WCA Finance Orientation

Webinar October 2015

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WCA Finance OrientationOctober 2015

Agenda1. McCormick Home

1. Funding envelopes and CMI2. Resident co-payments and preferred accommodation charges3. Rebuild financing4. Support from (to) McCormick Home Foundation5. Key financial indicators for the Board

2. AOS1. Funding sources2. Support from McCormick Home Foundation3. Key financial indicators for the Board

3. WCA Corporate1. Executive office costs2. Long term investment assets3. Key financial indicators for the Board4. 10 Year Plan5. Registered charity status implications6. Insurance coverage

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Funding and Key Financial IndicatorsMcCormick Home MOHLTC/SWLHIN Funding envelopes:

Envelopes where any surpluses must be repaid to MOHLTC/SWLHIN

Nursing and Personal Care ($99.72/resident/day or $5.8 million/year)

Program and Support Services ($9.23/resident/day or $539,000/year)

Raw food ($8.03/resident/day or $469,000/year) Other specified (BSO, RPN, Physiotherapy, NP - $24.65/resident/day

or $1,450,000/year) Envelopes must be reconciled as at December 31st Reallocation between Nursing and Personal Care and Program and

Support Services envelopes provides some flexibility Envelopes where surpluses may be retained by Home

Other accommodations ($53.93/resident/day or $3.15 million/year) Includes costs of dietary, housekeeping, laundry, administration,

maintenance, utilities, and surplus

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Funding and Key Financial IndicatorsMcCormick Home Case Mix Index (CMI) Adjustment

Nursing and personal care adjusted for CMI (Base of $92.52 times CMI of 1.0778 results in $99.72 per above)

CMI determined by RAI-MDS system; measures resident health care needs; reset annually

2014 CMI suggests that McCormick Home residents require a 7.78% higher level of care than the average long term care resident in Ontario. (Translates into $420,480 in additional nursing funding)

Home must maintain a 97% occupancy rate to maintain full funding from the Ministry and 98% occupancy to satisfy SWLHIN performance agreement.

As at August 2015, occupancy for the year is 99.4%. As at September 2015, McCormick Home has a wait list of 374 people: 43%

of the 871 people on the wait list in London/Middlesex/Elgin have selected McCormick Home as one of their choices.

McCormick Home accounts for 4% of the 3,922 beds in London/Middlesex/Elgin counties.

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Funding and Key Financial IndicatorsMcCormick Home Resident co-payments:

Rates set by MOHLTC on an annual basis; consistent across the province and home ownership type (for-profit versus not-for-profit)

As of September 1, 2015: $1,774.81 per month for basic (shared) room.

MOHLTC subsidizes a basic room if required-subject to formal approval process. (based on resident’s prior year taxable income)

Resident co-payments ($3.2 million/year) reduce MOHLTC gross funding; they do not add to the Home’s surplus

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Funding and Key Financial IndicatorsMcCormick Home Preferred accommodation revenues:

Premium per day for a private room $25.00/day or $760.42 per month in addition to basic rate

As of September 1, 2015 (new residents): $2,535.23 per month for private room

No MOHLTC subsidy available for private rooms Home can retain 100% of preferred accommodation premiums;

no impact on MOHLTC funding. Maximum available will increase gradually from $630,720/year to $876,000/year as new residents move in

Home limited to billing 60% of rooms at private room rates McCormick Home built with 67% private rooms to ensure 60%

is maintained Preferred accommodation revenues required to fund

mortgages for rebuilds like McCormick Home

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Funding and Key Financial IndicatorsMcCormick Home Summary of funding (2015 base levels):

MOHLTC (NPC, Rec, RF, OA, Specified)$195.56/res/day Resident co-payments (100% occ’y) $ (58.35)/res/day Net cost to MOHLTC $137.21/res/day

Actual funding for McC Home (YTD Aug 2015):

MOHLTC $195.56/res/day Resident co-payments (note 1) $(54.46)/res/day Net cost to MOH $141.10/res/day

(1) Net cost to MOH higher due to subsidization of low income residents and impact of occupancy being less than 100%

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Funding and Key Financial IndicatorsMcCormick Home Redevelopment funding $10.35/resident/day

Ministry of Health committed to provide per diem funding for 20 years to assist older Homes like McCormick Home to rebuild

No capital grants available to Homes Funding started in February 2006 with the opening of the Home (11 years

remaining). Total funding $604,440/year.

Long term mortgage with Desjardins $8.5M (August 2015) Interest rate fixed for 20 years (< 5%) CMHC insured Amortization over 20 years to match redevelopment funding (11 years

remaining)

Interest on mortgage covered 100% by redevelopment funding starting in 2009/10.

Principal payments are covered by preferred accommodation revenues and increasingly over time by redevelopment funding as interest expense declines

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Funding and Key Financial IndicatorsMcCormick HomeSources of funds:Redevelopment funding ($10.35/day) $604,000(11 yrs)Preferred accommodation ($18-$25.00/day) $750,000 (2016)

Total $1,354,000

Uses of funds:Long term debt (principal and interest) $1,020,000(11 yrs)Capital reinvestment (ongoing) $330,000 (2016)

Total $1,350,000

Supplementary information:Interest expense (fiscal 2016) $410,000Principal repayment (fiscal 2016) $610,000

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Funding and Key Financial IndicatorsMcCormick Home Support provided from the McCormick Home Foundation to

McCormick Home

Grant to enhance quality of resident life $50,000 Grant to expand role of Social Worker $28,500 Grant to provide spiritual care $20,000 Grant related to Golden Dreams $ 3,000 Grants for one time capital improvements TBD

i.e. Family dining room, Music enhancement

Non-capital grants are allocated to Program and Support funding envelope which must be reconciled annually as at December 31st.

Grants account for 19% of total Program and Support envelope spending

Manage payment of grants so that no donor dollars are refunded to MOHLTC on reconciliation on December 31st.

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Funding and Key Financial IndicatorsMcCormick Home Fee for services charged by McCormick

Home to McCormick Home Foundation

Finance support ($5,000/year)

Preparation of monthly financial statements Attendance at monthly Foundation Finance committee

by McCormick Home Director of Finance Information technology systems and support

Office rent ($6,000/year)

Includes housekeeping, utilities and property and liability insurance

Rent based on allocation of square footage

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Funding and Key Financial IndicatorsMcCormick Home Other supports provided to the McCormick Home

Foundation

WCA covers cost of Directors and Officers insurance for the McCormick Home Foundation board members and staff

WCA CEO provides ongoing financial support including preparation of year end audit file

McCormick Home Foundation benefits from using WCA auditors McCormick Home Foundation benefits from using WCA investment

managers WCA CEO prepares annual charitable return filing with CRA WCA CEO, Home Administrator and Director of AOS attend

McCormick Home Foundation board meetings WCA Director of Communication supports McCormick Home

Foundation staff WCA Board and staff support McCormick Home Foundation

fundraising initiatives

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Funding and Key Financial IndicatorsMcCormick Home Key indicators for the Board

Balance per diem spending to funding Nursing, program and raw food must be balanced

(changes introduced in 2013 allow Homes flexibility between nursing and recreation envelopes)

Other accommodations spending should be $2-$3 per resident day lower than funding resulting in surplus of $150,000 to $175,000 per year, which helps fund capital replacements and program expansion.

Ensure that preferred accommodation (private rooms) is at the maximum allowable of 60%

Ensure that occupancy remains greater than 97/98%

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Funding and Key Financial IndicatorsAOS Funded by MOHLTC/SW LHIN through Community

Support Services (CSS) funding program from April 1st to March 31st corresponding with our fiscal year.

Members also fund the program through co-payments ($10.00 per day for program and $10.00 per day for transportation). Subsidies available through McCormick Home Foundation to support those in need.

Summary: Total cost of program $2,200,000 Member co-payments (incl. $25,000 Fdn subsidies-6.5%) $ (385,000) Funding from SW LHIN $1,819,000

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Funding and Key Financial IndicatorsAOS Support from the McCormick Home Foundation:

Enhanced program support $20,000 Co-payment subsidies $25,000

Support from community strong for AOS program As at August 31, 2015 AOS unspent restricted funds in

Foundation total $186,000. Typically, restricted donations for AOS range from $50,000 to

$60,000 per year.

AOS typically benefits from year end requests for proposals from the SWLHIN for one time capital items

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Funding and Key Financial IndicatorsAOS Key financial indicators

Balanced spending with funding

Foundation support Subsidy need is increasing (6.5% of total co-

payments) Offsetting this is strong donor support for AOS Care needed with timing of requests for Foundation

support due to end of year one time funding programs to avoid using donor dollars to refund surpluses created.

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Funding and Key Financial IndicatorsWCA Corporate Financial statements combine:

Board and corporate office expenses Executive office salaries and benefits Executive office costs Communication costs Strategic planning costs Research costs

WCA Investment assets Professional investment management Plan of Management

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Funding and Key Financial IndicatorsWCA Corporate Long term investment assets:

Foyston, Gordon & Payne $6,460,976 (Aug 31, 2015)

Mawer Investment Mgmt $7,147,425 (Aug 31, 2015)

Asset mix benchmark: 55% bonds; 20% Cdn equity; 15% US equity; 10% International equity

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Funding and Key Financial IndicatorsWCA CorporateWCA Plan of Management

Offers legal protection for all Directors against claims related to losses on investment assets

Sets out processes for managing investments Sets out performance benchmarks: investment

returns and service expectations Sets out processes for monitoring investment

manager performance: semi-annual reviews and formal three year reviews

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Funding and Key Financial IndicatorsWCA Corporate

Key financial indicators Costs versus budget Investment performance versus budget Investment performance versus benchmarks

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Funding and Key Financial IndicatorsWCA Corporate 10 Year Plan

Living, breathing document Identifies the long term consequences of alternative

courses of action Developed to determine whether we could afford to

operate the home post rebuild Key Assumptions:

4% investment rate of return 2% inflation rate McCormick Home generates a surplus; AOS breaks even $200,000 to $400,000 capital reinvestment per year

Analysis: Generates amount of cash available to invest over the next

ten years in maintaining infrastructure and developing new programs (i.e. research)

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WCA - A Registered Charity Filing requirements

File T3010 within 6 months of year end Compliant to March 31, 2015-assessed as filed

Disbursement quota Disbursement quota rules eased in 2010 No concern as costs of running McCormick Home are treated as

qualifying expenses

Increased emphasis on fundraising and administrative costs of charities

CRA introduced “Quick View” on Charity Listing on CRA website Pie chart of revenue sources Pie chart of expenses broken down into management, fundraising and

spending on charitable programs No concern for WCA as costs of running McCormick Home and AOS

considered qualifying costs for charity even though funded through goverments

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WCA-Insurance Property coverage

Property All Risks (including Boiler &Machinery) $24,800,000

Business interruption $ 5,130,000 Extra expense $ 500,000 Deductible $ 10,000

Liability and other Health care $10,000,000 Crime coverage $ 100,000 Deductible $ 10,000

Directors and Officers $10,000,000 Includes McCormick Home Foundation Deductible $ 2,500

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WCA Finance Orientation Any questions contact:

Steven Crawford, CEO519-432-2648 ext 2319stevec@wcalondon.ca