Minutes - August 10, 2023 - Finance and Facilities Committee Meeting 

Members Present:

Michael Steele (Chair)
Matthew Newton-Reid
Michael McGuire
Emily Williams, Chief Executive Officer (ex-officio)
Dr. Alexander Summers, Medical Officer of Health (ex-officio)

Regrets:

Selomon Menghsha

Others Present:

Stephanie Egelton, Executive Assistant to the Board of Health (recorder)
David Jansseune, Assistant Director, Finance
Kaitlynn Van Diepen, Executive Assistant to the Chief Executive Officer
Morgan Lobzun, Communications Coordinator
Dr. Joanne Kearon, Associate Medical Officer of Health
Carolynne Gabriel, Executive Assistant to the Medical Officer of Health

At 9 a.m., Chair Michael Steele called the meeting to order.

Disclosures of Conflict of Interest

Chair Steele inquired if there were any disclosures of conflicts of interest. None were declared.

Approval of Agenda

It was moved by M. Newton-Reid, seconded by M. McGuire, that the AGENDA for the August 10, 2023 Finance & Facilities Committee meeting be approved.
Carried

Approval of Minutes 

It was moved by M. McGuire, seconded by M. Newton-Reid, that the MINUTES of the May 11, 2023 Finance & Facilities Committee meeting be approved.
Carried

New Business

2023 Q2 Financial Update and Factual Certificate (Report No. 10-23FFC)

David Jansseune, Assistant Director, Finance presented the Finance and Facilities Committee the 2023 Q2 Financial Update and Factual Certificate.

D. Jansseune noted before his presentation to the Committee that information would be presented to the Committee in a different format to provide more visibility to the Board, reduce commentary, and provide more information on financial variances in the case that the Committee wished to provide a recommendation to the Board on potential changes to how any variances were used.

D. Jansseune reminded the Committee that the Health Unit has three (3) financial segments, with two (2) reporting companies:
• MLHU – Shared Funded Programs
• MLHU – Four 100% Funded Programs (including the Ontario Seniors’ Dental Program)
• MLHU2 – Four 100% Funded Programs

D. Jansseune added that it was suggested during mid-year financial reporting to focus on expenditures and variance (favourable and unfavourable).

Shared Funding Programs

The following updates were provided for shared funding programs for Q2:
• During the first half of 2023, the Finance team focused their efforts on ensuring employees were being financially allocated (charged) to the correct departments within the Health Unit’s companies. There was a misalignment of approximately $209,000.
• General expenses are $418,647 (favourable), which includes $237,000 in professional services, $156,000 in program supplies, $136,000 in interest expenses, and $81,000 in occupancy costs.
• Salaries, overtime and benefits are $921,000 (favourable).
• The current gap is $769,658 (unfavourable) with a planned drawdown in the Employment Cost Reserve to partially offset wage increases.
• The forecast is based on information from January-May. The original Q2 forecast was at a $1,135,528 deficit, however upon review and revision, the forecast is now at a $175,000 deficit.

100% Funded Programs

The following updates were provided for 100% funded programs for Q2:
• The programs within the 100% shared funding company should be balanced and not have a surplus or deficit as any unspent funds are returned to the funder.
• Funding for 2023 has not been received at this time.
• The Q2 budget for 100% funded programs is $15,952,633.
• The COVID-19 budget is $10.7 million with a forecast of $8.2 million. The forecast is down from $20.3 million in 2022 due to less clinics planned. Expenditures at the end of June totaled $3.9 million. Any surplus from Shared Funded Programs will be used to reduce these expenses, which will result in reduced COVID-19 funding.
• The School Focused Nurses Initiative budget was $1.4 million with an annual forecast of $0.8 million. This funding officially ended on June 30 and no further funding has been provided.
• Ontario Seniors’ Dental Care Program budget is $3.7 million with an annual forecast of $3.7 million. Spending was modest during the first six months but is expected to increase as the Strathroy office becomes fully operational.
• City of London Cannabis Legalization (CLIF) budget is $0.2 million with an annual forecast of $0.2 million. This funding is approved carry over from the City of London and future funding has ended.
• Funding for 3 out of the 4 programs will be ending, with Ontario Seniors’ Dental Care Program remaining.

MLHU2 100% Funded Programs

The following updates were provided for 100% funded programs (MLHU2) for Q2:

• The programs within the 100% shared funding company MLHU2 should be balanced and not have a surplus or deficit as any unspent funds are returned to the funder.
• The MLHU2 results are not consolidated due to year end entry adjustments.
• The Q2 budget for 100% funded programs (MLHU2) is $2,859,543.
• Funding for programs within this company are from the Public Health Agency of Canada (PHAC), Public Health Ontario (PHO) and the Ministry of Children, Community and Social Services (MCCSS).
• The Smart Start for Babies (PHAC) budget is $152,000. The total expenditures at June 30 (after 3 months) were $29,000 with a budget of $37,000. General expenses were underspent, and it is anticipated that there will be increased spending as the year progresses.
• The Best Beginnings (MCCSS) budget is $2,483,000 and is spending to budget.
• The Library Shared Services (PHO) budget is $108,000. The total expenditures at June 30 were $29,000 with a budget of $25,000 due to increased spending on supplies, but is on track to be on budget.
• The FoodNet Canada (PHAC) budget is $116,000 and is spending to budget.

Cashflow

The following updates were provided on cashflow in Q2:
• The 2023 opening bank balance was $4.2 million and the closing balance on June 30 was $4.6 million.
• As of June 30, the fixed loan of $3,050,000 has $2,740,000 owing and the variable loan of $1,150,000 has $1,006,000 owing.
• Significant cash events included: a clawback of $962,000 from the Ministry of Health from 2022 programs (January), receipt of 2022 COVID-19 funding for $6.7 million (February), additional Ministry of Health clawback of $278,000 from 2022 programs (February), receipt of 2023 School Focused Nurses Initiative funding for $494,000 (March) and Ministry of Health clawback of $2.4 million for 2022 COVID-19 programming.

Ministry of Health Updates

The following Ministry of Health updates for Q2 were provided:
• Approved funding is still known, with the potential for being released in September.
• Mitigation funding has been approved until December 31, 2023 with uncertainty to extend.
• School Focused Nurses Initiative funding ended on June 30.
• COVID-19 funding will be withheld until the Ministry of Health has reviewed the Health Unit’s Q2 Standard Activity Report (SAR).
• 2022 Annual Reconciliation Report (ARR) is due on August 31.
• 2023 Q2 SAR was due July 31 and was submitted on July 27.

D. Jansseune further noted that the reportable matter on the factual certificate regarding the Cali Nails litigation was removed, as this matter was settled.

Committee Member Michael McGuire inquired if there was a fear of losing a program at the Health Unit due to late government funding. E. Williams noted that the Ministry of Health is signaling is that the Ontario Seniors’ Dental Care program funding will be supported, as capital funding has already been invested. E. Williams added that pressures for 2024 such as the loss of mitigation funding, inflationary increases and COVID-19 being integrated into the base budget are a risk for reducing programming.

Chair Steele inquired the purpose of Schedule A-4 affixed to the report. D. Jansseune explained the Schedule A-4 was focused on departmental funding and is a new piece of financial informational which the Committee will be able to review. Finance is working to bring more exposure to internally generated revenue. Regarding departmental budgets, budget packages were provided to management for their review.

Committee Member Matthew Newton-Reid inquired why there is a surplus while still having financial pressures to the Health Unit. D. Jansseune noted that the surplus was mainly caused by job vacancies and at the same time managing mandatory program funding. E. Williams added that restructuring and newly created positions as a result of the restructuring were a factor of the job vacancies creating a surplus. Human Resources and Finance are conducting monthly workforce planning meetings to review staffing complements with divisions.

It was moved by M. Newton-Reid, seconded by M. McGuire, that the Finance & Facilities Committee review and recommend to the Board of Health to receive Report No. 10-23FFC re: “2023 Q2 Financial Update and Factual Certificate” for information.
Carried

City of London Budget: Assessment Growth Proposals (Report No. 11-23FFC)

E. Williams provided information on the Health Unit’s pending submission to the City of London’s Assessment Growth Fund. At the July 20, 2023 Board of Health meeting, the Board approved the submission of the 2024 MLHU budgetary requirements to the City of London which accounted for the discontinuation of provincial mitigation funding and inflationary increases. There is an additional opportunity provided to the Health Unit to request funding from the “Assessment Growth” fund through the submission of business cases, related to population growth that has direct impacts to programs and services. Business cases are due to the City of London on August 15.

Staff have prepared the following business cases to submit to the Assessment Growth Fund, with the total business case amount for submission being $604,634:

School Health Team
The 14.3% increase in school-aged children (10,000 more by 2021) has increased demand for Public Health Nurses (PHN) on the Secondary School Health Team. The proposal for the Secondary School Health Team is for 1.0 Full Time Equivalent (FTE) PHN to enable all Secondary Schools in London to have nursing support which equates to $93,089.

Vaccine Preventable Disease Team
The 70% increase in recent immigrants to London has had a notable impact on demand for Immunization Clinic appointments at the Health Unit, as many newcomers do not have access to primary care. The 14.3% increase in school-aged children compounds this issue, as the Health Unit is accountable for ensuring that all children are compliant with the Immunization for School Pupils Act. The proposal for the Vaccine Preventable Disease Team is for 1.0 FTE Program Assistant, 1.0 FTE Public Health Nurse, and 0.30 FTE Casual Nurse which equates to $176,965.

Infectious Disease Control Team
As part of the immigration process, newcomers are required to complete an Immigration Medical Examination (IME). If there are any abnormalities noted, public health will review the examination and conduct a medical history interview and symptom assessment. The 70% increase in recent immigrants to London has also had an impact on the volumes of suspected and active tuberculosis (TB) cases, requiring follow up by the Health Unit, with the number of active TB cases more than tripling since 2016, up from 8 per year to 23 by 2021. Each client requires very intensive investigation, requiring 50 hours of staff time. The number of new referrals to the Health Unit has increased by 28% over the same five years, from 76 in 2016 to 273 in 2021. The proposal for the Infectious Disease Control Team is for 1.0 FTE Public Health Nurse, which equates to $93,089.

Substance Use Program Team
On October 17, 2018, the Smoke-Free Ontario Act, 2017 (SFOA, 2017) came into effect to regulate the use and retail sale of tobacco and vapour products, and to regulate the smoking and vaping of cannabis products in Ontario. Tobacco Enforcement Officers (TEO) are designated by the Minister of Health to enforce the SFOA, 2017. There has been an increase of over 2000% in cannabis retailers and over 15% in tobacco/vapour product retailers requiring inspection and education. The proposal for the Substance Use Program Team is 2.0 FTE TEO which equates to $148,402.

Healthy Families Home Visiting Team
Approximately 60% of Healthy Baby Healthy Children risk assessment screening completed at London Health Sciences Centre by the Health Unit qualify for follow-up with Home Visiting Nursing support. The 7.5% increase in births represents an additional 212 families that require home visiting. This is in addition to the increase of approximately 318 additional families that require low-risk breastfeeding home visiting. The proposal for the Healthy Families Home Visiting Team is 1.0 FTE Public Health Nurse, which equates to $93,089.

E. Williams thanked the Population, Health, Assessment and Surveillance team for their support with this work.

E. Williams noted that the Health Unit has never submitted business cases to the City of London to the Assessment Growth Fund and that the business cases are separate from mitigation funding requests to the City of London with the submissions being treated similar to a grant process.

Committee Member M. Newton-Reid inquired if the County of Middlesex has a similar fund for the Health Unit to apply and provide business cases to. E. Williams noted that the Health Unit was not aware of a similar fund with the County of Middlesex and would inquire with the County Treasurer.

It was moved by M. McGuire, seconded by M. Newton-Reid, that the Finance & Facilities Committee recommend to the Board of Health to receive Report No. 11-23FFC re: “City of London Budget: Assessment Growth Proposals” for information.
Carried

Annual 2022 Surplus – Alternate Use (Report No. 12-23FFC)

D. Jansseune added further clarification to Committee Member M. Newton-Reid’s previous question regarding the reason for the increased surplus for the Health Unit. In addition to previously mentioned reasons for a surplus, $572,000 in savings was found during a general expense review and $523,000 was used to reduce the 2023 budget.

D. Jansseune provided information on a potential alternate use for the 2022 annual surplus (municipal funding portion). The 2022 surplus was $2,016,902 and split in the following way: $1,288,452 (Ministry of Health), $611,898 (City of London) and $116,552 (County of Middlesex). The Ministry of Health portion of the surplus will be used to reduced 2022 COVID-19 expenditures. Historically, surplus amounts have been refunded to City of London and the County of Middlesex at the end of the fiscal year.

In 2020, the Health Unit entered into an agreement for a fixed loan for $3,050,000 and a variable loan for $1,150,000 to enable the fit up of the new location at Citi Plaza. The amount owing on the variable loan is $1,001,458 with prime less 0.75% interest rate. With the current increase in interest rates, staff is seeking Board approval to redirect the municipal portions of the surplus to the Health Unit’s lender (Canadian Imperial Bank of Commerce) to pay down the variable loan. If approved, the variable loan would be reduced to $273,008.

E. Williams noted that upon Board approval, staff would provide support to the County of Middlesex and the City of London as the redirection of funds would require notification, and potentially approval, of these councils.

Committee Member M. Newton-Reid noted that with the current interest rates, it would be beneficial for the Health Unit to be able to pay down the higher variable loan, however was concerned with how this ask would be perceived by municipal funding partners due to the previous asks for additional funding to the Health Unit.

Committee Member M. McGuire requested that a briefing note, indicating the funding needs for the Health Unit and the current surplus situation for reference be provided when the matter would be heard by County of Middlesex Council. Chair Steele indicated that this request would need to be added to the proposed motion.

It was moved by M. McGuire, seconded by M. Newton-Reid, that the Finance & Facilities Committee recommend to the Board of Health to:
1) Receive Report No. 12-23FFC re: “Annual 2022 Surplus – Alternate Use” for information;
2) Approve that the municipal portions of 2022 surplus funds be applied as payment on the Middlesex-London Health Unit’s variable loan; and
3) Direct staff to engage in required proceedings with the City of London and the County of Middlesex to enable surplus funds to be redirected to the Canadian Imperial Bank of Commerce (CIBC) for payment to the Health Unit’s variable loan in the following amounts:
a. City of London: $611,898;
b. The County of Middlesex: $116,552, and;
4) Direct staff to prepare a briefing note for the County of Middlesex and City of London Council regarding the alternate use of municipal surplus funds.
Carried

Other Business

The next meeting of the Finance and Facilities Committee will be held on Thursday, September 14, 2023 at 9 a.m.

Adjournment 

At 9:44 a.m., it was moved by M. Newton-Reid, seconded by M. McGuire, that the meeting be adjourned.
Carried

Michael Steele
Committee Chair

Emily Williams
Secretary