Policy 3.10 - Budget, FTE and Performance Management

Effective Date: 01-April-2005
Responsible Branch: Finance and Management Services Branch and
Strategic Policy and Planning Branch

Management Services Volume Table of Contents | Amendment Log

Scope

This policy provides for budget, FTE and performance management, including allocations, reallocations, and applicable reviews and applies to all ministry expenditures, including votes, special accounts, and other authorizations. Capital allocation and reallocations are also included in the scope of this policy.

Budget, Performance and FTE Allocations

Annual budget, performance, and FTE allocations, by business area, are approved by the Deputy Minister and are formally communicated to each branch, region, and BC Timber Sales (BCTS) office by the Assistant Deputy Minister, Corporate Services Division, at the beginning of each fiscal year (i.e. April). Throughout the fiscal year, budget, performance and FTE allocations can also be authorized/changed when:

• additional resources are made available to the Ministry.
• budget freezes or reductions are imposed by Treasury Board or the Executive.

In general, assigned performance measure targets will not change during the fiscal year. However; in some cases, performance measure targets may be changed by the Deputy Minister (DM) where published service plan goals change, or by Executive to more effectively achieve published service plan goals and objectives. These changes will normally be associated with related budget changes.

A formal record of annual high level budget allocations and performance measure targets are maintained in the ministry's financial forecasting system (MAX). Budget and FTE allocations are maintained by Finance and Management Services Branch (FMSB) and performance measure targets are maintained by Strategic Policy and Planning Branch (SPPB). High level budget allocations are also maintained in the general ledger (Corporate Accounting System - CAS) at the branch, region, and BCTS level by FMSB.

All financial and performance reporting for the ministry Executive and senior management will be derived from the financial and performance information contained in MAX and CAS.

Budget, Performance and FTE Management Rules

Regional Executive Directors (REDs), Branch Directors, and BCTS Managers must ensure that budget performance and FTE allocations assigned to spending authorities are accurately recorded, in MAX, at the responsibility center level.

Budget and FTE allocations, at the responsibility center level, must be reconciled to the high level budget and FTE allocations prior to the last working day of each month. On the last working day of the month, a snapshot is taken of the budget and performance information.

All unreconciled and unreconcilable transactions must be reconciled/corrected by the last working day of the month.

Budget forecasting information must be entered into MAX by the last working day of the month. Spending authorities are responsible for ensuring that information recorded in MAX accurately reflects their expenditure decisions and plans. Performance forecasting information must be entered into MAX by the last working day of each quarter.

• The sum of actual expenditures plus encumbrances for a division cannot exceed the budget allocation for a vote or special account without Executive approval.
• The sum of actual expenditures plus encumbrances for a region, branch, or timber sales office cannot exceed the region, branch, or timber sales office budget allocation for a vote or special account without written approval from the appropriate Assistant Deputy Minister (ADM).
• The sum of actual expenditures plus encumbrances for a district cannot exceed the district's budget allocation for a vote or special account without written approval from the appropriate RED.
• Reported actual expenditures and encumbrances plus forecasted expenditures may exceed a budget allocation at any point in time; however, the total amount spent in a year cannot exceed an approved budget allocation without the appropriate approvals noted above.
• All adjustments to expenditures, to record at the applicable/correct service line, must be done on a quarterly basis.

Budget, Performance and FTE Reallocations

A Budget, Performance and FTE Reallocation form (FS471) shall be completed for all budget, performance and FTE reallocations, including new ministry funding approved by Treasury Board after initial allocations.

Budget, FTE, and performance target reallocations (FS471) must be received, in FMSB, prior to the 5th working day of the last day of the month to be actioned for that month. The original should be sent to FMSB, with a copy to SPPB.

For transfers involving Forest Investment, a copy of an approved FS471 should also be sent to SPPB, FSI Section, to enable tracking and decision making by the Forest Investment Council.

For transfers within BCTS, a copy of an approved FS471 should also be sent to BCTS Headquarters to enable tracking.

Budget and FTE Reallocations:

Reallocations that would have the effect of transferring budgets between votes, between special accounts, and between votes and special accounts are not permitted.

Reallocations between Forest Investment and other business areas are not permitted.

Reallocations between Direct Fire and other business areas are not permitted.

Reallocations between capital and operating budgets are not permitted.

Reallocation of ministry targeted funding is not permitted. All surplus target funding must be reported and returned for reallocation for other ministry priorities as determined by the ministry executive.

Reallocations within and between divisions [e.g. branches, regions (including regional offices), and BCTS offices] requires the approval of the applicable branch directors, regional executive directors or BCTS director. FMSB must be formally advised (approved FS471) of transfers between regions, between branches and between regions/branches.

Performance Reallocations:

Unless additional resources or reductions are imposed by Central Agencies (e.g. Treasury Board or OCG), corporate performance measure targets published in the ministry's service plan on the 3rd Tuesday of February each year (as required by the Budget Transparency and Accountability Act), will not be changed during the fiscal year, but rather the Ministry will track against the published targets. Internal performance measure targets may be changed by ADMs, in discussion with the appropriate business area chairs, throughout the year as needed to achieve service plan goals.

In keeping with the above, published corporate performance measure targets may not be reallocated without approval from the DM. Internal performance measure targets assigned to regions and branches may only be reallocated with the approval of the appropriate ADMs who are accountable for the associated corporate objectives, strategies and performance measure targets published in the service plan.

Within the region or the branch, performance measure targets can be reassigned or reallocated (e.g. between Districts or Managers) according to region and branch policy.

With BCTS, performance measure targets assigned to timber sales offices may only be reallocated or amended with the approval of the appropriate Director.

Monthly Financial Reviews

Districts, BCTS offices, regions, and branches will review expenditures, encumbrances, and forecasts against budget allocations monthly to determine if corrective action is required to achieve the performance plan or to maintain expenditures within the budget allocation.

Ministry-wide financial reports will be prepared monthly beginning at the end of June (or as advised by the ADM, Corporate Services Division) for review by the Executive. Reports are due to the Executive on the Friday preceding the second Monday of the month. A year-end comparison of actual expenditures to the Estimates will be provided to the ministry executive in June.

Quarterly Performance Reviews

On a quarterly basis (or as advised by the ADM, Corporate Services Division) the financial review (as outlined above) will be done in conjunction with a performance review. Districts, BCTS offices, regions, and branches will review performance measure accomplishments and forecasts and provide a variance report for any significant under or over achievement expected by year-end.

Quarterly performance reports will be run by SPPB from MAX on June 30, September 30, December 31, and at year end, and provide an analysis of overall performance against the service plan to Executive. Regions and Branches will provide their ADM with a variance report (copied to SPPB) on the Wednesday preceding the second Monday of the month. Each ADM will be responsible to speak to divisional performance questions at the Executive meeting on the second Monday of the month following the end of the quarter.

Capital Allocations and Reallocations

Annual capital allocations, by asset category, are approved and formally communicated to each branch, region, and BCTS office by the ADM, Corporate Services Division, at the beginning of each fiscal year (i.e. April).

Throughout the fiscal year, additional capital allocations can be approved by the ADM, Corporate Services Division, as required.

All reallocation of capital funding requires the approval of the ADM, Corporate Services Division. An FS471 should be completed and forwarded to Budget Services, FMSB.

Capital financial reviews will be conducted at each quarter (June 30, September 30, December 31, and at FYE).

Definitions

Actual expenditure: payment made by the Ministry in the form of cash, cheque, or electronic funds transfer for the cost of goods and services acquired or amounts granted or contributed during a fiscal period. Expenditures also include non-cash expenditures such as amortization, leave liability, journal transfers between responsibility centres, etc. Actual expenditures are recorded in the Ministry's general ledger.

Branch: includes headquarters branches and the office of members of the Executive.

Budget allocation: an authority to spend up to a specified sum within a specific fiscal year to achieve objectives typically included in a performance plan or project plan.

Encumbrances: reservation of funds (from the appropriate budget allocation) where an obligation exists to pay in the current fiscal year for the acquisition of goods and/or services, on the condition that the supplier's obligations are carried out.

Forecast: a best estimate of funding required in the current fiscal year to accomplish activities under an approved performance plan (as approved by the spending authority's supervisor), excluding funds already spent or encumbered.

FTE: the equivalent of one person working 1,827 hours in one year. Direct FTEs include employees whose salaries are paid directly from the Consolidated Revenue Fund. Indirect FTEs include employees whose salaries are substantially paid by government indirectly through government transfers to external employers.

Performance target allocation: A target for a performance measure may be set by policy, by management based on funding and resources available, or by strategic corporate direction. Various processes will be used to determine the appropriate target for each performance measure. Once allocated, the target provides management with direction on priorities that must be achieved with the allocated budget for the fiscal year.

Performance variance: Unless otherwise determined by a business area team for a particular performance measure, the Ministry of Forests defines "substantial achievement" or "achievement" of performance as 85% to 120% of the allocated performance measure target, as projected to year-end. Achievement at less than 85% or more than 120% of target requires explanation in a variance report.

Targeted Funding: Budget and FTE allocations that have been allocated for a specific purpose. Targeted funding may not be reallocated without prior approval of the Executive.

References

• Core Policy and Procedures Manual, Chapter 3
• Expenditure Management Procedures Manual, Chapter 2
• Budget Transparency and Accountability Act