Item - 2021.AU9.3

The Audit Committee:

1.  Received the report (June 22, 2021) from the Chief Financial Officer and Treasurer for information.

This report summarizes the changes impacting the City of Toronto (the City)'s obligatory reserve funds (deferred revenues), and reserves and Council-directed reserve funds (accumulated surplus) as at December 31, 2020.

The City's deferred revenues (obligatory reserve funds) and reserves and Council-directed reserve funds (accumulated surplus) are subject to annual changes based on funding contributions, transfers, and drawdowns, which are authorized by legislation, third-party agreements, and Council's approvals. The tables and appendices reflect information by major category.

As at December 31, 2020, the City recognized $7,585.8 million of deferred revenues (obligatory reserve funds) and reserves and Council-directed reserve funds (accumulated surplus), which consist of the following balances:

-  committed funds for legislated, contractually bound or Council-directed activities ($5,983.2 million);

-  committed funds to offset capital costs and pressures on rate-based activities ($678.3 million); and

-  uncommitted and available funds for the City to respond to various unanticipated costs and to stabilize various funding sources, including the tax base ($924.3 million).

The uncommitted funds balance of $924.3 million includes the City's Tax Rate Stabilization Reserve balance of $704.6 million. Due to the uncertainty of the financial impact of the COVID-19 pandemic, the City deferred a number of capital projects to be funded from Capital from Current and the Provincial Gas Tax, in addition to reallocating capital funding from permanent underspending, in order to make a one-time contribution of $377.4 million to the reserve, in addition to a one-time contribution to the reserve of $212.8 million from the 2019 City operating surplus. Additional net amounts totalling $23.4 million were contributed to the reserve in 2020. These Council approved contributions will be used to offset COVID-19 financial impacts in the event adequate Federal/Provincial Safe Restart funding support is not provided in 2021 and going forward.

The reported balances include Council approved reserve and reserve fund loans that were granted to various agencies, City programs, and external parties, which must be repaid to the respective deferred revenues (obligatory reserve funds) and reserves and Council-directed reserve funds (accumulated surplus).