Quarterly Financial Report - For the period ending September 30, 2021

Statement outlining results, risks and significant changes in operations, personnel and program

1. Introduction

This quarterly financial report (QFR) has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. The report should be read in conjunction with the Main Estimates for 2021-22. The quarterly report has not been subject to an external audit or review.

1.1 Mandate

The Minister of Public Safety is the minister responsible for the Royal Canadian Mounted Police (RCMP). The responsibilities of the RCMP are set out in section 18 of the Royal Canadian Mounted Police Act. The RCMP's mandate is multi-faceted, it includes preventing and investigating crime; maintaining peace and order; enforcing laws; contributing to national security; ensuring safety of state officials, visiting dignitaries and foreign missions; and providing vital operational support services to other police and law enforcement agencies within Canada and abroad.

Further information on the mandate, roles, responsibilities and programs of the RCMP can be found in the Main Estimates (Part II of Estimates) and the Departmental Plan and Departmental Results Report (Part III of Estimates).

1.2 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the RCMP's spending authorities granted by Parliament and those used by the department consistent with the Main Estimates and Supplementary Estimates "A". This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

The RCMP uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on a cash expenditure basis.

2. Highlights of the fiscal quarter and fiscal year-to-date (YTD) results

For the period ending September 30, 2021, the RCMP had $3,808.5 million in total authorities available for use, which represents an increase of $286.7 million (or 8%) when compared at the same quarter in the previous year. The RCMP's authorities have increased in the Operating (Vote 1), Capital (Vote 5) and Grant and Contributions (Vote 10) totalling $400.0 million. These increases are offset by a decrease of $113.4 million in Statutory authorities.

The RCMP's expenditures were $2,266.4 million in the second quarter of the year, representing an increase of $399.5 million (or 21%) from the previous year's second quarter, as shown in Table 1.

Table 1: Summary of Fiscal Quarter and Fiscal Year-to-date (in thousands of dollars) Table 1 note 1
Authorities 2021-22 Authorities as at September 30, 2021 2020-21 Authorities as at September 30, 2020 Variance in authorities % Year-to-date expenditures as at September 30, 2021 Year-to-date expenditures as at September 30, 2020 Variance in expenditures %
Vote 1- Net Operating expenditures 2,726,440 2,478,055 248,385 10% 1,654,873 1,369,386 285,487 21%
Vote 5 - Capital expenditures 300,401 224,419 75,982 34% 68,562 65,590 2,972 5%
Vote 10 - Grants and contributions 425,273 349,604 75,669 22% 303,054 203,917 99,137 49%
Budgetary statutory authorities 356,342 469,700 (113,358) (24%) 239,879 227,999 11,880 5%
Total authorities 3,808,456 3,521,778 286,678 8% 2,266,368 1,866,892 399,476 21%

2.1 Statement of authorities

The RCMP's 2021-22 Main Estimates are $76.8 million lower than the 2020-21 Main Estimates mainly due to a decrease in the statutory employee benefits and Grants and Contributions, which are partially offset by increases in the Operating Vote and Capital Vote.

However, as of September 30th, the total authorities available for use in 2021-22 increased by $286.7 million from 2020-21 as a result of the reduced supply of the Main Estimates in the first two quarters of 2020-21. In 2020-21, due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall. The RCMP received full supply for the 2020-21 Main Estimates in December 2020, whereas in 2021-22, the RCMP received full supply of the Main Estimates by the end of the first quarter. The two charts below show the changes in Authorities by Vote year over year.

Table 2: Cumulative Variance in Authorities Available for use in 2021-22 in comparison to 2020-21Table 2 note 1
Based on the end of the Second Quarter (September) (in thousands of dollars) Total authorities available for use Year over year variance
2021-22 2020-21 Authorities Percentage
Gross Operating expenditures 4,506,139 4,122,137 384,002 9%
Less: Vote Netted Revenues 1,779,699 1,644,082 135,617 8%
Vote 1 - Net Operating expenditures 2,726,440 2,478,055 248,385 10%
Vote 5 - Capital expenditures 300,401 224,419 75,982 35%
Vote 10 - Grants and contributions 425,273 349,604 75,669 22%
Total voted authorities 3,452,114 3,052,078 400,036 13%
Pensions and other employee benefits - Members of the Force 247,036 373,034 (125,998) (34%)
Contributions to employee benefit plans (public servants) 96,226 82,252 13,974 17%
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 6,750 6,750 0 0%
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 6,330 7,663 (1,333) (17%)
Total statutory authorities 356,342 469,700 (113,358) (24%)
Total budgetary authorities 3,808,456 3,521,778 286,678 8%
Table 3: Explanation of authority changes (2021-22 compared to 2020-21)Table 3 note 1
Expenditure Year over Year Changes in Authorities by Vote (in Millions of dollars)
Vote 1 - Net Operating Expenditures
Compensation and modernization adjustment for various Public servants and Civilian members 26.4
RCMP's foundational improvements for Federal Policing 12.4
Ensuring Security and Prosperity in the Digital age phase II 8.2
Creation of the Independent Centre for Harassment Resolution 4.7
Other increases related to previously approved initiatives 4.2
Funding to strengthen Royal Canadian Mounted Police operations (18.1)
Funding profile change for the class action legal settlement (24.0)
Operation budget carry forward 17.0
Amount related to Government delays in receiving full supply 217.6
Sub-total Net Operating Expenditures 248.4
Vote 5 - Net Capital Expenditures
Ensuring Security and Prosperity in the Digital age phase II 8.2
RCMP's Foundational Improvements for Federal Policing 2.6
Funding profile change for various previously approved initiatives (1.8)
Renewing the radio system for Ontario, Quebec and the National Capital Region (6.3)
Capital Budget Carry Forward 11.0
Amount related to Government delays in receiving Full Supply 62.3
Sub-total Capital Expenditures 76.0
Vote 10 - Grants and Contributions
Funding for the grant to compensate members of the RCMP for injuries received in the performance of duty 26.8
Amount related to Government delays in receiving Full Supply 48.8
Sub-total Grants and Contributions 75.6
Statutory
Increase in Public Service Employees and Members of the Force Employee Benefits Plan related to new and previously approved initiatives 7.9
Proceeds from Disposal of Crown Assets (1.3)
Public Service Employees and Members of the Force Employee Benefits Plans related to changes in the effective EBP rate (119.9)
Sub-total Statutory (113.3)
Grand total 286.7

For more information on the authority changes that affect the RCMP, we would direct the reader to the RCMP's 2021-22 Main Estimates.

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

Net budgetary expenditures at the end of the second quarter 2021-22 were $399.5 million (or 21%) higher than the previous year. This variance is the result of an increase in gross budgetary expenditures of $255.3 million (or 10%) and a decrease in vote netted revenues of $144.2 million (or 23%) from the previous year.

Table 4: Expended by standard object at Quarter end (in thousands of dollars)Table 4 note 1 Table 4 note 2
Standard objects 2021-22 2020-21 Variance %
Personnel 1,777,747 1,691,039 86,708 5%
Transportation and communications 98,102 74,433 23,669 32%
Information 1,038 1,298 (260) (20%)
Professional and special services 248,028 203,363 44,665 22%
Rentals 55,692 49,088 6,604 13%
Purchased repair and maintenance 38,439 34,225 4,214 12%
Utilities, materials and supplies 65,953 62,026 3,927 6%
Acquisition of land, buildings and works 31,627 24,044 7,583 32%
Acquisition of machinery and equipment 65,596 78,563 (12,967) (17%)
Transfer payments 305,282 206,540 98,742 48%
Public debt charges 308 327 (19) (6%)
Other subsidies and payments 55,781 63,370 (7,589) (12%)
Total gross budgetary expenditures 2,743,593 2,488,316 255,277 10%
Less: Revenues and other reductions 477,225 621,424 (144,199) (23%)
Total net budgetary expenditures 2,266,368 1,866,892 399,476 21%

In 2020-21, the federal and provincial and territorial governments implemented various measures to curb the spread of COVID-19, which resulted in several activities within the RCMP being slowed down or halted at the onset of the pandemic. With restrictions loosening in 2021-22, the RCMP is experiencing an increase in operations, leading to the rise in the overall expenditures. It is observed that multiple standard objects had significant increases in year-over-year expenditures primarily for this reason.

2.2.1 Variance - Personnel

The increase in expenditures by $86.7 million (or 5%) is attributed to higher pay expenditures for Public Service Employees (PSE) and Members of the RCMP. As a number of collective agreements were ratified in the past years, newly implemented rates of pay for various occupational groups increased the overall expenditures. Also, an increase in Member Extra Duty Pay due to increased operational tempo in 2021-22 further increased Personnel expenditures.

2.2.2 Variance - Transportation and Communications

The increase in expenditures by $23.7 million (or 32%) is mainly due to the loosening of pandemic restrictions.

2.2.3 Variance - Information

The decrease in expenditures by $0.26 million (or 20%) is mainly related to one-time expenditures in 2020-21, as the RCMP provided firearm license holders information regarding the announcement by the Government of Canada to banning models and variants of assault-style firearms.

2.2.4 Variance - Professional and special services

The increase in expenditures by $44.7 million (or 22%) is mainly related to increases in health costs and legal services costs related to the increased operational tempo in 2021-22. In addition, delays in staffing within the Information Management and Information Technology area caused an increase in contracting services in an effort to move ahead with projects.

2.2.5 Variance - Rentals

The increase in expenditures by $6.6 million (or 13%) is mainly due to the loosening of pandemic restrictions.

2.2.6 Variance - Purchased repair and maintenance

The increase in expenditures by $4.2 million (or 12%) is mainly due to the loosening of pandemic restrictions.

2.2.7 Variance - Acquisition of land, buildings and works

The increase in expenditures by $7.6 million (or 32%) is mainly due to the increased operational tempo, and an increase of real property projects such as the construction of Pangnirtung detachment and Norway House detachment in Contract Policing jurisdiction, and Depot's Integrated Training Centre project.

2.2.8 Variance – Acquisition of machinery and equipment

The decrease in expenditures by $13.0 million (or 17%) is mainly due to higher expenditures for personal protective equipment (PPE), computer and office equipment in 2020-21, as the RCMP equipped employees with protective gears and with adequate work-from-home environment at the beginning of the pandemic. Also, in 2020-21, there was one-time carbine and armoury parts purchase.

2.2.9 Variance - Transfer payments

The increase in expenditures by $98.7 million (or 48%) is primarily related to an increase in disability pension payments under the Grant to compensate members of the RCMP for injuries received in the performance of duty.

2.2.10 Variance - Other subsidies and payments

The decrease in expenditures by $7.6 million (or 12%) is primarily due to the timing of items being cleared from suspense accounts into other standard objects, as well as decreased claims payments related to the Merlo Davidson Class Action Settlement.

2.2.11 Variance -Revenues and other reductions

The decrease in Vote netted revenues by $144.2 million (or 23%) is primarily due to the timing differences in revenue collections related to Contract Policing.

3. Risks and uncertainties

The Departmental QFR reflects the results of the current fiscal period in relation to the Main Estimates and the Supplementary Estimates (A).

The RCMP is funded through annual appropriations and are, therefore, impacted by any changes in funding approved through Parliament. In addition, it receives a significant portion of funding through vote netted revenue (VNR) from the provision of policing services to provinces, territories, municipalities and first nations communities, as well as from cost sharing agreements with provinces and territories for the provision of DNA analysis by the RCMP. The RCMP also receives VNR authorities to bill Parliamentary Protective Service (PPS) for the provision of security services throughout the Parliamentary precinct and the grounds of Parliament Hill.

On October 6, 2016, the RCMP announced that a settlement agreement had been reached between the RCMP and the plaintiffs in the Merlo and Davidson lawsuits filed on behalf of current and former female regular members, civilian members and public service employees. The settlement agreement was approved by the Federal Court and included an independent claims process with compensation for women working, or having worked, at the RCMP who experienced harassment, bullying or discrimination based on their gender or sexual orientation during their employment from September 16, 1974 until May 30, 2017. The assessment of claims was the responsibility of an Independent Assessor appointed by the Federal Court. Claims were filed between August 12, 2017 and May 22, 2018. As of August 14, 2020, all 3,086 claims that were submitted had been assessed. On November 19, 2020, the Assessor's final report was released that set out his observations and recommendations stemming from his work in assessing claims. All Compensation awards to successful claims in Merlo/Davidson have now been paid.

The Tiller class action concerns women who worked or volunteered in RCMP workplaces but who were not employed by the RCMP (e.g., municipal employees, contractors) and who experienced gender or sexual orientation based harassment and discrimination from RCMP members and employees between September 16, 1974 and July 5, 2019. A settlement that provides for a claims process based on the one used in the Merlo/Davidson settlement was approved by the Federal Court on March 10, 2020. Claims were filed between July 16, 2020 and April 22, 2021. Claims are currently being assessed by the Independent Assessors; as claims are decided, compensation awards are paid to successful claimants in accordance with the terms of the settlement.

On August 6, 2021, the Government of Canada signed an agreement with the National Police Federation (NPF) to establish the first ever collective agreement for RCMP members and reservists. Members and reservists voted in favor and the agreement was ratified. The newly implemented, and retroactive, compensation costs will have a material impact on the 2021-22 expenditures.

In recent years, the RCMP's reference levels have been constrained by government-wide spending reduction exercises which have resulted in significant financial pressures. In order to assess the financial integrity issues faced by the RCMP and serve as the basis for longer term strategic recommendations to the Minister of Public Safety and Emergency Preparedness, a comprehensive resourcing review was initiated in Budget 2016 and completed in May 2017, during which the Treasury Board committed to addressing integrity issues to ensure that the RCMP can deliver mission-critical services to Canadians. The review findings have been assessed and the RCMP returned to Treasury Board with a fulsome Departmental Review in the fall of 2018 that included short, medium and long-term proposals to address its ongoing resourcing issues. Recent announcements identified funding to support and enhance RCMP operations.

4. Significant changes in relation to operations, personnel and programs

4.1 Operations

In comparison to the second quarter of 2020-21, the operational tempo of certain activities resumed as a result of the loosening of COVID-19 restrictions. The RCMP continues to assess the evolving circumstances of COVID-19 and is adjusting its operations accordingly.

4.2 Personnel

Subsequent to the end of the second quarter, the following changes to the senior ranks of the department have occurred:

Frances McRae, previously the Assistant Deputy Minister for Innovation, Science and Economic Development Canada (ISED) becomes Chief Administrative Officer for the Royal Canadian Mounted Police.

4.3 Programs

There has been no significant change in relation to programs in the second quarter of 2021-22.

Approved by senior officials

Approved by:

Original signed by

Brenda Lucki
Commissioner

Original signed by

Jen O'Donoughue
Chief Financial Officer

Annex A: Statement of authorities (unaudited)

Fiscal year 2021-2022 (in thousands of dollars)
Total available for use for the year ending March 31, 2022Table 5 note 1 Used during the quarter ended September 30, 2021 Year to date used at quarter-end
Gross Operating expenditures 4,506,139 1,100,738 2,132,098
Less: Vote Netted Revenues 1,779,699 256,719 477,225
Vote 1 - Net Operating expenditures 2,726,440 844,019 1,654,873
Vote 5 - Capital expenditures 300,401 44,284 68,562
Vote 10 - Grants and contributions 425,273 182,499 303,054
Pensions and other employee benefits - Members of the Force 247,036 75,567 183,221
Contributions to employee benefit plans (public servants) 96,226 24,056 48,113
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 6,750 1,094 2,228
Refunds of amounts credited to revenues in previous years 0 45 68
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 6,330 3,513 6,249
Court Awards 0 0 0
Statutory Authorities 356,342 104,275 239,879
Total budgetary authorities 3,808,456 1,175,077 2,266,368
Fiscal year 2020-2021 (in thousands of dollars)
Total available for use for the year ending March 31, 2021Table 6 note 1 Used during the quarter ended September 30, 2020 Year to date used at quarter-end
Gross Operating expenditures 4,122,137 1,040,427 1,990,810
Less: Vote Netted Revenues 1,644,082 464,228 621,424
Vote 1 - Net Operating expenditures 2,478,055 576,199 1,369,386
Vote 5 - Capital expenditures 224,419 50,053 65,590
Vote 10 - Grants and contributions 349,604 136,310 203,917
Pensions and other employee benefits - Members of the Force 373,034 71,899 178,307
Contributions to employee benefit plans (public servants) 82,252 20,334 40,668
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 6,750 1,290 2,624
Refunds of amounts credited to revenues in previous years 0 41 71
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 7,663 6,227 6,329
Court Awards 0 0 0
Statutory Authorities 469,699 99,791 227,999
Total budgetary authorities 3,521,777 862,353 1,866,892

Annex B: Budgetary expenditures by standard object (unaudited)

Fiscal year 2021-2022 (in thousands of dollars)
Planned expenditures for the year ending March 31, 2022 Expended during the quarter ended September 30, 2021 Year to date used at quarter-end
Expenditures:
Personnel 3,440,860 883,602 1,777,747
Transportation and communications 218,586 44,612 98,102
Information 3,620 638 1,038
Professional and special services 533,386 142,428 248,028
Rentals 143,387 32,500 55,692
Repair and maintenance 111,549 20,340 38,439
Utilities, materials and supplies 158,740 31,730 65,953
Acquisition of land, buildings and works 110,780 21,010 31,627
Acquisition of machinery and equipment 289,535 35,652 65,596
Transfer payments 432,023 183,593 305,282
Public debt charges 504 154 308
Other subsidies and payments 145,184 35,537 55,781
Total gross budgetary expenditures 5,588,154 1,431,796 2,743,593
Less Revenues netted against expenditures:
Vote Netted Revenues 1,779,699 256,719 477,225
Total Revenues netted against expenditures: 1,779,699 256,719 477,225
Total net budgetary expenditures 3,808,455 1,175,077 2,266,368
Fiscal year 2020-2021 (in thousands of dollars)
Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended September 30, 2020 Year to date used at quarter-end
Expenditures:
Personnel 3,270,851 852,612 1,691,039
Transportation and communications 204,159 34,084 74,433
Information 3,799 467 1,298
Professional and special services 478,004 131,226 203,363
Rentals 136,564 31,496 49,088
Repair and maintenance 96,812 21,770 34,225
Utilities, materials and supplies 144,606 35,315 62,026
Acquisition of land, buildings and works 81,899 18,920 24,044
Acquisition of machinery and equipment 248,590 48,245 78,563
Transfer payments 356,354 137,599 206,540
Public debt charges 234 163 327
Other subsidies and payments 143,988 14,684 63,370
Total gross budgetary expenditures 5,165,860 1,326,581 2,488,316
Less Revenues netted against expenditures:
Vote Netted Revenues 1,644,082 464,228 621,424
Total Revenues netted against expenditures: 1,644,082 464,228 621,424
Total net budgetary expenditures 3,521,778 862,353 1,866,892
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