WHEREAS the Council of the Regional Corporation has, by resolution adopted on the 3rd day of June, 2004, authorized a by-law establishing financial controls related to the Current Budget, Capital Budget and reserve management of the Regional Municipality of Peel;

NOW THEREFORE, Council of the Regional Corporation enacts as follows:

1. Definitions in this by-law:

a) Financial Terminology

i) "Account" means a classification of expenditure or revenue within a Cost Centre to which an estimated budget value and actual expense or revenue amount is assigned;

ii) "Capital Budget" means the annual Council approved plan of the Regional Corporation for expenditures and financing sources to acquire or construct capital assets;

iii) "Capital Forecast" means the projection of expenditures and financing sources for years beyond the Capital Budget approval year in which the forecast is made;

iv) "Capital Plan" means the combined Capital Budget and Capital Forecast;

v) "Capital Project" means an undertaking for which expenditures of a capital nature are made or are to be made including expenditures to acquire, improve or maintain land, buildings, structures, machinery and equipment, to install computer software and to conduct studies relating to Corporate assets;

vi) "Current Budget" means the annual Council approved plan of the Regional Corporation for expenditures, revenues, staffing levels and service levels for operations of the Regional Corporation taking place from January 1st to December 31st each year;

vii) "Current Forecast" means the projection of expenditures, revenues, staffing levels and service levels for years beyond the Current Budget approval year in which the forecast is made;

viii) "Emergency" means an unforeseen situation of an urgent nature, presenting an unacceptable risk to the health and safety of persons or to property, requiring an immediate expenditure of funds;

ix) "Financial Report" means the summary of financial activities related to the Current Budget, Capital Budget and reserve management provided to Council by the Treasurer;

x) "Reclassification of a Sub Reserve" means the transfer of the unexpended amount of a Sub Reserve from one Sub Reserve Cost Centre to another which does not change the purpose for which the unexpended amount will be spent;

xi) "Redeployment of the Capital Budget" means the transfer of an Unexpended Budgeted Amount from one Capital Project Cost Centre to another within the same Division which has the effect of changing the purpose for which the Unexpended Budgeted Amount will be spent;

xii) "Redeployment of the Current Budget" means the transfer of an Unexpended Budgeted Amount from one Current Budget Cost Centre to another which has the effect of changing the purpose for which the Unexpended Budgeted Amount will be spent;

xiii) "Redistribution of the Capital Budget" means the splitting of the financing sources of one Capital Project into financing sources for new smaller Capital Projects having the same purpose;

xiv) "Reserve" means the unrestricted accumulation, at the discretion of Council, of appropriations from net revenues. Reserves include Working Funds, Capital Financing, Capital Construction and Infrastructure Replacement;

xv) "Reserve Forecast" means the projection of contributions to and withdrawals from Reserves for the year in which the forecast is made and for years beyond the year in which the forecast is made;

xvi) "Reserve Fund" means the accumulation of appropriations from net revenues for purposes which are restricted by law or by the direction of Council contained in the by-law establishing the Reserve Fund;

xvii) "Restructure of the Current Budget" means the transfer of an Account's Unexpended Budgeted Amount from one Cost Centre to another which does not change the purpose for which funds are budgeted or will be spent;

xviii) "Sub Reserve" means the result of the splitting by Department or Division of a Reserve into smaller amounts;

xix) "Unallocated Pre-approved Design Project" means a Capital Project related to pre-design work not specifically foreseen but which may reasonably be expected to occur within the given budget year;

xx) "Unallocated Project" means a Capital Project related to events not specifically foreseen but which may reasonably be expected to occur within the given budget year and includes Unallocated Pre-approved Design Projects;

xxi) "Unexpended Budgeted Amount" means the amount of approved budget funds in an Account that have not been spent or committed for spending;

xxii) "Utility Rate Stabilization Reserve" means a Reserve arising from the operation of programs funded from utility charge collections to minimize annual fluctuations in utility rates;

xxiii) "Venture Capital Fund" means the revolving loan fund established and administered under Council Resolution 93-527-22 and Financial Management Policy F10-03 pursuant to authority delegated by that resolution to the Chief Administrative Officer; and

xxiv) "Working Funds Reserve" means a Reserve arising from the operation of programs funded from property taxation to minimize annual fluctuations in property tax rates.

b) Organizational Structure

i) "Council" means the Council of the Regional Municipality of Peel;

ii) "Region" means the Regional Municipality of Peel;

iii) "Chief Administrative Officer" means the employee designated as such by Council and any person who has been authorized to temporarily act as the Chief Administrative Officer during the incumbent's absence or a vacancy in the office;

iv) "Treasurer" means the Treasurer and Commissioner of Finance of the Regional Municipality of Peel and any person who has been authorized to temporarily act as the Treasurer during the incumbent's absence or a vacancy in the office;

v) "Department" means a major service provider within the Regional Corporation headed by a single Department Head;

vi) "Department Head" means the head of any Department and any person who has been authorized to temporarily act as the above during the incumbent's absence or a vacancy in the office;

vii) "Division" means a part of a Department headed by a single Director;

viii) "Director" means the head of any Division and any person who has been authorized to temporarily act as the above during the incumbent's absence or a vacancy in the office;

ix) "Cost Centre" means a component of the Divisional financial summary for revenue and expense accounting purposes, and has its own distinct name and number in the accounting system, with applicable coding to identify it as a Current Budget Cost Centre, Capital Project Cost Centre or a Sub Reserve Cost Centre. Cost Centres are currently referred to as DeptIDs in the accounting system;

x) "Cost Centre Manager" means the person in a Division who is responsible for planning and implementing a current budget or capital budget or a portion thereof.

2. Current Budget Financial Controls

a) The Current Budget shall be submitted annually to Council for approval;

b) All current budgets submitted to Council must first be reviewed by the Treasurer and by the Chief Administrative Officer;

c) Departmental reports with financial implications submitted to Council for approval must first be reviewed by the Treasurer to ensure availability of financing sources and compliance with Regional Corporation financial by-laws and then shall be reviewed by the Chief Administrative Officer;

d) Public notice of the intention of Council to adopt or amend the Current Budget shall be given as prescribed by the Municipal Act, 2001 and in accordance with the provisions of By-law 63-2003, or any successor legislation, by the Finance Department in conjunction with the Corporate Services Department;

e) All Departments, and all boards and agencies for which the Regional Corporation provides funding, shall annually prepare a current budget and a current forecast;

f) Council shall be informed of any variance between the approved Current Budget and actual expenditures, actual revenues, or actual service levels where such variance is deemed to be material by the Treasurer not less frequently than semi-annually in a Financial Report including a written status report on each such variance;

g) Department Heads and Directors, together with their Cost Centre Managers, have the responsibility to provide the budgeted level of service approved by Council using the corresponding discretionary spending authority within the Council approved net current budget for the Division or Cost Centre, subject to the following:

i) goods and services shall be expensed in the fiscal year in which they are actually received, in accordance with Canadian generally accepted accounting principles; and

ii) unanticipated revenues shall not be spent or committed without approval of Council, provided that revenues which are received in consideration of or conditional upon the provision of a service requiring an expenditure of funds may be so expended without a requirement of further approval. At year-end unexpended unanticipated revenues shall be treated in the same manner as Unexpended Budgeted Amounts and shall become a part of the year-end surplus or shall be applied against the year-end deficit.

h) Unless otherwise provided in accordance with this by-law, a Restructure of the Current Budget or a Redeployment of the Current Budget between Cost Centres having the same revenue source, whether property taxation or the collection utility charges, shall be approved in accordance with the provisions of Schedule "A" to this by-law;

i) The Chief Administrative Officer is authorized to make contributions to or withdrawals from Sub Reserves established for the purposes of programs funded from property taxation including a Working Funds Sub Reserve to adjust a surplus or deficit in tax supported programs at the end of the current year. Such contributions or withdrawals shall be based upon a recommendation of the Treasurer and shall be for the purpose of reducing or eliminating changes in future property tax rates which would otherwise result from an unadjusted surplus or deficit. All such contributions or withdrawals shall be reported to Council in the current year-end Financial Report;

j) The Chief Administrative Officer is authorized to make contributions to or withdrawals from Sub Reserves established for the purposes of programs funded from utility charge collections including a Utility Rate Stabilization Sub Reserve to adjust a surplus or deficit in utility rate supported programs, at the end of the current year. Such contributions or withdrawals shall be based upon the recommendation of the Treasurer, for the purpose of reducing or eliminating changes in future utility rates which would otherwise result from an unadjusted surplus or deficit. All such contributions or withdrawals shall be reported to Council in the current year-end Financial Report;

k) The Chief Administrative Officer is authorized to approve contributions to or withdrawals from the Working Funds Reserve of a Department of up to $250,000 as transitional funding to meet an unanticipated expenditure pressure or a revenue receipt that was not budgeted for. All such contributions to or withdrawals from the Working Funds Reserve shall be reported to Council in the next Financial Report following the contribution or withdrawal; and

l) The Chief Administrative Officer is authorized to approve contributions to or withdrawals from the Utility Rate Stabilization Reserve of a Department of up to $250,000 as transitional funding to meet an unanticipated expenditure pressure or revenue receipt that was not budgeted for. All such contributions to or withdrawals from the Utility Rate Stabilization Reserve shall be reported to Council in the next Financial Report following the contribution or withdrawal.

3. Capital Budget Financial Controls

a) The Capital Budget shall be submitted annually to Council for approval;

b) All capital budgets submitted to Council must first be reviewed by the Treasurer and by the Chief Administrative Officer;

c) Departmental reports submitted to Council for approval which seek authority for the release of funds for the purposes of a Capital Project or which seek authority for the commencement of a Capital Project must first be reviewed by the Treasurer to ensure availability of financing sources and compliance with Regional Corporation financial by-laws and then shall be reviewed by the Chief Administrative Officer;

d) Public notice of the intention of Council to adopt or amend the Capital Budget shall be given as prescribed by the Municipal Act, 2001 and in accordance with the provisions of By-law 63-2003, or any successor legislation, by the Finance Department in conjunction with the Corporate Services Department;

e) All Departments, and all boards and agencies for which the Regional Corporation provides funding, shall annually prepare a capital budget and a capital forecast;

f) Council shall be informed of any variance between the approved Capital Budget and actual expenditures, actual revenues or actual service levels where such variance is deemed to be material by the Treasurer not less frequently than semi-annually in a Financial Report including a written status report on:

i) each such variance;

ii) Capital Projects in progress including a summary of major activity;

iii) all Unallocated Project activity;

iv) all Unallocated Pre-Approved Design Project activity; and

v) a summary of capital spending.

g) In order to avoid major changes to the financing requirements of the Capital Plan, new Capital Projects introduced to the Capital Plan shall not be scheduled to be approved in any of the first three years of the Capital Plan, unless approved Capital Projects of equal net budget value are deferred for that purpose. New Capital Projects can be recommended to Council for approval in the first three years of the Capital Plan without deferral of another project, at the discretion of the Chief Administrative Officer. New Capital Projects may be scheduled into the Capital Plan to be approved in years four to ten of the Capital Plan without deferral of another project;

h) No Capital Project which has not received Council approval within the Capital Budget shall commence prior to such approval being obtained unless:

i) Approval is granted by Council via a report outside of the budget process;

ii) The Capital Project is financed, in accordance with a Redeployment of the Capital Budget or a Redistribution of the Capital Budget in accordance with the provisions of Schedule "B" to this by-law; and

iii) The Capital Project qualifies to be financed from the Venture Capital Fund.

i) The Chief Administrative Officer may cause a previously active Capital Project which has become inactive for one year or more to be closed out. Such authority may be delegated by the Chief Administrative Officer to the Treasurer;

j) Notwithstanding sections 3(g)-(h), in the event of an Emergency requiring capital expenditures, the Chief Administrative Officer is authorized to create a new Capital Project and to authorize its financing from sources recommended by the Treasurer. The Chief Administrative Officer shall cause any such Emergency Capital Project to be reported to Council as soon as may be reasonably practical following the identification of the Emergency need for the Capital Project;

k) Upon approval of the Capital Budget, Capital Projects designated with the status "P" for "pending" shall require separate approval from Council before funds may be released or project tenders may be issued. Upon approval of the Capital Budget, all Capital Projects not designated in the approved Capital Budget with the status of "P" for "pending" shall be designated with the status "A" for "approved" for purposes of the release of funds and issuance of project tenders;

l) Capital Project financing sources shall be authorized by resolution or by by-law. Where external long-term debt financing is prescribed, it shall be obtained in accordance with current provincial legislation;

m) Capital Projects approved by Council must be resubmitted by the Department Head to Council in the event that the expenditure requirements for the Capital Project appear reasonably likely to increase substantially. An increase in the expenditure requirements for a Capital Project shall be deemed to be "substantial" where, by reason of a scope change to the service to be rendered by the Capital Project or otherwise, it appears to be reasonably likely that an increase in the net Capital Project budget which is greater than the lesser of 10% of the Council approved net project budget or $250,000 will be required;

n) No commitment shall be made to make expenditures upon Capital Projects which exceed the Council approved net project budget unless such expenditures are pre-approved in accordance with the provisions of Schedule "C" to this by-law;

o) Unless otherwise provided for in accordance with this by-law, a Redeployment of the Capital Budget shall be approved in accordance with the provisions of Schedule "B" to this by-law;

p) Unless the Capital Budget approval for the current year otherwise provides, the Unexpended Budgeted Amount for each Unallocated Project shall be brought forward annually to that Unallocated Project for the current year, immediately following the approval of the Capital Budget for the current year. The Treasurer, in consultation with the Department Head, shall annually assess the adequacy of all Unallocated Project balances and shall reduce such balances where it is possible to do so while maintaining their adequacy. Such reductions shall be reported by the Treasurer to Council in the next Financial Report following the reduction; and

q) Growth related expenditures may be eligible for financing from development charges subject to the provisions of the Development Charges Act, 1997 and the related Development Charges By-law.

4. Reserve Management Financial Controls

a) Council may authorize the creation of a Reserve by means of a resolution, which shall identify the purpose of the Reserve;

b) The Treasurer may create a new Sub Reserve, within an authorized Reserve;

c) Council may authorize the creation of a Reserve Fund by means of a by-law which shall identify the purpose of the Reserve Fund;

d) Public notice of the intention of Council to create a Reserve or Reserve Fund outside of the budget process, thereby creating an amendment to the Current Budget and Capital Budget, shall be given as prescribed by the Municipal Act, 2001 and in accordance with the provisions of By-law 63-2003, both as may be amended from time to time, by the Finance Department in conjunction with the Corporate Services Department;

e) Departmental reports submitted to Council for approval which seek authority for the contribution or withdrawal of funds to or from Reserves or Reserve Funds must first be reviewed by the Treasurer to ensure availability of financing sources and compliance with Regional Corporation financial by-laws and then shall be reviewed by the Chief Administrative Officer;

f) Not less frequently than semi-annually, the Treasurer shall provide Council with a Financial Report including a written status report on the Reserves and Reserve Funds;

g) All contributions to and all withdrawals from Reserves or Reserve Funds shall require advance Council approval either as part of the Current or Capital Budget approval process or by means of a resolution, save and except that:

i) The Treasurer may authorize at the Treasurer's discretion, the contribution to Reserves of revenues, including the contribution of settlements paid to the Regional Corporation. A contribution which in the opinion of the Treasurer is material shall be disclosed to Council in the next Financial Report following the contribution;

ii) Collected development charges shall be contributed to the development charges Reserve Funds in accordance with the Development Charges Act, 1997 or any successor legislation;

iii) The transfer of funds between Sub Reserve Cost Centres for the purposes of a Reclassification of a Sub Reserve may be authorized by the Treasurer. Such Reclassifications shall be reported to Council in the next Financial Report; and
iv) Contributions to or withdrawals from Reserves may be authorized without a requirement of Council approval in accordance with sections 2(i)-(l) of this by-law.

h) The balance of the Working Funds Reserve shall be maintained within a range of a minimum of 5% and a maximum of 10% of the total budget for programs funded from property taxation;

i) The balance of the Utility Rate Stabilization Reserve shall be maintained within a range of a minimum of 5% and a maximum of 10% of the total budget for programs funded from utility charge collections;

j) Annually, the Treasurer shall present to Council a Reserve Forecast for all Reserves and Reserve Funds based on the Capital Plan and all other relevant information;

k) Intra-Reserve Fund borrowing within the development charges Reserve Funds that may be required to avoid external temporary borrowing costs are permissible, provided that any investment income be retroactively reimbursed to the source Reserve Fund; and

l) Council authority is required to transfer Reserve balances between Reserves.

5. The Treasurer shall undertake a review of this by-law not less frequently than once every seven years and report to Council the results of such review.

6. a) The Chief Administrative Officer, upon the recommendation in writing of the Treasurer, is authorized to identify existing financial control policies and procedures of the Regional Corporation, including but not limited to policies and procedures adopted by Council and those policies and procedures identified in Schedule "D" to this by-law, and upon doing so shall assume full authority over and responsibility for the administration of such policies and procedures, which authority shall include the power to amend, repeal and replace them;

b) Upon assuming such authority and responsibility respecting a financial control policy or procedure not identified in Schedule "D" to this by-law which has been adopted by Council, or upon amending, repealing or replacing any such financial control policy or procedure which has been adopted by Council, the Chief Administrative Officer shall cause such action to be reported to the Council in the Financial Report next following the taking of such action;

c) Nothing in this by-law shall be deemed to authorize the Chief Administrative Officer to assume authority over a financial control policy or procedure adopted by the Council after the date upon which this by-law is enacted, unless the Council shall by resolution expressly so direct.

7. By-law 49-96 and By-law 14-74 are hereby repealed.

READ THREE TIMES AND FINALLY PASSED IN OPEN COUNCIL this 3rd day of June, 2004.

Schedule A to By-law 45-2004 (By-law Clause 2(h))

Schedule B to By-law 45-2004 (By-law Clause 3(h) and 3(o))
Capital Budget Redeployments and Redistributions

Schedule C to By-law 45-2004 (By-law Clause 3(n))
Capital Expenditure Commitments Exceeding Budget

Schedule D to By-law 45-2004 (By-law Clause 6(a) and 6(b))
Financial Control Policies and Procedures