Financial 2014 Fourth Quarter Repor?r Repori Winnipeg Police Service March 9, 2015 Table of Contents 20i 4 Fourth Quarter Overview ..2 Q4 Financial Highlights Revenues ..3 Q4 Financial Highlights Expenses ..5 Financial Summary ..7 Complement 1 Capital Expenditures 2 Financial Outlook 3 Revenues 33 Salary and Wages ..13 Overtime ..l3 Other Expenditures ..l4 Risks 4 Cost Saving Initiatives 4 Operational Efficiencies 5 Winnipeg Police Service 20 i 4 Fourth Quarter Dyerview Year to date for the fourth quarter of 2014 the Winnipeg Police Service overall revenues have exceeded last year's revenue by 4.70%. 0 Photo enforcement revenues have increased significantly 25.15% due to the addition of construction zone ticketing, at double the fine, and the late fall introduction of school zone enforcement, both increasing photo enforcement revenues to the highest they have been during the life of this speed reduction program. a Traditional enforcement increased last year by 12.01% primarily to an emphasis an enforcement beginning early in the year and being maintained consistently during this fiscal period. Criminal record check revenues are also up 12.26% as a result of fee and volume increases compared to the same time last year. Contract and police services revenues fell by 14.33% with the cessation of the Airport Unit contract in October as compared to last year, but the Service still managed to exceed 2014 budgeted revenues for this category by 7.32%. Overall expenses have increased by 5.30% as the retroactive impact of collective agreement increases flows through the system and impacts on all the salary and benefit related accounts, overtime, pensions, etc. 0 Asset purchases were delayed to avoid additional moving costs. It appears that the tentative move in date may begin sometime in late fall 2015. Unspent funds for these categories have been approved to be carried over as a commitment reserve. This totalled and will be used for the new Police HQ furniture and equipment that had been previously budgeted. Due to a significant reduction to facility costs of from the delayed move in date, the Police Service overall year to date expenses were less than amended budget. Additional cost reductions of were realized in salaries and benefits primarily due to vacancy management. Winnipeg Police Service 2 Q4 Financial Highlights Revenues 2014 Revenue Budget by Source 4% IRegulo?on Fees lSales of Goods 8. Services lGovemment Grants l'l'rot?c Enforcement Initiative Actual YTD Revenues Comparison 2014 to 2013 Dec 31, Dec 31, Revenues (000 s) 2014 2.013 Total Revenue Total Government Grants (19.354) {20, 128) 96% Police Fines (4,450) (3,973) 1 12% Traffic Enforcement Initiative (14,602] 1 1,668) 125% Other Regulation Fees {479) (127) 377% Total Regulation Fees (19,531) (15,768) 125% Police Services (6,580) (7,681) 86% Record Searches (1,857) (1,655] 1 14% Other (168) {127) 21% Total Sale of Goods Services (8,605) (9,463] 124% Total Revenue (4 7,490) (45,359) 105% Overview 0) Government grants were down due to the early termination of a number of funded programs which had not been anticipated. Winnipeg Police Service 3 b) Photo enforcement revenues are much greater than last year due to the re- occurrence of construction zone ticketing occurring this past summer. An additional impact that occurred was the Province doubling the actual fine portion on construction tickets. This generated additional revenue that was not expected and budgeted. This combination of events, plus good winter road conditions. assisted in this speed reduction program having the highest year in revenues since inception. The early winter introduction of school zone speed enforcement also aided in achieving higher revenues. These areas of enforcement have been added due to safety concerns for construction workers and our school children. c) Fee and volume increases related to criminal record checks have increased revenues. d) Alarm permit renewals occurred early in this fiscal year, already exceeding this year's budget by the first quarter. Another renewal process was anticipated to occur in 2014 but the Service is reviewing automating this process and developing an on-line payment system in early 2015, enabling some efficiencies to be obtained in administrative efforts. e) Traffic Fines are ahead of last year due to a consistent enforcement during the early winter months of 2014. Increased efforts in issuing tickets have also added to the amount of time that officers spend in court, which takes away from available time to do enforcement. Legislative changes to be enacted should reduce the requirement to attend court. It is unknown when this legislation will be passed. f) Revenues in police services were anticipated to decrease due to the termination of the Airport Unit contract, however several unexpected last minute cancellations of contracts added to this overall decrease. Increases in special duty services and retroactive billing for salary increases permitted on overall increase over budget. Winnipeg Police Service 4 Q4 Financial Highlights Expenses 2014 Expense Budget by Source 1% lSalaries 8, Bene?ts lServices IMaterials IAssets UDebt Financing Fo ciliiy other Actual Expenses Comparison 2014 to 2013 =EXpenses (000's) Total Expenditures Total Salaries Benefits Salaries-Permanent Overtime Other Salaries and Benefits Total Salaries Benefits Total Services Total Materials Parts Supplies Total Assets Purchases Total Debt Finance Charges to GCF-cash to capital to Civic Accommodations to Commitment Reserve Other Total Transfer to Other Funds Total Recoveries Total Expenditures 20. 121" 168,1 10 8,364 42,692 2 19, 166 15,374 5, 1 14 2,246 477 4, 143 7,405 2,467 730 14,745 (837) 256,286 Dec 3 l, 2013 156,131 8,875 39,912 204,918 13,931 5,238 1,673 611 8,781 7,416 700 1461 17,658 (637) 243,392 108% 94% 107 107% 1 10% 98% 282% 78% 47% 100% 352% 96% 1 16% 131% 105% Winnipeg Police Service Overview 0) New Collective Agreements signed in 2014 provided for a number of salary increases, some of which were for retroactive increases. These retroactive payments were all budgeted for and provided for in the current budget year. The new contracts, with an expiration date for the end of 2016 will assist in eliminating some of the in-year salary fluctuations that occur when contracts are ratified. b) With the continued delay of the move?in to the new Police HQ. some positions still have not been filled, caretakers, and along with other vacant positions, results in lower budgeted FTE salary costs. This has mitigated to some extent the increases due to collective agreement increases. Some savings will continue on to 2015 until the Service moves into the new headquanes. c) Continued effort to manage overtime has resulted in these costs by the end of the fourth quarter to be 5.76% lower than the previous year. This decrease occurred, in spite of the collective agreement increases, which partially disguises the excellent effort to stay on top of overtime costs. Court overtime hours are lower as well, although management action in this area is limited as it is determined by legislative processes. Although, where allowed, processes that can be implemented to further lower court costs are yielding positive results. 01) The non-salary expense category covers a wide variety of expenses and for the most part final YTD expenses primarily came in at budgeted amounts. A number of accounts were under budget as the Service made a concerted effort to minimize purchases in a broad category of items, including stationery and uniforms. These efforts were made as the move-in date at headquarters remained fluid. As a result, all unspent funds were collected into a commitment reserve, to be expended in 2015. The Service's goal was to minimize purchases of items to reduce the number of items to be moved. e) As a point of interest this is the first time in police financial history that cellular costs have exceeded land line costs. As cell phone technology improves, and costs drop, there will be more conversions of land lines to cell phones. f) Fuel costs, for the most part of the year, were looking like they were going to exceed budget. With the dramatic drop of fuel costs in the last quarter, not only was the Service quite a bit lower than budget, costs wound up being lower than last year. Winnipeg Police Service 6 g) Cost in relation to cash to capital is 47.181% of last year as budgeted, and Municipal Accommodations costs wound up comparable to last year. Originally the budget had anticipated that the Service would have been moved into the new building by July 1, but as this did not occur, the budget was credited for the new HQ costs for the balance of the year. As a result, costs were comparable to last year as the facility environment was the same. h) A commitment reserve request was submitted and approved for to carry over unexpended funds from the 2014 budget to be spent in 2015. This amount represents items that would have been acquired in 2014 if the move to the new Police Headquarters had taken place. As the move date was fluid it was fiscally responsible to not purchase items, and save potential moving costs. The bulk of the commitment reserve addresses furniture and building related items that would be required to outfit HQ. Financial Summon. From a budget perspective, a great deal of focus relates to salaries and benefits as these comprise approximately 85.6% of total costs in 2014. Due to vacancy management, savings in this area helped to offset a substantial arbitration settlement, resulting in the Service still coming in under budget. Normally vacancy management levels would not be this high, but a delay in hiring for new HQ requirements, the difficulty in attracting new Cadets, and the vacancy of a number of individual positions contributed to this one time savings. Projecting for attrition is a financial risk as it directly impacts salary budgeting. Attrition has been lower than expected over the last number of years; however, the number of employees eligible to retire remains high. Historically, the gap between projections and actual departures creates an annual challenge respecting budget and staffing. This year, a drop in authorized complement will be realized as a number of funded programs will terminate. The major one, the Winnipeg Airport Authority contract terminated as of October 15, 2014 and resulted in 25 officers returning to regular complement. It is expected that a number of officers that were assigned to the Airport Unit will retire; this has been built into attrition projections. However, actual retirements may deviate as it is unknown what the intentions of these members are. A number of other funded programs with MPI and the federal government have required additional decreases in the authorized complement. Another contract that expired, just recently announced for Q4, is one officer for the Community Corrections Liaison Officer. Winnipeg Police Service 7 Complement is generally adjusted by reducing the size of an incoming recruit class. The Winnipeg Airport Authority budget revenue was adjusted as part of the budget process; however, the MPI and federal contracts were not, thereby creating a decrease in revenues in these areas, but retaining the salary expenses. These reductions were considered in determining the size of the spring 2015 class, which was reduced from the third quarter YTD attrition was at 30, as compared to the yearly budget of 37. The 10 year average would indicate another 5 to 6 retiring by the end of the year. Some members from the Airport Unit did retire in 2014, although indications are that more would retire in early 2015 rather than the current fiscal year. The 2014 final result is that retirements were above projections, ultimately coming in at 4i. The authorized complement at the beginning of the year was 1463, and by the end of the year it was 1430. Police pension costs have increased over the last few years to 15.i2% of salaries, with overall costs of all benefits now totaling 24.79% of salary amounts for the police complement. Overtime comparisons (converted hours) to last year remain consistent with an overall 14.02% decrease from 2012. This is attributed to management's overtime mitigation strategies that began in 2012. New legislation. anticipated in 20l5. is expected to result in a decrease in traffic court overtime. Winnipeg Police Service 8 Quarterly Converted Overtime Hours1 for Fourth Quarter Ending For the Fourth Quarter Ending 53,133: 52,135: 53,153: Hours Hours Hours Winnipeg Police Service 274,895 288,236 319,717 Development Support Services 12,284 12,555 16,922 Division 30 - Services 288 497 436 Division 31 Bureau of Police Records 8,495 7,265 10,020 Division 32 Organizational Development Support 352 3,024 5,816 Division 33 - Training 1,849 492 Division 37 - Information and Technology Solutions 1,301 1,277 651 Executive 11,988 9,439 28,285 Behavioural Health 253 237 248 Chiefs Of?ce 6,903 6,279 25,468 Division 34 - Human Resources 3,471 2,243 1,317 Division 35 - Finance 527 343 325 Professional Standards 835 337 927 Investigative Operations 67,592 69,335 62,934 Division 40 - Organized Crime 19,750 29,586 39,567 Division 41 - Specialized Investigations 8,960 7,820 8,284 Division 42 - Forensics, Intelligence Technology 10,234 8,586 15,083 Division 43 Major Crimes 28,649 23,343 Operational Support Services 44,114 46,634 57,072 Division 50 - Community Support 14,1 1 1 12,628 20,013 Division 51 30,003 34,006 37,059 Uniform Operations 138,916 150,274 154,503 Division 11 - District 1 38,164 43,040 43,683 Division 12 - West District 30,776 32,510 34,350 Division 13 District 3 34,450 35,208 35,615 Division 14 - East District 24,409 24,655 27,625 Division 36 - Communications 6248 10,194 5,403 Duty Office 4,867 4,667 7,827 I Converted overtime hours is the actual amount of hours (straight time) awarded pursuant to the provisions of the Collective Bargaining Agreement with the Winnipeg Police Association. In most cases this compensation can be provided as time or pay as elected by the member. Statistics are based on a calendar year starting Jan 1 to the end of the given quarter. Winnipeg Police Service 9 Fuel expenses early in the first quarter were $1.06 per litre and during the second quarter went to $1.28 per litre. Every penny increase costs the service an extra $16,000.00 for a full budget year. A rate of $1.1378 per litre was used to determine the current budget. Fuel prices dropped to $1.119 for the third quarter but plummeted for most of the fourth quarter. As a result, fuel costs at the end of the year were 7.47% below the 2014 budgeted amount. With respect to managing fuel costs, new additions to the fleet are more fuel efficient than previous vehicles so this will reduce consumption. A move to the new headquarters will also allow some efficiency to occur as travel between buildings, Training Division to P88 will no longer occur. The delay in the move to the new Headquarters will deter these potential savings. An increase in overall mileage has occurred as a result of the newly amalgamated divisions. This has also increased the wear and tear of our vehicles within these divisions, and the costs associated. A significant expenditure of $960,000 occurred in 2014 relating to the acquisition of replacement firearms and conducted electrical weapons. At the same time as the firearms were purchased, mountable lights for the firearms were also purchased. This will result in additional safety for the officers. The Service has addressed the requirement to determine efficiency savings of $283,000 as was previously identified in the budget through the Police Board. The savings resulting from reductions in the contractual costs of the photo enforcement program will be used to achieve these savings. During the course of the 2014 fiscal year, additional financial and operational efficiencies were also made; these were provided in a separate report and have been included at the end of this report. The costs for buildings, managed by the City of Winnipeg Municipal Accommodations Branch, increased in 2014. The original budgeted increase was predicated on a July 1, 2014 move in date to the new headquarters. Current scheduling of the move is now expecting to be in Fall 2015 which required a significant credit adjustment, ultimately lowering the cost to the Service for this fiscal year, comparable to last year's costs. This will also reduce the 2015 budget estimates as well. This delayed move-in will also directly impact existing third party leases, and may require re-negotiation of leases and additional costs into 2015/2016. Lastly, delays in some expenditure areas, furniture resulted in a request to set up a commitment reserve to defer funds to the 2015 commitment reserve as the move to HQ will not be begin until fall 2015. Winnipeg Police Service 10 Comoleme 1' As previously outlined, actual 2014 salary costs are already 85.6% of total costs and will over time comprise a larger percentage of the overall budget as increases in this area are larger than increases in non-salary costs. As a result, a great deal of focus relates to maximizing these resources. A recruit class of 20 was hired on February 18, 2014, with an additional 13 hired in August 2014. Recruit classes have been smaller the last few years as attrition has been below the 10 year average, requiring smaller recruit classes. Reductions in externally funded contracts have also required the Service to reduce authorized complement, and as a result, recruit class size. Maintaining the complement of the Auxiliary Cadets remains a risk as attracting and retaining qualified applicants has been a challenge. It is anticipated that recent increases to the salary related to this position will be of assistance in attracting new recruits. However the Service had to cancel the Q3 Cadet class as the number of qualified candidates available was too low to efficiently run a class. A significant risk is the large number of officers eligible for retirement. Low attrition over the last number of years continues to escalate this risk. As of the end of this quarter, over 200 police members can retire without penalty. Should a large number retire within a short time span, this will impact recruiting, training and operations. The timeline from recruiting to graduation is and staffing minimums could generate additional overtime if there is a significant increase in unexpected retirements. The Service did project a larger retirement total in 2015. but this was primarily as a result of expected retirements from the Airport Unit contract cancellation. Winnipeg Police Service Capital Expenditures 2014 Forecast .ListofCapjtal Projects: 'Estimate: 2015 2016 2017 2018 2019 1 Automated Fingerprint Identi?cation System (AFISOf?cer Mobile \?deo System - - - 1,000 - 3 Trunk Radio System - 2,000 5.280 - - - 4 Radio Upgrade for Districts Police Division's Systems upgrades 3,743 2,986 1,400 - - - 6 North Station if requirements - 490 - - - - 7 East District Police Station - - - - 8 North District Police Station - - - 19,423 - - 9 Winnipeg Police Headquarters Redexelopment - - - - - - 10 Building Video Sunieillance Systems - - - 4,160 - 11 Communication Centre Back Up Site Upgrade - - - 400 - - 12 Security and Card Access 400 - - - - - 13 Mobile and Transient Users - - 250 - - - 14 Intelligence Led Reporting (Phase 2) - - - 1,050 - 15 Major Case Management System Expansion - - 1,158 - - 500 16 WPS Data Integration, Auditing and Quality Solution Tool - - - - 662 - 17 Bomb Unit Building - - - - - 651 18 Technology Upgrades - lnforrnation Systems - - - - - 1.200 19 Next Generation 911 - - - - - 800 20 In Car Computing - - - - 1,200 21 Bomb Unit Replacement - - - 4.464 5,476 8,578 20,823 5,872 5,151 The majority of the Winnipeg Police Service capital projects are generally for the replacement of information technology systems, or for replacing specialty equipment. While building capital projects are listed, they are managed by the City of Winnipeg Municipal Accommodations Branch. A number of current projects relate to the new headquarters. Significant expenditures and or investments directly related to information technology are currently within budget targets. The most significant budget risk relates to funding general office furniture and equipment. The delayed move-in has made it a prudent decision to defer purchases until an actual move in date has been determined, to minimize moving costs Winnipeg Police Service 12 Financial Outlook As of the end of the fourth quarter, final results show that the Service came in under budget. This was primarily due to a facility credit of received for not having moved to the new HQ in 2014. The remainder of savings was due to vacancy management savings from unfilled positions in a number of different areas. While there were overall savings in the non?salary area, these were bundled up and put into the commitment reserve of to be used on requirements for the new HQ. Overall, the financial results were excellent with good news on a number of fronts. The Police Service weathered the 2014 fiscal year without significant policing issues, and as a result overtime both in regular and court overtime came in favourable compared to budget. Many financial and operational decisions hinge on the move in to HQ date and will precipitate a flurry of activity once the move can begin in Fall 2015. Revenues The majority of revenue accounts showed an increase. The decrease in externally funded police services, due to the cancellation of the Airport Unit contract, showed a significant decline from last year. Traditional traffic enforcement, while 12.02% higher than last year, has still fallen short of budget over the last number of years. The Service's full time traffic enforcement unit members spend significant time in court which takes away from on-street enforcement. An expected legislative change in 2015 will potentially reduce traffic court time and associated costs. Salary and Wages The new Collective Agreements, now in place until late 2016, will increase wages and benefit costs at rates higher than CPI. The greatest risk to this budget area is attrition and predicting the actual rate and timing of departure. The impact of additional costs for carrying officers from expired contracts will continue to have an impact. Some of these costs are offset as vacancies due to delayed hiring for the new HQ has allowed a reduction in salary costs. Overtime Regular overtime hours have decreased 14.02% compared to 2012. Collective Agreement increases have mitigated the overall savings that would have been apparent from the reduced hours. The budget management strategy in place resulted in lower overtime hours. While continued effort will remain to manage regular overtime costs, court overtime costs are more difficult to manage as the judicial system has control of police attendance at court events. Should legislation be developed that changes officer appearance provisions for traffic court, court overtime will potentially decrease in the future. Winnipeg Police Service 13 Other Expenditures While all costs are ultimately controllable, many of the Service's yearly costs are either collective agreement driven, or under a contract of some type. Expenditure control on non-salary costs, where possible, has resulted in good financial results in this area and kept them under CPI and within budget. Risks The major goal for the Service, outside of general operations, is the effort required to move into the new headquarters. This is the largest undertaking that the Service has seen in recent history and will result in significant changes in some areas on how the Service conducts business. Cost Saving Initiatives The Winnipeg Police Board required the Service to identify $200,000 in efficiency savings in 2014. The WPS met and surpassed this requirement, in addition to the City- directed reduction of $1,000,000 ongoing since 2010 on non-salary accounts. Overtime Management Strategy Reduction in overtime expenditures achieved from the previous year. Attributed to overtime mitigation strategies that began in 2012. Resulted in a reduction of regular overtime by $282,446. In addition, the WPS implemented processes which resulted in lower court attendance overtime by $228,167. 0 Total overtime savings in 2014 was $510,613. Photo Enforcement 0 Generated $14,601,905, an increase of $2,900,419 from 2013. 0 Construction zone and introduction of school zone ticketing yielded the increased revenues. Civilianization Civilian staffing strategy in developmental stage. process requiring thorough review of job descriptions and the establishment of new policy and processes. 0 Moderate immediate cost savings can be attributed to sworn member position Civilianization, including: 0 Supervisor of Exhibit Stores Sergeant Inspector Human Resources, Division 34 a Two Constable positions converted to civilian IT positions a Inspector ODS, Division 32 Winnipeg Police Service 14 Revised Civilian Salary Schedule 0 Reduced salary schedules came into effect on June 29, 2014 for specific civilian positions in the Collective Bargaining Agreements for the Winnipeg Police Association and the Winnipeg Police Senior Officers Association. 0 Nine civilians hired under the new salary structure with a savings of $7943.89. Facility Closures 0 Service centers located at 1400 Henderson Highway and 1086 St. Mary's Road were closed 0 Cost savings of $152,717, includes only facility costs. Criminal Record Checks 0 Yearend revenue result of $182,652 due to increased rates and volumes External Training 0 Training external agencies on a fee for service basis resulted in reimbursement of $41,559. Electronic Forms 0 Use of online forms created savings in printing and related stationery items. 0 Estimated savings of $10,000. Operational Ef?c1enc;es In addition to cost-savings, several operational efficiencies were employed to ensure efficient service delivery to the citizens of Winnipeg. Resource Deployment 0 Peak operating times occur annually during the summer months as well as December, coinciding with a high demand for employee holidays. 0 In order to maximize service capacity and minimize overtime during these periods, the WPS ensures recruit availability in the summer and Christmas season. 0 Although this is not new, the timing of recruit classes and the deployment of new members continues to be a consideration. Winnipeg Police Service 15 Evidence Based Policing Techniques 0 Smart Policing Initiatives (SPI) is used as a strategic, proactive approach to policing. 0 intelligence sharing between crime and sworn officers assists in identifying crime patterns, persons of interest and high crime activity areas. Intelligence led policing techniques increase the efficiency of general patrol officers by focusing patrols in targeted crime areas. Auxiliary Force Cadet Section 0 Since 2010, the Cadet Section has created operational efficiencies by freeing up general patrol officers from lower priority duties, allowing them to focus on higher priority calls for service. 0 A first year Cadet earns $i6.8l an hour whereas a first year constable earns $24.61. In 2014, a two person Cadet unit responding to a low priority call for service saw a cost savings of at least $15.60 an hour. 0 Through negotiations with the Winnipeg Police Association, Cadets will now be performing front desk security duties, and other duties in the Central Processing Unit. If this agreement had not been formalized, 14 police officers would have been required to perform these duties. Central Processing Unit 0 The Service is in the development stages of a Central Processing Unit (CPU) designed to streamline the arrest process and accommodate the requirements of the new police headquarters. The CPU will merge two autonomous units: the Arrest Processing Unit and Central Reading Unit to increase operational efficiencies. CPU will be responsible for reading and approving police reports, compiling court packages, conducting bail hearings, transporting prisoners and will be involved in the supervision of all persons held in custody within the new headquarters building. This restructure will reduce the time required for arresting officers to process an individual and will increase their availability to respond to calls for service. 0 Although the move to headquarters has been delayed, the WPS has commenced some of the new processes to support more effective service delivery. For every prisoner transported or warrant processed by the CPU, the Service generates time savings of one to two hours. Coplogic The introduction of online police reporting in 2012 occurred in conjunction with the closure of WPS service centers. Coplogic is an online reporting tool that utilizes interactive web technologies to provide citizens with a convenient alternative for reporting non-violent low priority incidents. Winnipeg Police Service 16 0 Citizens can now file a report at any time of the day without having to call the police or attend a service center. It takes approximately one hour for a one-officer report car to take a report for a low priority incident from a citizen. Sworn officers working in a report car capacity are senior officers with an estimated salary of $45 per hour depending on seniority, as the pay range varies with time served. 0 In 2014, 8,892 were incidents reported to the WP3 through Coplogic, which resulted in an estimated efficiency savings of $400,140. Social Media 0 Service YouTube2 and Twitter3 accounts provided value in 2014 by maintaining quick and convenient communication with the public. 0 The use of social media platforms has supported the diversion of traffic during major police events or street closures. As well, it has enabled the Service to reach out to the community for assistance on specific police matters. 0 The Service is able to provide a higher level of service to the community through the use of social media. 2 3 Winnipeg Police Service 17