City council has approved a repayment strategy that would see the Edmonton Police Service pay down its outstanding budget deficit within three years, but the details of how that will be achieved are being kept private for now.
The EPS Operating Reserve, established in 2018 alongside the funding formula to manage operational surpluses and deficits in the police budget, currently has a negative balance of $2.895 million, though EPS is projecting that will shrink to $854,000 by the end of 2022.
During the meeting, Coun. Erin Rutherford indicated the private report outlined a strategy that reduced the original deficit, but that the strategy ended in October when city council approved the new funding formula for 2023. As part of that decision, responsibility for salary settlements was transferred from EPS to the city.
"At a high level, when they thought they might be responsible, they had a strategy to put money aside," Rutherford explained to Taproot following the meeting. "Now, since the city is responsible, that money can go to the reserve."
During the meeting, Rutherford sought to understand why that strategy isn't ongoing given that the reserve remains in deficit.
Rob Davidson, a member of the delegation from EPS, responded that no plan or strategy was stopped at the time of the funding formula decision. "We still proceed with opportunities in our budget ... to create a favourable situation at year-end," he said. "We still anticipate changes will happen from Q3 to year-end; could be positive, could be negative."
"In the report, it does specifically say that the accrual process that was being done was stopped," Rutherford countered.
Davidson said the process in question was related to collective bargaining settlements.
"Why wasn't that same strategy carried forward to completely address the deficit?" Rutherford continued. "The plan basically just says we'll clean up that deficit in three years, but I don't really see concrete steps to do that."
She also criticized the report for a lack of information about how future deficits might be avoided. "They didn't provide a strategy for how to keep the reserve from going back into deficit," Rutherford told Taproot.
She suggested upcoming council decisions could have a significant impact on that. "If we don't continue with a funding formula, I wouldn't be surprised if there's another deficit."
Collective bargaining settlements still outstanding
Policy C605 states that if the reserve falls into a deficit position, "a strategy will be developed by the Edmonton Police Service, to be approved by city council, in order to achieve a balanced position over a period not to exceed three years, starting with the subsequent year operating budget."
The Edmonton Police Service finished 2021 with a deficit in the EPS Operating Reserve of $2.895 million. Following surpluses of $1.162 million, $1.083 million, and $2.249 million in 2018, 2019, and 2020 respectively, the service reported a $7.389 million loss at the end of 2021.
As of May 31, EPS was projecting a deficit for 2022 of $2.499 million, which would have brought the total reserve deficit to $5.394 million. Current projections suggest that EPS will instead finish 2022 with a $2.041 million surplus, resulting in a negative balance in the reserve of $854,000 at year-end.
In a statement to Taproot, Edmonton Police Commission executive director Matthew Barker explained the change in forecasts from May to September.
"The main reason for the projected change from May 31 to Sept. 30 is the ownership of collective bargaining settlements," he said. "In October 2022, during the funding formula discussion, the city approved a policy which set out responsibility for collective bargaining settlement with their administration. As a result, the EPS removed all financial risk of collective bargaining settlements from their financial statements."
Concern about transparency
After Coun. Karen Principe moved to approve the strategy, Rutherford put forward an amendment asking the city clerk to review in Q2 2023 — when collective bargaining is anticipated to be completed — whether to keep the strategy private, in consultation with the commission.
"I don't think that this needs to stay private in perpetuity, and given the public interest in this topic, it's important that when we can, we should be releasing this," Rutherford said, introducing the amendment.
John McDougall, chair of the Edmonton Police Commission, said he supported making the information public when appropriate.
"The commission is always advocating for transparency and I think that as soon as the clerk and the commission have a discussion on releasing this, I think it is certainly in the best interest of the public to release anything we can," McDougall said.
Both the amendment and the amended motion passed unanimously, 10-0. Mayor Amarjeet Sohi, Coun. Sarah Hamilton (who is also a member of the Edmonton Police Commission), and Coun. Aaron Paquette were absent from the meeting.
Rutherford told Taproot she considered speaking to the motion, but ultimately decided not to.
"I will patiently wait and see," she said. "Now this is out in the public, let's see what they do."