Capital staffing costs are (wrongly) included in the Toronto operating budget

Updated: August 28, 2017

This one snuck up on me. I was trying to get separate operating and capital staffing complements for the 2017 budget, for budgetpedia.ca, but found that the capital staff complement was combined with the operating staff complement in the reports I could access, without an explanatory note, still called “operating” (see here, page 7). I was told this was “technically correct” since capital staff were charged to capital projects only as operating staff were assigned to these projects. It never occurred to me that this would be reflected in the operating budget as well. For comparison, here is a Briefing Note which discloses most (but not all) of the distinction between capital and operating staff complement (see page 2 of Appendix 1).

This is important because we estimate there is some $360M involved.

I corresponded with a couple of helpful folks at TTC who assured me that capital staff costs were not included in the TTC operating budget, but were tucked away in the capital budget as it should be. Yet there was evidence that Engineering’s staff was included in the operating budget. Contradictory evidence. So, time for a Freedom of Information (FOI) request. Here are the results, as interpreted from the spreadsheet returned by the City for our FOI:

• All divisions and agencies (except TTC) book capital staff costs to both operating and capital budgets. This amounts to $129,759,301 (not including TTC) according to the FOI.
• All divisions and agencies (including TTC) show capital and operating staff complements as one aggregated figure in their operating budget analyst notes.
• Capital staff costs booked to operating are offset by an entry in the operating revenue account Transfers from Capital to avoid double counting.

To be exact, City representatives confirmed the following statements:

1. The capital staff costs are also included in the relevant capital expenditure budgets

2. To avoid double counting, the capital staff costs included in the operating expenses are offset by values included in the revenue budget account “Transfers from capital”

So it’s kind of a mess, at least for outsiders. We spot-checked the numbers, it all appears to be true. Next we’ll try to get an explanation from the City.

Importantly, there’s no way for new readers of these reports to understand what’s going on; no notes, no explanations.

For example here’s an image of the relevant table from the TTC operating budget analyst notes (page 33):

Source: City of Toronto Preliminary TTC 2017 operating budget Analyst Notes, page 33

The circled number at the top is the operating staff cost. The circled number at the bottom is the combined operating and capital staff complement (the correct operating staff complement is 11,798 — keep in mind that we’re comparing final numbers from FOI with preliminary numbers from analyst notes). There’s no way for the reader to know this. No asterisk, no note, nothing. So for example if someone does an average salary by dividing Salaries and Benefits from this table by Approved Positions they’re going to end up with the wrong number, without knowing. We’re t0ld that this chart shows the combined operating and capital complement “for consistency” with other divisions and agencies.

My opinion: there may well be some good City internal reason to organize the numbers this way, but this really doesn’t work for presenting budget information in a clear way. This is what happens when civil servants operate in a bubble — without open data, without transparent reasoning, without active collaboration with the community. The data and the practices behind the data degrade.

We wish there would be closer constructive collaboration between the City and community people to help improve readability of budgets. This is why we need groups like budgetpedia.ca to examine budget data closely, and present challenges when appropriate. And of course this is a good illustration of why the City needs to release all budget data, to a granular level.

Henrik Bechmann founded the budgetpedia project in 2015, and is currently the project lead (see budgetpedia.ca). The opinions expressed here are his own.