from the 2009-10 school year • Enter all expected disposals from the 2009-10 school year • For accumulated amortization • Enter September 1, 2009 opening balances would be the August 31, 2009 closing balance (from 2008-09 schedule 3C) • Enter expected amortization expense for the 2009-10 school year • Enter expected disposals/write-downs for the 2009-10 school year • Closing Balances are forwarded to Sch. 3C (2010-11) (pg 15 of Estimate forms) • Sch. 3C (2010-11) would be completed similarly to Sch. 3C (prior year, 2009-10)

9. 1b) Reallocation of fund/ ATBR accounts Purpose: To be in compliance with PS1200 Standard is effective for fiscal years starting on or after January 1, 2009, therefore Boards are required to implement for 2009-10 school year Boards are required to reallocate fund balances to new accumulated surplus accounts at the beginning of the school year 8

10. 1b) New Schedule 5 – Detail of Accumulated Surplus / (Deficit) Replacing Schedules 2.1 to 2.4, Old Schedule 5 and Appendix I Previously 4 fund accounts Operating (Schedule 2.1) Capital (Schedule 2.2) Reserve (Schedule 2.3 and old Schedule 5) School Activity (Schedule 2.4) 4 amount to be recovered (ATBR) accounts (Appendix I) Employee Future Benefits Interest to be accrued Vacation accrued Capital Financing 9

11. 1b) New Schedule 5 – Detail of Accumulated Surplus / (Deficit) Subsequently: 3 Accumulated Surplus (Deficit) accounts Available for Compliance Balances are to be used in the calculation of compliance per Education Act, 231.(1) Available for Compliance – Internally Appropriated Internally restricted surplus (deficit) balances which are used in the calculation of compliance per Education Act, 231. (1) Unavailable for Compliance Balances that will not be used in the calculation of compliance per Education Act, 231.(1) 10

12. 1b) Financial statement presentation of Accumulated Surplus • Accumulated Surplus will be presented on the statement of financial position as a single balance Old Presentation New Presentation

13. 1b) New Schedule 5 – Detail of Accumulated Surplus / (Deficit) Breakdown of Accumulated Surplus (Deficit) allocation Available for Compliance includes Operating Accumulated Surplus (Deficit) (formerly Sch. 2.1 and reserve for working funds on old Sch. 5) Available for Compliance – Internally Appropriated includes Retirement Gratuities (formerly on old Sch. 5) WSIB (formerly on old Sch. 5) Other Purposes (formerly on old Sch. 5) Unavailable for Compliance Employee Future Benefits (formerly on Appendix I – ATBR) Interest to be Accrued (formerly on Appendix I – ATBR) Vacation Accrued (formerly on Appendix I – ATBR) School Generated Funds (formerly Sch. 2.4) Net TCA Debt & Not Permanently Financed Amounts (NPF) at August 31, 2010 (formerly Sch. 2.2 and capital financing on Appendix I – ATBR) Amount recognized as deferred capital contribution (DCC) Note: Net TCA, Debt & NPF and amount recognized as DCC will be discussed in detail later in the presentation) 12

14. 1b) Reallocation of fund/ ATBR accounts to accumulated surplus

15. 1b) Schedule 5 - Opening Balances Walkthrough Worksheet 4 (Not part of EFIS) (pg 10 on Estimated Forms) Worksheet is an offline calculation to help boards estimate the opening accumulated surplus for the 2010-11 budget Record opening balances in the September 1, 2009 column For Funds this entry is similar to how they were recorded on Sch. 2.1-2.4 and 5 For ATBR opening balances would be the Boards August 31,2009 ending balance on the 2008-09 financials See Note 1 on Worksheet for a summary of where balances would have previously been inputted Record the expected in-year increase/decrease for the 2009-10 school year 14

16. 1b) Schedule 5 - Opening Balances Walkthrough • Worksheet 4 (Not part of EFIS) (…continued) • Appropriation for supported capital expenditures (Col. 4) automatically populated and forwarded to Schedule 5.2 Accounts Receivable/Payable Continuity • Ending balances at August 31, 2010 are automatically forwarded to Schedule 5 (pg 17 on Estimated Forms) • Schedule 5 Detail of Accumulated Surplus / (Deficit) (pg 17 on Estimated Forms) • Balances at September 1, 2010 are pre-populated from Worksheet 4 for the training forms • Cells will be white in EFIS for boards to manually enter data 15

17. 1c) Opening Balances – Appropriation Per SB memo 10, the Ministry is wrapping up the capital grant allocation model. Why is the capital grant allocation wrap-up happening? • New Pupil Places (NPP) grants are used mainly for debt support with very little generated to support new schools or additions. • Boards are experiencing a decline in enrolment – funding for NPP works well for boards with enrolment growth. • Funding has become too complex with adjustments made to recognize other factors. Implication • A new capital model is be implemented. • The province will commit to fund supported capital debt, similar to what was done for pre-1998 debt. • Boards will record receivable from the province and a corresponding revenue as at August 31, 2010. For this example, the entry would be (JE 2): DR: Accounts Receivable – Gov’t of Ontario $350,183,272 CR: Revenue $350,183,272

18. 1c) Opening Balances - Appropriation How will the new model work? • Currently, for NPP funding, principal and interest is allocated based on a benchmark, combined as one amount. • Starting in 2010-11, board will receive separate principal and interest amounts. Interest • Boards will continue to receive a yearly allocation (i.e. revenue) for interest on debt, receiving a transfer payment for the same amount. • The difference going forward is that the allocation will be based on actual interest requirements, not a benchmark, to the extent the related capital debt is supported. Principal • For principal payments, boards will record a one-time allocation recognizing the value of the outstanding supported capital debt as at August 31, 2010 (i.e. “the appropriation”). • This results in boards reporting a very large revenue in the 2009-10 fiscal year, with a corresponding receivable from the province. • Starting in 2010-11, boards will receive a yearly transfer payment for the actual principal requirement, not a benchmark, to the extent the related capital debt is supported.

19. 1c) Opening Balances – Appropriation What is the definition of supported capital debt? • Supported capital debt, for the purpose of the capital grant allocation wrap-up, is a debt incurred for projects supported under the existing capital programs. • The funding streams that are part of the capital grant allocation wrap-up include NPP, Best Start, Growth Schools, PTR, Outstanding Capital Commitments, French Capital Transition, Capital Priorities, GPL renewal stages 1 to 4 and PCS. • Not included are Early Learning and Energy Efficient Schools. • Some capital debt are supported in whole or in part by another funding stream (ex. renewal or third party revenues). Renewal and third party capital contributions are not part of the capital grant allocation wrap-up, thus they are not considered supported capital debt for the purpose of the capital grant allocation wrap-up.

20. 1c) Opening Balances – Appropriation Determination of supported capital debt • Boards will be instructed to engage their auditors to perform specified audit procedures on capital debt. • Ministry staff is developing a consistent set of procedures to be used by all boards, which will be communicated at a later date. • The amounts determined through the specified procedures will form the basis of the appropriation calculation, with the final amount being determined by the Ministry. • The Ministry may make adjustments based on information in the capital liquidity template. Timing • These procedures will be performed on data as at August 31, 2010, close to the time when school board auditors will be doing their annual financial audit of their client boards. • Since the Estimates forms are released in the spring and are due at the end of June, boards will be required to estimate these amounts.

21. 1c) Opening Balances - Appropriation Section 12 – Debt Charges Allocation (Forms, p36) • To determine the appropriation, supported capital debt will be pulled from Section 12. • Section 12 has changed to stratify the capital debt and sinking funds as supported and unsupported for both permanently financed and not permanently financed (NPF) amounts. • Otherwise, the schedule is fairly similar. • Boards will populate the supported and supported amounts in column 1. • The stratification will be verified by the finance officers during the review of board estimates.

22. 1c) Opening Balances - Appropriation Estimation of supported capital debt (Forms, p36) • Supported debt includes permanently financed pre-1998 amounts, which correspond to the old section 12 ‘approved capital debt’ section. • OFA loans would be recorded under ‘permanently financed post-1998’ since OFA loans would, for the majority of cases, represent supported capital debt. • Examples of unsupported capital debt are amounts that relate to the construction of unapproved structures (ex. domes, admin buildings) and overspending on supported capital projects. • Overspending on supported capital projects has been identified during the Ministry review of boards’ capital liquidity templates, and discussed/communicated to impacted boards. • Unsupported capital debt can also relate to non-Ministry funding streams, such as education development charges (EDCs). • For NPF, the supported amounts will be pre-populated in section 12, since boards will enter this amount on the capital budget. Boards will enter the unsupported NPF amount on section 12.

23. 1c) Opening Balances - Appropriation Section 12 – In-year transactions (Forms, p 36) • Debt issue/retirement, principal, interest and admin fee and sinking fund contributions will continue to be recorded on section 12. • Principal, interest/admin and sinking fund contributions for supported debt will be cash flowed to the boards in the year. • The cash flow of the supported principal and sinking fund (SF) contributions will reduce the board’s receivable from the province (that was set-up by the appropriation). • Boards will receive a yearly allocation (revenue) for the supported interest/admin amount, in addition to the principal and SF contributions cash flow. This is because the appropriation will not include an interest component, thus there is no receivable on which to draw down. • Debt retirements on supported amounts will also be cash flowed in the year, less supported sinking fund retirements. There will be a corresponding reduction in the board’s receivable from the province. The cash flow will be to the extent that the board has not reissued the debt in another form (ex. OFA). Any refinancing of supported debt will require Ministry approval.

24. 1c) Opening Balances – Appropriation Impact on accumulated surplus (A/S) unavailable for compliance • The revenue related to the appropriation is recognized in the 2009-10 cycle (at Aug 31, 2010), thus it forms part of the September 1, 2010 A/S unavailable for compliance balance. • The calculation of this balance was demonstrated earlier, excluding the impact of capital. • With respect to capital, the A/S unavailable contains a deficit representing the outstanding debt related capital spending (section 12, column 1). • Permanently financed amounts (A.K.A. ATBR capital financing balance) • NPF amounts (A.K.A. negative capital fund balance) • When the appropriation is recorded in A/S unavailable for compliance, it reduces the deficit balance created by the historical capital spending. Any deficit leftover represents the historical capital spending that is unsupported under the capital grant allocation wrap-up. • The A/S unavailable for compliance also contains the TCA balance, as shown earlier.

25. 1c) Opening Balances – Appropriation Summary: Impact on accumulated surplus/(deficit) unavailable for compliance related to TCA TCA (Sch 3C) $723,709,821 Not Permanently financed (Sec 12) ($41,513,906) Permanently financed (Sec 12) ($317,669,366) Less: Appropriation re: supported capital debt (Sec 12) $350,183,272 Unsupported outstanding capital debt (Sec 12/Sch 5) ($9,000,000) A/S surplus unavailable for compliance re: TCA (Sch 5) $714,709,821

26. 1c) Opening Balances – Appropriation Pupil Accommodation Debt Reserve (Internally Restricted Accumulated Surplus) • Since the province will recognize supported debt on existing capital programs, the pupil accommodation debt reserve at August 31, 2010 will be recovered. • This amount will also be subject to specified audit procedures. • It will be offset against any combination of amounts owing to school boards: • For future capital grant entitlement • To support debt servicing costs • Using the sample data, the following entry is required (JE 3): DR: Expense $12,284,747 CR: Accounts Payable – Gov’t of Ontario $12,284,747 DR: A/S available for compliance – internally restricted $12,284,747 CR: Expense $12,284,747 To recognize a liability to the province related to the pupil accommodation debt reserve, and close out the related expense to A/S available for compliance-internally restricted at August 31, 2010.

27. 1d) Opening Balances – DCC Implementation of deferred capital contributions (DCC) • As noted in SB memo 10, the Office of the Provincial Controller (OPC) requires that the school board sector to follow a policy of deferral and amortization of capital grants (i.e. DCC). This aligns with the provincial standard and the current approach in other broader public sector consolidated entities. What is DCC? • DCC is an account used to record capital contributions. The amount in this account is recognized in revenue in proportion to how the related TCAs are recognized in expense through amortization. • Use of DCC will reflect the sector’s financial results in a way that avoids large swings between in-year surpluses and in-year deficits caused by a mismatch of capital grant recognition versus capital asset amortization.

28. 1d) Opening Balances – DCC What guidance can school boards follow to implement DCC? • DCC will be implemented as per direction from OPC. Guidance will be from Section 4410 of the CICA Handbook (Not for profit organizations) to the extent the framework allows. • Capital contributions are defined as government transfers for capital and third party capital contributions. • For DCC related to depreciable assets, the DCC will be amortized into revenue at the same rate as the TCA. • For DCC related to non-depreciable assets (ex. land), the DCC will not be amortized into revenue. • Capital contributions will be recorded first in deferred revenue. Once they have been spent on capital, they will be transferred to DCC. • DCC will be implemented retroactively without restatement, using a reasonable method to estimate the opening balances.

29. 1d) Opening Balances – DCC Determining DCC Opening Balance • Amounts recorded in DCC will be the portion of the TCA that has been paid for with capital contributions, either provincial or third party. • To implement DCC in a cost beneficial manner, the Ministry has evaluated the TCA in the sector and determined that only a small portion of the TCA (representing the unsupported capital debt) has not been funded through capital contributions (approx. 2% - 3%). • This unsupported debt can usually be related to particular assets (ex. admin building, domes).

30. 1d) Opening Balances – DCC Determining DCC Opening Balance • Before the introduction of the funding model in 1998, capital grants were provided to school boards to fund their capital projects. Boards had taxing power then and also funded part of their project costs through local taxation (generally a smaller % depending on the individual board’s tax base). • Most boards long term financed the local share of their capital projects and raised annual taxes to meet the debt servicing costs of their capital debt. • The province recognized unsupported pre-1998 capital debt through annual debt support grants provided in the GSN since 1998. The outstanding amounts of that debt will be recognized as revenue as part of the appropriation for eligible capital debt. • Given the NBV of assets consists largely of infrastructure investment in the sector over the last 10 years, and current legislation requires proceeds to be used for future infrastructure investment, this supports the Ministry’s position that most of the capital, including those previously funded from local property taxes, are capital contributions.

31. 1d) Opening Balances – DCC Recap: the September 1, 2010 A/S surplus unavailable for compliance related to TCA is represented as follows (before the implementation of DCC). TCA (Sch 3C) $723,709,821 Not permanently financed (Sec 12) ($41,513,906) Permanently financed (Sec 12) ($317,669,366) Less: Appropriation re: supported capital debt (Sec 12) $350,183,272 Unsupported outstanding capital debt (Sec 12/Sch 5) ($9,000,000) A/S surplus unavailable for compliance re: TCA (Sch 5) $714,709,821

32. 1d) Opening Balances – DCC Determining DCC Opening Balance • Effectively, the amount in A/S surplus unavailable for compliance represents the entire value of the TCA as at September 1, 2010, less the outstanding capital debt that is unsupported for the capital grant allocation wrap-up. • In other words, what is left is the portion of the TCA that has been funded through capital contributions. • This is the amount that will be recorded as the opening DCC balance.

33. 1d) Opening Balances – DCC • As a result, boards will record DCC and reduce the A/S unavailable for compliance for the same amount as at September 1, 2010. For this example, the entry would be: DR: A/S unavailable for compliance (Sch 5) $714,709,821 CR: Deferred Capital Contributions (Sch 5.3) $714,709,821 This journal entry is a restatement that reverses capital contributions that have been recognized as revenue in the past.

34. 2a) In-Year Transactions – Capital Flowchart Capital Allocation (Sec. 1 GSN) Deferred Revenue (Sch 5.1) Capital Budget (Sch 3B) TCA Continuity (Sch 3C) DCC (Sch 5.3) A/R from Province re: Capital (Sch 5.2) 6 4 1 2 3 5 Record estimated additions DR: TCA CR: A/P Record DCC (eligible expenditure made relative to approval room) DR: A/R CR: DCC Transfer DR to DCC as capital contribution used DR: DR CR: DCC Decrease DR (funds received in advance used on eligible expenditures) DR: DR CR: DCC Record allocation for the same amount as the increase in A/R DR: A/R CR: DCC Increase A/R (eligible expenditures made relative to approval room) DR: A/R CR: DCC Increase DR (funds received in advance not yet used on eligible expenditures) DR: Cash CR: DR

35. 2b) In-Year Transactions – Capital Budget Capital Expenditures (Forms, p11, 13 & 14) • Starting in 2010-11, board will complete a capital budget at Estimates. • The purpose will be to capture expenditures to be made during the year that will be capitalizable. • Any capital expenditures to be made for non-capitalizable items will be recorded as an expense (Sch 10). Key: Capital expenditures recorded in the capital budget (Sch 3B) will tie to the additions recorded in the TCA continuity (Sch 3C).

36. 2b) In-Year Transactions – Capital Budget Capital Expenditures (Forms, p11, 13 & 14): Data Requirements • By TCA category (rows) and funding source (columns). • For current year, and two following years (with less detail). Out-year data is required so that the province will project the proper amount to support school board capital construction. • Moveable-type assets (p13) and new school (p14) data is entered through subschedules. • Other moveable-type asset data is required in less detail than at financial statements (equipment and first-time equipping included in ‘other’ category).

37. 2b) In-Year Transactions – Capital Budget Capital Expenditures (Forms, p11): Input Details • NPP column (col 1) contains NPP, Outstanding Capital Commitments and Best Start. • GPL column (col 2) contains Growth Schools, PTR, French Capital Transitional Adjustment and Capital Priorities. • GPL Renewal (col 3) includes stages 1 to 4. • Land rows are stratified by EDC and non-EDC (lines 2.2 and 2.3). • The portion of expenditures expected to relate to capitalizable interest to be input on line 2.23. • The other column (col 12) – example would be board admin expenditures • School Generated Funds column (col 10) – example would be spending related to amounts raised specifically to make a capital purchase.

38. 2b) In-Year Transactions – Capital Budget • Using the sample dataset, the estimated capital expenditures of $58,616,092 on the capital budget would be recorded as additions on the TCA continuity on schedule 3C.

39. 2b) In-Year Transactions – Capital Budget Capital Approvals vs. Expenditures (Forms, p12) • The purpose of this schedule is to compare capital approvals/allocations to estimated expenditures. • Boards can apply capital deferred revenues against capital expenditures here. • Schedule shows the receivable that the board will record from the province based on eligible capital expenditures. • Will also show remaining approval room.

40. 2b) In-Year Transactions – Capital Budget Capital Approvals/Allocations (Forms, p12, columns 1 to 12) • Top portion of schedule show approvals/allocations. • Columns 1 to 6 show approval room. This is the amount up to which boards may spend to be entitled to record a receivable from the province. • Columns 7 to 11 pre-populated with amounts that have been received by the board (amount was recorded in deferred revenue). • Two new capital grants are shown: Minor TCA (minor tangible capital assets) and short term interest on capital • These grants must be spent on their intended purpose. To the extent amounts spent are capitalizable, the spending would trigger recognition in DCC.

41. 2b) In-Year Transactions – Capital Budget Capital Approvals/Allocations (Forms, p12, lines 1 & 2) • Line 1 includes only approval for Ministry funded amounts at August 31, 2010; it is net of third party amounts and any cash down. • Line 2 deducts the portion of line 1 that is long term financed at August 31, 2010. • The Ministry will pre-populate lines 1 and 2 for GPL renewal (col 3). • For lines 1 and 2 in columns 1, 2 and 4 to 6, the Ministry will provide these amounts separately from the EFIS forms, along with a file explaining how the amounts were calculated. • The board will enter the amounts provided in the EFIS forms. • If the board feels there is a discrepancy, the board will enter the data believed to be correct. • The board would then submit a reconciliation to the Ministry explaining the difference.

42. 2b) In-Year Transactions – Capital Budget Capital Approvals/Allocations (Forms, p12, lines 3 to 6) • Boards will enter an amount at line 3 for the portion of NPF that would be considered supported for the capital grant allocation wrap-up. The total supported NPF amount is flowed to section 12, and used in the calculation of the appropriation amount. • If the board has NPF, a negative amount would be entered here. • If the board prefinanced, a positive amount would be entered here. • The prefinancing would be included in line 2 so it has already been deducted from the approval room, but no amounts would have been spent against this. • Therefore, the prefinanced portion would be added back to the allocation room. • Line 6 shows the expected approvals for 2010-11. • For columns 7 to 11, the amounts in lines 4 to 6 come from the deferred revenue schedule (Sch 5.1), opening balances plus in-year contributions.

43. 2b) In-Year Transactions – Capital Budget Expenditures (Forms, p12, line 7) • Lines 7.1 to 7.3 are pre-populated with the expenditures entered at page 11. • The amounts are split into EDC and non-EDC eligible. Capital Deferred Revenues (Forms, p12, line 8) • At lines 8.1 and 8.2, boards would enter the amount of deferred revenue they wish to apply to any of the project categories (ex. to cover spending over approval/allocation). • On line 8.1, boards can apply any EDC deferred revenue, which will be matched against EDC-eligible capitalizable spending. • On line 8.2, boards can apply any other capital deferred revenue related to non-EDC eligible capitalizable spending. • The amount recorded on the capital budget will also be recorded on the deferred revenue schedule (Sch 5.1, column 5, lines 2.9, 2.13, 2.14 or 2.17 to 2.26). • The application of deferred revenue must meet the original criteria for deferral, and can only be to the maximum available opening plus current year deferred revenue.

44. 2b) In-Year Transactions – Capital Budget Net Capital Expenditures (Forms, p12, line 9) • Net capital expenditures are the estimated capital expenditures less the capital deferred revenue used against the spending. • Equals lines 7.1, 7.2 and 7.3 less lines 8.1, 8.2 and 8.3 respectively. • The amounts are split into EDC and non-EDC eligible. Remaining Approval Room/(Capital Budget Shortfall) (Forms, p12, line 10) • A positive results means that the board has remaining approval room or allocation available after deducting net capital expenditures. • A negative result means that the board has a capital budget shortfall. • The amount of the shortfall will be the difference between the additions recorded in TCA and the additions recorded in DCC (Sch 5.3). • Equals line 6 less line 9.1 (EDC) or line 9.2 (Non-EDC)

45. 2b) In-Year Transactions – Capital Budget Capital Grants Receivable Before Line 12 Adjustment (Forms, p12, line 11) • Boards will record a receivable from the province to the extent they made eligible capital expenditures within their approval room. • A receivable will only be recorded for amount in columns 1 to 6 since these are the programs that have approval room. • Columns 7 to 12 represent allocations that are received in advance, in cash (recorded as deferred revenue). A receivable will not be recorded in these column because this would result in double funding. • Equals the lesser of line 6 (approval room) and line 9 (net capital expenditures).

46. 2b) In-Year Transactions – Capital Budget Energy Efficiency / Pupil Accommodation Deferred Revenue (Forms, p12, line 12) • Some boards have deferred revenue balances for capital energy efficiency and pupil accommodation, meaning cash was received in advance of spending. • These deferred revenues must first be applied to any eligible capital spending on those programs. • To the extent that there is not enough deferred revenue to cover the spending, the board will then record a receivable from the province. • This is an automated calculation, with the amount pulled from deferred revenue (Sch 5.1, lines 2.5 and 2.10, columns 1, 2 and 3).

47. 2b) In-Year Transactions – Capital Budget Total Capital Grant Receivable (Forms, p12, line 13) • Equals line 11 (preliminary receivable calculated) less the line 12 (adjustment for deferred revenue received from province). • This is the receivable from the province that the board will record based on eligible capital expenditures made within their approval room. Approval Remaining (Forms, p12, line 14) • For columns 1 to 6, line 14 shows the remaining approval room under each program. • Remaining allocation for columns 7 to 11 is the ending balance on the deferred revenue schedule (Sch 5.1).

48. 2b) In-Year Transactions – Capital Budget Using this example, the entries would be: DR: Accounts receivable from province (Sch 5.2) $33,540,624 CR: Deferred Capital Contributions (Sch 5.3) $33,540,624 To recognize the amount that the province owes the board for eligible capital spending. The amount is a capital contribution, so the credit is to DCC. DR: Deferred revenue (Sch 5.1) $200,000 CR: Deferred Capital Contributions (Sch 5.3) $200,000 To recognize capital energy efficiency and pupil accommodation deferred revenues in DCC, since the amounts were spent on eligible capitalizable items. DR: Deferred revenue (Sch 5.1) $7,934,352 CR: Deferred Capital Contributions (Sch 5.3) $7,934,352 To recognize third party and other provincial capital deferred revenues in DCC, since the amounts were spent on eligible capitalizable items (Sch 3B, line 8.3, col 13).

49. 2b) In-Year Transactions – Capital Budget An entry is also required for school renewal, short term interest on capital and Minor TCA. DR: Deferred Revenue (Sch 5.1) $9,522,633 CR: Deferred Capital Contributions (Sch 5.3) $9,522,633 To recognize school renewal, short term interest on capital and Minor TCA, since the amounts were spent on eligible capitalizable items.

50. Questions? • Break