PREPARED BY: PMichael Horrobin, Director of Corporate Services & CFO
DATE: 2025-09-18
SUBJECT: 2025 Q2 Financial Report
Executive Summary
Mandatory and Ontario Seniors Dental Care Program (OSDCP)
For the six months ended June 30,2025 both the Mandatory and OSDCP were below the YTD budgeted net expenditures:
| June 2025 YTD | ||||
|---|---|---|---|---|
| Net Expenses $ (000)'s | Budget | Actual | Variance | Var (%) |
| Mandatory Programs | $ 12,426 | $ 11,808 | $ 618 | 5% |
| Seniors Dental | 1,516 | 1,242 | 274 | 18% |
| Total | $ 13,942 | $ 13,050 | 892 | 6% |
The primary reason for the underbudget expenditures is within the salaries and benefits expense and is due to:
- Several vacancies due to maternity leaves, sick leaves, resignations, retirements and terminations.
- Vacancies take long lead times to fill: 2-3 months on average
- When vacancies are filled from within, new vacancies are triggered.
- Contract positions are difficult to fill as permanent positions are preferred impacting maternity leave and sick leave replacements.
- The budget contemplates all positions at the maximum rate for conservatism purposes. Most vacant positions being filled with either contract or permanent employee are starting below the maximum rate.
The forecasted net expenditures for the year ended December 31,2025 are projected to be:
| December 2025 YTD Forecast | ||||
|---|---|---|---|---|
| Net Expenses $ (000)'s | Budget | Forecast | Variance | Var (%) |
| Mandatory Programs | $ 25,207 | $ 24,701 | $ 506 | 2% |
| Seniors Dental | 3,033 | 3,008 | 26 | 1% |
| Total | $ 28,240 | $ 27,533 | 532 | 2% |
The underbudget amount at December 31,2025 is expected to be $532K or $360K or 40% less than the underbudget position of $892K as of June 30, 2025.
The Leadership Team reviews the overall underbudget amount monthly and determines strategic spending priorities based on program and staffing needs and IT or Facility projects approving items not contemplated in the original budget to absorb the underspent amount.
Detailed Financial Report for the Six Months Ended June 30, 2025
Mandatory Programs June 30, 2025 YTD
The budgeted net expenditures for Q2 are $12.4M versus actual net expenditures of $11.8M (including open purchase orders) resulting in a total of $618K or 5% underspent. It is important to note that the actual net expenditures as at June 30,2025 include $437K in costs attributed to the measles outbreak. The MOH has asked us to track costs of the measles outbreak but has not yet asked the WECHU to formally submit for one-time funding.
| Description | Budget $ (000)'s | Actual $ (000)'s | Variance $ (000)'s | Var(%) | YTD Budget Var (%) |
|---|---|---|---|---|---|
| Expense | |||||
| Salaries | 8,053 | 7,422 | 631 | 8% | 46% |
| Benefits | 2,418 | 2,253 | 165 | 7% | 47% |
| Mileage | 142 | 140 | 2 | 1% | 49% |
| Office and Administration Expenses | 161 | 129 | 32 | 20% | 40% |
| Professional Fees-Legal, Audit and Consulting | 92 | 121 | (29) | -32% | 66% |
| Supplies-Programs and Corporate | 438 | 216 | 222 | 51% | 22% |
| Purchased Services-Programs and Corporate | 75 | 79 | (4) | -5% | 52% |
| Information Technology | 334 | 307 | 27 | 8% | 46% |
| Building Maintenance | 228 | 192 | 36 | 16% | 27% |
| Rent | 415 | 402 | 13 | 3% | 48% |
| Property Taxes | 117 | 108 | 9 | 8% | 46% |
| Insurance | 130 | 121 | 9 | 7% | 46% |
| Utilities, Telephone and Security | 144 | 128 | 16 | 11% | 44% |
| Total Expense | 12,749 | 11,617 | 1,132 | 9% | 45% |
| Less: Offset Revenue | (322) | (341) | 19 | -6% | 53% |
| Add: Open PO's and other adjustments | 532 | (532) | |||
| Total Surplus/(Deficit) | 12,426 | 11,808 | 618 | 5% | 47% |
Analysis of Key Variances
1. Salaries - $631K or 8% Under Budget
Variance is primarily due to unfilled or partially filled positions, staff resignations and terminations as well as mandatory leaves of absences which account for approximately 75% of the variance. Another factor is all roles are budgeted at the maximum salary rate, however, when these positions are filled – whether by full time or contract workers – these individuals typically start below the maximum rate when they are hired some 2-3 months after the vacancy was created.
2. Benefits - $165K or 7% Under Budget
The variance in benefits cost is mainly due to the lower than budgeted employer pension plan contributions (OMERS), as these costs are calculated as a percentage of actual salaries which are currently below the projected levels.
3. Office and Administration Costs - $32K or 20% Under Budget
Variance is due to timing of purchases. Several purchases were made before year end of the previous year reducing the need for spending in Q2. Additionally, some administration costs were charged to programs that received one-time funding thus taking the expense out of the Mandatory Programs budget.
4. Professional Fees – Legal, Audit and Consulting $29K or 32% Over Budget
Legal and professional fees have exceeded the budget due to an increase in labour relations issues, the negotiation of the Leamington Lease Amending Agreement and architectural design work required for Phase 1 of the Facility Renewal Project.
5. Supplies – Programs and Corporate - $222K or 50.73% Under Budget
The variance is almost completely related to a timing issue with the mosquito trapping and larvicide program which is exclusively a seasonal based program. Most of the supplies for this program are used in the second half of the year. As a result, we anticipate that this budget will be fully spent by year-end.
6. Building Maintenance - $36K or 16% Under Budget
This expense line is underbudget because the costs of Phase 1 of the Facility Renewal Project were Budgeted to occur in Q3 and Q4. This line item is expected to be on budget by the end of the year.
b. OSDCP June 30,2025 YTD
The budgeted net expenditures for Q2 are $1.5M versus actual net expenditures of $1.24M resulting in a total of $274K or 18% underspent.
| Description | Budget $ (000)'s | Actual $ (000)'s | Variance $ (000)'s | Var(%) | YTD Budget Var (%) |
|---|---|---|---|---|---|
| Expense | |||||
| Salaries | 750 | 627 | 123 | 16% | 42% |
| Benefits | 228 | 186 | 42 | 18% | 41% |
| Mileage | 4 | 10 | (6) | -150% | 134% |
| Office and Administration Expenses | 4 | - | 4 | 100% | 4% |
| Clinical Supplies | 114 | 59 | 55 | 48% | 26% |
| Purchased Services-Programs and Corporate | 341 | 289 | 52 | 15% | 42% |
| Information Technology | 6 | 5 | 1 | 17% | 49% |
| Building Occupancy | 64 | 64 | - | 0% | 50% |
| Utilities, Telephone and Security | 10 | 5 | 5 | 50% | 26% |
| Total Expense | 1,519 | 1,245 | 274 | 18% | 82% |
| Offset Revenue | (3) | (3) | - | 0% | 40% |
| Total Revenue | (3) | (3) | - | 0% | 40% |
| Total Surplus/(Deficit) | 1,516 | 1,242 | 274 | 18% | 41% |
Analysis of Key Variances
1. Salaries - $123K or 16% Under Budget
The variance is primarily due to unfilled or partially filled positions, resignations and terminations as well as mandatory leaves of absences. The department is down one manager and one dental assistant for the whole of Q2. Another key factor is that all roles were budgeted at the maximum salary rate, however, when these positions are filled – whether by full time or contract workers – these individuals typically start below the maximum rate when they are hired some 2-3 months after the vacancy was created.
2. Benefits - $42K or 18% Under Budget
The variance in benefits cost is mainly due to lower than budgeted employer pension plan contributions (OMERS), as these costs are calculated as actual salaries which are currently below the projected levels.
3. Clinical Supplies - $55K or 48% Under Budget
Clinical supplies spending is lower than budgeted due in part to a $15K credit received from the vendor. Also, purchases at year-end remained in stock for a portion of Q1 so no additional spending was done.
4. Purchased Services - $52K or 15% Under Budget
Given the demand for this program exceeding the capacity of the department and a strategy of outsourcing to third party dental offices has been implemented to lower the current wait list. Contracts with dental offices have been signed and will impact Q3 and Q4 and this expense line will be in line with budget by year-end.
2025 Mandatory Programs Forecast as at December 31,2025
Net expenditure for twelve (12) months ended December 31,2025 are forecasted to be $24.7K versus an annual budget of $25.2M resulting in a forecasted underspend of $506.5K. This amount included open purchase orders of $211K.
| Description | Budget $ (000)'s | Forecast $ (000)'s | Variance $ (000)'s | Var(%) |
|---|---|---|---|---|
| Expense | ||||
| Salaries | 16,107 | 15,431 | 676 | 4% |
| Benefits | 4,837 | 4,671 | 166 | 3% |
| Mileage | 284 | 282 | 2 | 1% |
| Office and Administration Expenses | 323 | 330 | (7) | -2% |
| Professional Fees-Legal, Audit and Consulting | 185 | 213 | (28) | -15% |
| Supplies-Programs and Corporate | 963 | 931 | 32 | 3% |
| Purchased Services-Programs and Corporate | 152 | 156 | (4) | -3% |
| Information Technology | 667 | 696 | (29) | -4% |
| Building Maintenance | 722 | 879 | (157) | -22% |
| Rent | 830 | 817 | 13 | 2% |
| Property Taxes | 235 | 225 | 10 | 4% |
| Insurance | 260 | 251 | 9 | 3% |
| Utilities, Telephone and Security | 287 | 271 | 16 | 6% |
| Total Expense | 25,852 | 25,153 | 699 | 3% |
| Less: Offset Revenue | (645) | (663) | 18 | -3% |
| Add: Open PO's and other adjustments | 211 | (211) | ||
| Total Surplus/(Deficit) | 25,207 | 24,701 | 506 | 2% |
The Leadership Team meets monthly to review the overall budget variance to identify potential strategic uses of unused budget dollars. A total of $467K has been built into the forecast to reduce the excess budget dollars (gapping).
The following outlines the main components of the gapping strategy developed by the Leadership team.
- Salaries and Benefits – a number of contract roles were identified and hired to assist in program areas under pressure. Also, the role of the Facilities Coordinator was eliminated, and a Facilities Manager role was created in light of the increased demand of the Facilities operations. The incremental cost has been added to the forecast.
- Leadership and Staff Training – in addition to training and professional development included in the budget, additional training focused on team building for the Leadership Team and training for the Finance Department after a major system conversion were added.
- Program Supplies - additional KI (potassium iodine) pills were purchased in order to satisfy community needs.
- Information Technology – additional projects to enhance the WECHU’s cyber security posture were added.
- Building Maintenance – additional amounts for the Leamington office construction project (included in the terms of the Leamington Lease Amending Agreement) along with extra contingency for Phase I construction were added.
| Item | Expense |
|---|---|
| Net Operating Expenditures Before Gapping Strategies | $ 24,233,705 |
| Salaries and Benefits | 155,393 |
| Leadership and Staff Training | 40,000 |
| Program Supplies | 25,000 |
| Information Technology | 54,800 |
| Building Maintenance - Contingency for Facility Renewal Project Phase 1 | 152,000 |
| Building Maintenance - Leamington Office Construction | 40,000 |
| Net Operating Expenditures After Gapping Strategies | $ 24,700,898 |
2025 OSDCP Forecast as at December 31,2025
Net expenditures for the twelve (12) months ended December 31,2025 are forecasted to be $3.01M versus an annual budget of $3.03M resulting in a forecasted underspend of $25K.
| Description | Budget $ (000)'s | Forecast $ (000)'s | Variance $ (000)'s | Var(%) |
|---|---|---|---|---|
| Expense | ||||
| Salaries | 1,501 | 1,359 | 142 | 9% |
| Benefits | 456 | 402 | 54 | 12% |
| Mileage | 7 | 7 | - | 0% |
| Office and Administration Expenses | 9 | 4 | 5 | 56% |
| Clinical Supplies | 228 | 233 | (5) | -2% |
| Purchased Services-Programs and Corporate | 682 | 696 | (14) | -2% |
| Information Technology | 11 | 127 | (116) | -1055% |
| Building Occupancy | 127 | 172 | (45) | -35% |
| Utilities, Telephone and Security | 19 | 14 | 5 | 26% |
| Total Expense | 3,040 | 3,014 | 26 | 1% |
| Offset Revenue | (7) | (6) | (1) | 14% |
| Total Revenue | (7) | (6) | (1) | 14% |
| Total Surplus/(Deficit) | 3,033 | 3,008 | 25 | 1% |
The Leadership Team meets monthly to review the OSDCP budget variance to identify potential strategic uses of unused budget dollars. A total of $155K has been built into the forecast to reduce the excess budget dollars (gapping).
The following outlines the main components of the gapping strategy developed by the Leadership Team for the OSDCP.
- Clinical Supplies – the dental equipment for the new dental operatory has been added.
- Purchased Services – an additional amount has been added for both outsourced dental and denturist offices to reduce wait times.
- Occupancy costs – the construction cost of the new dental operatory has been added to this expense line.
| Item | Expense |
|---|---|
| Net Operating Expenditures Before Gapping Strategies | $ 2,853,094 |
| Clinical Supplies - new dental equipment | 75,000 |
| Purchased Services - outsourced dental/denturist offices | 35,000 |
| Occupancy Costs - constructions costs for new operatory | 45,000 |
| Net Operating Expenditures After Gapping Strategies | $ 3,008,094 |