ISSUE

Constrained financial resources and uncertain funding approval timelines limit the ability of the Windsor-Essex County Health Unit (WECHU) to address public health needs within the community of Windsor and Essex County.

BACKGROUND

The WECHU is a publicly funded organization. As such, the WECHU has a responsibility to spend funds prudently toward its objective of providing public health programs and services as required under the Health Protection and Promotion Act, R.S.O. 1990 ("HPPA") and the Ontario Public Health Standards: Requirements for Programs, Services, and Accountability ("OPHS").

The WECHU is funded through grants from the Province of Ontario, more specifically the Ministry of Health (MOH) and the Ministry of Children and Social Services (MCSS) (collectively referred to as "Ministries"). In addition, it is funded through required contributions from the Corporation of the City of Windsor ("City"), the Corporation of the County of Essex ("County") and the Corporation of the Township of Pelee ("Pelee") (collectively referred to as "the Obligated Municipalities").

The WECHU operational budgets can be broken down into 3 main categories:

1. Mandatory Programs Budget which is funded to a maximum of 75% from the MOH and remainder to come from the obligated municipalities. These funds are allocated and required to be expended within the fiscal year January to December.
2. Fully Provincially Funded dollars outside the mandatory budget allotment that contribute to 100% of the cost of programming exist in the following areas:
   1. Healthy Babies Healthy Children Program - funded by MCCSS and falls in the fiscal year of April to March.
   2. Ontario Seniors Dental Care Program - funded by MOH and falls in the fiscal year of January to December.
   3. Infection Prevention and Control (IPAC) Hub - funded by MOH and falls in the fiscal year of April to March.
3. One-time Funding Requests that are submitted each year to the MOH, through the Annual Service Plan submission, which operates on a fiscal year from Apr-March. In the 2024 ASP budget submission, no one-time funding request applications were accepted by the MOH except for costs related to PHU mergers.

Prior to 2022, the mandatory budgets were approved on an annual basis and typically, the WECHU received the final and officially approved budget in Q4 of that fiscal year.  Post 2022, the MOH  made the 3-year commitment of 1% per annum from 2024 to 2026 which allows local public health units in the province  to plan mandatory budgets more consistently.

There are significant obstacles that the WECHU encounters regarding the current public health funding model.  The overlap of two fiscal year-ends (WECHU/Municipalities – December 31; MOH March 31) creates complications in the execution of budgetary changes to operations as well as the completion of complex items such as our current facility renewal project. The uncertainty around timelines for funding approvals compounds this complication by reducing the time needed to execute implementation of funds while increasing the risk of returning unspent dollars. 

Based on the risks imposed on the WECHU in this funding timeline model, the organization has operated in a state of extreme caution to ensure it does not exceed the funding allotment of the base budget. Failure to complete the year within budget would force the board into a position to seek the additional funds from the obligated municipalities to fund the difference. This obligation is set out by the HPPA in the following provision: 

Payment by obligated municipalities

72 (6) Where additional expenses incurred

If, after a notice is given by a board of health under subsection (5) in a respect of a year, additional expenses referred to in subsection (1) that were not anticipated at the time the notice was given are incurred during the year, the board of health may give another written notice to each obligated municipality in the health unit, specifying the additional amount for which the obligated municipality is responsible under this section and the time at which the addition amount must be paid.

In operating  conservatively to not exceed the mandatory budget, the organization has missed several opportunities to address staffing and infrastructure upgrades over the span of several decades. Below are three recent examples of how the WECHU adjusted its operational funding allotment, including the risks involved, and the elements that would continue to be reallocated to future years facing further financial restrictions. 

1. KI pills purchase and distribution in 2024.  Given the proximity to nuclear energy facilities in the United States, the WECHU bears the unique requirement to distribute Potassium Iodide (KI) pills to its residents. This project required an additional $342K in excess costs relative to our annual budget.  Following discussion with the MOH permission was granted to submit a request for the funds, in spite of previously stated restrictions regarding one-time funding requests.   Although the Ministry expressed optimism that the request would be approved, the initiative was required to begin without confirmation that funding would be granted.  In doing so, the WECHU ensured that positive variances available through staffing vacancies (i.e., gapping) dollars were available as a mitigation strategy in the year to ensure this service could be provided without exceeding the board approved budget. Funding for this initiative was approved in late Q1 of 2025.
2. Covid-19 post pandemic.  In recent years, funding has been available to account for the ongoing impact of COVID-19 and the additional work required of the WECHU.  Similar to the KI pills work, the WECHU was required to resource this work without certainty on the additional funding until late in the fiscal year. This resulted in the delay of key infrastructure initiatives to ensure the budget was not exceeded.
3. RSV Vaccine Program.   The expansion of the publicly funded immunization program to include RSV vaccine (infant and older adult) began in 2024 with an expansion of eligibility this year. Increased resource expectations to support this new work created similar budgetary pressures to those which public health units experienced during the COVID-19 pandemic.  Once again, allocating additional staff and contracts to this work without knowing what funding is being provided until late Q1 of 2025. 

The WECHU has been successful in mitigating this risk at the expense of not keeping current with capital (including IT) expenditures.  With so much uncertainty throughout the fiscal year, it has been the practice to not move forward with renewal projects until funding approvals are received which is too late in the fiscal year to implement, as mentioned in the examples above.   As the WECHU operates on a different funding cycle than the MOH, any approval received in November or later for additional pressures or capital/infrastructure projects creates a significantly short timeline to execute these items over the span of 2-3 months (i.e., required to be completed by either December 31^st or March 31^st) with the consequence of funds being returned if work cannot be completed.   

Below are examples of significant items that continuously appear on each budgetary cycle highlighting how the inability to address them in a planned and staged way has exacerbated their magnitude over several years. 

1. Ongoing relocation project initiatives that commenced in 2014-2015. Multiple attempts have been made to find a more suitable space to serve the community of Windsor Essex.  Each scenario did not proceed due to funding limitations, traditionally late approval timelines that increased the risk of overspending on a fiscal budget leading to negative impact on staffing numbers and ongoing building challenges.
2. IT infrastructure and system upgrades. In this area, items that could be accomplished within a short timeframe have been successfully executed. Over many years, replacement of several items was necessary for items that were at a level beyond traditional life expectancy and needed immediate attention before critical failure.  Although we have made advancements in this area, there are still items such as the replacement of aging servers and cyber security upgrades that need addressing to mitigate ongoing risk to the organization.

Present day: 

3. 1005 Ouellette Facility Renewal Project.  Despite the extensive planning of the project, the WECHU is being presented with significant time limitations to start and complete the project phases within the December 2025 and March 2026 deadlines.   We had been successful in launching Phase 1 with the budgeted moneys for 2025 but have had to continuously delay Phase 2 to a critical point. If approved without official funding notification from the ministry, the WECHU is entering into this expenditure with risk of exceeding the budget and if variance dollars are not sufficient, would be faced with the decision to seek the additional dollars from the obligated municipalities.

Reserve Funds

Reserve funds have historically been used by public sector entities to ensure that adequate financial resources exist to fund specific initiatives and/or circumstances that arise that were unforeseen in the current year's budget. Contributions to and utilization of reserve funds typically follow a prescribed methodology in accordance with an organization's Corporate By-Laws or approved policy. The Province of Ontario does not permit Public Health Units to contribute unspent grant funding into a reserve fund . The following section within the 2014 Accountability Agreement dated January 1, 2014 address this matter:

15.5 Carry Over of Grant Not Permitted. The Board of Health is not permitted to carry over the Grant from one calendar year to the next, unless pre-authorized in writing by the Province.

In practice, all provincial grant funding is fully allocated to the delivery of mandatory public health programs and is utilized within the fiscal year.  As a result, provincial grants are not available to support reserve contributions, nor are they permitted to be carried forward under the terms of provincial funding agreements.  Therefore, reserve funds held by a public health unit would need to be established through contributions from Obligated Municipalities or other non-restricted funding sources. 

The authority to establish and maintain reserve funds is expressly provided under the Municipal Act, 2001.  Specifically, Section 417(1) states:

Reserve funds

417 (1) If a local board, conservation authority or any other body exercising a power with respect to municipal affairs under any Act in unorganized territory does not have power under another Act or another section of this Act to establish and maintain a reserve fund, it may, under this subsection, provide in its budget for the establishment or maintenance of a reserve fund for any purpose for which it has authority to spend money.  2006, c. 32, Sched. A, s. 181; 2009, c. 34, Sched. I, s. 22.

As a local board under the Act, the WECHU is permitted to establish and maintain reserve funds to support its public health responsibilities. In any given year municipal year-end surplus dollars noted in the annual audited financial statements would be allocated to the reserve fund. For the year ended December 31, 2025 the estimated municipal surplus dollars are estimated to be in the range of $800K to $1.3M.

With a proper policy and reporting structure, the reserve fund mechanism funded through contributions from the Obligated Municipalities could provide the necessary resources to address the challenges identified above. More specifically:

• Reserve funds would assist in mitigating financial risk in future periods to the Obligated Municipalities in instances where financial pressures caused the WECHU to overspend.
• The Reserve Fund may be used to temporarily support the implementation of Board-approved business cases that are expected to receive 100% Ministry funding in advance of formal approval.  Such use would be subject to appropriate risk management protocols, with any reimbursed amounts returned to the Reserve Fund upon confirmation of Ministry funding.
• The Reserve Fund may be used to address emergent public health needs, allowing the Health Unit to respond promptly without deferring or reprioritizing other approved public health activities.
• The Reserve Fund could be used to fund capital, and infrastructure needs so that it would not have to come from program budgets.
• In alignment with the Reserve Fund Policy, the reserve shall be subject to a maximum balance of 10% of the total annual WECHU budget.  This cap ensures the reserve remains proportionate to organizational scale while providing sufficient flexibility to manage operational risk, address funding delays, and support infrastructure and emergency response needs.

PROPOSED MOTION

Whereas, the Windsor-Essex County Health Unit (“WECHU”) does not currently maintain a reserve fund to mitigate financial risks arising from delayed funding approvals or to respond to emergent public health needs; 

And Whereas, provincial grants are subject to year-end restrictions and specific conditions imposed by the funder, whereas contributions from the Obligated Municipalities may be allocated in accordance with the Health Unit’s statutory authority; and

And Whereas, the Municipal Act, 2001 expressly authorizes local boards, including boards of health, to establish and maintain reserve funds for any purpose within their spending authority; and

 And Whereas, the establishment of a reserve fund is a prudent financial management practice that will support WECHU’s ability to respond to funding delays, address urgent public health priorities, and reduce financial risk to the Obligated Municipalities; and

And Whereas, at its meeting of November 10,2025, the Finance and Audit Committee passed a motion recommending to the Board of Health that the Reserve Fund Policy be approved, that the Reserve Fund be established in accordance with the approved policy and that all municipal year-end surplus dollars, as identified in the audited financial statements for the year ended December 31,2025, be allocated to the newly established Reserve Fund;

Now therefore be it resolved that the Windsor-Essex County Board of Health approve the following:

1. That the Reserve Fund Policy, as presented, be approved;
2. That a Reserve Fund be established in accordance with the approved policy; and
3. That all municipal year-end surplus dollars, as identified in the audited financial statements for the year ended December 31, 2025, be allocated to the newly established Reserve Fund.