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Section D: Budget 2023 – Presented at Convention 2023

Finance – April 2023

1. Introduction

Budgeting is a process of setting priorities. Building a budget to achieve the collective goals of OPSEU/SEFPO’s diverse membership starts with listening to members and activists on the ground about their vision and strategies for the year ahead.

During this year’s budget process, there were two clear goals in mind: develop an activist budget that supports members by building bargaining power in our units, locals, and our communities, while ensuring financial responsibility.

That’s why this year, for the first time, our activists were empowered to participate in the development of the 2023 budget. With this increased responsibility also comes improved accountability for how our shared resources are allocated in a fair and equitable manner. In previous years, OPSEU/SEFPO’s Finance and Operations Division allocated funds to budget lines, not based on future goals, but rather on past budget allotments and amounts spent.

This year, budgeting was goal-oriented and proactive. Stakeholders, including internal staff, activists and sectoral leaders, shared the responsibility of budgeting. They were asked to develop a business and operations plan for their respective area(s) of responsibility using a zero-based concept. This is a method of budgeting in which all expenses must be justified for each new period, and budget lines aren’t simply “carried over.”

The challenge for senior staff, activists and sectoral leaders was to create an activist budget where campaigns, meetings, trainings, and other needs/activities under their respective umbrella could be projected and pre-planned for organizational and budgetary purposes. It was an opportunity to pivot to a more proactive and fresh approach for operations in 2023, and it will reduce the volume of requests requiring Board approval for use of contingency funds.

When the first iteration of the budget was drafted, in collaboration with key stakeholders, members’ strong desire to take action in 2023 was evident. With the ongoing recruitment and retention crisis plaguing the public sector, capped wages and a cost of living crisis, the time to fight for better is now.

The draft budget was reviewed, analyzed and discussed by the Officers and the Board over many days of meetings and fulsome discussions. Keeping the two goals in mind – to develop an activist budget while ensuring financial responsibility – adjustments were made to produce a manageable budget focused on strategic spending. These adjustments were made with consensus from the Board and in consideration of many factors, including the current political and economic climate, the government’s privatization agenda, as well as Sector/Divisional needs, the fair and equitable distribution of funds and the current status of contracted and non-contracted monetary obligations.

With the current state of the economy in Ontario and worldwide, we anticipate that this operating year will be incredibly challenging. Inflation levels continue to rise, and many economists are predicting a recession. We take our responsibility to manage every dollar spent seriously, and we strive to minimize risk and our exposure to any financial losses.

As such, we’ve taken an innovative approach that will increase financial controls by increasing stakeholder responsibility and accountability in the budget-making process. Our leaders and activists are more accountable for spending within the budgets they have helped to create.

As we return to in-person meetings, with the flexibility of the hybrid option made available, meeting costs are expected to increase by five to ten per cent.

The 2023 Budget is an activist budget that is member-focused – with support and solidarity for members woven into every page. The budget includes $11,200,000 for local rebates and $272,949 for hardship funds to support those most in need. It will allow us to continue our important work to build bargaining power, and win!

2. Budget Fund Summaries

a. General Operating Fund

The budget that is being presented to you reflects a manageable deficit for the General Operating Fund of –$18,868.

Revenue, net after transfers to other funds, is predicted to be $125,670,500, and expenses $125,689,368.

A high-level schedule of the General Operation Fund 2023 budget is shown in the chart immediately below. A graph showing major expense categories by percentage is shown as well:

	General Operating Fund
Net Revenue		$125,670,500
Expenses
Departmental Expenses	$    73,799,066
Member Activities	48,204,276
Board Expenses	1,186,026
Contingency and Other Expenses	2,500,000
Total		$        125,689,368
General Operating Fund Deficit		-$                  18,868

b. Strike Fund

Based on OPSEU/SEFPO’s Constitution, five per cent of all member dues is transferred monthly to the Strike Fund, this monthly transfer of revenue to the Strike Fund for the year is $6,670,000.

Over the past two years, given the volatility of the trading market, the investments held in the Strike Fund, and managed by independent money managers, have decreased in value, resulting in material investment unrealized losses to this fund. In fiscal 2022, the unrealized loss, net of dividends received, and interest income was -$4.5 million.

Given that this trend is expected to continue through 2023, the Strike Fund 2023 budget includes no realized investment income or losses. This assumption was based on a conservative view of the timing for the investment market recovery, and it also assumes no further material investment unrealized losses in 2023. Our investment managers are in the process of making all possible alterations to our portfolios to try to minimize further risk, without realizing large actual investment losses.

No expenses have been included in the Strike Fund budget, as it is not possible to predict what these expenses might be – except for depreciation on capital assets held in this fund, including buildings, and building improvements.

Strike Fund
Net Revenue		$6,670,000
Expenses
Depreciation	$      3,200,000
Total		$            3,200,000
Strike Fund Surplus		$            3,470,000

c. Education Fund

The revenue budget for the Education Fund has been maintained at the same level as the previous two years at $1,909,500. These dollars are allocated monthly to this fund from collected membership dues.

Expenses from the Education Fund for 2023 have been budgeted by regional education and training needs and central education and training needs for total 2023 expenses of $2,047,000.

Any surplus of regional education funds at the end of each year is carried forward to a reserve on the balance sheet for educational needs in the future, and to accommodate any deficit budget years, as is the case in 2023.

Education Fund
Net Revenue		$1,909,500
Expenses
Region 1	$         172,000
Region 2	281,000
Region 3	237,000
Region 4	240,000
Region 5	355,000
Region 6	162,000
Region 7	130,000	1,577,000
Central Education	470,000	470,000
Total		$            2,047,000
Education Fund Deficit		-$               137,500

d. Defense Fund

The 2023 Budget has allocated $200,000 to the Defense Fund as revenue from membership dues. It is anticipated that the entire amount will be used for criminal and other defense needs. However, shortfalls resulting from expenses for the 2023 budget year, will be funded from the General Fund.

Defense Fund
Net Revenue		$200,000
Expenses
Criminal Defense & Other	$         200,000
Total		$                200,000
Defense Fund Surplus / Deficit		$                             –

3. Revenue Budget

The OPSEU/SEFPO member dues rate has remained at 1.375 per cent for many years and Budget 2023 assumes that rate will continue. The revenue growth budgeted for 2023 is derived from membership growth and from contracted salary and wage agreements. Growth has been budgeted at one per cent more than the actual revenue recorded in the 2022 audited financial statements. This one per cent growth is assumed to be equal for all the categories of dues revenue, including OPS, BPS and Colleges.

Despite the province’s ongoing austerity agenda, our locals and members have continued to negotiate Collective Agreements with compensation increases that have exceeding others and will continue to aggressively do so in 2023 – especially given the Ontario Superior Court of Justice’s declaration that Bill 124 is “void and of no effect.”

Revenue generated from permit fees and other miscellaneous revenue sources has been budgeted for 2023 at the same levels as the 2022 actual receipts. No expected growth has been budgeted, apart from investment income where there is a small amount of interest earned from cash balances held in bank accounts, and no unrealized gains or losses on investments as stated previously.

The graph directly below illustrates membership dues revenue and growth from fiscal 2020 to budget 2023:

4. Departmental Expenses

The 2023 Departmental Expenses budget reflects the organizational changes approved by the Board in mid-2022. This organization change was necessary to better reflect the activities, needs and responsibilities within each division.

The payroll and benefit portion of the departmental cost is 77 per cent of the total, with benefit costs being 27 per cent and salary and wages 50 per cent. All benefit and salary budgeted costs are based on existing Collective Agreements and other compensation-based agreements.

The staff and benefit budget for 2023 includes fourteen new net staff positions to accommodate the increase in work done to support members – a direct result of the growth in membership over the last few years. This increase in net new staff positions accounts for approximately 4 per cent of the 77 per cent total for payroll and benefits.

The remaining 23 per cent of the departmental budgets are administrative and operations expenses including, but not limited to, vehicle and travel, supplies, telecommunications, fulfillment, operating expenses relating to owned and leased office and meeting space, IT infrastructure and network and website, outside contracted legal and audit needs, insurance, capital asset depreciation and amortization, and staff severance costs and benefits for retirees.

The chart below provides further information on the 2023 Departmental Expenses by showing each Division’s budget, what percentage that Division’s budget is of the total, what proportion of the Division’s budget is salary and benefits, and lastly, the number of staff.

Departmental Expense Budget & Salaries and Benefits Cost
Department	2023 Division Budget	% of Total	Salaries & Benefits Only	% of Total	# of Staff
President’s Office	$       2,934,809	4%	$       2,408,035	4%	12
First Vice President Treasurer	980,393	1%	812,163	1%	4
Contract Enforcement	9,324,839	13%	9,001,839	16%	59
People and Culture	8,718,425	12%	4,532,480	8%	12
Finance and Operations	14,588,006	20%	8,475,304	15%	64
Political Action and Education	6,635,844	9%	5,556,798	10%	32
Contract Negotiations	6,817,002	9%	6,298,085	11%	39
Local Services and Member Organizing	5,137,362	7%	Cost included Below
Regional Offices	18,662,385	25%	19,870,605	35%	125
Total	$    73,799,065	100%	$    56,955,310	100%	347

5. Member and Other Member Related Costs

a. Affiliation Dues

In 2023, affiliation dues and the Convention budget are as follows:

Affiliations Budget 2023
	Dues	Convention
NUPGE	$     2,668,000	$                       –
OFL	773,832	380,000
CLC	777,600	285,000
CAUT	102,000	1,900
Other		134,570
Total Budget	$      4,321,432	$          801,470

NUPGE dues are two per cent of dues collected. This two per cent calculation has been set and stable for some time.

In the 2023 budget, OFL dues have increased by 14 per cent. OFL dues are based on a calculation of FTE (Full-Time Equivalent) members, which has not been updated for some time. This has now been updated to reflect the reality of our increased membership, and in turn has increased our dues. OFL dues remain at $0.63 per FTE, with the FTE currently calculated to be approximately 102,358 members.

For 2023, CLC dues are calculated at $0.81 per FTE, which is an increase from $0.79 in 2022 and based on 80,000 members. OPSEU/SEFPO’s 2023 budget reflects the increase of $0.02 per member but does not reflect an increase from the previously used 80,000-member base.

The 2023 budget for CAUT dues is based on a review of actuals spent over the last few years.

b. Convention 2023, Regional Meetings and Affiliates Conventions Cost

The 2023 budget for Convention 2023 is less than the 2022 actual spend, because there are no projected Regional meetings being held in 2023.

The Convention 2023 budget has allowed for the cost of holding a significant number of hybrid caucuses. Please see below the 2023 budget:

Convention & Regional Meetings
	2023 Budget
Delegates & Staff		$                  2,719,264
Committees		27,640
AGM & Other		1,615,000
Regional Meetings		–
Total Annual Convention		$                     4,361,904

c. Committees & Divisional/Sector Meetings

As mentioned, the 2023 is an activist budget, developed in collaboration with Committee and Sector leadership, with support from staff. Please see the chart directly below for details:

Committees Budget 2023
OPS		$        358,002
CAAT – A		120,690
CAAT – Support		263,077
CAAT Joint		76,889
BPS Health		408,709
Other BPS		72,367
Corrections Justice		25,088
Social Services		304,512
Education & Culture		69,676
Liquor Board		255,664
HRC Regional		86,880
PWC Regional		86,217
PYC Regional		86,136
Equity		515,130
Other General		136,352
Total Committee Costs		$      2,865,389

The 2023 budget includes $1,488,084 for Divisional and Sectoral meetings. The chart below provided additional details on this budget amount:

Divisional and Sector Meetings
OPS		$                  –
CAAT – A		142,500
CAAT – Support		190,000
BPS		1,155,584
Total Regional & Sector		$      1,488,084

d. Negotiations

Negotiating costs for 2023 are budgeted below:

Negotiations Budget 2023 Details
OPS		$        146,027
CAAT – A		140,466
CAAT – Support		108,347
Health Care		621,904
Corrections Justice		33,653
Social Services		361,918
Education		265,601
Liquor Board		406,997
General		133,000
Mobilizing		434,248
Total Negotiations Expenses		$      2,652,161

Legal expenses to support civil, criminal, arbitrations and negotiations totals $8,440,000 in Budget 2023.

e. Rebates and Local Expenses

The 2023 budget has allocated $15,100,000 for rebates and local expenses. Included in this amount is $11,200,000 for rebates paid quarterly to locals, and the remaining $3,900,000 is detailed below:

Local Expenses
Area Council Dues		$          22,800
Labour Council Dues		171,000
Local Time Off		662,500
Local Time Off Member Book off		3,000,000
Other Local Needs and Expenses		43,700
Total Locals Expenses		$      3,900,000

6. Donation, Programs and Campaigns

Budget 2023 continues to support our members and communities through donations approved by the board and the members. This year’s budget amount for donations is $237,250 – the details of which can be found in the budget detail package.

Donations
G.T.A. Injured Worker Resource Centre				$      1,250
CCPA				25,000
Rainford Jackson Education Fund				2,500
Canadian Civil Liberties				1,250
Ont. Coalition for Better Daycare				500
Workers’ Arts & Heritage Center				5,000
Helen Kiss Memorial Bursary				1,000
Andre Bekerman Bursary				750
National Movement for Harmony				2,500
Donna Bryant Memorial Fund				1,000
Our Times				1,000
Stephen Lewis Fund				25,000
The Leonard Peltier Fund				2,500
Brian MacIntosh Memorial Fund				250
Bill Kuehnbaum Bursary				250
Larry Cripps Bursary/Scholarship				1,000
Carol McGregor Scholarship				1,500
Curt Bishop Scholarship				1,000
L.E.A.F. Patron Sponsorship				5,000
Mayworks Festival of Working People				2,000
Barbra Schlifer Commemorative Clinic				750
Speakers School				2,250
Peter Kormos Memorial Bursury				1,000
Ontario Autism Coalition				10,000
Amy Stiles Scholarship				1,000
Karen Gottschalk-Millar Memorial Sch				1,000
Fred Upshaw Scholarship				1,000
SHARE				25,000
Water Resolution				10,000
Bloodwatch.org				15,000
Other Donations				90,000
Total Donations				$ 237,250

 

Member Activities
Membership Centers	1,360,610
Dismantling Systemic Racism-Members	887,563
Regional Hardship Committees	272,959
MDT Assignments	237,500
Promoting the Union Agenda	208,050
Equity Dev Training for Equity Comm. & Caucuses	185,203
Social Justice Annual Funding	154,315
Accommodation Policy	133,000
Equity Quarterly Meeting	126,350
Equity Gathering	111,150
In Solidarity	76,497
Pride Day Activities	68,779
Donation to Broadbent Institute	50,000
Caribana Activities	47,750
CLC Labour College	47,500
Young Worker Mentorship Program	38,000
Joint Leadership Meeting	38,000
Labour Day Parade	34,770
Political Action Committee	23,750
National Indigenous Day June 21	23,750
Annual All Pension	20,852
Regional Hardship Administration	19,000
Social Justice	11,400
OPSEU Accessibility Fund	9,500
Communications Incentive Fund	4,750
ILGA Membership	500
Total Member Activities	4,191,498

 

Other Member Activities
Francophone Bi-annual Conference	$   152,000
Human Rights Policies	85,500
OPSEU Women’s Conference	205,759
Racialized Workers Conference	23,750
Retirees	72,592
Retirees Committee – Reg 1	4,669
Retirees Committee – Reg 2	3,472
Retirees Committee – Reg 3	1,710
Retirees Committee – Reg 4	2,142
Retirees Committee – Reg 5	5,016
Retirees Committee – Reg 6	2,351
Retirees Committee – Reg 7	3,605
Retiree Conference	90,250
Human Rights Conference	25,650
Indigenous Bi-Annual Conference	180,000
Young Workers Conference	172,329
Total Other Programs	$ 1,030,796

The budget has allowed for the carryover of $2,000,190 in previous year board approvals from the contingency fund that were not completed by December 31, 2022.

7. Executive Board Members’ Costs and Contingency Fund

Due to activities being planned in advance, this activist budget will not rely as heavily on the contingency fund. The contingency fund should be accessed for emergencies and for activities that would not have been known in advance. The contingency fund for 2023 has, therefore, been reduced to $2,500,000.

Executive Board Members’ expenses for the 2023 budget year have been set at $1,186,026.  Expenses include, but are not limited, travel and travel related expenses, release time, and supplies needed for board work. Please see the schedule directly below for further details.

Executive Board of Directors Expenses
Board Meetings	$   227,430
Officers Meetings	29,450
Board Committees	180,006
Fraternal	11,400
Regional Activities	408,755
General Activities	328,985
Total Executive Board of Directors Expenses	$ 1,186,026

Regional Board Meetings have the same amount of funds allocated at $1,186,026. The Regional Board Expenses capture activities within the region that EBMs are being reimbursed for. Similar to the chart above, these can include travel, release time, and other costs associated with attending events and meetings within their regions.

Regional Board of Directors Expenses
Region 1	$   150,231
Region 2	110,274
Region 3	201,645
Region 4	155,817
Region 5	103,336
Region 6	156,862
Region 7	166,311
Administration	141,550
Total Regional Board of Directors Expenses	$ 1,186,026

8. Financial Position Moving from December 31, 2022, to January 1, 2023

Fiscal year 2022 finished with a combined operating deficit of $18,420,419, and a deficit for the year of $36,159,419 after adjustments of $17,739,000 were made for the post-retirement benefits losses and underfunding needs. The two funds that had the largest impact from this 2022 deficit for the year were the General Operating Fund and the Strike Fund.

a. General Operating Fund

Early 2022 marked the return to an in-person work environment. Membership meetings, which had either been cancelled for the last two years or held virtually, returned to in-person as well – but often using a hybrid model for those who wished to join virtually. This return to in-person and hybrid gathering also led to a gradual increase in budgeted spending.

The General Fund finished 2022 with an operating deficit of $886,871, which was a direct result of higher-than-expected severance and termination costs, operating costs for the new training centre, additional hybrid and accommodation needs for Convention 2022, and unbudgeted, contracted and other services, including the board-approved forensic audit.

Convention 2022 was offered to all delegates in a fully hybrid model, with observers joining virtually. This move to hybrid caused spending to be over-budget as there was a need for additional technical equipment, a virtual interactive option for voting, and increased telecommunications options, in addition to higher-than-expected accommodation costs.

The post-retirement benefit adjustment that needed to be made at year-end in the General Fund was $17,739,000 – a direct result of losses incurred in the post-retirement fund investments. This adjustment, and the operating deficit referred to above, left the net assets for the General Fund in a deficit position of $67,922,132 moving into fiscal year 2023.

b. Strike Fund

The Strike Fund started 2022 with a net asset value of $80,867,782 and ended the fiscal with a net asset value of $62,904,860.

This approximate $18 million loss of value in the fund was a direct result of the $4.5 million unrealized loss on investments, and a necessary impairment adjustment to the capital assets in the fund of $15 million, reduced by the 2022 operating surplus of $1.5 million.

In conjunction with our annual audit, there were professional appraisals completed for three of the properties held in the strike fund. These appraisals revealed that two properties were valued in our records at an amount that exceeded the appraised/market value reported. An impairment adjustment of $14,454,183 was made to reflect the appraised value stated in this report.

Additionally, our TSSA safety inspectors of Local 546 were on strike in 2022 for 11 weeks. Expenses included, but were not limited to, strike and strike related payments from this fund. After 11 weeks, negotiations resumed and TSSA members achieved their first Collective Agreement.

Other expenses charged to the Strike Fund in 2022 were primarily campaign-based for various sectors.

 

	December 31, 2022 Net Asset Value by Fund
	General Fund	Strike Fund	Education Fund	Defense Fund	Fund Balance 2022	Fund Balance 2021
Opening Balance 2021	($49,296,262)	$80,867,782	$3,055,987	($25,113)	$34,602,394	$15,287,264
Added Surplus			404,260	25,113	429,373	19,315,131
Deficit reductions	(18,625,871)	(17,962,921)			(36,588,792)
Closing Balance 2022	($67,922,132)	$62,904,860	$3,460,247	($0)	($1,557,025)	$34,602,395