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HomeMy WebLinkAboutTR-74-89 V �.. UNFINISHED BUSINESS TOWN OF NEWCASTLE r t: REPORT Fiie ��4to Asti Res. # — -�" By-Law # MEETING: GENERAL PURPOSE & ADMINISTRATION COMMITTEE DATE: September 5, 1989 REUT #: TR-74-89 FILE #: SUBJECT: COMMUNITY AND RECREATION BOARDS RECOMMENDATIONS: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. That report TR-74-89 be received; and 2. That, in accordance with the Auditor's recommendations, and in compliance with the Municipal Act, Sections 81 & 82, the local Recreation and Community Boards (with the exception of the Orono Arena, Newcastle Arena and the Newcastle Community Hall) be dissolved as established Boards of Council; 3. That these Community and Recreation Boards be allowed to operate in similar fashion to the way they have historically, with the exception that they would not be required to submit their records for consolidation with those of the Town, and that there would be a mutual agreement established whereby the Town would lease the currently occupied premesis for a nominal fee of $2.00 per year; and 4. That the local Recreation and Community Boards affected be notified that this procedure will be effective for the year ending December 31, 1989, and that they will be contacted prior to that date regarding an appropriate agreement. BACKGROUND & COMMENTS: In 1986 a joint advisement was issued from the Ministry of Tourism and Recreation and the Ministry of Municipal Affairs which stated that if the local recreation boards were conducting their financial affairs without direct supervision and control of the Municipal Treasurer, they were operating in contradiction of the Municipal Act, Sections 81 & 82. (A copy of this memeo is attached for reference.) X18 . . .i2 Page 2 TR-74-89 COMMUNITY AND RECREATION BOARDS Subsequently, in the annual audit management letters representing the years ended 1987 and again in 1988, the recommendation from the Town's external auditors, Deloitte, Haskins & Sells, was to dissolve these local recreation affiliate boards from their status of "commissions or boards of Council". If Council sanction this recommendation, the effect on the local recreation boards would be minimal. The boards would operate just as they have in the past, with the exception that they would not have to present their records annually for review and audit and subsequent consolidation into the Town's financial statements. There would be an agreement drawn up to state that the operations of the community service boards would be under their direct control, and they would be renting the facilities from the Town for a nominal fee. The Town would continue to maintain insurance on the property since in all cases these groups are operating on Town owned properties, and they could continue to apply for operating and/or capital grants as community service groups that are non-affiliated. This would be recognized as a welcome change for many of the boards who annually express their desire to maintain their own records and find it inconvenient to bring the books in twice a year for reveiw. It would also translate into substantial savings in terms of staff time to audit, review, prepare and type the financial statements for the semi-annual and year end reviews. There is also external audit time to factor into the cost analysis. In terms of Council representation, there would not be mandatory representation in consideration of the dissolution of these boards as "commissions of Council". Staff strongly recommend consideration to be given to this change in order to aleviate concerns expressed by the Province and the auditors. As well it would generate compliance with the Municipal Act, Sections 81 & 82, and rule out further unforeseen legal complications with regard to the operations of local recreation and community boards who are not under the direct control of the Municipality while being recognized as established "boards or commissions of Council". Respectfully submitted, Recommended for presentation to the Committee Jarie Marano, awrence Est` Kotseff, Treasurer. Chief Administrative Officer. MM/lb 719 ALIG 14 '89 11:29 NUN AFFAIRS OSHAWA P02 ' � t0�d�.5CAV8ZI 'dkco�urrSr!� Ontano m Ministry of Ministere du Ministry of Minist6re des Tourism and tourisme et des Municipal Affaires Recreation loisirs Affairs municipates March 14, 1986 TO: MUNICIPAL ADMINISTRATORS, CLERKS, TRRASURERS AND RECREATION DIRECTORS We would like to draw your attention to an area of concern to both the Ministry of Municipal Affairs and the Ministry of Tourism and Recreation. It has come to light that in a number o£.municipali.ties across the Province, municipal recreation and community centre operations are maintaining bank accounts for fin- ancial transactions outside the control of the municipal treasurer. This practice . is in direct contravention of Sections 81 and 82 of the Municipal Act. Legal opinions have been sought by both Ministries, which has resulted in the following policy by the Ministry of Tourism and Recreation: "It is Ministry policy not to .sanction or condone a clear contravention of the Municipal Act or any other Provincial legislation: The Ministry would attempt to resolve any such'.matter by negotiation, but if such methods fail, an applicant would be refused a grant". This would clearly affect legislated grant programs directly aimed at municipal recreation, namely Programs of Recreation (Regulation 517) and the Community Recreation Centres Act, but it also may apply to any grant which is applied for by a municipality to support recreation activity such as lottery assisted or Provincial Incentive Programs. The enclosed pamphlet has been prepared ,jointly by both Ministries to assist municipalities in reviewing their recreation financing and to identify methods of operating Cont'd. . . . .2 ?20 AUG 14 ' 89 11:29 NUN AFFAIRS OSHAWA P03 - z - within the Municipal Act, but still maintaining as much flexibility as possible. In addition, the local staff of both Ministries are willing and able to provide direct assistance to municipalities and their recreation committees that find themselves in the position described. It should be made clear that this is by no means a universal practice, although one which exists in a number of communi- ties throughout the Province. It is also not a practice which has created a great deal of operational difficulties, although the possibilities are there. The Ministries are just trying to bring all operations within the legal frame- work of the Municipal Act and on a more modern, professional financial base. Your co-operation would• be greatly appreciated• in assessing your local operations and contacting your• local representa- tive of either Ministry where a contravention exists. We look forward to assisting in the orderly resolution of this problem. Peter Jackson Bill %riesel Manager Recreation Coordinator Field Services Branch Operations Division Ministry of Municipal Affairs Ministry of Tourism & Recreation Enclosure I 721 AUG 14 '89 11:30 MI_IN AFFAIRS OSHAWA F'04 SOME EXAMPLES OF MODIFICATIONS TO COMMUNITY CENTRE FINANCIAL OPERATIONS TO CONFORM -TO THE MUN CIPA& ACT 'REQUIREMENTS Most municipal community centre and recreation committees operate within the requirements of the Municipal Act. In. instances where they do not, the most frequently cited reason is a concern over offending the many volunteers, without whose efforts, the centres and programs would certainly be less effective. The following examples are set forth to show some ways to correct improper financial proeedures,. reduce the risks to councillors and committee members-, .and allow the volunteers to focus their efforts in the area where their interests lie. (1) Municipality A owned a curling facility built with a combination of local funds, municipal funds, and Provincial Grant. The municipality had established a Committee of Management to oversee the operations and maintenance of the facility.. The Club was effectively run by the Committee, with the assistance Of interested curlers who looked after most of the operations. The Committee members established their own bank account, appointed one of their members as secretary-treasurer, and only dealt with Council when capital improvement funds were required, or in those rare instances when they ended the year with a deficit and asked Council for an operating grant. When Council , Committee, and the curlers realized they were operating outside the statutory limits on financial matters , they rectified the situation by executing a rental agreement between the Curling Club and the ;Municipality. The Committee. Qf Management was dis- solved. The main elements of the agreement were as follows: The Club paid the municipality an annual rent equivalent to the cost Of- fire insurance on the structure, fixed cost utilities, and a sum to be set aside in a capital improve- meat reserve fund; Both were to purchase appropriate liability insurance; The Club was to provide specified access opportunities for the general ratepayers; The Club was responsible for repairs under a certain dollar level; 722 AUG 14 '89 11:30 NUN AFFAIRS OSHAWA P05 2 - Plus other' terms., such as agreement duration, right of inspection, terms of cancellation, con.ditions for capital improvements, etc. (2) Municipality B owned a large Community Centre/Arena/Sall Park Complex. The facility was the focus of most recrea- tion activity in the municipality. The facility also served ratepayers of neighbouring municipalities. By agreement, the neighbouring municipalities agreed to pay a portion of the annual operating deficit. The Committee of Management was dominated by members of the local Booster Club, which had raised all of the local funds on the municipality's behalf, needed to match the Wintario and other Grants for construction of the complex. From opening day. Council had allowed the .Committee to handle the Centre's funds. The Booster Club kept its funds separate and donated its profits from dances, bingoes, banquets, etc. to the.Committee, mostly for capital improvements and for some operating costs. The Council and Committee had often been advised that the financial operations were outside the statutory limits and inadequate by reasonable standards of internal control. They' were willing to accept the risks, and any extra cost, for fear of offending the volunteers on the Booster Club,. until the other municipalities started to question the deficit funding agreement under which they were contributing. To address the issue, the municipality enlisted the assistance of its auditor .to make detailed recommenda- tions. The. main components of the auditor's report 'were: That the Booster Club funds and the municipal funds be kept completely separate; _That the Committee recommend a budget to Council each year by March lst for both capital and operating.purposes; That the Committee be allowed to authorize payment of expenditures approved by Council in the annual budget, without further refer- ence to Council except for information purposes; Cont 'd. . . . .3 AUG 14 ' G9 11 :ti 1 MUN AFFAIFMS GSHAIJA F'06 3 - That all Committee receipts be deposited to an account in the municipality's name; That all cheques be signed by the Municipal Treasurer and one of two designated Committee Members; That an appropriate petty cash fund be established for use by the-appropriate Committee Members where limited -size cash Payments were required; That monthly operating statements be prepared by the Municipal Treasurer for the Committee and for Council; That if the Club wished to donate to either operating- or' capital purposes, the Committee would review the proposal and make a recommenda- tion to Council which would make the final decision; and That the Club be charged an appropriate rent for use of the facilities for recreational or fund-raising events.. (3) Township C had purchased a surplus school to be used as a Community Centre in the Hamlet of V. Its primary uses were for Boy Scout meetings and Senior Citizens functions. The Council paid expenses such as insurance, and snow clearing for the parking lot. A ;Committee of Management had been appointed, composed mainly of members of hamlet D's Senior Citizens- The Club and Committee ran a variety of social events, and also occasionally rented out the facility for other events. No .one was sure how it had happened, but all . funds ended up in one bank account, handled by the Committee Chairman and a Secretary-Treasurer, who was also on the .Club executive. The Club used its profits for improvements to the facility, such as painting, renovations, and a. new heating system. The Councillors appointed to the Committee of Management attended meetings infrequently. Council usually heard about improvements after they were done. Council was not unhappy with the arrangement, but its auditors pointed out that Council was in effect paying for the audit of the Club's financial transactions and had also allowed municipal funds to be held outside the Municipal Treasurer's control and to be expended without Municipal Council. approval. Cont'd. . . . .4 724 AL13 14 ' ':;'=+ 11:32 MLIN AFFAIRS i SHAWA P07 4 To solve the problem, Council, with the assistance of its solicitor, drew up an agreement, which was executed with the Club for a nominal annual sum. The Club took over complete responsibility for maintenance; Capital improve- ments, in consultation with Council; and for programming and use of the facility. The Council agreed, in the agreement, the term of which was concurrent with that of Council, to provide an annual operating grant equivalent to the cost of services it had previously been providing. The Committee of Management was retained to maintain a link between Council and the Club. No two situations are alike, and solutions or systems that work in one should not be automatically imposed on another. The following checklist may prove useful to you in assessing the adequacy of the financial systems) for your recreation facilities. Has your auditor suggested changes which have not been made? �- Are all Council/Committee revenues deposited in an account requiring the Municipal Treasurer's signature for disbursement? Are municipal and "booster/service club" funds Properly segregated? Does the Committee present a complete .budget to Council showing gross revenues and expendi- tures for both operating and capital purposes? Are periodic operating statements presented to Council and Committee.? Are all parties properly insured? e. g, fire. liability (for staff, volunteers, committee members, etc. ) Does any lease/joint agreement that you have or are contemplating meet the requirements of the Ministry of Tourism and Recreation for grant. grant purposes. Staff of both the Ministry of Municipal Affairs and the Ministry of Tourism and Recreation Field Offices are available to discuss the above. For assistance, please contact the appropriate Field Office for your area. PL'G 14 189 11 : 29 tylUN AFFAIRS OSHAWA P02 !. may� Iva,to Pdi= jas==do Ontario averl� Ministry of Ministere du Ministry of Minist6re des Tourism and tourisme et des Municipat Affaires Recreation loisirs Affairs municipales March 14, 1986 TO :, MUNICIPAL ADMINISTRATORS , CLERKS , TR..'TASURERS AND RECREATION DIRECTORS We would like to draw your attention to an area of concern ,to both the Ministry of Municipal Affairs and the Ministry of Tourism and Recreation . It has come to 'light that in. a number of, municipali.ties across the Province, municipal recreation and community centre operations are maintaining bank accounts for fin- a:ncial ' transactions outside the control of. the . municipal treasurer. This practice , is in direct contravention of Sections 81 and 82 of the Municipal Act . Legal opinions have been sought by both Ministries , which has resulted in the following policy by the M-inistry of Tourism and Recreation : "It is Ministry• policy not to .sanction or condone a clear contravention of 'the Municipal Act or any other Provincial legislation .* The Ministry would attempt to resolve any such' matter by ne,go.tiation , but if such methods fail, an applicant wou.1d .be refused a grant" . This would clearly affect legislated grant programs, directly aimed at, municipal recreation , namely Programs of Recreation (Regulation 5.17) and ' the* Community Recreation Centres Act , but it also may apply to any grant which is applied for by a municipality to support recreation activity such as lottery assisted or Provincial. Incentive Programs . The enclosed pamphlet has been prepared ,jointly by- both Ministries to assist municipalities in reviewing their recreation financing and to identify methods of operating Ccent ' d . . . . . Z j AUG 14 : 89 11 : 29 MUN AFFAIRS OSHAWA F03 -- Z - within the Municipal Act , but still maintaining as much flexibility as possible. In addition , the local staff of both Ministries are willing and able to provide direct , assistance to municipalities and their recreation committees that find themselves in the position described. It should be made clear that this is by no means a universal practice , although one which exists in a number of communi- ties throughout the Province. It is also not a practice which has created a great deal of operational difficulties , although the possibilities are there. The Ministries are ,just trying to bring all operations within the legal frame-, work of the Municipal and on a more modern, professional financial base. Your co-operation would be greatly appr.eciated' in assessing your local operations and contacting your. local representa- tive of either Ministry where a contravention exists . We look forward to assisting in . the orderly resolution of this problem. Peter Jackson Bill Kriesel Manager Recreation Coordinator Field Services Branch Operations Division Ministry of Municipal Affairs Ministry of Tourism & Recreation. Enclosure I z PI_IG 14 ` 89 11 : 30 MLIN AFFAIRS OSHAIJN PO4 SOME EXAMPLES OF MODIFICATIONS TO COMMUNITY CENTRE FINANCIAL, OPERATIONS TO CONFORM*TO TliE_MUNICIPA4 ACT REQUIREMENTS - --- -- Most municipal community centre and recreation committees operate within the requirements of the Municipal, Act . In. instances where they do not , - the most fre-quentl y cited reason is a concern over .offending the many volunteers , without whose efforts , the centres and programs would certainly be less effective . The following examples are set forth to show some ways to.. correct improper financial- procedures.,. reduce the risks to councillors and committee members., and allow the volunteers to focus their efforts in the area where their' interests . lie . ( 1 ) Municipality A owned a curl ing.• facility' built with a combination of local funds ; municipal funds , and Provincial Grant . The municipality had established a Committee of Management to 'oversee the operations and maintenance of the facility.. The Ciub was effectively run .by the Committee , with the assistance of interested curlers who looked after most of the operations . The Committee members established their own bank account , appointed one of their members as secretary-treasurer , and only dealt with Council when capital improvement funds were required, or in those rare instances when they ended the year with a deficit and asked Council for an operating grant . When Council , Committee, and the curlers realized they were operating outside the statutory limits on financial matters , they rectified the situation by executing a rental agreement between the Curling Club and the Municipality. The Committee. uf Management was dis - solved . The main elements of the agreement were as follows : . The Club paid the municipality an annual rent equivalent to the cost of- fire insurance on the structure, fixed cost utilities , and a sum to be set aside in a capital. improve- ment reserve fund; Both were to purchase appropriate liability insurance; The Club was to provide specified access Opportunities for the general ratepayers ; The Club was responsible for repairs under a certain dollar level ; Cont ' c!. . . . . 2 AUG 14 ` 89 11 : 30 NUN AFFAIRS OSHAWA PO 2 Plus other terms,,. such as agreement duration , right of inspection, terms of cancellation, conditions for capital improvements , etc. (2) Municipality B owned a large Community Centre/Arena/Bail Park Complex. The facility was the focus of most recrea- tion activity in the municipality.. The facility also served ratepayers of neighbouring municipalities. By agreement , the neighbouring municipalities agreed to pay a portion of the annual operating deficit . The Committee of Management was dominated by members of the local Booster Club, which had raised all of the local funds on the municipality' s behalf, needed to match the Wintario and other Grants for construction of the complex . From opening day. Council had allowed the .Committee to handle the Centre ' s funds . The Booster Club kept its funds separate and donated its profits from dances , bingoes , banquets , etc. to the , Committee, mostly for capital improvements and for some operating costs . The Council and Committee had often been advised that the financial operations were outside the statutory limits and inadequate by reasonable standards of internal control . They were willing to accept the risks , and any extra cost , for fear of. offending the volunteers on the Booster Club ,, until the other municipalities started to question the deficit funding agre6ment under which they were contributing. To address the issue , the municipality enlisted the assistance of its auditor .to make detailed recommenda- tions . The, mein components of the auditor's . report 'were: That the Booster Club funds and the i municipal funds be kept completely separate; That the Committee recommend a budget to Council each year by March ist for both capital and operatin g . purposes ; That the Committee be allowed to authorize payment of expenditures approved by Council in the annual budget , without further refer- ence to Council except for information purposes ; Cont ' d. . . . . 3 AUG 14 ` 89 11 : 31 MUN APFA I RS. 08HAWA PO 3 That all Committee receipts be deposited to an account ' in the municipality's name, That all cheques be signed by the Municipal. Treasurer and one of two designated Committee Members ; That an app'ropri.ate Petty cash fund be established for use by the - appropriate Committee Members where limited size cash Payments were required; That monthly operating statements be prepared by the Municipal Treasurer for t-he Committee and for Council ; . That if the Club wished to donate to either operating- or capital purposes , the Committee would review the proposal and make a rec.ammenda- tion to Council which would make the final i decision; and 1 That the Club be charged an appropriate rent for use of the facilities for recreational or fund-raising events.. (3) Township C had purchased a surplus schvvl to be used as a Community Centre in the Rantlet of •D. Its primary uses were for BOY Scout meetings and Senior Citizens functions . The Council paid expenses such as A nsurance, and Snow clearing for the parking lot . A Committee of Management had been appointed, composed mainly of members of hamlet D ' s Senior Citizens •Club . The Club and Committee ran a 'variety of social :e vents , and also occasionally rented out the facility for other events . Nu .one was sure how it had happened, but all funds ended 'up in one bank account , handled by the Committee . Chairman and a Secretary—Treasurer, who was also ou the . Club executive . The Club used its profits for improvements to the facility, such as painting, renovations , and a., new heating system. The Councillors appointed to the Committee of Management attended meetings infrequently. Council usually heard about improvements after they were done. Council was not unhappy with the arrangement , but its auditors pointed out that Council was in effect paying for the audit of the Club ' s financial transactions and had also allowed municipal funds to be held outside the Municipal Treasurer' s control and. to be expended without Municipal ,Council. approval . Cont ' d. . . . . 4 AUG 14 189 11 : 32 MUN AFFAIRS O SHAIJA F07 4 To solve the problem, Council , with the assistance of its solicitor, drew up an agreement , which was executed with the Club for a nominal annual sum. The Club took over complete responsibility for maintenance; capital improve- ments , in consultation with Council ; and for programming, and use of the facility, The Council agreed, .in the agreement , the term of which was concurrent with that of Council , to provide an annual operating grant equivalent to the Cost of services it had previously been The Committee of Managsmea.t teas retained to maintain clang. link between Council and the Club . No two situations are alike, and solutions or systems that work in one should not be automatically imposed on another . The following checklist may prove useful to you in assessing the adequacy of the financial systems ) for your recreation facilities . Has your auditor suggested changes which have not been made? Are all Council/Committee revenues deposite.d in an account requiring the Municipal Treasurer ` s signature for disbursement? Are municipal and "booster/service club " funds Properly segregated? _ Does the Committee present a complete ,budget to Council shoeing gross revenues and expendi- tures for both operating and capital .purposes? Are periodic operating statements presented to Council and Committee,? Are al parties properly insured? e. g. fire, liability ( for staff, volunteers , committee members , etc. ) Does any lease/joint agreement that you have or are contemplating meet the requirements of the Ministry of Tourism and Recreation for grant. grant g purposes . Staff of both the Ministry of Muzicipal Affairs and the Ministry of Tourism and Recreation Field Offices are available to discuss the above. For assistance, please contact the appropriate Field Office' for your area.