Treatment of Operating Surpluses/Deficits – Local Agencies, Boards and Commissions

Legislative History: Enacted June 13, 2017 (By-law No. CPOL.-43-239); Amended June 26, 2018 (By-law No. CPOL.-351-342); Amended August 10, 2021 (By-law No. CPOL.-43(a)-238); Amended October 14, 2025 (By-law No. CPOL.-43(b)-281)

Last Review Date: October 14, 2025

Service Area Lead: Director, Financial Planning & Business Support

1. Policy Statement

The purpose of this policy is to establish a framework for treatment of year-end operating surpluses and operating deficits for Local Agencies, Boards, and Commissions (ABCs) for which the City of London has funding responsibilities (subject to applicable legislation, regulations, by-laws and contracts) through the property tax supported and/or Water and/or Wastewater Treatment budgets. It outlines the responsibilities of each ABC in relation to fiscal outcomes.

2. Definitions

2.1 Deficit: In the operating budget, when there is an excess of expenditures over revenues within the fiscal year.

2.2 Operating Budget: A budget that funds ongoing operations, including expenses such as personnel, utilities, and contributions to reserve funds.

2.3 Reserve: An appropriation from net revenue and/or cost savings at the discretion of any Agency, Board or Commission, after the provision for all known expenditures. It has no reference to any specific asset and does not require the physical segregation of money or assets as in the case of a reserve fund. 

2.4 Reserve Fund: Funds that have been set aside by the ABC or by a requirement of senior government statute or agreement to meet a future event. 

2.5 Surplus: In the operating budget, when there is an excess of revenue over expenditure within the fiscal year.

3. Applicability

This policy applies to the Agencies, Boards and Commissions annual operating budgets who receive funding (including partial or program specific funding) through the City of London’s property tax supported budget, water budget, and/or wastewater and treatment budget, subject to applicable legislation, regulations, by-laws and contracts. 

4. The Policy

4.1 Principles

4.1.1 All surpluses and deficits should be treated as one-time in nature.

4.1.2 Any surplus or deficit under this policy relates to the City of London’s funding responsibilities.

4.2 Treatment of a Surplus/Deficit

4.2.1 For ABCs with established reserves or reserve funds to manage operating surpluses or deficits:

In a Year of Surplus

a) The ABC to retain the year-end surplus in their own reserve or reserve fund.

In a Year of Deficit

b) The ABC to draw from its reserve or reserve fund to cover any year-end operating deficit, up to the balance available in the reserve/reserve fund.

c) If the deficit exceeds the reserve/reserve fund balance, the ABC may seek Council approval to receive additional funding through the City of London’s budget monitoring process.

4.2.2 For ABCs without established reserve or reserve funds to manage operating surpluses or deficits: 

In a Year of Surplus

a) The ABC to return the year-end surplus to the City of London. The ABC’s subsequent year’s budget payments shall be reduced accordingly, unless other arrangements for repayment are otherwise mutually agreed to by the City and ABC.

In a Year of Deficit

b) The ABC may seek Council approval to receive additional funding through the City of London’s budget monitoring process.

4.3 Requests for Information

4.3.1 The City may, at its discretion, request information from an ABC about its projected and/or actual surplus/deficit position in detail and form consistent with City’s budget monitoring process.

4.3.2 The City may, at its discretion, request information from an ABC about the balance of reserve or reserve funds used for the purpose of managing surpluses and deficits.