Policy 3.10 - Budget, FTE and Performance Management

Effective Date: 09-January-2009
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 corporate performance measure targets. This applies to allocations, reallocations, and applicable reviews and applies to all ministry expenditures, including votes, special accounts, and other authorizations. Capital allocation and reallocations and budget management roles and responsibilities are also included in the scope of this policy.

Budget, Corporate Performance Measure Target and FTE Allocations

Annual budget, corporate performance measure targets, and FTE allocations, 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. Throughout the fiscal year, budget, corporate performance measure targets and FTE allocations can also be authorized/changed when:

• additional resources are made available to the Ministry.
• budget freezes/reductions are imposed by Treasury Board or the Executive.
• reallocation of funding is required for ministry priorities.

In general, assigned corporate performance measure targets will not change during the fiscal year. However, in some cases, these targets may be changed by the Deputy Minister (DM) where published service plan goals change, or by the 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 corporate performance measure targets is maintained in the ministry's financial forecasting system (MAX). Budget and FTE allocations are maintained by Finance and Management Services Branch (FMSB) and corporate 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).

Internal Performance Measures targets, where applicable, are allocated and maintained (in MAX or otherwise) at the Division, Region or Branch level.

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, Corporate Performance Measure and FTE Management Rules

Regional Executive Directors (REDs), Branch Directors, and BCTS Managers must ensure that budget performance and FTE allocations assigned to expense 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.

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

All adjustments to expenditures, to record at the applicable/correct service line, must be done on a quarterly basis.

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

• 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.
• FTE allocations, at the divisional level, can not exceed the FTE allocation, without the approval of the Executive (with the exception of Direct Fire FTE's).

Budget, Corporate Performance Measure target and FTE Reallocations

Budget and FTE Reallocations:

The following reallocations are not permitted:

• between votes, between special accounts, and between votes and special accounts.
• between capital and operating budgets.
• targeted funding. All surplus targeted funding must be reported and returned for reallocation for other ministry priorities as determined by the ministry executive.

A Budget, Performance Measure target and FTE Reallocation form (FS471) shall be completed for all budget, corporate performance measures and FTE reallocations between regions, between branches, between regions/branches, between core businesses and any new ministry funding approved by Treasury Board after initial allocations.

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

The 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.

No FS471's, returning surplus funds, will be processed after February 15th without the approval of the Budget Manager, FMSB - RC would show the surplus.

Corporate performance measure target reallocations must be sent to SPPB prior to the 5th working day of the last day of the reporting period, to be actioned for that reporting period.

Corporate Performance Measure target Reallocations:

Unless additional resources or reductions are imposed by Central Agencies (e.g. Treasury Board or OCG), 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. Corporate performance measure targets may be changed by ADMs throughout the year as needed to achieve corporate ministry goals and objectives.

In keeping with the above, published performance measure targets may not be reallocated without approval from the DM.

Corporate 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, and strategies outlined in the Corporate Internal 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, forecasts and FTE's 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 September (or as advised by the ADM, Corporate Services Division) for review by the Executive. Reports are due to the Resource Working Group on the Friday preceding the second Monday of the month. Reports are due to the Executive on the Friday preceding the third Monday of the month. A year-end comparison of actual expenditures to the Estimates will be provided to the ministry executive in June.

Performance Progress Reports

As advised by the ADM, Corporate Services Division, a performance progress report (as outlined above) will be done in conjunction with the financial review. The exception is BC Timber Sales, who will continue to report on a quarterly basis to meet their business requirements.

After the end of the reporting period, Districts, BCTS offices, regions, and branches will review corporate performance measure accomplishments and forecasts and provide a performance variance report for any significant under or over achievement expected by year-end.

Performance progress reports will be run from MAX snapshots taken on June 30, September 30, November 30, January 31, and at year end (mid-April). SPPB will provide an analysis of overall performance against the Published and Corporate Internal Service Plans to Executive. Regions and Branches will provide their ADM with a variance report (copied to SPPB) by noon on the third business day after the month-end MAX snapshot. Each ADM will be responsible to speak to divisional corporate performance questions at the Executive meeting on the third Monday of the month following the end of the reporting period.

Capital Allocations/ Reallocations and Financial Reviews

Annual capital allocations, by asset category, are approved by the Deputy Minister and formally communicated to each branch, region, and BCTS office by the Assistant Deputy Minister, Corporate Services Division, at the beginning of each fiscal year. Throughout the fiscal year, capital allocations can also be authorized/changed when:

• additional resources are made available to the Ministry.
• budget freezes/reductions are imposed by Treasury Board or the Executive.
• reallocation of funding is required for ministry priorities.

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

Capital financial reviews will be conducted monthly beginning at the end of September (or as advised by the ADM, Corporate Services Division).

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. 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.

Corporate Internal Service Plan: outlines the corporate goals, objectives, and strategies that the ministry will focus on annually. Contains more information than the published Ministry Service Plan.

Corporate performance measures: includes measures published in the Ministry Service Plan, as well as those in the Corporate Internal Service Plan. Measures are generally outcome oriented and of interest to strategic and corporate planning and reporting.

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. Forecasts for performance measure targets should estimate the results expected between the actual performance (to date) and the year-end.

FTE: full-time equivalent, or 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.

Internal Performance Measures: are measures developed and used by Divisions, Branches or Regions to guide their own progress and performance.

Performance target allocation: A target for a corporate 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 corporate performance measure. Once allocated, the target provides management with direction on corporate priorities that must be achieved with the allocated budget for the fiscal year.

Performance variance: Unless otherwise determined by Strategic Policy and Planning Branch for a particular performance measure, the Ministry of Forests defines "substantial achievement" of performance as 90% to 110% of the allocated performance measure target, as projected to year-end. Achievement at less than or more than 10% of target requires explanation in a variance report.

Published Ministry Service Plan: published annually and tabled in the Legislature on Budget Day, outlines the goals, objectives, strategies, performance measures and targets for a three year period, as required in the Budget Transparency and Accountability Act. The published performance indicators are selected from corporate performance measures, based on the requirements from the Premier's Office, which are generally consistent with key priorities in the BC Government Strategic Plan.

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