A mistake at town hall means the Town of Collingwood collected $3.5 million in funds from taxpayers since 2009 that weren’t necessary.
And now that the error has been discovered, councillors will decide how to deal with the excess funds collected over the past 15 years.
During council’s committee of the whole meeting on March 18, town treasurer Monica Quinlan explained that the town discovered in 2023 that they had been putting money away since 2009 both by recording a liability and contributing to a reserve fund for post-employment benefits in the event the municipality is ever dissolved.
The amount collected between 2009 and December 31, 2022 was $1,774,100 each in the liability account and the reserve account, that had been funded through taxes, for a total of $3.5 million collected.
“Essentially, we were double funding them in error,” said Quinlan.
Government financial statements are governed by Public Sector Accounting Board standards. Under these standards, post-employment benefits are to be provided to employees and their beneficiaries after the employee has retired, but before the employee reaches the age of 65. These benefits include health care and dental benefits as well as life insurance. The standards do not mandate that the liability be funded by a municipality.
The liability and town reserves that had been accumulating funds for this purpose are only eligible to be used if the municipality ever dissolves. Town employees who retire before 65 and pull on benefits until they reach 65 are funded through the municipal reserve.
As of now, Quinlan said no one has ever had to pull funds from the future employment benefits reserve as the town has never been dissolved.
“In reviewing the audited financial statements of peer municipalities, the majority do not fund the liability as it’s seen as a very small risk,” said Quinlan. “If we did dissolve, there would be a whole lot of other problems and quite honestly, the assets of the organization would likely pay it.”
During their meeting on Monday, councillors gave preliminary approval to reallocate $1,774,100 from the employee future benefit reserve to the lifecycle reserve fund, the latter of which is set aside for asset management.
Council also gave preliminary approval to discontinue funding the employee future benefit liability. Both these decisions need to be ratified at the next regular council meeting before going into effect.
While staff had recommended keeping the other $1,774,100 in the benefit reserve just to be safe, an amendment put forward by Deputy Mayor Tim Fryer saw councillors requesting a staff report on how those funds could be better used, which would include an option to set aside that money for a future hospital reserve.
“Why would we keep any of it if it’s such a remote possibility?” asked Mayor Yvonne Hamlin. Quinlan said the town was erring on the side of conservatism.
“It’s unfortunate that this was being funded incorrectly,” said Quinlan.
Hamlin noted that she felt the lifecycle reserve fund was a good option for the surplus.
“I know it’s really easy to say, yippie, we have $3.5 million – I feel that the lifecycle reserve fund is a good option. It will help with a lot of road repairs, as one example,” she said. “I think it’s a prudent thing to do.”
Hamlin noted she was uneasy about allocating the second $1.7 million specifically to a hospital reserve without staff advice on all the competing needs facing the town including roads and light standards, the water treatment plant expansion, an arts centre and a multi-use recreation facility.
“I’m conflicted about what to do. It would be helpful for me to have staff advice...on all the things we need in place to have our municipality operate properly,” said Hamlin.
Town chief administrative officer Sonya Skinner said staff would appreciate time to think through all the options before providing advice.
Coun. Kathy Jeffery said whenever it comes to surpluses, she feels the money should be given back in some way.
“I would really like us to do something with it for the taxpayer,” said Jeffery. “The lifecycle reserve is desirable for our future...but I’m really stuck.”
Fryer said had he known there was this surplus, he may have voted differently on the 2024 budget, which was passed by councillors in January.
Coun. Deb Doherty said that while taxpayers of the past have contributed to this employment reserve, they had not kept up with lifecycle reserve funding so for her, to move the funds into the lifecycle reserve would be a fair choice.
“We’re now in a situation where we’re a little behind (on asset management),” said Doherty.
Councillors voted 6-3 in favour of referring the $1.7 million surplus issue back to staff to collect advice on different paths forward, to be presented to committee of the whole at a later date. Coun. Chris Potts, Fryer and Jeffery were opposed.
