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Province of Alberta (11OC)

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Wednesday 03 July, 2013

Province of Alberta

2012-13 Annual Report

RNS Number : 4588I
Province of Alberta
02 July 2013
 



Regulatory Announcement

 

Province of Alberta
2 July 2013

  

Click on, or paste the following link into your web browser, to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/4588I_-2013-7-2.pdf

  

The Province's 2012-2013 Annual Report has been submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM

 

For further information, please contact:

Hilary McVey 
Director, Capital Markets 
Treasury Board and Finance
Edmonton, Alberta
Telephone Number:  1-780-415-9198
Fax Number:  1-780-427-2435
Email:  [email protected]

 

 

  

Government of Alberta

2012-13 AnnualReport

 

 Consolidated  Financial Statements

 Measuring  Up

 

 

 

 This is the report to Albertans on Budget 2012: Investing in People. It is a permanent public record of the dollars spent and the results achieved by the Government of Alberta for the 2012-13 fiscal year.

The Government of Alberta Annual Report consists of two parts:

 Consolidated Financial Statements, which provide an overall accounting of the government's revenue and spending, and assets and liabilities.

 Measuring Up, which reports on the progress that has been made towards achieving the government's goals.

Annual reports for each ministry have also been published, providing additional detailed information on performance and financial results.

 

 

 

~o~

 

Copyright © 2013

 

Government of Alberta 2012-13 Annual Report

Consolidated Financial Statements and Measuring Up

ISBN 978-1-4601-1139-0 (Print)           ISBN 978-1-4601-1140-6 (Online) ISSN 2291-6423 (Print)            ISSN 2291-6431 (Online)

 

 


 

ACCOUNTABILITY STATEMENT 

The government's Annual Report for the year ended March 31, 2013 was prepared under my direction on behalf of the government in accordance with the Government Accountability Act and the government's accounting policies. All of the government's policy decisions as at June 19, 2013 with material economic or fiscal implications have been considered in the preparation of the Annual Report.

Original signed by

 

Doug Horner
President of Treasury Board and Minister of Finance


 

 

 

 

 

 


A MESSAGE FROM THE PRESIDENT OF TREASURY BOARD AND MINISTER OF FINANCE

 

Alberta's economy and population grew significantly in 2012-13. Even with the addition of about 100,000 people to our province, and with a severe drop in resource revenue, government continued to provide the quality programs and services that Albertans have come to expect.

While Alberta's economic indicators remained strong- including low unemployment and nation-leading job creation- we faced fiscal challenges, primarily due to declining energy prices and the discounts faced by Alberta producers. Even as we addressed these challenges- through increasing in-year savings and a disciplined approach to spending decisions- we continued to maintain our focus on addressing Albertans' priorities and preparing for a larger population and continued solid economic growth in the future.

At budget time, the government committed to investing in people. That meant delivering on priorities, while getting the most value for taxpayers' dollars. During 2012-13, we commenced the results-based budgeting process- a review of every government program and service to ensure they are as effective and efficient as possible. While the 2012-13 year-end results did not turn out as well as expected, the efforts undertaken and decisions made in preparing Budget 2013 reflect the government's prudent approach, and set the stage for a future of fiscal responsibility.

Non-renewable resource revenue was $3.6 billion lower than budget-due primarily to volatile energy prices and the effects of the "Bitumen Bubble," which resulted in Alberta producers and the government receiving discounted prices for bitumen production. This was partially offset by higher tax and other revenue. Overall, total revenue was $1.8 billion lower than budget. 

Expense was $161 million higher than budget, a result of providing $596 million in disaster assistance mainly for agriculture and forest fires. However, operating expense was $339 million lower than budget, while capital grant expense was $452 million lower than budget. The year-end results were impacted by the revenue decline and expense changes, with the deficit$2 billion higher than the budget estimate.

The initiatives highlighted in Measuring Up show that Alberta continued to honour the commitments made in Budget 2012. We invested in key infrastructure such as roads, health facilities and municipal capital projects that are high priorities for Alberta families, and will meet the needs of our growing province. 

We supported programs that help Albertans raise their families, protect the vulnerable and assist in securing our economic future. We ensured better access to health care services, helped our growing seniors population, assisted with a better quality of life for the vulnerable, and continued to build the best education system in Canada. And we did this without raising taxes.

The work we did in 2012-13 is setting the stage for the future. Going forward, we will continue to implement our government's Building Alberta Plan, which invests in families and communities, including the new roads, schools and health facilities our growing province needs. 

It ensures we live within our means by challenging every dollar the government spends and making sure every program continues to deliver real results for people. And it builds new markets for all our resources so we get the fairest prices and protect the jobs and prosperity Albertans depend on.

 

Original signed by

 

Doug Horner
President of Treasury Board and Minister of Finance


 

TABLE OF CONTENTS

 

 

PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       vi

 

EXECUTIVE SUMMARY

Budget 2012: Investing in People  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Fiscal Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4

Cash Adjustments and Alberta Sustainability Fund . . . . . . . . . . . . . . . .   5

Economic and Tax Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6

Overview of Program and Capital Spending . . . . . . . . . . . . . . . . . . . . .   7

Spending Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     9

2012-13 Ministry Expense by Function . . . . . . . . . . . . . . . . . . . . . . . .    15

Revenue Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16

Net Financial and Capital Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Fiscal Plan to Consolidated Financial Statements

Reporting Reconciliation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          19

Reconciliation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    21

Historical Fiscal Summary, 1994-95 to 2012-13 . . . . . . . . . . . . . . . . .     22

 

 

CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     25

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      26

Management's Responsibility for the Consolidated Financial Statements       27

Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     28

Consolidated Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . .      29

Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . .      30

Consolidated Statement of Change in Net Financial Assets . . . . . . . . . .     31

Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . .    32

Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . .      33

Schedules to the Consolidated Financial Statements . . . . . . . . . . . . . . .      52

1    Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     52

2   Expenses by Ministry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      53

3   Expenses by Object . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      54

4   Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       54

5   Portfolio Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      55

6   Equity in Government Business Enterprises. . . . . . . . . . . . . . . . . .        56

7    Loans and Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    57

8   Unmatured Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      57

9   Debt of Alberta Capital Finance Authority . . . . . . . . . . . . . . . . . .        58

10   Pension Plans and Other Defined Benefit Plans . . . . . . . . . . . . . . .     58

11   Tangible Capital Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    65

12   Deferred Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . .      66

13   Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     66

14   Listing of Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        67

Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    73


 

 

 

 

MEASURING UP

Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    78

Management's Responsbility for Reporting. . . . . . . . . . . . . . . . . . . . . . . . . .    79

Readers' Guide. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    80

Working Together . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   80

Government of Alberta Strategic Planning and

Results-Based Budgeting (RBB) Framework . . . . . . . . . . . . . . . . . . . . .          81

Results Analysis by Goal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   82

Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Performance Measures by Goal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Sources and Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115


 

PREFACE

  

The Public Accounts of Alberta are prepared in accordance with the Financial Administration Act and the Government Accountability Act. The Public Accounts consist of the Annual Report of the Government of Alberta and the annual reports of each of the 18 ministries.

This Annual Report of the Government of Alberta contains the Minister's Accountability Statement, an Executive Summary, the audited Consolidated Financial Statements of the Province and the Measuring Up report, which compares actual performance results to desired results set out in the government's strategic plan.

The annual reports of ministries are released concurrently with the Annual Report of the Government of Alberta. The ministry annual reports contain Ministers' accountability statements, the audited consolidated financial statements of the ministries and a comparison of actual performance results to desired results set out in the ministries' business plans. Each ministry annual report also includes:

 

   Financial statements of entities making up the ministry including departments (all departments combined form the General Revenue Fund), regulated funds, provincial agencies and Crown-controlled corporations;

   Other financial information as required by the Financial Administration Act and

the Government Accountability Act, either as separate reports or as a part of financial statements, to the extent that the ministry has anything to report;

   Financial information relating to accountable organizations and trust funds.

 

 

 NOTE:

 

Effective April 1, 2013, the Fiscal Responsibility Act and Government Accountability Act were repealed and replaced by the Fiscal Management Act (FMA). Beginning in 2013-14, the government's Annual Report will be prepared pursuant to section 12 of the FMA.


 

 

EXECUTIVE SUMMARY

 

 

  

1


  

NOTE: AMOUNTS PRESENTED IN TABLES MAY NOT ADD TO TOTALS DUE TO ROUNDING.


ExEcutivE Summary

BUDGET 2012: INVESTING IN PEOPLE

Budget 2012 focused on the Premier's commitments and Albertans' priorities: investing in families and communities, securing Alberta's economic future and advancing world-leading resource stewardship.

A long-term vision for Alberta was articulated, with specific initatives identified:

   Remodel primary health care delivery;

   Ensure vulnerable Albertans are looked after;

   Strive for a thriving, co-ordinated K-12 and post- secondary education system;

   Continue building Alberta's infrastructure to keep pace with population and economic growth;

   Tell the world of Alberta's responsible energy development;

   Manage spending carefully, with an ongoing process to evaluate effectiveness and efficiency of programs and services in delivering outcomes

Albertans expect.

As is not unusual for Alberta, and especially with recent global economic turmoil, the 2012-13 results differed from the original Budget 2012 estimates. While revenue from almost all sources improved, spurred by rapid population growth, Alberta's energy sector suffered from deep discounts to their prices, largely from an unexpected jump in North American oil production and insufficient pipeline capacity to access markets and higher prices. As a result, resource revenue was $3.6 billion lower than budget, and total revenue was $1.8 billion lower.

The actual deficit of $2.8 billion was $2 billion higher than the budget estimate. Expense was $161 million higher due almost entirely to in-year provision of agriculture and forest-fire disaster assistance.

Global economic conditions remain very uncertain, with large daily commodity and financial market swings. Access to markets for our energy production also will continue to be a focus for the Premier. In this environment, the government will continue to be prudent, concentrating on delivering the outcomes Albertans expect, while managing our unique fiscal volatility responsibly. A new fiscal framework, with a legislated saving plan, was developed during 2012-13, and implemented for 2013-14.


Program Initiatives

Total expense increased by $1.9 billion or 4.7% from 2011-12 to $41.4 billion.

Health. 6% increase to Alberta Health Services' base operating grant, plus extra support for new facility operations. Opened three pilot Family Care Clinics.

Advanced and basic education. Increased school board grants for enrolment growth and teachers' salaries. Higher grants to post-secondary institutions for enrolment growth, new facilities and better collaboration. Student aid programs improved.

Support for vulnerable Albertans. Increased funding for seniors benefits, Assured Income for the Severely Handicapped, programs for children and the disabled, and contracted agency staffcompensation. Developed a comprehensive Social Policy Framework. 

Other. Added 42 new frontline RCMP officers, implemented the Joint Canada Alberta Oil Sands Monitoring Plan, and provided disaster assistance to agricultural and forestry sectors. Funded research and technology commercialization through Alberta Innovates corporations.

Capital Plan

Infrastructure support of $5.2 billion remained significant, but was lower than budget and 2011-12.

 

 

NOTE ON DIFFERENCES IN REPORTING

The Annual Report Consolidated Financial Statements (CFS) report on a different basis than the Fiscal Plan (budget) documents. The CFS includes:

   Revenue, expense, assets and liabilities of Crown-controlled SUCH sector entities (schools, universities, colleges and health entities) and Alberta Innovates corporations. This adds revenue of $3.9 billion, expense of $3.8 billion and net assets of $23 billion.

   Deferred capital contribution treatment for capital transfers. Reduces revenue by $0.1 billion and net assets by $2.4 billion.

   Pension liabilities. Adds $0.3 billion to expense and $10.9 billion to liabilities.

 

The 2012‑13 Fiscal Plan deficit was $2.8 billion while the Consolidated Financial Statements deficit was

$3.1 billion. More details on the differences between the reporting methods is provided on pages 19-21.


FISCAL HIGHLIGHTS

On the Fiscal Plan basis (excludes pension provisions, SUCH sector and Alberta Innovates corporations, deferred capital contributions treatment), the deficit was $2.8 billion, $2 billion higher than the Budget 2012 estimate and $2.8 billion higher than the 2011-12 deficit.

Revenue was $38.6 billion, a decrease of $1 billion from 2011-12 and $1.8 billion from the budget. 

   Change from 2011-12. Increases of $2.4 billion in tax revenue, $0.4 billion in investment income and

$0.3 billion in other revenue were more than offset by a $4 billion decrease in resource revenue.

   Change from Budget. Increases of $0.7 billion in investment income, $0.5 billion in tax revenue, and $0.7 billion in other revenue were more than offset by decreases of $3.6 billion in resource revenue and $116 million in federal transfers.

Expense was $41.4 billion, an increase of $1.9 billion from 2011-12 and $161 million from the budget.


   Change from 2011-12. Increases of $2.2 billion in operating expense and $0.3 billion in amortization and disaster / emergency assistance were partly offset by a $0.6 billion decrease in capital grants.

   Change from Budget. Decreases of $0.3 billion in operating expense and $0.5 billion in capital grants and debt servicing costs were offset by $0.6 billion for in-year disaster assistance and integrating the budgeted $360 million in-year savings into actual operating and capital grant reductions.

 

The Consolidated Financial Statements basis deficit was $3.1 billion, $3 billion higher than in 2011-12.

 

Net Assets. At March 31, 2013, on the Fiscal

Plan basis, net assets were $44.2 billion, including

capital assets of $21.6 billion. On the Consolidated

Financial Statements basis, net assets were $54 billion,

including capital assets of $41.8 billion. More details

on assets and liabilities are provided on pages 18-19.


 


Fiscal Summarya

(millions of dollars)


 

2012-13


 

2011-12


 

FISCAL PLAN BASIS (Fiscal Responsibility Act )


 

Actual

 

 

 

 

RECONCILIATION TO CONSOLIDATED FINANCIAL STATEMENTS BASIS

 

Revenue Adjustment

10  SUCH sector / Alberta Innovates corporations / deferred capital contributions

11  Total Revenue (Consolidated Financial Statements basis - lines 1 + 10)

 

Expense Adjustments

12  Adjustment for capital spending

13  SUCH sector / Alberta Innovates corporations net adjustment

14  Pension provisions

15  Total expense adjustments

16  Total Expense (Consolidated Financial Statements basis - lines 8 + 15)

17  Surplus / (Deficit) - Consolidated Financial Statements basis

 

 

3,793

 

 

3,853

42,386

43,396

 

 

975

2,779

296

 

 

1,068

2,242

634

4,050

3,944

45,485

43,510

(3,099)

(114)

a  2011-12 revenue and operating expense have been increased by $294 million due to accounting policy changes. Transfersmade through the tax system are no longer deducted from revenue, but rather reported as expense, increasing personal income tax and expense by $114 million (Family Employment

Tax Credit), and corporate income tax by $57 million (Scientific Research and Experimental Development Tax Credit). In addition, an allowance for doubtful

accounts for corporate income tax, previously deducted from revenue, is now reported as expense, increasing revenue and expense by $123 million. This

last change also requires restating the 2012-13 Budget corporate income tax revenue and operating expense by $125 million.


CASH ADJUSTMENTS AND ALBERTA SUSTAINABILITY FUND

 

 


CASH ADJUSTMENTS

   Retained income of funds and agencies.

Heritage Fund inflation-proofing of $161 million, and a net $562 million in financial surpluses of entities, like Alberta Treasury Branches and the endowment funds, are included in the 2012-13 year-end results, but kept by the entities.

   Capital cash requirements. Investment in government-owned capital and principal repayments on P3 contracts required $2.2 billion in cash not included in expense in 2012-13.

   Capital cash sources. $1.2 billion, including

$0.9 billion in non-cash amortization /

consumption of government-owned assets and

book value of capital asset disposals, included in

expense, and $0.3 billion in funding for capital

spending from P3 and direct borrowing.

   Energy royalties. Differences between reported revenue and when cash is actually received amount to a net $294 million more reported resource revenue than cash received.

   Other cash adjustments. $267 million in cash was needed for student loans, net of loan repayments, and another $134 million in net negative cash adjustments primarily related to higher reported personal income tax revenue than cash received.


ALBERTA SUSTAINABILITY FUND

The Fiscal Responsibility Act set out Alberta's fiscal framework for managing revenue volatility, including establishing the Sustainability Fund as a risk management mechanism, to offset deficits. The new Fiscal Management Act takes effect for 2013-14, and replaces the Sustainability Fund with the Contingency Account, available to offset operational deficits.

 

The Fund receives cash from year-end results,

or provides cash to fund a reported deficit, after

adjusting for differences between accrued revenue

and cash receipts, non-cash expense and transfers not

reported on the income statement.

 

   The Fund began the year with $7.5 billion in assets and on March 31, 2013 had $3.3 billion. This was

$0.4 billion lower than estimated, due mainly to lower revenue and the higher deficit.

   $1.3 billion from 2011-12 fourth quarter results was transferred after March 31, 2012. Similarly,

a transfer of $256 million from 2012-13 fourth quarter results will take place in 2013-14.

   $5.2 billion was transferred to offset cash requirements, including the $2.8 billion reported deficit, as permitted by the Fiscal Responsibility Act.


 


Cash Adjustments and Sustainability Fund (at March 31, 2013)

(millions of dollars)


 

2012-13


 

 

Change from


Cash Adjustments - (requirements) / sources                                              Budget             Actual           Budget

 

Retained income of funds and agencies

Heritage Fund inflation-proofing

ATB / AFSC / other funds and agencies

Capital cash adjustments

Capital investment / principal repayments

Capital amortization / net book value of disposals

Alternative financing (P3s) / direct borrowing

Other cash adjustments

Energy royalties

Student loans / other cash adjustments

Net Cash Adjustments

Plus: Deficit

Net Cash Requirements

 

(306) (530)

 

(2,246)

884

172

 

(633) (187)

 

(161) (562)

 

(2,182)

941

278

 

(294) (401)

 

145 (32)

 

64

57

106

 

339 (214)

(2,846)

(886)

(2,381)

(2,842)

465

(1,956)

(3,732)

(5,223)

(1,491)


Alberta Sustainability Fund


 

At March 31


 

Assets at Start of Year

Cash transferred from 2011-12 fourth quarter results

Transfer to offset net cash requirements

Cash from 2012-13 fourth quarter results to be transferred in 2013-14

Assets at End of Year

7,462

- (3,732)

-

7,497

1,308 (5,223)

(256)

 

1,308 (1,491)

(256)

3,730

3,326

(404)


ECONOMIC AND TAX HIGHLIGHTS

 

 


ECONOMIC HIGHLIGHTS

(Calendar year basis)

2012 Economic Growth. Alberta's economy expanded in 2012 by an estimated 3.9%, closely in line with the

3.8% forecast in Budget 2012. This followed robust growth of 5.1% in 2011.

 

Employment. Increased 55,500, or 2.7% in 2012, as Budget 2012 forecast, and the average unemployment rate fell to 4.6% from 5.5% in 2011.

 

Population Growth.Annual population growth

in census year 2012 (ended June 30) accelerated to

2.5%, driven mainly by strong international and

interprovincial migration. This was higher than the

1.8% forecast in Budget 2012, and also significantly

above the national rate of 1.1%.

 

Primary Household Income. Primary Household Income (PHI) replaced "Personal Income" in 2012 as a new measure of overall wages and salaries, investment and other forms of household income. Alberta PHI rose by an estimated 7.3% in 2012, following an 8.3% increase in 2011. Average weekly earnings, a different measure, increased 3.6%, or

$37.23, to $1,072.98.

 

Consumer Sector. Strong in-migration and a robust labour market supported a large increase in consumer spending in 2012. Retail sales rose by 6.9%, nearly triple the national average and slightly better than the

6.8% growth in 2011.Consumer bankruptcies,which peaked at 9,986 in 2009, declined for the third year

in a row, by 18% in 2012 to 5,759.

 

Housing. Housing starts jumped to 33,396 units in

2012, a 30% surge from 2011. The new house price

index rose by 1.3%, while the Canadian average

increase in new home prices in 2012 was 2.3%.

 

Inflation. Consumer prices in 2012 climbed by a modest 1.1% in Alberta compared to the national average of 1.5%. The non-residential building construction cost index (average of Edmonton and Calgary) increased by 3.8% in 2012.

 

Energy Sector. A moderation in oil prices, due mainly to the widening of the discount between prices for Alberta oil and international benchmarks, weighed on the oil industry in 2012. Significant growth in North American oil production coupled with insufficient access to pipelines severely impacted prices for Alberta's oil. The average number of rigs drilling in Alberta was 250, a decrease of 12.6% from 2011. Bitumen production expanded by 10%, while conventional oil production grew by 14%. Estimated recoverable reserves of conventional oil were revised upward by 10%. Natural gas production continued to decline, falling by 5.6%.

 

Manufacturing Sector. The value of Alberta manufacturing shipments increased for the third year in a row in 2012, rising by 3.4%.

 

Agriculture Sector. Farm cash receipts jumped

14.1% in 2012, led by gains in crop receipts.

 

 

TAX HIGHLIGHTS

A Competitive Tax System. Alberta's tax system continues to be one of the most competitive in North America. If Alberta had any other provincial tax system, Albertans and Alberta businesses would pay

at least $10.6 billion more in taxes each year. When

all taxes are considered, Alberta small business owners

continue to pay the lowest overall taxes in Canada.

In 2012-13, the government enhanced the Scientific

Research and Experimental Development tax credit

by about $25 million annually through elimination

of the "grind," which deducted the federal investment

tax credit as part of the calculation of Alberta's credit.

Elimination of the grind enhanced competitiveness

and reduced complexity.

 

Fair Tax System. Alberta's personal income tax system is progressive and fair, with the highest basic, spousal and eligible dependant credit amounts in Canada. Also, in contrast with other provinces, Alberta does not levy a general sales tax. Sales taxes are more heavily felt by lower and middle income households since they tend to spend a larger share of their income on consumption.

 

Education Property Tax. The methodology for determining the education property tax requisition was reviewed in 2012-13, resulting in a new policy being introduced in Budget 2013. The education property tax revenue to be collected is now calculated as 32% of total education system operating expense, and mitigation measures will be eliminated, achieving greater equity in the distribution of the education property tax among Alberta municipalities.


OVERVIEW OF PROGRAM AND CAPITAL SPENDING

 

 


EXPENSE

On the Fiscal Plan basis, 2012-13 total expense was

$41.4 billion. Health and education accounted for

62% of total expense.

 

Year-over-year comparison. Expense was

$1.9 billion higher than 2011-12. This included:


 

Budget-to-actual changes.Expense was

$161 million higher than budgeted. This included:

 

   Operating expense. $339 million or 1% decrease, primarily due to savings in various ministries, partially offset by higher physician compensation and external investment management fees.


   Operating expense. $2.2 billion or 6.5% increase,

primarily for Alberta Health Services, physician

compensation, school board grants, AISH benefit

increases and contracted agency wages.

   Capital grants.$603 million or 16.4% decrease, primarily due to lower school, housing, health facility and post-secondary institution grants, partly offsetby higher grants for environmental initiatives and carbon capture and storage.

   Disaster / emergency assistance. $60 million or 11% increase primarily due to agriculture hail indemnity and crop insurance payments related to severe weather, and forest fire-fighting costs.

   Other expense. Increase of $196 million or

15.6% in amortization / inventory consumption

expense, disposals of land to municipalities and

debt servicing costs.


   Capital grants.$452 million or 12.8% decrease, primarily from re-profiling projects to future years.

   Disaster / emergency assistance. $552 million increase for agriculture assistance, forest fire- fighting costs and municipal flood assistance.

    In-year savings. The $360 million is integrated in operating expense and capital grant reductions.

   Other expense. A net increase of $40 million, mainly from disposals of lands to municipalities partly offset by a decrease in debt servicing costs related to lower interest rates.

On the Consolidated FinancialStatements basis, total expense was $45.5 billion, $2 billion higher than in 2011-12.


 

 


Expense

(millions of dollars)


 

 

 

2012-13


 

 

Change from

 

2011-12                                  2011-12


FISCAL PLAN BASIS (Fiscal Responsibility Act )                          Budget           Actual          Actual             Budget          Actual

 

Operating expense

Capital grants

Disaster / emergency assistance

Capital amortization / inventory consumption / asset disposals

In-year savings

Debt servicing costs

Total Expense

36,651

3,526

44

882 (360)

531

36,312

3,074

596

941

-

512

34,096                  (339)           2,216

3,677                  (452)             (603)

536                    552                  60

758                     59                183

-                   360                     -

499                     (19)                13

41,274

41,435

39,566                   161             1,869

RECONCILIATION TO CONSOLIDATED FINANCIAL STATEMENTS BASIS

 

Adjustment for capital spending

SUCH sector net expense adjustment Alberta Innovates corporations Pension provisions

Total Expense (Consolidated Financial Statements basis)

n.a. n.a. n.a. n.a.

975

2,742

37

296

1,068                   n.a.                 (93)

2,180                   n.a.                562

62                   n.a.                 (25)

634                   n.a.              (338)

n.a.

45,485

43,510                   n.a.             1,975

Capital investment (Fiscal Plan)                                                        2,218

Capital investment (SUCH / Alberta Innovates corporations)        n.a.

2,154

2,070

2,194                    (64)               (40)

2,853                   n.a.               (783)

 

Note on CapitalInvestment

In 2012-13, capital investment in government-owned facilities and equipment was $2.2 billion, $40 million lower than 2011-12. Capital

investment is not recorded as an expense; only the amortization of government‑owned capital is reflected in expense. Capital support

to external authorities (including the SUCH sector) is treated as an expense and is not amortized in provincial government Fiscal Plan

documents. Capital investment plus capital grants to external authorities and support for other infrastructure equal the total Capital Plan support provided by the provincial government. The Capital Plan does not include amortization expense.


Expense by Function

(millions of dollars)


 

 

 

2012-13


 

 

 

2011-12


 

 

Change from

 

2011-12


FISCAL PLAN BASIS (Fiscal Responsibility Act )                               Budget        Actual        Actual           Budget            Actual

 

Health Education Social Services

Agriculture, Resource Management and Economic Development

Transportation, Communications and Utilities

Protection of Persons and Property Regional Planning and Development Housing

Recreation and Culture

Environment

General Government

In-year savings

Debt Servicing Costs

Total Expense

16,845

9,436

4,727

2,208

1,895

1,587

1,122

250

370

394

2,269 (360)

531

16,529

9,306

4,641

2,430

1,945

1,805

1,113

188

377

389

2,201

-

512

15,562                (316)                967

9,271                (130)                  35

4,278                  (86)                363

1,988                 222                 442

1,970                   50                  (25)

1,866                 218                  (61)

1,109                    (9)                    4

285                  (62)                 (97)

367                     7                   10

318                    (5)                  71

2,053                  (68)                148

-                 360                      -

499                  (19)                  13

41,274

41,435

39,566                 161              1,869

 

RECONCILIATION TO CONSOLIDATED FINANCIAL STATEMENTS BASIS

 

Adjustment for capital spending

SUCH sector net expense adjustment Alberta Innovates corporations Pension provisions

Total Expense (Consolidated Financial Statements basis)

n.a. n.a. n.a. n.a.

975

2,742

37

296

1,068                 n.a.                  (93)

2,180                 n.a.                 562

62                 n.a.                  (25)

634                 n.a.                (338)

n.a.

45,485

43,510                 n.a.              1,975

 

 

CAPITAL PLAN


 

   The Capital Plan supported $5.2 billion in projects in 2012-13, a decrease of $516 million or 9%

from budget, and $643 million or 11% lower than in 2011-12.

   The decrease from budget was mainly due to re- profilingcash flows requirements of various health, schools and other major projects to future years, offset by progress on major highway projects such as the northeast section of the Anthony Henday ring road.


 

   The decrease from 2011-12 was mainly due to the completion of post-secondary institution projects, the winding down of significant investment in affordable housing over the last several years, and GreenTRIP grants approved for Edmonton in

2011-12, partly offset by higher capital grants for carbon capture and storage and the Climate Change and Emissions Management Fund.


 

 


Capital Plan

(Fiscal Plan basis, millions of dollars)


 

 

 

2012-13


 

 

Change from

2011-12                                  2011-12


Budget          Actual          Actual             Budget          Actual

 

Municipal infrastructure support Provincial highway network Health facilities and equipment Schools

Post-secondary facilities

Community facilities

Water and wastewater management

Housing

Government facilities, equipment and other capital

Total Capital Plan

1,620

1,367

816

364

76

135

272

162

932

1,607

1,532

565

307

76

116

217

77

732

1,719                    (13)             (112)

1,534                   165                  (2)

652                  (251)               (87)

387                     (57)               (80)

255                        -               (179)

140                    (19)               (24)

305                    (55)               (88)

280                    (85)             (203)

599                  (200)              133

5,744

5,228

5,871                  (516)             (643)

a Capital plan has been prepared on the Fiscal Plan basis.


SPENDING HIGHLIGHTS(By functional area)

 

 


HEALTH

Health expense was $16.5 billion,a $967 million

or 6.2% increase from 2011-12,and a $316 million

decreasefrom budget.

 

   Changes from 2011-12 included:

 $580 million increase in the operating grant to

Alberta Health Services (AHS), plus an additional

$145 million increase to AHS for new operations

and increased capacity of the South Health

Campus and the Kaye Edmonton Clinic.

 $165 million increase for physician services, reflecting more physicians and service demand.

 $157 million net increase in other programs.

 $80 million net decrease in capital grants.

 

   Changes from budget included:

 $258 million net decrease in capital grants.

 $117 million decrease from delays in opening the South Health Campus and Kaye Edmonton Clinic.

 $82 million decrease primarily related to delayed progress on Family Care Clinics implementation.

 $22 million decrease from reduced generic drug pricing.

 $89 million net decrease in other programs.

 $252 million increase for physician services, due mainly to more physicians and service demand.

 

MAJOR INITIATIVES

   Opened three pilot Family Care Clinics in Edmonton, Calgary, and Slave Lake in April 2012. The clinics treated thousands of patients during

the year, and provided an alternative to hospital emergency departments for non-urgent situations.

   Began work with the Primary Care Alliance and AHS on continued development of Primary Care Networks (PCNs), aimed at standardizing and expanding the range of services offered by PCNs. As of March 31, 2013, there were 40 PCNs with more than 2,600 family physicians providing primary care to over 2.9 million Albertans.

   Released Creating Tobacco-free Futures: Alberta's

Strategy to Prevent and Reduce Tobacco Use 2012-

2022. The strategy includes measures to protect

Albertans from the harms of second-hand smoke.


 

 

   Developed the new Compensation Plan for Pharmacy Services in July 2012 to enable pharmacists to offer clinical pharmacy services, such as administering drug injections and altering prescriptions based on a patient's health needs.

   Immunized almost 900,000 Albertans over a six week period against influenza.

 

CAPITAL PLAN

   Opened the new South Health Campus in Calgary, the Kaye Edmonton Clinic and the Fort Saskatchewan Community Hospital.

   Finished construction of a new emergency department, main entrance and administration

area at St. Albert's Sturgeon Community Hospital.

   Construction commenced on health facilities in Edson, Grande Prairie, High Prairie, Lethbridge, and Medicine Hat.

 

 

EDUCATION

Education expense was $9.3 billion in 2012-13,

$35 million higher than 2011-12 but $130 million

lower than the Budget 2012 estimate.

 

Changes from 2011-12 included increased school board support to accommodate higher enrolment and teachers' salaries and increased operating grants to post-secondary institutions for enrolment growth, enhancing collaboration and operating costs of new

facilities, offset by a decrease in student loan remission expense arising from changes made to student aid programs and lower capital grants.

 

The decrease from budget was primarily due to lower capital grants for schools and lower student loan remission expense due to student aid program changes made subsequent to presentation of Budget 2012.

 

MAJOR INITIATIVES

 

Kindergarten to Grade 12 Education

   $6.1 billion in operating and property tax support for public and separate school boards, an increase

of $197 million or 3.4% from 2011-12, mainly for teachers' salaries and enrolment growth.

   $315 million for current-year pension expense (post-1992 Teacher's Pension Plan), a $19 million or 6% increase from 2011-12.


   $233 million for the Class Size Initiative, now focused on Kindergarten to Grade 3 classes.

   $296 million in support for transportation of nearly 300,000 students, a $21 million or 7.6% increase from 2011-12.

   A new funding model, Inclusive Education, was introduced in 2012-13, to support meeting both common and diverse learning needs of all students.

$68 million in additional funding was provided.

   In 2012-13, Equity of Opportunity was developed to govern the distribution of the $107 million

re-instated during 2011-12. Funding is provided in three streams: per student, for distance and for low student density.

 

Advanced Education

   Provided nearly $2.3 billion in operating grants to post-secondary institutions.

   Awarded $74 million in scholarships to 38,500

Alberta students. Funded over 58,000 full-time

students by providing $340 million in Alberta

student loans and $29 million in provincial grants.

   Changed student aid programs to improve part- time student accessibility, reduce eligibility criteria and provide incentives for completion.


   Provided $76 million to support maintenance and renewal of post-secondary facilities. The new SAIT Trades and Technology Complex and the Bow Valley College downtown campus were opened in

2012-13.

 

 

SOCIAL SERVICES

Social services expense was $4.6 billion in 2012-13, an increase of $363 million, or 8.5% from 2011-12, but $86 million lower than the Budget 2012 estimate.

 

The increase from 2011-12 was mainly due to the significant increase in Assured Income for the Severely Handicapped (AISH) benefits, higher caseloads

and costs per case in programs for children, seniors and the disabled, and higher wages to contracted agency staff (through Persons with Developmental Disabilities boards and Child and Family Service Authorities).

 

The decrease from budget was due primarily to lower-than-expected demand for training programs, caseloads in AISH and in programs for children,

and accommodation subsidies from delays in implementing long term care rate increases, partially offset by higher low-income rent supplement support.

 

MAJOR INITIATIVES


   Established Productivity Alberta to advise small

and medium-sized industrial companies regarding

efficiency and productivity.

   Recruited 10 of 17 Campus Alberta Innovation Program research chairs, who will strive to attract new leaders in energy and environment, food

and nutrition, neuroscience / prions, and water research.

   Provided $229 million in job training and other employment supports for Albertans.

 

CAPITAL PLAN

   Provided $307 million for school facilities. Three high schools in Edmonton, Sherwood Park and Spruce Grove, and one middle school in Millet opened in September 2012, and a high school in Calgary will open in September 2013. Under the

P3 Alberta Schools Alternative Procurement (Phase II), ten schools opened September 2012. Work commenced on the 35 school projects announced May 2011, with 34 of them expected to open in September 2014.


   Provided $3.9 billion for programs supporting children, youth, low-income and disabled Albertans, and $459 million in seniors programs.

   AISH expense was over $1 billion, $229 million or

28.4% higher than 2011-12, providing financial

assistance to over 45,000 clients. The maximum

monthly income benefit and monthly income

exemptions were increased, making Alberta's

program for clients with severe and permanent

disabilities one of the most comprehensive in

Canada.

   Support to Persons with Disabilities expense

was $702 million, an increase of $60 million or

9.3% from 2011-12, for growth and increasing

complexity of cases, and higher wages for

contracted agency staff.

   Provided $459 million to seniors through the Alberta Seniors Benefit (ASB), Special Needs Assistance, dental, optical and property tax assistance programs, $16 million more than in

2011-12. ASB income exemption and thresholds were adjusted to protect seniors from the impact of increases to federal seniors benefit programs.


   $25 million for supportive home care, to allow Albertans to age within their own communities. Initiatives include more adult day program spaces, greater access to 24-hour on-call registered nurses and the Destination Home program.

   Developed a comprehensive Social Policy Framework, in consultation with Albertans, that will guide decisions and design of programs.

   Provided $66 million in rent supplements for low-income households.

   $110 million allocated to eliminate homelessness.

Approximately 6,600 people have been provided

with housing and other supports since 2009.

   Family Support for Children with Disabilities expense was $138 million, a $5 million or 3.4% increase from 2011-12. The program served 8,827 children and their families.

   The Alberta Family Employment Tax Credit provided $114 million to low and middle-income families with children and employment income.

 

 

AGRICULTURE, RESOURCE MANAGEMENT AND ECONOMIC DEVELOPMENT

Expense was $2.4 billion, an increase of $442 million or 23% from 2011-12, and $222 million higher than the Budget 2012 estimate.

 

The increase from 2011-12 was primarily from higher agriculture indemnity payments (disaster expense) and carbon capture and storage capital grants.

 

The increase from budget mainly reflectedhigher agriculture indemnity payments.

 

MAJOR INITIATIVES

   Provided $217 million in grants to Alberta Innovates corporations to support research, innovation and technology commercialization.

   $44 million was provided under the Bioenergy Producer Credit program to encourage a variety of bioenergy products, such as renewable fuels, liquid biofuels, electricity, heat and biomass pellets and gas products.

   Indemnity payments of $552 million for production insurance (including hail endorsement) and $59 million for hail insurance were made. These included $266 million of in-year disaster assistance related mainly to severe hail storms.


   The Alberta Livestock and Meat Agency allocated

$31 million to help agri-food businesses develop

new markets, products and technologies.

   The Final Mile Rural Community Program provided $5 million in grants to assist municipal, First Nations and Metis communities to gain access to Alberta's broadband network.

   Alberta Multimedia Development Fund expense was $25 million, an increase of $9 million or 56%, providing 189 grants for screen-based productions, film industry events, book and magazine publishing, and sound recording.

   Provided $38 million to combat mountain pine beetle infestations.

   $60 million in Alberta tourism promotion.

   Finalized agreement on the North West Redwater Partnership upgrader. Continued exploring marketing options under the Bitumen Royalty-in- Kind initiative.

   $115 million in carbon capture and storage (CCS) capital grants were provided in 2012-13, bringing total CCS support provided to $135 million.

   Numerous trade and investment missions were undertaken in 2012-13, to Asia, the US and Europe, to promote Alberta as an environmentally- responsible, stable, global energy supplier, and to seek expanded market access.

 

 

TRANSPORTATION, COMMUNICATIONS AND UTILITIES

Expense was $1.9 billion in 2012-13, a decrease of

$25 million, or 1.3% from 2011-12, but an increase

of $50 million from the Budget 2012 estimate. This

included $917 million in municipal capital grants,

amortization expense of $415 million, $408 million

in highway maintenance and preservation expense

and $205 million in other program expense.

 

The decrease from 2011-12 primarily reflected funding approved in 2011-12 under GreenTRIP for Edmonton's light rail transit system.

 

The increase from budget primarily reflected transfers of airport lands and sections of highways to various municipalities.

 

MAJOR INITIATIVES

   Launched the 5-1-1 Official Roads Report program, providing reliable traveler information.


CAPITAL PLAN

   Municipal support of $917 million included

$656 million to address local transportation

infrastructure priorities, $168 million for water

and wastewater infrastructure and $93 million for

GreenTRIP projects, primarily for light rail transit

systems in Edmonton (NAIT line) and Calgary

(completion of west portion).

   Capital investment (not included in expense) on the provincial highway network was $1.5 billion in

2012-13, the same as 2011-12. Projects included:

 Continued work on ring roads and associated interchanges in Edmonton and Calgary. Construction commenced on the final, northeast segment of Edmonton's Anthony Henday Drive, expected to be completed by October 2016, and continued on the southeast segment of Calgary's Stoney Trail, to open in October 2013.

 An accelerated schedule to twin Highway 63 between Grassland and Fort McMurray by fall

2016, and completed twinning of 36 kilometers north of Wandering River.

 Fort McMurray's Confederation Way interchange opened and the Thickwood Boulevard interchange is to be completed in fall 2013.

 Major bridge replacements across the North Saskatchewan River near Drayton Valley and the South Saskatchewan River in Medicine Hat.

 Twinning of Highway 43 by Sturgeon Lake, to be opened in fall 2014, will provide a twinned corridor from west of Grande Prairie to the Alberta-Montana border at Coutts.

 Widened 46 kilometers of Highway 58 near High Level, six-laned 11 kilometers of Highway 2 north of Airdrie and Highway 625 through Nisku Business Park, and reconstructed Highway 13 east of Camrose.

 Over 950 kilometers paved throughout Alberta.

 

 

PROTECTION OF PERSONS AND PROPERTY

Expense was $1.8 billion in 2012-13, a decrease of

$61 million, or 3.3% from 2011-12, but

$218 million higher than the Budget 2012 estimate.

 

The decrease from 2011-12 was mainly due to the municipal disaster assistance for floods and the Slave Lake wildfire provided in 2011-12, partially offset by increases for policing and correctional services staff.


The increase from budget was mainly due to in-year disaster expense for forest fire-fighting costs.

 

MAJOR INITIATIVES

   Spent $352 million, including $247 million of in- year disaster assistance, to fight 1,568 forest fires, which consumed over 377,000 hectares.

   Provided $48 million for disaster recovery and municipal wildfire assistance, including

$15 million for the Slave Lake wildfire.

   Renewed the Provincial Police Service Agreement with the RCMP until 2032, which included adding 42 new frontline RCMP officers.

   Added 40 Sheriffs for courtrooms and perimeter screening to enhance courthouse security.

   Phased-in the new impaired driving legislation, on July 1st and September 1st, with a public education and awareness campaign. Traffic safety initiatives continued, including a new Class 5 licence curriculum, to lower fatalities and injuries.

   The Missing Persons Act will assist police in locating missing persons where it does not appear that a crime is involved, while maintaining privacy rights.

   The BodyArmour Control Act will help prevent body armour use by gangs and organized criminals.

   Provided $66 million to Legal Aid Alberta, including $7 million in one-time funding to address its operating deficit.

 

 

REGIONAL PLANNINGAND DEVELOPMENT

Expense was $1.1 billion, a $4 million increase from

2011-12, but a decrease of $9 million from budget.

 

The increase from 2011-12 was mainly due to higher casino revenue which is allocated to the First Nations Development Fund.

 

The decrease from budget was due to lower expense in a variety of ministries.

 

MAJOR INITIATIVES

   Provided $896 million to municipalities under the Municipal Sustainability Initiative, including

$849 million in capital grants and $47 million in operating grants.

   $119 million in casino revenue was provided to First Nations through the First Nations Development Fund.


   Updated the Policy on Consultation with First

Nations on Land and Natural Resource Management.

   Provided over $17 million to Aboriginal communities and people for consultation capacity and economic development initiatives.

   Signed the Metis Settlements Long-term Governance and Funding Arrangements following two years of negotiations.

 

 

OTHER PROGRAM EXPENSE

Other program expense was $3.2 billion in 2012-13, an increase of $132 million or 4.4% from 2011-12, but $128 million lower than budget.

 

The increase from 2011-12 mainly related to higher expense for environmental initiatives and external investment management fees (offset by investment income), partly offset by lower housing expense, reflecting the easing of substantial investment in prior years and delays in Affordable Supportive Living Initiative projects.

 

The decrease from budget was mainly due to lower- than-expected expense on housing programs and capital grants, partially offset by higher external investment management fees.

 

MAJOR INITIATIVES

 

Housing


 $22 million for 915 projects under the

Community Initiatives Program.

 $16 million in the Community Spirit Program, for 2,125 non-profit and charitable organizations.

 

   Provided $55 million to support Alberta historic sites, museums and heritage preservation and conservation programs.

   $27 million for capital projects cost-shared with the federal government included the National Music Centre in Calgary and facilities in Lethbridge, Medicine Hat and Spruce Grove.

   Alberta Foundation for the Arts provided grants of

$24 million to support artists and arts promotion.

   Public libraries received $31 million.

   $59 million for provincial park operations and management, and an additional $12 million in capital investment (not included in expense) for park infrastructure maintenance and renewal.

   Supported the fifth annual Alberta Culture Days celebration with thousands of Albertans participating in 1,235 events in 81 communities.

   $26 million to promote active and healthy lifestyles, recreation and sport, and implement Active Alberta.

 

Environment


 

   Provided $121 million to housing providers for seniors and community housing.

   Added 857 continuing care spaces in 2012-13.

Since March 2010, over 3,000 spaces have been

added, leaving about 2,300 remaining to achieve

the 5-year target of 5,300 by March 2015. The

Budget 2013 three-year Capital Plan contains

$100 million for the Affordable Supportive Living

Initiative to support that goal.

   $44 million in inventory acquisition (not included in expense) for continued land development in

the Parsons Creek subdivision of Fort McMurray, which is expected to house 24,000 residents.

 

Recreation and Culture

   Community-based initiative support included:

 $44 million for 492 projects under the Community Facility Enhancement Program, to build, purchase, repair and improve community- use facilities.


   $29 million in ecoTrust for Clean Air and Climate

Change initiatives.

   Recorded $94 million in emissions management charges from industry in 2012-13, and flowed through $93 million to the Climate Change and Emissions Management Corporation, which invests in technologies to reduce greenhouse gas emissions and adapt to climate change.

   $16 million for land conservation purchases.

   Implemented the Joint Canada Alberta Oil Sands

Monitoring Plan.

 

General Government

   Initiated the results-based budgeting process, in which all programs and services will be reviewed to determine if they are achieving results effectively.

   Conducted consultations on Alberta's fiscal framework and savings policy, and implemented the rules in Budget 2013 through approval of the Fiscal Management Act.


   Implemented a comprehensive disclosure policy on travel, accommodation, meals and hospitality expense for Ministers, Associate Ministers, political staff and senior government officials.

   Introduced a whistleblower protection law to allow public service employees to report wrongdoings without fear of reprisal.

   Developed the Seniors Property Tax Deferral program, permitting senior homeowners to borrow at low rates from government to pay property tax.


 

Accumulated Debt (at March 31)

(millions of dollars)

2013           2012

 

Accumulated  debt at start of year

Repayment of debt maturities

489 (250)

828 (339)

Accumulated  debt at end of year

Less Debt Retirement Account

239

249

489

503

Accumulated  Debt

less Debt Retirement Account

 

(10)

 

(14)

 

a The assets in the Debt RetirementAccount exceded

PuEnmNatSureIOd aNccuPmRulaOteVddISebItObyN$1S4million.


   Opened the Edmonton Remand Centre, which

is the largest facility of its kind in Canada, with

1,952 beds.

   Continued work on the Edmonton Federal Building and surrounding Centennial Plaza, and the Royal Alberta Museum design. Began construction of the Evan Thomas Water and Wastewater Treatment Facility in Kananaskis.

 

 

DEBT SERVICING COSTS


   Public sector pension plan liabilities increased by

$296 million, to $10.9 billion at March 31, 2013.

The increase was mainly due to reductions in the

discount rates used to calculate the liabilities of

several plans. The discount rates reflect expected

rates of return on pension plan investments.

   Liabilities for pre-1992 obligations account for

83% of the government obligation, with the pre-

1992 Teachers' Pension Plan unfunded liability

accounting for 74%.


   Debt servicing costs primarily represent interest

paid on: unmatured accumulated debt; borrowing

for capital purposes and to repay theTeachers'

Pension Plan debt; the lending operations of

Alberta Capital Finance Authority (ACFA) and

Agriculture Financial Services Corporation.

   2012-13 debt servicing costs were $512 million, an increase of $13 million from 2011-12, but a decrease of $19 million from the budget estimate.

   The increase from 2011-12 is related mainly

to higher ACFA borrowing, to facilitate higher

lending to municipalities, which generates

offsetting interest revenue for the government, and

to increased P3 financing costs for ring road and

school projects. The decrease from budget is due

primarily to lower-than-expected interest rates.

   Sufficient funds were set aside in the Debt Retirement Account (DRA) to repay the outstanding accumulated debt as it matured. At March 31, 2013, only $239 million of accumulated debt remained. The new Fiscal

Management Act repeals the Fiscal Responsibility Act and the DRA as of April 1, 2013. The remaining assets and accumulated debt will be reported in other financial assets and other financial liabilities for the 2013-14 Balance Sheet.


   For the purposes of the Fiscal Responsibility Act, the annual, non-cash change in pension liabilities is excluded from expense and fiscal framework rules.

 

 

Pension Liabilities (at March 31)

Government obligations for pension plan liabilities

(millions of dollars)

2013        2012


 

 

2012-13 Ministry Expense by Function

(Fiscal Plan basis, millions of dollars) 

 

e


REVENUE HIGHLIGHTS

 


TOTAL REVENUE

   Total 2012-13 revenue on the Fiscal Plan basis was $38.6 billion, $1 billion lower than 2011-12 and $1.8 billion lower than budget.

   The decrease from 2011-12 was due mainly to lower bitumen, crude oil and natural gas royalties, and Crown land lease sales, partially offset by higher tax revenue and investment income.

   The decrease from budget was due mainly to lower bitumen, crude oil and natural gas royalties, and Crown land lease sales, partially offset by higher investment income, and increased revenue from taxes, gaming, premiums, fees and licences, land sales and investment management charges.

   On the Consolidated Financial Statements basis, total revenue was $42.4 billion, $1 billion lower than in 2011-12.

 

 

NON-RENEWABLE RESOURCE REVENUE

   Non-renewable resource revenue was $7.6 billion.

This was $4 billion lower than in 2011-12 and

$3.6 billion lower than estimated in Budget 2012.

   Global economic growth prospects were erratic, with generally positive developments dampened by negative news or events. Uncertainty over US

and European fiscal situations, and deceleration of developing nations' growth, dragged commodity prices down. Thespread between the North Sea Brent oil price and the North American WTI price was also wider than expected, increasing costs


of diluents (priced off Brent) used by bitumen producers to transport bitumen. In addition, prices for Alberta oil production suffered severely from a wider discount relative to WTI, caused by a rapid rise in North American production and insufficient pipeline access.

   The WTI oil price averaged US$92.07 per barrel,

$5.26 lower than 2011-12 and $7.18 lower than

the budget estimate. Bitumen prices were also

lower, averaging Cdn$68.48 per barrel, $14.80

lower than the budget estimate.

   As a result of both lower global prices and the additional discount for Alberta oil, bitumen royalties of $3.6 billion were $2.1 billion lower than budget and $1 billion lower than 2011-12. Conventional oil royalties were $219 million lower than estimated in Budget 2012 and $403 million lower than 2011-12, due to lower oil prices.

   Natural gas and by-product royalties were

$268 million lower than estimated in budget and

$350 million lower than in 2011-12. Natural gas

prices remained weak due to strong growth in US

shale gas production and low demand growth. The

Alberta Reference Price was $2.28, $0.72 lower

than budget and $0.70 lower than in 2011-12.

   Crown land lease sales revenue was $1.1 billion, a decrease of $1 billion from budget and $2.2 billion from 2011-12, due to lower prices per hectare and number of hectares sold, and to relatively high revenue in 2011-12. Low industry cash flow and economic uncertainty deterred investment.


 


Revenue a

(millions of dollars)


 

 

2012-13


 

Change from

2011-12                                  2011-12


FISCAL PLAN BASIS (Fiscal Responsibility Act )                          Budget           Actual          Actual             Budget          Actual

 

Personal income tax Corporate income tax Other taxes

Non-renewable resource revenue Transfers from Government of Canada Investment income

Net income from commercial operations

Premiums, fees and licences

Other

Total Revenue

9,314

4,596

4,106

11,198

4,915

1,794

2,279

1,391

795

9,621

4,756

4,121

7,622

4,799

2,493

2,485

1,525

1,171

8,563                   307             1,058

3,678                   160             1,078

3,901                     15                220

11,636               (3,576)          (4,014)

4,777                  (116)                22

2,059                   699                434

2,393                   206                  92

1,397                   134                128

1,139                   376                  32

40,388

38,593

39,543               (1,795)             (950)

 

RECONCILIATION TO CONSOLIDATED FINANCIAL STATEMENTS BASIS

 

SUCH sector/Alberta Innovates/deferred capital contributions

Total Revenue (Consolidated Financial Statements basis)

n.a.

3,793

3,853                   n.a.                 (60)

n.a.

42,386

43,396                   n.a.            (1,010)

a  More detailed information on revenue is provided in the Backgrounder Tables accompanying the News Release and in Schedule 1 (page 52) of the

Consolidated Financial Statements.


Oil and Natural Gas Prices 2012-13


Global Equity Markets 2011-13


 

Oil Prices

US$

110

100

90

80

70

60

50


 

Oil WCS Natural Gas


 

Gas Price

Cdn$

3.5

3

2.5

2

1.5

1

0.5

0


 

16,000

 

 

13,000

 

 

10,000

 

 

7,000


 

 

DOW                            S&P TSX NIKKEI      FTSE 250


 

 

 


   The exchange rate averaged US¢99.9/Cdn$ in

2012-13, 1.3 cents higher than the Budget 2012

estimate. A higher rate decreases royalty revenue.

 

TAX REVENUE

   Total tax revenue was $18.5 billion, an increase of

$482 million from the Budget 2012 estimate and

$2.4 billion higher than in 2011-12.

   Personal income tax revenue was $9.6 billion, an increase of $307 million from the budget estimate and $1.1 billion from 2011-12, due mainly to strong population and income growth, and to higher-than-expected 2011 tax year assessments. The higher 2011 assessments means revenue reported for 2010-11 and 2011-12 was underestimated, elevating the base used to forecast

2012-13 revenue and requiring a positive prior years' adjustment of $163 million.

   Corporate income tax revenue was $4.8 billion, an increase of $160 million from the budget estimate and $1.1 billion from 2011-12. Cash instalment payments from corporations were higher than expected despite the energy sector's weakness, mainly due to a one-time impact of federal

tax changes and solid growth in housing and construction sectors.

   Other tax revenue was $4.1 billion, an increase of

$220 million from 2011-12 and $15 million from

budget. Higher revenue from property, insurance

and fuel taxes was partly offset by lower freehold

mineral rights tax revenue.


TRANSFERS FROM GOVERNMENT OF CANADA

   $4.8 billion, a decrease of $116 million from budget but $22 million higher than 2011-12.

The decrease from budget was mainly due to lower agriculture support and re-profiling of cost-shared capital projects. The increase from 2011-12 was mainly due to expected increases in health and social transfers, offset by the winding down of job training and infrastructure programs.

 

INVESTMENT INCOME

   Investment income was $2.5 billion, $699 million higher than budget and $434 million higher

than 2011-12. Heritage and endowment fund income was boosted by strong returns in global equity markets in the second half of the fiscal year. Withdrawals from the Sustainability Fund, to

fund the deficit, resulted in realized gains as fixed income assets increase in value when interest rates decline relative to rates the assets were issued at.

 

 

OTHER REVENUE

   Other revenue was $5.2 billion, an increase of

$716 million from the budget and $252 million

from 2011-12, primarily from the impact of

population growth on volume-driven fees, gaming,

liquor and ATB activity, and higher land sales and

investment management fees. The increase from

2011-12 was muted by unusually high recoveries

of prior-year expense accruals in 2011-12.


 

Energy Prices and Exchange Rates

Fiscal year averages, 2000-01 to 2012-13

 


00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-10

10-11

11-12

12-13

Oil Price (WTI US$/bbl)

30.20

24.13

29.04

31.38

45.03

59.94

64.89

82.25

85.94

70.71

83.38

97.33

92.07

WCS @ Hardisty (Cdn$/bbl)

-

-

-

-

-

44.35

52.84

59.30

74.36

66.08

66.70

80.72

68.48

Natural Gas Price (Cdn$/GJ)

5.76

3.57

4.72

5.45

6.05

8.29

5.94

5.92

6.97

3.58

3.28

2.98

2.28

Exchange rate (US¢/Cdn$)         66.5      63.9     64.6      74.0     78.4      83.9     87.9      97.1     89.6      91.9     98.4   100.7      99.9

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EXECUTIVE SUMMARY


2013_Executive SummaryTables.xlsx/Performance of Major Stock  (2)


#buildingAlberta


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NET FINANCIAL AND CAPITAL ASSETS

 

 


At March 31, 2013, on the Fiscal Plan basis, Government of Alberta financial and capital assets exceeded liabilities by $44.2 billion.

 

This was $2.8 billion lower than March 31, 2012. A reduction of $2.9 billion in net financial assets, mainly due to Sustainability Fund withdrawals for the deficit and capital spending cash requirements, and an increase of $1.1 billion in net liabilities, mainly due

to borrowing for the Capital Plan, are offsetby a net

$1.2 billion increase in capital assets.

 

 

FINANCIAL ASSETS

$48.4 billion at March 31, 2013.


   Other financial assets. $6.7 billion. This includes the $256 million that will be deposited in the Contingency Account after March 31, 2013. The remaining $6.5 billion represents accounts and interest receivable, natural gas royalty deposits, student loans and cash associated with future liabilities such as corporate income tax refunds.

 

 

LIABILITIES

$25.7 billion at March 31, 2012.

 

   Accumulated debt. $239 million. The new Fiscal Management Act does not contain a reference to "accumulated debt." The liabilities will be included in "other financial liabilities" as of April 1, 2013.


   Heritage Fund.$14.8 billion book value, an

increase of $161 million from March 31, 2012,

resulting from inflation-proofing.

   Sustainability Fund. $3.3 billion, a decrease of

$4.2 billion from March 31, 2012. Additional

cash of $256 million from the improved 2012-13

fourth quarter results, reported in "other financial

assets" at March 31, 2013, will be deposited into

the renamed Contingency Account in 2013-14,

bringing the Account balance to $3.6 billion.

   Endowment and other funds. $3.4 billion, a

$79 million increase from March 31, 2012, mainly

from stronger-than-expected income. Includes the

three endowment funds, Cancer Prevention Legacy

Fund and Alberta Enterprise Corporation.

   Self-supporting lendingorganizations.

$16 billion in financial assets of Alberta Capital Finance Authority and Agriculture Financial Services Corporation. These assets more than offset the liabilities of these organizations.

   Equity in commercial enterprises. $3 billion, primarily equity in Alberta Treasury Branches.


 

   Self-supporting lendingorganizations.

$14.7 billion in liabilities of Alberta Capital Finance Authority and Agriculture Financial Services Corporation are more than offset by their

$16 billion in financial assets.

   Liabilities for capital projects. $4.6 billion, a

$1.2 billion increase from March 31, 2012, due

to the addition of $255 million in P3 project

liabilities and $925 million in direct borrowing,

less $28 million in repayment of principal.

   Accounts and interest payable and other liabilities. $6.1 billion. Includes natural gas royalty and security deposits, unearned revenue and

trade payable and liabilities. There is an offsetting

relationship between some of these liabilities and

"other financial assets."

 

CONSOLIDATED FINANCIAL STATEMENTS BASIS

At March 31, 2013, on the Consolidated Financial Statements basis, net assets were $54 billion. The broader basis includes the addition of:


   Debt Retirement Account. $249 million. The new

Fiscal Management Act eliminated this Account,

and its assets will be included in "other financial

assets" as of April 1, 2013.

   Capital Plan Financing Account.$902 million.

$925 million was borrowed in 2012-13 for the

Capital Plan, and $23 million was invested in

the Highway 63 twinning project. The remaining

funds will be used for 2013-14 capital spending.


 

   $7.9 billion in financial assets, and $20.2 billion in capital assets, of SUCH sector entities and Alberta Innovates corporations;

   $5.1 billion in liabilities of SUCH sector entities and Alberta Innovates corporations;

   $10.9 billion in pension liabilities;

   $2.4 billion in deferred capital contributions (see page 20 for more information on the accounting change for transfers received for capital purposes).


 

Balance Sheet

(millions of dollars)


at March 31

2013                    2012       Change from

Actual                 Actual                    2011


 

Financial Assets Heritage Fund equity Alberta Sustainability Fund

Endowment and other funds

Self-supporting lending organizations: Alberta Capital Finance Authority Agriculture Financial Services Corporation

Equity in commercial enterprises

Debt Retirement Account Capital Plan Financing Account Other financial assets

Total Financial Assets

 

14,813

3,326

3,363

 

12,662

3,317

2,986

249

902

6,735

 

14,652                      161

7,497                  (4,171)

3,284                        79

 

11,316                   1,346

3,154                      163

2,737                      249

503                     (254)

-                      902

8,118                  (1,383)

48,353

51,261                  (2,908)

Liabilities

Accumulated debt

Self-supporting lending organizations: Alberta Capital Finance Authority Agriculture Financial Services Corporation

Liabilities for capital projects

Accounts and interest payable and other liabilities

Liabilities

 

239

 

12,662

2,045

4,594

6,140

 

489                     (250)

 

11,316                   1,346

1,903                      142

3,442                   1,152

7,383                  (1,243)

25,680

24,533                   1,147

Net Financial Assets (total financial assets less liabilities)

Capital Assets

22,673

21,555

26,728                  (4,055)

20,342                   1,213

Net Assets on Fiscal Plan basis (net financial assets plus capital assets)

 

RECONCILIATION TO CONSOLIDATED FINANCIAL STATEMENTS BASIS

44,228

47,070                  (2,842)

 

SUCH sector / Alberta Innovates corporations financial assets SUCH sector / Alberta Innovates corporations capital assets SUCH sector / Alberta Innovates corporations liabilities Pension liabilities

Deferred capital contributionsa

 

7,920

20,225 (5,137) (10,852)

(2,412)

 

7,144                      776

19,780                      445 (4,325)                               (812) (10,556)             (296)

-                  (2,412)

9,744

12,043                   4,445

Net Assets on Consolidated Financial Statements basisb

53,972

59,113                  (5,141)

a  Accounting policy for recognizing transfers received for capital purposes changed effectiveApril 1, 2012, requiring an opening balance reclassification from net assets to deferred capital contributions (DCC) of $2 billion. In 2012-13, $0.6 billion in cash was received, spent, but reported as an increase to DCC, rather than in revenue, and $0.2 billion in previously-received transfers was removed from DCC and reported as revenue. As a result, DCC increased by a net $2.4 billion. More details are in the following "Fiscal Plan to Consolidated Financial Statements" section, Note 1, page 34 and Schedule 12, page 66.

b  The change in Net Assets from 2011-12 of $5.1 billion differs from the $3.1 billion CFS defcit by the $2 billion opening net assets adjustment.

 

 

FISCAL PLANTO CONSOLIDATED FINANCIAL STATEMENTS REPORTING RECONCILIATION


The audited Consolidated Financial Statements

in the Annual Report follow Canadian public sector

accounting standards. While not required to, the

Fiscal Plan documents, including the budget,

generally follow the standards. There are several

reporting differences.The Fiscal Plan basis:

 

   excludes change in valuation of pension liabilities;

   does not consolidate SUCH sector entities or

Alberta Innovates corporations;

   does not defer recognition of revenue transferred for capital purposes, but reports it as it is spent.


Since the early 1990s, the change in pension liabilities has been excluded from expense for the Fiscal Plan basis. It is typically a significant non- cash expense, is based on actuarial evaluations, assumptions and investment returns, and is largely not subject to policy decision-making.

 

Only the grants provided to Crown-controlled

SUCH sector entities (school boards, universities and

colleges, and health entities) are included in expense

for the Fiscal Plan basis. This is currently considered

most appropriate for budgeting as it is more relevant

to decision-makers, who determine the amount of


grants and are evaluated for balancing the budget on this basis. The SUCH sector entities have varying degrees of autonomy to manage their budgets, once they receive the grants, to manage their assets and liabilities, and to raise some revenue themselves.

 

For the Consolidated Financial Statements basis, the SUCH sector has been included in government reporting since 2005-06. The broader reporting scope is relevant for the Consolidated Financial Statements since these entities are determined to be "controlled," and how they spend the grants provided, their results of operations and their overall net value are important for transparency and accountability purposes.

 

Beginning in 2009-10, the SUCH sector has been reported in the Consolidated Financial Statements on a "line-by-line" basis. This means:


INCOME STATEMENT

 

Revenue

   On the Fiscal Plan basis, total 2012-13 revenue was $38.6 billion. The SUCH sector and Alberta Innovates corporations had additional "own- source" revenue of $3.9 billion, including:

 $1 billion in post-secondary tuition fees;

 $0.8 billion in donations, gifts and fundraising;

 $0.6 billion in sales, rentals and fees, consisting of revenue from parking operations, book stores, food services, facility rentals, equipment sales, professional services and various other sources;

 $0.6 billion in fees, mainly in the health sector, such as from WCB, non-Alberta patients or Emergency Medical Services, and school boards;


   First, capital grants provided to the SUCH sector, included in expense on the Fiscal Plan basis,

are removed from expense, and become capital investment in "government-owned assets." The costs of acquisition are expensed over time as the assets depreciate (amortization expense).

   Second, the SUCH sector amortization of capital assets expense is added to expense.

   Third, government revenue is adjusted to "deferred capital contributions" accounting treatment.

   Finally, revenue, non-amortization expense, assets and liabilities, including deferred capital contributions, are directly added to government revenue, expense, assets and liabilities.

Also starting in 2009-10, the four Alberta Innovates corporations were excluded from the government reporting entity for Fiscal Plan purposes, to improve flexibility for multi-year research-grant recipients. The financial results are included on the line-by-line basis in the Consolidated Financial Statements.

 

Effective April 1, 2012, the government changed its accounting policy for recording transfers received for capital purposes and donated capital assets. Rather than being recorded as revenue when the cash is used for capital asset acquisition or the asset donated, a "deferred capital contribution" is recorded, similar

to a liability, when cash or asset is received, and revenue is recognized over the related asset's useful

life. The Fiscal Plan basis will continue to record these as revenue when cash is spent or the asset is donated.

 

An explanation of the differences between the Fiscal

Plan and Consolidated Financial Statements follows.


 $0.4 billion in direct federal government transfers for advanced education and First Nation education programs;

 $0.2 billion of opted-out school board property tax revenue;

 $0.2 billion of investment income;

 $0.1 billion of Alberta Innovates revenue.

 

   Adding this revenue, and adjusting Fiscal Plan revenue for "deferred capital contributions" (a net decrease of $0.1 billion), the Consolidated

Financial Statements total revenue is $42.4 billion.

 

Expense

   On the Fiscal Plan basis, total 2012-13 expense was $41.4 billion.

   This includes capital grants provided to the SUCH sector, which ultimately become capital investment. As noted, this expense must be removed and instead amortization expense of SUCH capital assets added. Total 2012-13 SUCH amortization and inventory consumption expense exceeded capital grants by nearly $1 billion.

   In 2012-13 the SUCH sector and Alberta Innovates corporations had additional net expense of $2.8 billion. This reflects the spending of their own-source revenue, for example, on education services, the costs of goods sold or services provided for fees.

   Pension provisions of $0.3 billion are added.

   Adding these increases, Consolidated Financial

Statements total expense is $45.5 billion.


Surplus / (Deficit)


Liabilities


   On the Fiscal Plan basis, the 2012-13 deficit

was $2.8 billion. After adding the additional net

revenue and expense, the Consolidated Financial

Statements basis deficit was $3.1 billion.

 

 

BALANCE SHEET

 

Assets


   On the Fiscal Plan basis, at March 31, 2013, the

Government of Alberta had total liabilities of

$25.7 billion.

    SUCH sector and Alberta Innovates corporations had additional liabilities of $5.1 billion, mainly accounts payable.

   Pension liabilities amounted to $10.9 billion at

March 31, 2013.


   On the Fiscal Plan basis, at March 31, 2013, the

Government of Alberta had total financial assets of

$48.4 billion and capital assets of $21.6 billion.

   SUCH sector and Alberta Innovates corporations had additional financial assets of $7.9 billion, and additional capital assets of $20.2 billion, consisting mainly of buildings.

   Adding these financial and capital assets, on the Consolidated Financial Statements basis, at March 31, 2013, the Government of Alberta had total financial assets of $56.3 billion and capital assets of $41.8 billion.


 

   An adjustment of $2 billion for the defered capital contribution accounting policy change, and a net increase of $0.4 billion in 2012-13, decrease net assets by $2.4 billion.

   After adjusting for the different accounting policy for capital transfers, and adding these liabilities,

on the Consolidated Financial Statements basis, at March 31, 2013, the Government of Alberta had total liabilities and deferred capital contributions

of $44.1 billion.


 

 

Reconciliation Summary

INCOME STATEMENT

(billions of dollars)                                                                                                                            2012-13                      2011-12

 

Revenue - Fiscal Plan basis (Fiscal Responsibility Act )

Adjustment for deferred capital contributions

Add:  SUCH/Alberta Innovates own-source revenue

Revenue - Consolidated Financial Statements basis

 

 

 

 

 

 

 

 

 


BALANCE SHEET


at March 31


(billions of dollars)                                                                                                                              2013                           2012

 

Financial Assets - Fiscal Plan basis (Fiscal Responsibility Act )

Add:  SUCH/Alberta Innovates corporations financial assets

Financial Assets - Consolidated Financial Statements basis


Historical Fiscal Summary, 1994-95 to 2012-13a

(Fiscal Plan basis,b millions of dollars)

 


 

Income Statement

      Revenue


1994-95   1995-96   1996-97   1997-98   1998-99   1999-00    2000-01   2001-02    2002-03   2003-04   2004-05   2005-06    2006-07   2007-08   2008-09   2009-10    2010-1 2011-12   2012-13


1  Personal income tax c                                                                    3,063        3,177         3,445         3,877        4,601        5,100         3,943        4,183         4,834        4,613         4,649        4,677         7,622         8,271         8,708                                                                             7,877        7,631         8,563         9,621

2  Corporate income tax                               1,073        1,332         1,407         1,849        1,659        1,255         2,023        2,229         2,019        1,696         2,364        2,917         3,606         4,695         4,252                                                                             4,754        3,334         3,678         4,756

3  Education property tax                             1,196        1,205         1,169         1,212        1,118         1,128         1,151        1,094         1,113        1,178         1,247        1,283         1,330         1,393         1,466                                                                             1,532        1,589         1,660         1,776

4  Other tax revenue                                     1,126        1,112         1,157         1,218        1,178        1,241         1,386        1,469         1,633        1,838         1,918        1,990         2,138         2,180         2,175                                                                             2,029        2,040         2,241         2,345

5  Resource revenue                                    3,378        2,786         4,034         3,778        2,368        4,650       10,586       6,227         7,130        7,676         9,744     14,347       12,260      11,024       11,915                                                                             6,768        8,428     11,636          7,622

6  Investment income                                     1,567        1,724         1,616         1,747        1,610        1,906         1,353           788          (462)        1,838         1,812        2,348         3,013         2,414     (1,917)                                                                             3,413        2,360         2,059         2,493

7  Other own-source revenue                     2,832        2,431         2,473         2,890        2,950        3,183         3,272        3,672         4,321        4,122         4,375        4,588         4,971         5,144         5,027                                                                             4,344        4,627         4,929         5,181

8  Total own-source revenue                    14,235     13,767      15,301      16,571      15,484     18,463       23,714     19,662      20,588     22,961      26,109     32,150      34,940      35,121      31,626     30,717                                                             30,009     34,766      33,794

9  Federal transfers                                       1,929        1,748         1,351         1,183        1,335        1,640         1,813        2,264         2,074        2,926         3,219        3,392         3,077         3,048         4,185                                                                             4,941        5,025         4,777         4,799

10   Total Revenue                         16,164      15,515          16,652         17,754         16,819      20,103           25,527      21,926           22,662      25,887          29,328      35,542           38,017         38,169         35,811      35,658                                                                  35,034      39,543          38,593

 

      Expense by Function d

11  Health                                                           3,928        3,773         4,006         4,401        4,660        5,341         5,946        6,846         6,917        7,646         9,059        9,709       10,880      12,286      13,107     13,180                                                                 15,034     15,562      16,529

12  Basic / advanced education                   3,756        3,713         3,738         4,081        4,241        4,735         5,040        6,099         5,461        5,854         6,370        6,900         7,817         8,886         9,411                                                                               9,538        9,276         9,271         9,306

13  Social services                                           1,495        1,456         1,511         1,564        1,560        1,668         1,790        1,942         2,108        2,272         2,438        2,707         2,879         3,117         3,418                                                                               3,807        4,130         4,278         4,641

14  Other program expense                          4,301        3,739         3,446         3,727        3,885        4,612         5,200        5,184         5,567        5,708         5,984        7,427         7,716         9,085       10,519                                                                               9,802        9,532         9,956         10,447

15  Total programexpense                         13,480     12,681      12,701      13,773      14,346     16,356       17,976     20,071      20,053     21,480      23,851     26,743      29,292      33,374      36,455     36,327                                                               37,972     38,944      40,923

16  Debt servicing costs e                                                                     1,746        1,683         1,462         1,322        1,379           956             980            774             476           271            302           248             215            214            208                                                                               363           472            499            512

17  Total Expense                         15,226     14,364      14,163      15,095      15,725     17,312       18,956     20,845      20,529     21,751      24,153     26,991      29,507      33,588      36,663     36,690                                                               38,444     39,566      41,435

18  Surplus / (Deficit)                       938        1,151         2,489         2,659        1,094        2,791         6,571        1,081         2,133        4,136         5,175        8,551         8,510         4,581         (852)    (1,032)                                                                    (3,410) (23)     (2,842)

 

19  Capital Plan f                                                                                                 891           939            821         1,310        1,256        1,878         2,091        2,860             997        1,659         2,842        3,743         4,769         6,971         7,593                                                                                  6,528        5,889         5,871     5,228

Balance Sheet (at March 31)

20  NetFinancial Assets (Debt)                     (7,355)    (6,255)     (3,728)     (1,089)          (63)        2,654         9,042        9,814       11,696     15,607      20,395     28,318      36,047      39,410      36,954     33,017                                                               28,114     26,728                                                  22,690

21  Capital Assets                                              7,669        7,411         7,292         7,215        7,218        7,259         8,002     10,141       10,309     10,534      10,921     11,552       12,429      14,140      15,848     17,532                                                                 18,975     20,342      21,555

22  Net Assets / (Debt)                      314        1,156         3,564         6,126        7,155        9,913       17,044     19,955      22,005     26,141      31,316     39,870      48,476      53,550      52,802     50,549                                                                     47,089     47,070  44,228

23  Accumulated Debt g                                                                           21,451     20,531      17,733      14,976      14,106     12,020         8,195        5,261         4,736        3,730               -               -                -                -                -                                                                             -                                  -                -               -

24  Sustainability Fund assetsh                                                                                                                                                                                                                                                                                                                                                                                   -         2,500         3,498        4,083         7,653         7,653         9,848     14,983                                                                                                                                                                                                                                 11,192                   7,497        3,326

25  Capital Account assets h                                                                                                                                                                                                                                                                                                                                                                                   910        1,180            674        4,243         6,091         7,472         6,974                                                                                                                                                                                                                                            -           -                   -           -

26  Pension liabilities                                      5,352        5,352         4,981         4,890        4,813        4,728         4,742        4,771         4,927        5,059         5,235        5,435         5,593         7,883       10,081                                                                               9,279        9,716     10,333         10,598

 


a  Numbers have been restatedon 2012-13 basis where possible.Beginning in 2012-13,transfers made throughthe tax system (AlbertaFamily Employment  and Scientific Researchand Experimental  Development  tax credits) are no longer netted against revenue. In addition, the allowance for doubtful accountsfor corporate income tax revenuethat was previously netted off revenue is being reportedin expense. These increase both revenue and expense by the same amount. 2011-12 numbershave been restatedby $294 million.

b  The Fiscal Plan basis excludesrevenue, expense, assetsand liabilities of Crown-controlled SUCH sector entitiesand

Alberta Innovates corporations, pension liabilities and the expenserelated to the annual changein pension liabilities.

c  The costs of the Albertaenergy tax refund ($345 million in 2000-01;$320 million in 2001-02) and the 2005 Resource

Rebate ($1.3 billion in 2005-06) were netted against personal income tax.

d  Excludes changein pension liabilities. Beginning in 1996-97,valuation adjustments are allocatedby function rather than included in other program expense.


e  Beginning in 2011-12,Alberta Capital FinanceAuthority debt chargesare included in debt servicing costs rather than programexpense. Numbers for 2009-10 and 2010-11 have been restated.

 Reflects capitalgrants and other support includedin expense, and capital investment in government-owned assets not includedin expense. Capitalinvestment adds to capital assets,which are depreciated over time through amortization expense.

g  Net of cash set asidefor debt repayment. In 2001-02, the amount of $5,261 millionincludes commitment of

$414 million to debt retirement from higher-than-expected year-end surplus, which was transferred in 2002-03 from other assets. The new Fiscal Management Act replaced the Fiscal Responsibility Act on April 1, 2013, and removed the reference and definition of "accumulated debt" and the Debt Retirement Account (DRA). On March

31, 2013, $239 millionof accumulated debt remained, offset by $249 millionin the DRA.

h  The Capital Accountwas consolidated  with the Sustainability  Fund in 2009-10.


 

CONSOLIDATED FINANCIAL STATEMENTS

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BLANK PAGE


 

TABLE OF CONTENTS

 

 

CONSOLIDATED FINANCIAL STATEMENTS

Introduction   .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .    .  26

Management's Responsibility for the Consolidated Financial Statements  .     .        27

     Independent Auditor's Report .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .        28

Consolidated Statement of Operations   .     .     .     .     .     .     .     .     .     .     .    .     .     .     .     .     .     29

Consolidated Statement of Financial Position   .     .     .     .     .     .     .     .     .     .     .     .     .       30

Consolidated Statement of Change in Net Financial Assets  .    .     .     .     .     .     .     .            31

Consolidated Statement of Cash Flows   .     .     .     .     .     .     .     .     .     .     .    .     .     .     .     .     .     32

Notes to the Consolidated Financial Statements   .     .     .     .     .     .     .     .     .     .     .     .       33

Schedules to the Consolidated Financial Statements   .     .     .     .     .     .     .     .     .     .       52

1   Revenues  .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .   52

2   Expenses by Ministry  .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .    .     .     .     53

3   Expenses by Object  .     .     .    .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     54

4   Cash and Cash Equivalents  .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     54

5   Portfolio Investments .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     55

6   Equity in Government Business Enterprises .     .     .     .     .     .    .     .     .               56

7   Loans and Advances .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .    .     .        57

8   Unmatured Debt  .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .        57

9   Debt of Alberta Capital Finance Authority .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .           58

10   Pension Plans and Other Defined BenefitPlans  .     .     .     .     .     .     .     .              59

11   Tangible Capital Assets .    .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     65

12   Deferred Capital Contributions  .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     66

13   Guarantees .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     66

14   Listing of Organizations .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     67

Glossary .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .    .                   73


Consolidated Financial Statements of the Province of Alberta

Year Ended March 31, 2013

 

 

 

 

INTRODUCTION

 

The financial statements of the Government of Alberta are a consolidation of ministry financial statements, which themselves are a consolidation of the financial statements of departments, regulated funds, provincial agencies, Crown-controlled corporations and SUCH sector organizations, for which separate or summary financial statements are presented in ministry annual reports .  SUCH is an acronym for schools, universities, colleges and hospitals .  However, the term "Crown-controlled SUCH sector organizations" is used to describe a much broader

list of organizations, including school boards, technical institutes, Alberta Health Services, and other health entities .  A listing of these organizations is provided in Schedule 14 of the financial statements .

 

The method of consolidation is described in the Accounting Policies note (Note 1) that forms part of the financial statements .


Management Responsibility

for the Consolidated Financial Statements

 

 

 

The consolidated financial statements are prepared by the Controller under the general direction of the Deputy Minister of Treasury Board and Finance as authorized by the President of Treasury Board and Minister of Finance pursuant to the Financial Administration Act. The consolidated financial statements are prepared in accordance with Canadian public sector accounting standards, and of necessity include some amounts that are based on estimates and judgements .  As required by the Government Accountability Act, the consolidated financial statements are included in the consolidated annual report of the Government of Alberta that forms part of the Public Accounts .

 

To fulfill its accounting and reporting responsibilities, management maintains systems of financial management and internal control which give consideration to costs, benefits and risks, and which are designed to:

 

  provide reasonable assurance that transactions are properly authorized, executed in accordance with prescribed legislation and regulations, and properly recorded so as to maintain accountability for public money, and

  safeguard the assets and properties of the Province of Alberta under government administration .

 

Under the Financial Administration Act, deputy heads are responsible for the collection of revenue payable to the Crown, and for making and controlling disbursements with respect to their departments .  They

are also responsible for prescribing the accounting systems to be used in their departments .  In order to meet government accounting and reporting requirements, the Controller obtains information relating to departments, regulated funds, provincial agencies, Crown-controlled corporations, schools, universities, colleges, technical institutes, Alberta Health Services and other health entities from ministries as necessary .

 

The consolidated financial statements are reviewed by the Provincial Audit Committee established under the Auditor General Act. The Provincial Audit Committee advises the Lieutenant Governor in Council

on the scope and results of the Auditor General's audit of the consolidated financial statements of the

Province .

 

The Auditor General of Alberta provides an independent opinion on the consolidated financial statements prepared by the government .  The duties of the Auditor General in that respect are contained in the

Auditor General Act .

 

Annually, the consolidated annual report is tabled in the Legislature as a part of the Public Accounts and is referred to the Standing Committee on Public Accounts of the Legislative Assembly .

 

Approved by:

 

Annette Trimbee

Deputy Minister of Treasury Board and Finance

 

Darwin Bozek, CGA Controller

 

 

 

Edmonton, Alberta

 

June 19, 2013


 

 

 

 

 

Independent Auditor's Report

 

 

 

To the Members of the Legislative Assembly

 

Report on the Consolidated Financial Statements

 

I have audited the accompanying consolidated financial statements of the Province of Alberta which comprise the consolidated statement of financial position as at March 31, 2013, and the consolidated statements of operations, change in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information .

 

 

Management's Responsibility for the Consolidated Financial Statements

 

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error .

 

 

Auditor's Responsibility

 

My responsibility is to express an opinion on these consolidated financial statements based on my audit .  I conducted my audit in accordance with Canadian generally accepted auditing standards .  Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement .

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements .  The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or errorIn making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control .  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements .

 

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion .

 

 

Opinion

 

In my opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of the Province of Alberta as at March 31, 2013, and the results of its operations, changes in its net financial assets

and its cash flows for the year then ended in accordance with Canadian public sector accounting standards .

 

 

[Original signed by Merwan N .  Saher, FCA]

 

Auditor General

June 19, 2013

Edmonton, Alberta


CONSOLIDATED STATEMENTOF OPERATIONS

 

 

 

 

Year Ended March 31

 

 

 

 

Revenues (Schedule 1) Income taxes

Other taxes

Non-renewable resource revenue

Transfers from Government of Canada

Net income from government business enterprises (Schedule 6) Net investment income

Premiums, fees and licences

Other

 

 

Expenses by function (Schedules 2 and 3) Health

Education

Social services

Transportation, communications and utilities

Agriculture, resource management and economic development

Protection of persons and property Regional planning and development Recreation and culture

Housing

Environment

General government

Debt servicing costs

Pension provisions (Schedule 10)

 

 

Annual deficit

Net assets at beginning of year

Adjustments to net assets (Note 12)

Net assets at end of year

2013

2012

In m

 

 

$            14,376

4,333

7,622

5,042

2,487

2,595

2,147

3,784

illions

 

 

$            12,071

4,099

11,636

5,192

2,393

2,168

1,942

3,724

42,386

43,225

 

17,254

12,394

4,641

1,945

 

 

2,352

1,805

1,113

377

188

389

2,201

530

296

 

16,284

11,951

4,164

1,970

 

 

1,830

1,866

1,109

366

285

318

2,053

509

634

45,485

43,339

(3,099)

59,113 (2,042)

(114)

59,260 (33)

$            53,972

$            59,113

 

The accompanying notes and schedules are part of these consolidated financial statements.


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

As at March 31

 

 

 

 

Financial assets

Cash and cash equivalents (Schedule 4) Accounts and accrued interest receivable Portfolio investments (Note 11 and Schedule 5)

Equity in government business enterprises (Schedule 6) Loans and advances (Schedule 7)

Inventories for resale

 

 

Liabilities

Accounts and accrued interest payable

Unmatured debt (Note 6 and Schedule 8)

Debt of Alberta Capital Finance Authority (Schedule 9) Pension liabilities (Schedule 10)

Liabilities under public private partnerships (Note 7)

 

 

Net financial assets

 

 

Non-financial assets

Tangible capital assets (Schedule 11) Inventories of supplies

Prepaid expenses

 

 

Net assets before deferred capital contributions

 

 

Deferred capital contributions (Schedule 12)

Net assets

2013

2012

In m

 

 

$             6,398

4,501

27,994

2,987

14,190

203

illions

 

 

$             6,187

4,970

31,910

2,739

12,462

137

56,273

58,405

 

10,740

5,582

12,325

10,852

 

2,170

 

11,121

4,748

11,045

10,556

 

1,944

41,669

39,414

14,604

18,991

 

 

 

41,469

142

169

 

 

 

39,830

144

148

41,780

40,122

56,384

59,113

 

 

(2,412)

 

 

-

$            53,972

$            59,113

 

Contractual obligations and contingent liabilities (Notes 8 and 9) Endowment funds (Note 11)

The accompanying notes and schedules are part of these consolidated financial statements.


CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS

 

 

Year Ended March 31

 

 

 

 

Annual deficit

 

 

Acquisition of tangible capital assets and inventories of supplies

Additions to public private partnerships, capital leases and donated capital

Amortization of tangible capital assets and consumption of inventories of supplies

Net gain on disposal and write-down of tangible capital assets

Proceeds on sale of tangible capital assets Net increase in deferred capital contributions Increase in prepaid expenses

Change in accumulated unrealized losses (Schedule 6) Net increase in endowments (Note 12)

Consolidation adjustments relating to SUCH sector

Other

Decrease in net financial assets

 

Net financial assets at beginning of year

 

Net financial assets at end of year

2013

2012

In m

 

$             (3,099)

 

 

(4,222) (295)

 

2,721

73

87

409 (21) (50)

65 (44)

 

(11)

illions

 

$                (114)

 

 

(4,749) (298)

 

2,497 (15)

39

- (19) (3)

59 (53)

 

(6)

(4,387)

18,991

(2,662)

21,653

$            14,604

$            18,991

 

The accompanying notes and schedules are part of these consolidated financial statements.


CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

Year Ended March 31

 

 

 

 

Operating transactions

Annual deficit

 

 

Non-cash items

Amortization of tangible capital assets and consumption of inventories of supplies

Other

 

 

Decrease in receivables Decrease in payables Other

Cash (used in) provided by operating transactions

 

 

Capital transactions

Acquisition of tangible capital assets and inventories of supplies

Proceeds on sale of tangible capital assets

 

Cash applied to capital transactions

 

 

Investing transactions

Purchase of portfolio investments Disposals of portfolio investments Loans and advances made Repayment of loans and advances

Cash provided by investing transactions

 

 

Financing transactions

Debt retirement

Debt issues

Repayment of liabilities under capital leases and public private partnerships

Other

 

Cash provided by financing transactions

 

Increase in cash and cash equivalents

 

Cash and cash equivalents at beginning of year

 

Cash and cash equivalents at end of year

2013

2012

In m

 

 

$             (3,099)

 

 

 

 

 

2,721

86

illions

 

 

$                (114)

 

 

 

 

 

2,497

225

(292)

448 (381) (24)

2,608

182 (746) (41)

(249)

2,003

 

 

 

(4,222)

87

 

 

 

(4,749)

39

(4,135)

(4,710)

 

 

 

(9,210)

14,252 (2,789)

293

 

 

 

(11,402)

14,734 (2,716)

858

2,546

1,474

 

 

 

(14,829)

16,916

 

 

(66)

28

 

 

 

(11,637)

13,022

 

 

(28)

13

2,049

1,370

211

 

6,187

137

 

6,050

$              6,398

$              6,187

 

The accompanying notes and schedules are part of these consolidated financial statements.


Notes to the Consolidated Financial Statements

March 31, 2013

 







SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES




 

These consolidated financial statements are prepared in accordance with Canadian public sector accounting standards .

 

 

(a)  REPORTINGENTITY

 

These consolidated financial statements include the accounts of all organizations that are controlled by the Province, including government sector entities and Crown-controlled SUCH sector organizations .  SUCH is an acronym for schools, universities, colleges and hospitals .  However,

the term "Crown-controlled SUCH sector organizations" is used to describe a much broader list of organizations including school boards, technical institutes, Alberta Health Services, and other health entities .

 

A listing of these organizations is provided in Schedule 14 .

 

 

(b)  METHOD OFCONSOLIDATION

 

The accounts of government sector entities and Crown-controlled SUCH sector entities, except those designated as government business enterprises, are consolidated using the line-by-line method .  Under this method, accounting policies of the consolidated entities are adjusted to conform to government accounting policies and the results of each line item in their financial statements (revenue, expense, assets, and liabilities) are included with the government's results . Revenue, expense, capital, investing and financing transactions, as well as related asset and liability balances between consolidated entities have been eliminated .  Asset retirement obligations of the SUCH sector organizations have been included in the Province's financial statements .

 

Public sector accounting standards allow that when the scope of activities reported in the budget is different from the scope of activities reported in the financial statements, the budget to actual comparison may be done on the same reporting scope as presented in the budget . When there is

a difference in the basis of reporting for financial statement purposes and basis for the budget, the budget is revised to conform to the accounting policy used for actual results .  These consolidated financial statements are presented on a different scope and basis than the budget .  Therefore, there is no "Budget" column on the Consolidated Statement of Operations, the Consolidated Statement of Change in Net Financial Assets, or in other Notes or Schedules throughout the statements .  Rather,

a comparison between planned results and actual results adjusted for differences in scope and basis is shown in Note 5 .

 

Schools, colleges, technical institutes and some provincial agencies have year ends that are other than March 31 .  The significant transactions of these organizations that have occurred during the period between their year ends and the Province's year end of March 31, 2013, have been recorded in these financial statements .


NOTE 1        continued

 

The accounts of provincial agencies designated as government business enterprises, such as ATB Financial (see Schedule 6), are accounted for on the modified equity basis, with the equity being computed in accordance with the accounting standards applicable to these entities .  Under the modified equity method, the accounting policies of government business enterprises are not adjusted to conform to those of the government sector entities .  Inter-sector revenue and expense transactions and related asset and liability balances are not eliminated .

 

 

(c)  CHANGES IN ACCOUNTING POLICY

 

In 2012-13 the Province adopted the following two new accounting standards of the Public Sector

Accounting Board:

 

PS 3510 Tax Revenue

Effective April 1, 2012, transfers made through a tax system are recognized as expense rather than a reduction of revenues .  Adopted on a prospective basis, the Province reports the Alberta Family Employment Tax Credit and the Scientific Research and Experimental Development Tax Credit on

a gross basis .    The impact of this change in accounting policy increases total revenue and expense by

$179 million with no impact on net operating results .

 

PS 3410 Government Transfers

Effective April 1, 2012, the Province changed its policy for recording transfers from the Government of Canada for capital purposes and donated assets .  Previously, these transfers and donations were recorded as revenue when the tangible capital assets were acquired or constructed . As a result of this policy change, these transfers and donations are recognized as deferred capital contributions and recorded in revenue over the useful life of the tangible capital assets based on relevant stipulations of the transfer taken together with the actions and communications of the Province .  This policy has been applied retroactively without restatement of comparatives .  An adjustment of $2,003 million has been made to the opening balance of net assets of the current period to reflect the cumulative effectof the change on prior periods .

 

 

(d)  FUTURE CHANGES IN ACCOUNTING POLICY

 

PS 3450 Financial Instruments

Items within the scope of the section are assigned to one of two measurement categories: fair value, or cost or amortized cost .  Fair value measurement will apply to derivatives and portfolio investments in equity instruments that are quoted in an active market .  Also, when groups of financial assets and financial liabilities are managed on a fair value basis they may be reported on that basis .  Other financial assets and financial liabilities will generally be measured at cost

or amortized cost .  Until an item is derecognized, gains and losses arising due to fair value remeasurement will be reported in the Statement of Remeasurement Gains and Losses .

 

The Province, including ministries and departments, has not yet adopted this standard and has the option of adopting it in fiscal year 2015-16 or earlierAdoption of this standard requires corresponding adoption of: PS 2601 Foreign Currency Translation, PS 1201 Financial Statement Presentation, and PS 3041 Portfolio Investments in the same fiscal period .  The Province is currently analyzing the impact of these standards on its financial statements .






N

OTE 1



continued




 

PS 3260 Liability for Contaminated Sites

The Public Sector Accounting Board issued this accounting standard effective for fiscal years starting on or after April 1, 2014 .  Contaminated sites are a result of contamination being introduced into air, soil, water, or sediment of a chemical, organic, or radioactive material, or live organism that exceeds an environmental standard .  The Province will recognize a liability related to the remediation of such contaminated sites subject to certain recognition criteria .

 

The Province is currently analyzing the impact of this standard on its financial statements .

 

 

(e)  BASIS OF FINANCIAL REPORTING FOR GOVERNMENT ENTITIES AND CROWN-CONTROLLED SUCH SECTOR ENTITIES

 

Revenues

All revenues are reported on the accrual basis of accounting .  Cash received for which goods or services have not been provided by year end is recorded as unearned revenue and included in accounts payable .

 

Corporate income tax revenue is recognized when installments are received from taxpayer corporations .  Corporate income tax refunds payable are accrued based on the prior year's corporate income tax refunds paid on assessments .  Corporate income tax receipts from corporations in anticipation of an upward reassessment of Alberta income tax payable are described as corporate income tax receipts in abeyance and recorded as accounts payable .  The Province calculates an allowance for corporate income taxes under objection to reflect the ultimate collectability of these amounts .  Corporate income tax receivable is presented net of this allowance .

 

Personal income tax is recognized on an accrual basis based on an economic estimate of the various components of personal income tax for the fiscal yearGross personal income tax for the taxation year is a key component of the estimate for the fiscal year .

 

The provincial tax system is predicated on self-assessment where taxpayers are expected to understand the tax laws and comply with them .  This has an impact on the completeness of tax revenues when taxpayers fail to comply with tax laws, for example, if they do not report all of their income .  The Province has implemented systems and controls in order to detect and correct situations where taxpayers are not complying with the various Acts it administers .  These systems and controls include performing audits of taxpayer records when determined necessaryHowever,

such procedures cannot identify all sources of unreported income or other cases of non-compliance with tax laws .  The Province does not estimate the amount of unreported tax .

 

Non-renewable resource revenue is reported based on royalties on oil and gas produced during the year .

 

The provincial royalty system is predicated on self-reporting where the petroleum and natural gas industry is expected to understand the relevant energy legislation (statutes and regulations) and comply with them .  This has an impact on the completeness of revenue when the petroleum and natural gas industry does not fully meet the legislative requirements, for example, by reporting inaccurate or incomplete production data .  The Province has implemented systems and controls

in order to detect and correct situations where the petroleum and natural gas industry has not complied with the various Acts and regulations the Province administers .  These systems and controls, based on areas of highest risk, include performing audits of the petroleum and natural gas industry records when determined necessary .  TheProvince does not estimate the effect of misreported revenue .


NOTE 1        continued

 

Transfers from the Government of Canada for capital purposes and donated assets are recorded as deferred capital contributions and recorded as revenue over the useful life of the tangible capital assets based on relevant stipulations of the transfer taken together with the actions and communications of the Province .

 

Expenses

Expenses represent the cost of resources consumed during the year on government operations . Expenses include provisions for amortization of acquired tangible capital assets and expenses incurred in accordance with the terms of approved grant programs .  Grants are recognized as expenses when authorized, eligibility criteria, if any, are met, and a reasonable estimate of the amounts can be made .

 

Pension costs comprise the cost of pension benefits earned by employees during the year, interest on the Province's share of the unfunded pension liabilities, and the amortization over the expected average remaining service life of employees of deferred adjustments arising from experience gains and losses and changes in actuarial assumptions .  Schedule 10 provides additional information on the components of pension liabilities .

 

In the Consolidated Statement of Operations, pension costs of government sector entities which are funded are included in expenses by function and costs which have not been funded are recorded as pension provisions .

 

Costs arising from obligations under guarantees and indemnities are recorded as expenses when management determines that the Province will likely be called upon to make payment .  The expense represents management's best estimate of future payments less recoveries .

 

The estimated increase or decrease for the year in accrued employee vacation entitlements is recorded in the appropriate expense function .

 

Financial Assets

Financial assets are the government's financial claims on external organizations and individuals, and inventories for resale at the year end .

 

Cash includes deposits in banks and cash in transit .  Cash equivalents include directly held interest bearing securities with terms to maturity of primarily less than three months .

 

Portfolio investments authorized by legislation to provide income for the long term or for other special purposes are recorded at cost .  Cost includes amortization of discount or premium using the straight line method over the life of the investments .  Realized gains and losses on disposals of these investments are included in calculating the net operating results for the yearIf an investment loses value that is other than a temporary decline, its recorded value is reduced to reflect the loss .  The reduced value is deemed to be the new cost .

 

Endowment fund assets are included in Portfolio investments and Net assets in the Consolidated

Statement of Financial Position .

 

Loans are recorded at cost less any discounts and allowance for credit loss .

 

Inventories for resale representing the Province's share of royalty oil in feeder and trunk pipelines

are recorded at the lower of cost or net realizable value .  Other inventories for resale are valued at the

lower of cost, determined on a first-in, first-outbasis, and estimated net realizable value .


NOTE 1        continued

 

Liabilities

Liabilities represent present obligations of the government to external organizations and individuals arising from transactions or events occurring before the year end .  They are recorded when there is

an appropriate basis of measurement and management can reasonably estimate the amount .

 

The value of pension liabilities and associated changes during the year are based on an actuarial extrapolation of the most recent actuarial valuation .  This valuation technique uses the projected benefit method pro-rated on service, and management's best estimate as at the extrapolation date of various economic and non-economic assumptions . Where the Province is a participating employer in the plan, experience gains and losses to the extent of the Province's employer share are amortized over the estimated average remaining service life of employees .

 

Debentures included in unmatured debt are recorded at their face amount less unamortized discount, which includes issue expenses and hedging costs .

 

Income or expense on interest rate swaps used to manage interest rate exposure is recorded as an adjustment to debt servicing costs .

 

Liabilities also include:

 

  all financial claims payable by the Province at the year end,

  contingent liabilities where future liabilities are likely,

  estimates of the Province's liabilities for site remediation and reclamation,

  accrued employee vacation entitlements, and

  asset retirement obligations of the SUCH sector organizations .

 

Non-financial Assets

 

Non-financial assets are limited to tangible capital assets, inventories of supplies and prepaid expenses .

Tangible capital assets of government business enterprises are included in the Consolidated Statement of Financial Position within Equity in government business enterprises . Tangible capital assets acquired by right, such as Crown lands, forests, water and mineral resources, are not included on the Consolidated Statement of Financial Position .  Post-secondary institutions

and certain departments have collections consisting of historical artifacts and provincial, national and international works of art .  The value of these collections is not recognized in these financial statements .

 

Tangible capital assets are valued at cost less accumulated amortization .  Amortization is provided on a straight-line basis over the periods expected to benefit from their use (see Schedule 11) .  The annual amortization costs are allocated to the functions of the government that employ those assets and are reported on the Consolidated Statement of Operations .

 

Inventories of supplies are valued at the lower of cost, determined on a first-in, first-outbasis, and replacement cost .

 

Derivative Contracts

Income and expense from derivative contracts are recorded as investment income or debt servicing costs .  Certain derivative contracts, which are primarily interest rate swaps reported as interest rate derivatives for which there is an underlying matching asset and liability, are recorded at cost plus






N

OTE 1



continued




 

accrued interest .  Gains and losses from these derivatives are recognized in the same period as the gains and losses of the underlying assets and liabilities .

 

Other derivative contracts without an underlying matching asset and liability, which are primarily bond index swaps reported as interest rate derivatives, equity index swaps and equity index futures reported as equity replication derivatives, and forward foreign exchange contracts reported as foreign currency derivatives, are recognized at fair value (see Note 4) in portfolio investments and net investment income .

 

The estimated amounts receivable and payable from derivative contracts are included in accrued interest receivable and payable respectively .

 

Foreign Currency

 

Assets and liabilities denominated in foreign currency are translated at the year end exchange rate .

 

Foreign currency transactions are translated into Canadian dollars using average exchange rate

for the day, except for hedged foreign currency transactions which are translated at exchange rates

established by the terms of the forward exchange contracts .

 

Exchange gains and losses that arise on translation of fixed term foreign currency denominated monetary items are deferred and amortized over the life of the contract .

 

Amortization of deferred exchange gains and losses and other exchange differences on unhedged transactions are included in the determination of the net operating results for the year .

 

Public Private Partnerships

A public private partnership (P3) is defined as a cooperative venture based on a contract between the Province and one or more public or private partners that meet clearly defined public needs for the provision of goods or services .

 

The Province accounts for P3 projects in accordance with the substance of the underlying agreements .  Agreements that transfer substantially all the risks and rewards of ownership of the assets to the Province are classified as capital leases and are accounted for as follows:

 

  the capital asset value and the corresponding liabilities are recorded at the net present value of the minimum lease payments discounted using the Province's borrowing rate for long term debt at the time of signing the P3 agreement,

  during construction the capital asset (classified as work in progress) and the corresponding liability are recorded based on the estimated percentage of completion, and

  amortization is accounted for on a straight-line basis over the estimated useful life and commences when the asset is in service .

 

Measurement Uncertainty

Estimates are used in accruing revenues, expenses, assets and liabilities in circumstances where the actual results are unknown at the time the financial statements are prepared .  Uncertainty in the determination of the amount at which an item is recognized in financial statements is known as measurement uncertaintySuch uncertainty exists when there is a variance between the recognized amount and another reasonably possible amount, as there is whenever estimates are used .

 

Measurement uncertainty that is material to these financial statements exists in the accrual of personal and corporate income taxes; royalties derived from non-renewable resources; health






N

OTE 1



continued




 

transfers and Canada social transfer entitlements; private investments, inflation sensitive and alternative investments; and pension liabilities .

 

Personal income tax revenue of $9,621 million (2012: $8,450 million), see Schedule 1, is subject to measurement uncertainty due primarily to the use of economic estimates of personal income growth .  Personal income growth is inherently difficult to estimate due to subsequent revisions

to personal income data .  The estimate of personal income growth used in determining personal income tax for the current fiscal year is 7 .3% (2012: 6 .7%) .

 

Corporate income tax revenue of $4,713 million (2012: $3,621 million), see Schedule 1, is subject to measurement uncertainty due primarily to the timing differences between tax collected and future tax assessments, along with the estimate for allowance for doubtful accounts .

 

Natural gas and by-products royalty of $955 million (2012: $1,304 million), and bitumen royalty of $3,560 million (2012: $4,513 million), see Schedule 1, are subject to measurement uncertainty . Natural gas and by-products royalty is calculated based on allowable costs incurred by the royalty payers and production volumes that are reported to the Province by royalty payers .  These costs and volumes could vary significantly from that initially reported .  The Province estimates what the costs, volumes and royalty rates for the fiscal year should be based on statistical analysis of industry data .

 

Health transfers and Canada social transfer entitlements are subject to uncertainty relating to the tax transfer component .  The current value of income tax points (personal and corporate) transferred historically by the federal government are used to adjust the entitlements .  The value of the tax transfer amounts is unknown at year end because the tax years have not yet been assessed . Accordingly, these amounts are estimated and could change by a material amount .

 

Private equities, inflation sensitive and alternative investments of $5,466 million (2012:

$5,066  million), see Schedule 5, are subject to measurement uncertainty as the fair value may

differ significantly from the values that would have been used had a ready market for these

investments existed .

 

Pension liabilities of $10,852 million (2012: $10,556 million), see Schedule 10, are subject to measurement uncertainty because a plan's actual experience may differ significantly from assumptions used in the calculation of the plan's accrued benefits .

 

The accounts of SUCH sector organizations are consolidated based on the results of their latest financial year end .  Some of these entities have year ends that are other than March 31 .  Estimation of transactions for the period between their year ends and March 31 is therefore subject to measurement uncertainty .

 

While best estimates have been used for reporting items subject to measurement uncertainty, management considers that it is possible, based on existing knowledge, that changes in future conditions in the near term could require a material change in the recognized amounts .  Near term is defined as a period of time not to exceed one year from the date of the financial statements .

 

Segment Disclosure

Sector information is reported in Note 5 and Schedules 1, 2 and 6 and is based on accountability, budgetary practices and governance relationships within the reporting entityAdditional information is provided in ministry and other entity annual reports .






N

OTE 2



VALUATION OF FINANCIAL ASSETS AND LIABILITIES




 

Fair value is the amount of consideration agreed upon in an arm's length transaction between knowledgeable, willing parties who are under no compulsion to act .

 

Due to their short term nature, the fair values of cash and cash equivalents, accounts and accrued interest receivable, accounts and accrued interest payable, and other accrued liabilities are estimated to approximate their book values .

 

The methods used to determine the fair values of portfolio investments are explained in the following paragraphs:

 

Public fixed-income securities and equities are valued at the year-end closing sale price or the average of the latest bid and ask prices quoted by an independent securities valuation company .

 

Mortgages and certain non-public provincial debentures are valued at the net present value of future cash flows .  These cash flows are discounted using appropriate interest rate premiums over similar Government of Canada benchmark bonds trading in the market .

 

The fair value of alternative investments including absolute return strategy investments, investments in limited partnerships, private investment funds, private equities and securities with limited marketability is estimated using methods such as cost, discounted cash flows, earnings multiples, prevailing market values for instruments with similar characteristics and other pricing models as appropriate .

 

Real estate investments are reported at their most recent appraised value, net of any liabilities against the real propertyReal estate properties are appraised annually by qualified external real estate appraisers using methods such as replacement cost, discounted cash flows, earnings

multiples, prevailing market values for properties with similar characteristics and other pricing models as appropriate .

 

Because quoted market prices are not readily available for private and alternative investments and private real estate, estimated fair values may not reflect amounts that could be realized upon immediate sale, or amounts that may ultimately be realized .  Accordingly, estimated fair values may differ significantly from the values that would have been used had a ready market existed for these investments .

 

The fair value of loans and advances made under the authority of the Alberta Capital Finance Authority Act is based on the net present value of future cash flows discounted using the Alberta Capital Finance Authority's (the Authority) current cost of borrowing .  Fair values of other loans and advances, including those made under the authority of the Agriculture Financial Services Act, are not reported due to there being no organized financial market for the instruments and it is not practicable within constraints of timeliness or cost to estimate the fair values with sufficient

reliability .  The fair value of unmatured debt and debt held by the Authority is an approximation of its fair value to the holder .

 

 

The fair value of derivative contracts relating to portfolio investments is disclosed in Note 4 . The estimated amount receivable or payable from derivative contracts at the reporting date is determined by the following methods:

 

Equity and bond index swaps are valued based on changes in the appropriate market based index net of accrued floating rate interest .  Forward foreign exchange contracts and equity index and interest rate futures contracts are valued based on quoted market prices .  Interest rate swaps and cross-currency interest rate swaps are valued based on discounted cash flows using current


NOTE 2        continued

 

market yields and exchange rates .  Options to enter into interest rate swap contracts are valued based on discounted cash flows using current market yields and volatility parameters which measure change in the underlying swapCredit default swaps are valued based on discounted cash flows using current market yields and calculated default probabilities . Warrants and rights are valued at the year end closing sale price or the average of the latest bid and ask prices quoted by an independent securities valuation company .

 

At the year end, the fair value of investments and any other assets and liabilities denominated in a foreign currency are translated to Canadian dollars at the year end exchange rate .

 

 

 

NOTE 3        FINANCIAL RISK MANAGEMENT

 

 

(a)  ASSET MANAGEMENT

 

The investments that the Province holds are exposed to credit risk and market risk .  Market risk is comprised of currency risk, interest rate risk and price risk .  In order to earn the best possible return at an acceptable level of risk, the Province has established policies for the asset mix of its investment portfolios .

 

The Province reduces its investment risk by holding many different types of assets, investing in securities from various governments and companies in different industries and countries, having quality constraints on fixed income instruments, and restricting amounts exposed to countries designated as emerging markets .  The use of derivatives is controlled (see Note 4) .

 

Some of the Province's investments are in the Alberta Heritage Savings Trust Fund (Heritage Fund), which also includes money allocated to the Heritage Fund under the Access to the Future Act .  The objective is to invest in a diversified portfolio to maximize long-term returns at an acceptable level

of risk .

 

Investments in the Alberta Heritage Foundation for Medical Research Endowment Fund, the Alberta Heritage Science and Engineering Research Endowment Fund, the Alberta Heritage Scholarship Fund and the Alberta Cancer Prevention Legacy Fund are managed to provide an annual level of income to intermediary boards responsible for making grants to researchers in the fields of medicine, science and engineering, and to selected students .

 

Other investments are used to repay debt as it matures, to provide funding for the capital plan, and to help protect operating and capital spending from short-term declines in revenue and the costs of emergencies, disasters, and settlements with First Nations .

 

 

(b)  LIABILITYMANAGEMENT

 

The objective of the Province's liability management program is to achieve the lowest cost on debt within an acceptable degree of variability of debt servicing costs .  In order to achieve this objective, the Province manages four risks: interest rate risk, currency exchange risk, credit risk, and refinancing risk .  The Province manages these four risks within approved policy guidelines .  The debt of provincial corporations is managed separately .

 

The Province has decided that the most effective liability risk management strategy is to allow existing debt instruments to mature in accordance to their terms (see Schedule 8) .






N

OTE 4



DERIVATIVE CONTRACTS AND RELATED CREDIT RISK




 

A derivative is a financial contract with the following three characteristics:

 

  its value changes in response to the change in a specified interest rate, equity index price, foreign exchange rate or credit rating,

  it requires no initial net investment or the initial investment is smaller than required for exposure to a similar investment market, and

  it is settled in the future .

 

The Province uses various types of derivative contracts held indirectly through pooled investment funds or directly held by ATB Financial and Alberta Capital Finance Authority to gain access to equity markets and enhance returns or to manage exposure to interest rate risk, currency risk and credit risk .  The notional value of a derivative contract represents the amount to which a rate or price is applied in order to calculate the exchange of cash flows with a counter-party .

 

Interest rate derivatives allow the Province to exchange interest rate cash flows (fixed, floatingand bond index) based on a notional amount .  Interest rate derivatives primarily include interest rate swaps, cross currency interest rate swaps, bond index swaps, futures contracts, and options .

 

Equity replication derivatives allow for the Province to receive or pay cash based on the

performance of a specified market-based equity index, security or basket of equity securities applied

to a notional amount .  Equity derivatives primarily include equity index swaps, futures contracts

and rights, warrants and options .

 

Foreign currency derivatives include contractual agreements to exchange specified currencies at an agreed upon exchange rate and on an agreed settlement date in the future .

 

Credit risk derivatives include credit default swaps allowing the Province to buy and sell protection on credit risk inherent in a bond .  A premium is paid or received, based on a notional amount,

in exchange for a contingent payment should a defined credit event occur with respect to the underlying security .

 

The following is a summary of the fair values of the Province's derivative contracts by type:

 

 

 

 

 

 

 

 

Interest rate derivatives Equity replication derivatives Foreign currency derivatives Credit risk derivatives Commodity derivatives

Derivatives-related payables, net

Deposits in futures contracts margin accounts

Deposits as collateral for derivative contracts

 

Net derivative-related investments

2013

 

Fair

Value (a)(b)

2012

 

Fair

 

Value

In mil

 

$             (642)

119 (38)

5

13

lions

 

$             (520)

150 (19) (26)

8

(543)

32

25

(407)

8

6

$             (486)

$             (393)

 

(a)   Includes derivatives of ATB Financial with a net fair value of $79 million (2012: $65 million). Also includes interest rate derivatives of Alberta Capital Finance Authority with a net fair value of $(721) million (2012: $(600) million).

 

(b)   The method of determining the fair value of derivative contracts is described in Note 2.






N

OTE 5



BUDGET




 

The Consolidated Fiscal Plan documents, which describe the Province's budget for the 2013 fiscal year, were tabled in the Legislature on February 9, 2012 .  The reporting entity for budget purposes excludes Crown-controlled SUCH sector organizations and the four Alberta Innovates Corporations .  However, these are included in the reporting entity for reporting actual results in the consolidated financial statements because these entities are deemed to be controlled by the

Province for accounting purposes .  For fiscal policy purposes, the budget also excludes the change in pension liabilities, allowance for doubtful accounts related to corporate income tax, and recognizes grants for capital purposes and donated assets as revenue as the tangible capital assets are acquired

or constructed .  For consolidated financial statement purposes, these grants for capital purposes and donated assets are deferred and recorded in revenue over the useful life of the tangible capital assets .

 

When there is a difference in scope and basis between the activities reported in the budget and those reported in the financial statements, public sector accounting standards allow that the budget to actual comparison may be done on the same reporting scope of the budget, with the budget revised to conform to the accounting policy used for actual results .  As a result, the actual results have been presented excluding the Crown-controlled SUCH sector organizations and the Alberta Innovates Corporations .  The planned results have been adjusted to include the change in pension liabilities, the allowance for doubtful accounts related to corporate income tax, and to conform to the accounting policy for recognition of grants for capital purposes and donated assets .

 

A comparison of the actual operating results of the Province on the same reporting basis as the budget described in the Fiscal Plan is below:

 

 

 

 

 

 

 

 

 

 

Revenues - fiscal plan basis Expenses - fiscal plan basis Annual surplus of SUCH sector organizations and

Alberta Innovates Corporations

Annual deficit

2013

2012

Budget                                      Financial

Statements

Adjustment to conform

to accounting       Revised

Budget (a)              policy(b)(c)                  Budget           Actual

 

 

 

 

Actual

In millions

 

$    40,263     $                      11    40,274   $        38,457

41,149                          333          41,482               41,701

 

 

 

-                               -                    -                   145

 

 

$      39,249

39,889

 

 

 

526

$         (886)  $                   (322)   (1,208)  $         (3,099)

$            (114)

 

(a)  The budget column excludes the change in pension liability and the revenues and expenses of Crown-controlled

SUCH sector organizations and the Alberta Innovates Corporations. The financial statements report the budget

as presented in the Fiscal Plan tabled in the Legislature on February 9, 2012 and does not include in year budget restatements.

 

(b Decrease in revenuesfor accounting policy change to defer and record into revenue grants received for capital purposes and donatedassets over the useful life of the tangible capital assets has been netted against increase in revenues due to gross up of revenuesfor allowance for doubtful accounts related to corporate income tax.

 

(c Increase in expensesfor estimates of change in pension liability as published in the 2012-13 Government Estimates and increase in expensesfor allowance for doubtful accounts related to corporate income tax.

The budgeted capital investment on a fiscal plan basis for the year is $2,218 million with actual capital investment amounting to $2,154 million (2012: $2,194 million) .    The budget amortization on a fiscal plan basis for the year is $882 million with actual amortization amounting to

$857 million (2012: $748 million) .


NOTE 6        FISCAL RESPONSIBILITY LEGISLATION

 

Effective April 1, 2005, the Fiscal Responsibility Act requires that the financial assets in the Debt Retirement Account must be equal to or greater than the amount of the accumulated debt at the fiscalyear end .  During 2012-13, the Province complied with the Act .  The Fiscal Responsibility

Act specifically excludes from the definition of accumulated debt any amounts borrowed for the purposes of making advances to or purchasing securities of a provincial corporation, any amounts borrowed for capital, and any amounts borrowed for the purpose of paying to the post-1992 fund all or any portion of the amounts owing in accordance with the Teachers' Pension Plans Act .

 

Accumulated Debt

 

The table below shows the balance of accumulated debt at March 31:

 

 

 

 

 

Unmatured debt (Schedule 8)

Funding obligation for school board debentures

Adjustments to conform to statutory definition

Borrowings for provincial corporations

Borrowings to repay the Teachers' Pension Plan Liability

Borrowings for capital purposes, including Alberta Capital Bonds

 

Accumulated debt as per the Fiscal Responsibility Act

2013

2012

In m

 

$             5,582

66

 

 

(1,793) (1,187) (2,429)

illions

 

$             4,748

91

 

 

(1,667) (1,186) (1,497)

$                239

$                489

 

 

The table below shows the funds set aside in the Debt Retirement Account to retire accumulated debt that has not yet matured:

 

 

 

 

 

 

Accumulated debt per the Fiscal Responsibility Act

Funds available for debt repayment

 

Accumulated debt less funds set aside

2013

2012

Budget                  Actual

Actual

In millions

 

$                238        $                 239

253                           249

 

 

$                489

503

$                 (15)       $                 (10)

$                 (14)

 

 

NOTE 7        LIABILITIES UNDER PUBLIC PRIVATE PARTNERSHIPS

 

The Province has entered into contracts to design, build, finance and operate ring road segments under the following public private partnerships: Anthony Henday - South East Edmonton Ring Road, Stoney Trail - North East Calgary Ring Road, Anthony Henday - North West Edmonton Ring Road, Stoney Trail - South East Calgary Ring Road, and Anthony Henday - North East Edmonton Ring Road .  The Province has also entered into public private partnership contracts to design, build, finance and maintain schools under the Alberta Schools Alternative Procurement Phase 1, Phase 2 and Phase 3 projects .  These contracts include a construction period followed by a

30 year operational period for the ring roads and a 30 year maintenance period for the schools .






N

OTE 7



continued




 

The details of the 30 year contracts for those projects that are under construction are as follows:

 



 

Date Contract

Scheduled completion

Date Capital payments

Contractor

entered into

date

begin

 

Stoney Trail - South

 

Chinook Roads

 

March 2010

 

September 2013

 

October 2013

East Calgary Ring Road

Partnership




Anthony Henday - North East

Capital City Link

May 1, 2012

September 2016

October 2016

Edmonton Ring Road

General Partnership




Alberta Schools Alternative

ABC Schools

September 2012

June 2014

July 2014

Procurement Phase 3

Partnership




 

The details of the contracts for those projects that are already operational are as follows:

 


 

 

Contractor

 

Date Contract entered into

 

Completion date

Date Capital payments

began

Anthony Henday - South

Access Roads

January 2005

October 2007

November 2007

East Edmonton Ring Road

Edmonton Ltd.




Stoney Trail - North

Stoney Trail Group

February 2007

October 2009

November 2009

East Calgary Ring Road





Alberta Schools Alternative

Procurement Phase 1

Anthony Henday - North

BBPP Alberta Schools Ltd. NorthwestConnect

September 2008

 

July 2008

June 2010

 

October 2011

July 2010

 

November 2011

West Edmonton Ring Road

General Partnership




Alberta Schools Alternative

B2L Partnership

April 2010

June 2012

August 2012

Procurement Phase 2

 

 

The calculation of the liabilities under public private partnerships is as follows:

 

 

 

 

 

 

Liabilities, beginning of year

Additions to liabilities during the year

Principal payments

Liabilities, end of year

2013

Total

2012

Total

In m

 

$             1,944

 

 

256 (30)

illions

 

$             1,734

 

 

231 (21)

$             2,170

$             1,944






N

OTE 8



CONTRACTUAL OBLIGATIONS




 

Contractual obligations are obligations of the Province to others that will become liabilities in the future when the terms of those contracts or agreements are met .

 

 

 

 

Obligations under operating leases, contracts and programs

Loans and advances approved

Obligations under capital leases and public private partnerships

Operations and maintenance payments

Capital payments

Obligations under the North West Redwater Partnership

2013

2012

In mi

 

$            21,131

165

 

2,280

5,443

19,096

llions

 

$          21,775

134

 

1,736

4,062

-

$            48,115

$         27,707

 

 

Estimated payment requirements for each of the next five years and thereafter are as follows:

 

Obligations Under Operating Leases, Contracts and Programs



In millions

2013-14

$              6,753

2014-15

3,884

2015-16

2,960

2016-17

1,593

2017-18

1,197

Thereafter

4,744


$            21,131

 

Major commitments included in the above figures are commitments for capital construction contracts for health and education facilities, highways and the Municipal Sustainability Initiative which is an agreement that began in 2007-08 between the Province and Alberta municipalities for capital and operating purposes and is subject to the annual appropriation of the Legislature .

 

Obligations under Capital Leases and Public Private Partnerships

 


Operations and Maintenance Payments


 

 

In millions


 

2013-14


 

$                  45


2014-15                                                                                                                                                                       50

2015-16                                                                                                                                                                       51

2016-17                                                                                                                                                                       57

2017-18                                                                                                                                                                       65

Thereafter                                                                                                                                                              2,012

$             2,280






N

OTE 8



continued




 

Capital Payments



In millions

2013-14

$                 144

2014-15

157

2015-16

158

2016-17

179

2017-18

197

Thereafter

4,608


5,443

Less amount representing interest

(2,290)


$             3,153

 

Capital payments include payments for capital leases and for public private partnerships .  The

capital payments for public private partnerships are fixed, equal monthly payments for the privately

financed portion of the costs of building the infrastructure .  The present value of these capital

payments is recorded as a liability on the Consolidated Statement of Financial Position .

 

The government has various commitments relating to the devolution of services or disposition of assets to the private sector .  Those commitments include the performance of duties and obligations if the private sector organization fails to meet them .

 

Obligations under the North West Redwater Partnership

On November 8, 2012, the North West Redwater Partnership (Partnership) announced the sanctioning of the construction of Phase 1 of the Sturgeon Refinery which it will build, own and operate .  The Province has entered into agreements whereby the Partnership will process and market Crown royalty bitumen, or equivalent volumes, collected pursuant to the Bitumen Royalty in

Kind initiative in order to capture additional value within Alberta .  The Partnership will market the refined products (primarily ultra low sulphur diesel and low sulphur vacuum gas oil) on behalf of the Province .  There is financial risk to the Province under these agreements related to the difference in price between bitumen supplied as feedstock and marketed refined products, relative to the costs of the processing .

 

Under the processing agreement, the Province is obligated to pay a monthly toll comprised of operating, debt, equity, and profit share components on 37,500 barrels per day of bitumen (75% of the project's feedstock) for 30 years .  The toll includes both flow through costs as well as costs that are capped at certain levels, such as the $6 .5 billion cap on Facility Capital Costs which are the key determinant of the debt and equity components of the toll .  The Province has very restricted rights

to terminate the agreement, and if it is terminated, the Province remains obligated to pay the debt component of the toll .  The term begins upon commencement of commercial operations, which is expected to be July 1, 2016 .


NOTE 8        continued

 

The toll under the processing agreement, assuming a $5 .7 billion Facility Capital Cost, market interest rates and 2% operating cost inflation rate, is estimated to be:

 

In millions

 

2013-14                                                                                                                                                         $               -

2014-15                                                                                                                                                                          -

2015-16                                                                                                                                                                          -

2016-17                                                                                                                                                                     248

2017-18                                                                                                                                                                     532

Thereafter                                                                                                                                                             18,316


$

 

 

pdf name:  Note 9 North West Redwatter Partnership

NOTE 9        CONTINGENT LIABILITIES

Set out below are details of contingent liabilities resulting from guarantees, indemnities and litigation, other than those reported as liabilities .  Any losses arising from the settlement of contingent liabilities are treated as current year expenses .

 

 

(a)  GUARANTEES

 

Guarantees amounting to $50 million (2012: $53 million) are detailed in Schedule 13 .


19,096


 

 

(b)  CONTINGENT LIABILITIES

 

The Province, through the Credit Union Deposit Guarantee Corporation which operates under

the authority of the Credit Union Act, has a potential liability under guarantees relating to deposits

of credit unions .  At March 31, 2013 credit unions in Alberta held deposits totalling $18 .7 billion

(2012: $17 .5 billion) .  Substantial assets are available from credit unions to safeguard the Province

from the risk of loss from its potential obligation under the Act .

 

At March 31, 2013, ATB Financial had a contingent liability under guarantees and letters of credit amounting to $437million (2012: $358 million) .

 

The Province has a potential liability under guarantees relating to the debt of Alberta Capital Finance Authority of $5,595 million (2012: $7,738 million) and Alberta Social Housing Corporation of $67 million (2012: $69 million) that is held external to the Government of Alberta .

 

Through the PublicTrustee Act, the Province unconditionally guarantees the amount outstanding on a client's guaranteed account as administered by the Office of the Public Trustee .  As at

March 31, 2013, the potential liability of the Province based on the outstanding balance of the

Client Guaranteed Accounts is $418 million (2012: $403 million) .

 

The Province has contingent liabilities with respect to various indemnities as permitted under

the Financial Administration Act .  The indemnified amount and corresponding liability cannot be

reasonably estimated .


NOTE 9        continued

 

(c)  LEGAL ACTIONS

 

At March 31, 2013, the Province was involved in legal matters where damages are being sought . These matters may give rise to contingent liabilities .

 

Accruals have been made in specific instances where it is likely that losses will be incurred based on a reasonable estimate .  As at March 31, 2013, accruals totalling $133 million (2012: $126 million) have been recorded as a liability .  The total amount claimed for all likely claims is $589 million (2012: $491 million) .    The resulting additional liability, if any, from likely claims in excess of the amounts accrued is not determinable .

 

In addition, the Province has been named in 596 (2012: 639) claims of which the outcome is not determinable .  Of these claims 506 (2012: 516) have specified amounts totalling $3 .8 billion (2012: $3 .9 billion) .  The remaining 90 (2012: 123) claims have no amounts specified .  The resolution of indeterminable claims may result in a liability, if any, that may be significantly lower than the claimed amount .

 

The Province has been named in 30 (2012: 29) claims in matters such as aboriginal rights, Indian title and treaty rights .  In most cases, these claims have been filed jointly and severally against the Province of Alberta and the Government of Canada and in some cases involve third parties .  Of these claims, 17 (2012: 14) have specified amounts totalling $155 .6 billion (2012: $141 .9 billion) plus a provision for interest and other costs that are not determinable .  The remaining 13 (2012:

15) claims have no amounts specified .  In addition, there are 5 claims (2012: 4) for treaty land entitlement for which the Province may have an obligation under the Natural Resources Transfer Agreement .

 

 

(d)  BITUMEN ROYALTIES

 

Certain producers have disputed the basis of royalty calculation for bitumen royalties .  Bitumen royalties reported may be adjusted by potentially significant amounts following resolution of the dispute .

 

 

(e)  TAX ASSESSMENTS

 

Some of the taxes assessed by the Province are under objection and some are being appealed .  The resulting loss, if any, cannot be reasonably estimated .


NOTE 10      TRUST AND OTHER FUNDS UNDER ADMINISTRATION

 

Trust and other funds under administration are regulated and other funds consisting of public money over which the Legislature has no power of appropriation .  Because the Province has no equity in the funds and administers them for the purposes of various trusts, they are not included in the consolidated financial statements .  As at March 31, 2013, trust and other funds under administration were as follows:

 

 

 

 

 

Public Sector Pension Plan Funds

Teachers' Pension Plan Funds

The Workers' Compensation Board Accident Fund

Public Trustee

Special Areas Trust Account

Various Court Offices and Fines Distribution Trust

Miscellaneous trust funds

2013

2012

In m

 

$            39,695

7,839

659

563

251

122

774

illions

 

$            34,929

6,773

622

544

231

117

443

$            49,903

$            43,659

 

In addition to the above trust and other funds under administration, the Province holds cash and bank guarantees in the form of letters of credit and promissory notes in the amount of $1,695 million (2012: $1,534 million) .  The majority of these guarantees are held to assure satisfactory reclamation of coal and oil sands operations, sand and gravel pits, landfills, hazardous waste management and hazardous recyclable facilities .

 

 

NOTE 11       ENDOWMENT FUNDS

 

 

 

 

 

Endowment funds of universities, colleges and hospitals

2013

2012

In m

 

$            1,608

illions

 

$       1,543

 

Endowment fund assets are included in Portfolio investments and Net assets in the Consolidated Statement of Financial Position .  Donors have placed restrictions on their contribution to the endowment funds of universities, colleges and hospitals .  The principal restriction is that the original contribution should not be spent .  Capital preservation, investment returns and the impact of inflation may also form restrictions on these funds .


NOTE 12      ADJUSTMENTS TO NET ASSETS

 

The reconciliation of adjustments to Net assets is as follows:

 

 

 

 

Adjustments to net assets

Change in unrealized losses (Schedule 6 ) Change in accounting policy (a)

Increase in endowments (Note 11)

Other

Consolidation adjustments relating to SUCH sector

2013

2012

In m

 

$               (50) (2,003)

65 (11) (43)

illions

 

$                 (3) (101)

59

108 (96)

$          (2,042)

$               (33)

 

(a)  EffectiveApril 1, 2012, the Province changed its policy for recording transfers from the Government of Canada for capital purposes and donated assets (Note 1). As a result of this policy change, these transfers and donations are

pdrfencoagmniezedd: aNsodteefer1re4dOcathpietarl cAondtjruibsuttimones nantsd .rpecdorded as revenue over the useful life of the tangible capital assets based on the relevant stipulations of the transfer taken together with the actions and communications of the

Province.

 

In 2011-12, government business enterprises were required to adopt International Financial Reporting Standards (IFRS) which resulted in a $90 million decrease to net assets. In addition, two provincial agencies adopted the public sector accounting standards on April 1, 2011. As a result of electing a different discount rate for the calculation of the pension liability, the related balance of accrued pension plan assets was changed

into a pension liability resulting in a decrease in opening net assets of $11 million.

 

 

 

NOTE 13      COMPARATIVE FIGURES

 

Certain 2012 figures have been reclassified, where necessary, to conform to 2013 presentation .


Schedules to the Consolidated Financial Statements

March 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)       The negative revenue for Coal royalty in 2012-13 is primarily due to a large refund of $16 million for production in the prior year.


 




EXPENSES BY MINISTRY



SCHEDULE 2






 

 

 

 

Program expenses

Offices of the Legislative Assembly

Ministries Health Education

Enterprise and Advanced Education

Human Services

Transportation

Treasury Board and Finance

Municipal Affairs

Justice and Solicitor General Agriculture and Rural Development Infrastructure

Environment and Sustainable Resource Development

Energy

Service Alberta

Culture

Tourism, Parks and Recreation

Aboriginal Relations

Executive Council

International and Intergovernmental Relations

 

 

Debt servicing costs (a)

Pension provisions (b) (Schedule 10)

2013

2012

In m

 

 

$                121

 

 

17,237

7,218

5,215

4,227

1,936

1,443

1,343

1,291

1,166

1,069

900

535

303

249

183

153

42

28

illions

 

 

$                  97

 

 

16,203

6,976

4,995

3,842

1,983

1,145

1,589

1,181

921

1,142

818

392

285

238

177

144

45

23

44,659

530

296

42,196

509

634

$            45,485

$            43,339

 

(a)       Debt servicing costs consists of interest paid on various forms of government debt. It excludes interest on pension liabilities. Interest on pension liabilities has been included in pension provisions and other program expense.

 

(b)       Pension provisions are related to the Ministry of Enterprise and Advanced Education, the Ministry of Education, the Ministry of

Energy, the Ministry of Treasury Board and Finance, and the Ministry of Health.





EXPENSES BY OBJECT



SCHEDULE 3






 

 

 

 

 

Grants

Services

Salaries, wages, employment contracts and benefits

Amortization of tangible capital assets and consumption of inventories of supplies

Interest and amortization of exchange gains and losses

Materials and supplies

Pension provisions (Schedule 10) Corporate income tax allowance provision Travel and communication

Pension liability funding

Other

2013

2012

In m

 

$            11,903

7,522

17,960

 

 

2,721

495

3,257

296

125

293

514

399

illions

 

$            11,370

7,166

16,798

 

 

2,497

478

3,115

634

123

283

504

371

$            45,485

$            43,339

 

The pension expense for the Province (Schedule 10) is included in salaries, wages, employment contracts and benefits, pension

provisions and pension liability funding.

 

 

 




CASH AND CASH EQUIVALENTS



SCHEDULE 4






 

 

 

 

 

 

 

 

Cash (a)

Cash equivalents

2013

2012

Book                    Fair

Value                  Value

Book                      Fair

Value                    Value

In m

 

 

$         3,427       $          3,427

2,971                   2,971

illions

 

 

$          3,568       $              3,568

2,619                       2,620

$         6,398       $          6,398

$          6,187       $              6,188

 

(a)       Cash includes deposits in the Consolidated Cash Investments Trust Fund (CCITF). At March 31, 2013, deposits in CCITF had a time-weighted return of 1.3% (2012: 1.3%) per annum.





PORTFOLIO INVESTMENTS



SCHEDULE 5






 

 

 

 

 

 

 

Interest bearing securities

Deposits and short-term securities

Bonds and mortgages

 

 

Equities

Canadian public equities

Global developed public equities Emerging markets public equities Private equities

Pooled investment funds

 

 

Inflation sensitive and alternative investments

Private real estate

Inflation sensitive real return bonds

Private infrastructure

Timberland

Private debt and loans

Other investments

2013

2012

Book                    Fair

Value                  Value

Book                    Fair

Value                  Value

In mi

 

 

$              906      $              907

11,227                 11,444

llions

 

 

$              845      $              845

15,999                 16,328

12,133                 12,351

16,844                 17,173

 

2,338                   2,576

7,081                   7,899

943                   1,059

1,049                   1,228

33                        34

 

2,008                   2,153

7,340                   7,764

616                      661

1,004                   1,161

36                        38

11,444                 12,796

11,004                 11,777

 

 

2,539                   3,477

-                           -

1,186                   1,285

273                      333

351                      352

68                        68

 

 

2,198                   3,009

-                          -

1,288                   1,306

281                      336

227                      241

68                        68

4,417                   5,515

4,062                   4,960

$         27,994      $         30,662

$         31,910      $          33,910





EQUITY IN GOVERNMENT BUSINESS ENTERPRISES



SCHEDULE 6






 

 

 

Accumulated surpluses

Accumulated surpluses at beginning of year

Restatement (a)

Restated opening surpluses

Total revenue Total expense (b) Net income

 

Change in accumulated unrealized losses (c)

Transfers to the Province from Alberta Gaming and Liquor Commission

Accumulated surpluses at end of year

 

Represented by

 

Loans Investments Other

 

Liabilities

Accounts payable Deposits (d) Unmatured debt

Capital investment deposits

 

 

Equity in government business enterprises at end of year

As reported by the entities

ATB Financial

Alberta Gaming and Liquor Commission

Credit Union Deposit Guarantee Corporation

 

Subordinated debentures in support of deposit guarantees

2013

2012

In m

 

$           2,626 (12)

illions

 

$           2,545 (107)

2,614

2,438

5,230

2,743

4,943

2,550

2,487

2,393

 

(50) (2,219)

 

(3) (2,202)

$           2,832

$           2,626

 

 

 

$         29,663

1,214

2,989

 

 

 

$         26,713

2,131

2,899

33,866

31,743

 

1,366

26,327

3,103

238

 

1,062

25,053

2,764

238

31,034

29,117

$           2,832

$           2,626

 

 

$           2,256

363

213

 

 

$           2,062

380

184

2,832

155

2,626

113

$           2,987

$           2,739

(a)       During the year, the Alberta Gaming and Liquor Commission had a restatement to its pension liability which had a a total impact to equity in government business enterprises of $12 million. In 2012, government business enterprises adopted International Financial Reporting Standards (IFRS) resulting in restatements of $107 million. This consists of a $90 million decrease in opening net assets forATB Financial and the Credit Union Deposit Guarantee Corporation and a $17 million decrease due to the General Revenue Fund for Alberta Gaming and Liquor Commission.

 

(b)       Included in the total expense is $32 million (2012: $22 million) of interest expense of ATB Financial that was paid to the Province for amounts borrowed directly by the Province on behalf of ATB Financial. Also included in the total expense is $73 million (2012: $58 million) of payment in lieu of taxes ofATB Financial that was paid to the Province.

 

(c)       The change in accumulated unrealized losses of $50 million (2012: $3 million) is comprised of changes in other comprehensive income in government business enterprises. At March 31, 2013, the Province has $63 million in accumulated unrealized losses (2012: $13 million).

 

(d)       The repayment of all deposits without limit, including accrued interest, is guaranteed by the Province in respect of which the Province assesses a deposit guarantee fee of $29 million (2012: $27 million) payable by ATB Financial. Included in the total deposits of ATB Financial are amounts borrowed by the Province on behalf of ATB Financial totalling $2,196 million (2012:

$1,990 million) to be repaid as follows: $300 million in 2014-15, $900 million in 2016-17, and the remaining $996 million in 2017-18.

 

At March 31, 2013, ATB Financial had a contingent liability under guarantees and letters of credit of

$437 million (2012: $358 million) .

 

Included in the Province's contractual obligations are $383 million (2012: $317 million) for contracts belonging to government business enterprises .  These amounts include obligations under operating leases which expire on various dates .





LOANS AND ADVANCES



SCHEDULE 7






 

 

 

 

Loans and advances made under the authority of

Alberta Capital Finance Authority Act (a) Agriculture Financial Services Act (b) Student Loan Act

Alberta Heritage Savings Trust Fund Act

Alberta Housing Act

Financial Administration Act

 

 

Less allowance for doubtful accounts

2013

2012

In m

 

 

$         11,388

1,789

974

278

21

4

illions

 

 

$         10,052

1,610

762

282

8

64

14,454

 

264

12,778

 

316

$         14,190

$         12,462

 

(a)       The fair value of the loans as at March 31, 2013 was $12,815 million (2012: $11,192 million). Municipal loans on average yield 4.4% (2012: 4.6%) per annum.

 

(b)       The fair value of the loans receivable is not disclosed. Determining fair values with sufficient reliability is not practical due to the absence of verifiable information from established financial markets for such loans. Agricultural loan portfolios on average yield 4.8% (2012: 4.9%) per annum.

 

 




UNMATURED DEBT



SCHEDULE 8






 

 

 

 

 

 

 

 

Direct debt

Canadian dollar debt

Floating rate and short-term fixed rate (c )

Fixed rate long-term (d)

 

 

Alberta Social Housing Corporation

Canadian dollar fixed rate debt

2013

2012

Effective        Modified            Book                 Fair

 

Rate (a)       Duration (b)       Value (a)          Value (a)

Book                Fair

 

Value (a)        Value (a)

%                  years                                               In mil

 

 

 

 

 

4.54                   0.55      $              64      $             65

3.55                   7.72                 5,451                5,901

lions

 

 

 

 

 

$           266      $         281

4,413              4,798

3.56                   7.64

5,515                5,966

 

 

67                     98

4,679              5,079

 

 

69                 102


$         5,582      $        6,064

$        4,748      $      5,181

 

(a)       Book value represents the amount the Province owes. Fair value approximates market value to the debt holder. The book value, fair value and weighted average effectiverate include the effect of interest rate and currency rate swaps. Effective rate is the rate that exactly discounts estimated future cash payments through the expected term of the debt to the net carrying amount. For non- marketable issues, the effective rate and fair value are determined by reference to yield curves for comparable quoted issues.

 

(b)       Modified duration is the weighted average term to maturity of a security's cash flows (i.e. interest and principal) and is a measure of price volatility. The greater a bond's modified duration, the greater the impact a change in interest rates will have on its value.

 

(c)       Floating rate debt includes short-term debt, term debt with less than one year to maturity, and term debt with interest rate reset within a year.

 

(d)       Includes $2,429 million (2012: $1,497 million) borrowed for capital purposes and borrowing of $1,187 million (2012: $1,186 million)

to repay the Teachers' Pension Plan liability (see Note 6).





UNMATURED DEBT



SCHEDULE 8 (continued)






 

In addition to the unmatured debt shown above, and in order to reduce overall borrowing costs for the Province, the Province borrows money at a more favourable rate and loans it to various provincial entities (see Schedule 7) with the exact same repayment terms and interest rates .  The Province borrowed funds on behalf of ATB Financial totalling $2,196 million (2012: $ 1,990 million) (see Schedule 6) and Alberta Capital Finance Authority totalling

$6,724 million (2012: $ 3,307 million) (see Schedule 9) .

 

Debt principal repayment requirements (based on par value) in each of the next five years, including short-term maturing in 2013-14 and therefore, are as follows:

 

In millions

 

2013-14

$              114

2014-15

1,227

2015-16

143

2016-17

85

2017-18

72

Thereafter

3,941


$           5,582

 

 




DEBT OF ALBERTA CAPITAL FINANCE AUTHORITY



SCHEDULE 9






 

 

 

 

 

 

 

Alberta Capital Finance Authority

Canadian dollar  and foreign currency fixed rate debt (a)

Canadian dollar floating rate debt

Total (b)

 

Effective rate per annum

2013

2012

Book                  Fair

Value                Value

Book                        Fair

Value                      Value

In m

 

 

$           8,788   $           9,429

3,537                 3,557

illions

 

 

$               5,990        $           6,596

5,055                     5,075

12,325               12,986

11,045                   11,671

 

4.4%

 

4.9%

 

(a)       Includes fixed note US dollar debt of $600 million (fair value: $607 million) in Canadian dollars.

 

(b)       Included in the Alberta Capital Finance Authority debt are amounts borrowed directly by the Province on behalf of the Alberta Capital

Finance Authority totalling $6,724 million (2012: $ 3,307 million).

 

 

Debt principal repayment requirements in each of the next five years, including short-term debt maturing in

2013-14 and thereafter, are as follows:

 

In millions

 

2013-14

$             3,471

2014-15

657

2015-16

800

2016-17

1,500

2017-18

2,559

Thereafter

3,338


$            12,325


PENSION PLANS AND OTHER DEFINED BENEFIT PLANS                                                 SCHEDULE 10

 

Pension Plans

 

The Province is the trustee for the following pension plans under the Public Sector Pension Plans Act:

 

Local Authorities Pension Plan (LAPP), Management Employees Pension Plan (MEPP), Public Service Pension Plan (PSPP), Special Forces Pension Plan (SFPP), and the Public Service Management (Closed Membership) Pension Plan (PSMC) .  The Province is also trustee for the Provincial Judges and Masters in Chambers (Registered) Pension Plan (PJMCPP) under the Provincial Court Act and the Supplementary Retirement Plan for Public

Service Managers (MSRP) under the Supplementary Retirement Plan - Retirement Compensation Arrangement Directive (Treasury Board Directive 01/99) .  All of these pension plans are open with the exception of PSMC . Financial statements for all of these pension plans as of their December 31, 2012 year end or March 31, 2013 year end are reported as supplementary information in the Ministry of Treasury Board and Finance Annual Report .  All of the plans, except the Judges plan, are multi-employer plans .

 

Boards, on behalf of Crown-controlled SUCH sector organizations, administer the Teachers' Pension Plan

(Teachers') and the Universities Academic Pension Plan (UAPP) .

 

In addition to the aforementioned plans, there are several agencies which maintain their own plans to compensate senior staff members that do not participate in the regular government pension plans .  These entities include the Energy Resource Conservation Board, Alberta Utilities Commission, Alberta Securities Commission, and some SUCH sector entities .  Summaries of these plans are included in these financial statements as Supplementary Executive Retirement Plans (SERP) .  Additional information can be found in the entity's financial statements .

 

The following is a summary of the plans for the year ended March 31, 2013:

 

Approximate

 

 

Approximate

Number of

Former

Approximate

Number


Defined

Number

Average

Employees

of

Benefit

of

Age of

Entitled

Retirees

Pension

Active

Active

to Refunds of

Receiving

Employee

Employer

Benefit

Plans

Employees

Employees

Contributions

Benefits

Contributions

Contributions

Payments







In millions


LAPP

147,153

47

27,831

49,767

$                  899

$               1,035

$       1,010

PSPP

41,234

46

15,677

22,178

260

285

412

MEPP

5,330

52

1,044

3,957

65

107

159

MSRP

1,069

56

125

710

3

3

3

PJMCPP (a)

128

65

3

136

1

2

7

PSMC (a)

-

-

123

1,976

-

-

56

SFPP (a)

4,129

42

185

2,278

52

61

92

Teachers' Pre-92

9,675

53

2,481

23,150

-

-

435

Teachers' Post-92

36,263

42

6,521

18,771

334

315

257

UAPP (a)

7,727

49

1,532

4,185

104

113

197

 

(a)       These four plans also received during the year contributions, primarily related to pre-1992 commitments, from the Province of

pdf name:  Schedule 10 TB1

Alberta as follows: PJMCPP $1 million, PSMC $60 million, SFPP $5 million and UAPP $11 million.


PENSION PLANS AND OTHER DEFINED BENEFIT PLANS                             SCHEDULE 10 (continued)

 

The plans provide a defined benefitretirement income based on a formula for each plan that considers final average years of salary, length of service and a percentage ranging from 1 .4% to 2% per year of service .

 

The Province accounts for the liabilities for pension obligations on a defined benefit basis as a participating employer for former and current employees in Local Authorities Pension Plan, Management Employees Pension Plan, Supplementary Retirement Plan for Public Service Managers, Provincial Judges and Masters in Chambers Pension Plan and Public Service Pension Plan for the government's consolidated reporting entity except for government business enterprises that report under International Financial Reporting Standards (IFRS) and are required to account directly for participation in the public service pension plans under IFRS .

 

The Province also accounts for the specific commitments made by the Government of Alberta for pre-1992 pension obligations to the Teachers' Pension Plan, Public Service Management (Closed Membership) Pension Plan, Universities Academic Pension Plan and Special Forces Pension Plan .  In 1992, there was pension plan reform resulting in pre-1992 and post-1991 arrangements for several pension plans .

The Province also accounts for the obligation to the Members of the Legislative Assembly Pension Plan (MLAPP) . The following table contains summary information on these specific pension plans .  Complete financial reporting

is available through each pension plan .  Pension liabilities are as follows:

 

 

 

 

 

 

 

 

 

Liabilities for the Province's employer share for former and current employees

Local Authorities Pension Plan (a)

Management Employee Pension Plan (b)

Supplementary Retirement Plan for Public

Service Managers (c)

Provincial Judges and Masters in Chambers

Pension Plan (d)

Public Service Pension Plan (e)

Teachers' Pension Plan (f)

Universities Academic Pension Plan (g)

Supplementary Executive Retirement Plans (h)

 

 

 

Liabilities for the Province's commitment towards pre-1992 obligations

Teachers' Pension Plan (f)

Public Service Management (Closed Membership) Pension Plan (i) Universities Academic Pension Plan (g) Special Forces Pension Plan (g)

 

Members of the Legislative Assembly Pension

Plan (j)

2013

2012

Pension

Provisions Pension (Recovery) Liabilities          (Schedule 3)

 

 

 

Pension

Liabilities

In millions

 

 

 

$                 494    $                   44

139                         10

 

 

52                         (1)

 

 

6                           6

250                         74

560                         57

199                         20

58                         11

 

 

 

 

$                 450

129

 

 

53

 

 

-

176

503

179

47

1,758                       221

1,537

 

 

 

 

8,014                         98

 

 

584                       (30)

328                         13

123                          (6)

 

 

 

 

7,916

 

 

614

315

129

9,049                         75

8,974

 

45                            -

 

45

$            10,852    $                 296

$            10,556

 

Pension provisions represent the change in pension liabilities, net of pension expense and contributions made.

pdf name:  Schedule 10 TB2


PENSION PLANS AND OTHER DEFINED BENEFIT PLANS                             SCHEDULE 10 (continued)

 

The following is a description of each pension liability:

 

(a)       The Local Authorities Pension Plan is a contributory defined benefit pension plan for eligible employees of local authorities and approved public bodies. These include cities, towns, villages, municipal districts, hospitals, Alberta Health Services, school divisions, school districts, colleges, technical institutes, certain commissions, foundations, agencies, libraries, corporations, associations, and societies. Inaccordance with the Public Sector Pension Plans Act,the actuarial deficiencies as determined by actuarial funding valuations are expected to be funded by special payments currently totalling 6.96% of pensionable earnings shared equally between employees and employers until December 31, 2025. Current service costs are funded by employers and employees.

 

(b)       The Management Employee Pension Plan is a contributory defined benefit pension plan for eligible management employees of the Province and certain approved provincial agencies and public bodies. Members of the former Public Service Management Pension Plan who were active contributors atAugust 1, 1992, and have not withdrawn from the Plan since that date, continue as members of this Plan. In accordance with the Public Sector Pension Plans Act, the actuarial deficiencies as determined by actuarial funding valuations are expected to be funded by special payments currently totalling 9.4% of pensionable earnings shared between employees and employers until December 31, 2014, 7.3% until December 31, 2016, 2.5% until December 31, 2017 and 2.1% until December 31, 2024. Current services costs are funded by employers and employees.

 

(c)       The Supplementary Retirement Plan for Public Service Managers is a contributory defined benefit pension plan for certain public service managers of designated employers who participate in the Management Employees Pension Plan (MEPP) and whose annual salary exceeds the maximum pensionable salary limit under the Income Tax Act. The Plan is supplementary to the MEPP. The contribution rates in effect at December 31, 2012 were at 11.16% (2011: 11.16%) of pensionable salary in excess of the maximum pensionable salary limit for eligible employees and designated employers.

 

(d)       The Provincial Judges and Masters in Chambers Pension Plan is a contributory defined benefit pension plan for Judges and

Masters in Chambers of the Province of Alberta. Current service costs are funded by the Province and plan members at rates which are expected to provide for all benefits payable under the Plan. The rates in effect at March 31, 2013 are 7.00% of capped salary for plan members and 14.65% of capped salary for the Province. Benefits are payable by the Province if assets are insufficient to pay for all benefits under the Plan.

 

(e)       The Public Service Pension Plan is a contributory defined benefit pension plan for eligible employees of the Province, approved provincial agencies and public bodies. In accordance with the Public Sector Pension Plans Act, the actuarial deficiencies as determined by an actuarial funding valuation are expected to be funded by special payments currently totaling 6.94% of pensionable earnings shared equally between employees and employers until December 31, 2025. Current service costs are funded by employers and employees.

 

(f)        The Teachers' Pension Plans Act requires all teachers under contract with jurisdictions inAlberta to contribute to the Teachers' Pension Plan. The Province assumed responsibility for the entire unfunded pre-1992 pension obligation of the Teachers' Pension Plan. The costs of all benefits paid under the pre-1992 Teachers' Pension Plan are paid by the Province. In addition, the Province is responsible for 50% of the unfunded liability, any current service costs and certain cost of living benefits for service after August

1992.

 

(g)       Under the Public Sector Pension Plans Act, the Province has a liability for payment of additional contributions under defined benefit pension plans for certain employees of post-secondary educational institutions and municipalities. The plans are the Universities Academic and Special Forces pension plans.

 

For the Universities Academic Pension Plan, the unfunded liability for service credited prior to January 1, 1992 is being financed by additional contributions of 1.25% of pensionable salaries by the Province and contributions by employees and employers to fund the remaining amount, as determined by the plan valuation, over the period ending on or before December 31, 2043. Current service costs are funded by employers and employees.

 

For the Special Forces Pension Plan, the unfunded liability for service credited prior to January 1, 1992 is being financed by additional contributions in the ratio of 45.45% by the Province and 27.27% each by employers and employees, over the period ending on or before December 31, 2036. Current service costs are funded by employers and employees. The Act provides that payment of all benefits arising from pensionable service prior to 1994, excluding post-1991 cost of living adjustment benefits, is guaranteed by the Province.





PENSION PLANS AND OTHER DEFINED BENEFIT PLANS


S

CHEDULE 10 (continued)






 

(h)       Certain consolidated entities provide defined supplementary executive retirement plans for certain management staff, and other benefit plans for all or specific groups of staff, depending on the plans. The cost of these benefits are actuarially determined on an annual basis using the projected benefit method pro-rated on services, a market interest rate, and management's best estimate of expected costs and the period of benefit coverage.

 

(i)        The Public Service Management (Closed Membership) Pension Plan provides benefits to former members of the Public Service Management Pension Plan who were retired, were entitled to receive a deferred pension or had attained 35 years ofservice before August 1, 1992. The costs of all benefits under the Plan are paid by the Province.

 

(j)        The Province has a liability for payment of pension benefits under a defined benefit pension plan for Members of the Legislative Assembly. Active participation in this plan was terminated as of June 1993, and no benefits can be earned for service after that date. The costs for all benefits under the plan are paid by the Province.

 

The liability for pension obligations as a participating employer is as follows:

 

 

 

 

As at March 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)       These numbers are as reported in the pension plan 2012 financial statements, except for the Teachers Post-92 Pension Plan and

the UAPP which use numbers as reported in actuarial reports.

 

(b)       Under Public Sector Accounting Standards, losses are amortized over the employee expected average remaining service life of the employees of each plan, which ranges from eight to eleven years.

 

(c)       Accounting timing differences from January 1, 2013 toMarch 31, 2013 for payments and interest expense.

 

(d)       Others includes the Supplementary Retirement Plan for Public Service Managers, Provincial Judges and Masters in Chambers

Pension Plan and Supplementary Executive Retirement Plans.


PENSION PLANS AND OTHER DEFINED BENEFIT PLANS                             SCHEDULE 10 (continued)

 

The pension expense for the Province is as follows:

 

 

 

 

 

Pension Expense

Current period benefit cost (a)

Amortization of actuarial gains and losses(b)

Total

 

Province of Alberta share of pension expense

 

Interest Expense

Interest on pension liability (a)

Total Province of Alberta

pension related expenses

Teachers' Pension Plan

LAPP      MEPP     PSPP         Pre-92          Post-92        UAPP     Others(c)

Total

2013

Total

2012

(In millions)

 

 

 

 1,384   $  119   $   352   $              -   $            399   $     69   $         26

 

 

426          41        231                186                  159           24               44

 

 

 

 

 2,349

 

 

1,111

 

 

 

 

 2,168

 

 

1,340

 1,810   $  160   $   583   $          186   $             558   $     93   $         70

 3,460

 3,508

 

 

$       620   $    97   $   258   $          186   $             279   $     93   $         64

 

 

 

 

 

68          13           46                347                    54           28               39

 

 

 1,597

 

 

 

 

 

595

 

 

 1,750

 

 

 

 

 

666

$       688   $  110   $   304   $          533   $             333    121   $       103

 2,192

 2,416

 

(Pa)DF Ansamreep:orStecdheindupleen1s0ioTnBp4lan financial statements or actuarial reports. Numbers in UAPP are net of employees' share.

 

(b)       Except for Special Forces Pension Plan, numbers are adjusted to March 31, 2013.

 

(c)       Others includes the Supplementary Retirement Plan for Public Service Managers, Provincial Judges and Masters in Chambers

Pension Plan, Special Forces Pension Plan and Supplementary Executive Retirement Plans.

 

Pension liabilities are based upon actuarial valuations performed at least triennially using the projected benefit method prorated on services and actuarial extrapolations performed at December 31, 2012 or March 31, 2013 . The assumptions used in the valuations and extrapolations were adopted after consultation between the pension plan boards, the government and the actuaries, depending on the plan, and represent best estimates of future events .  The non-economic assumptions include considerations such as mortality as well as withdrawal and

retirement rates .  The primary economic assumptions include salary escalation rate, discount rate and inflationrate . Each plan's future experience will inevitably vary, perhaps significantly, from the assumptions .  Any differences between the actuarial assumptions and future experience will emerge as gains or losses in future valuations .  Gains and losses are amortized over the expected average remaining service lives of the related employee groups .


PENSION PLANS AND OTHER DEFINED BENEFIT PLANS                             SCHEDULE 10 (continued)

 

The date of actuarial extrapolation and primary economic assumptions used for accounting purposes were:

 

Salary

Latest                         Latest                Escalation        Inflation       Discount

Valuation                Extrapolation               Rate                Rate            Rate (a)

Plan                                                                              Date                            Date                          %                    %                   %

 

Teachers' Pre-1992 Pension Plan                          August 2012                March 2013                  3.50                 2.25               4.25

Teachers' Post-1992 Pension Plan                         August 2012                March 2013                  3.50                 2.25               6.50

Public Service Management (Closed

Membership) Pension Plan                                December 2011           December 2012                  -                   2.25               4.25

Universities Academic Pension Plan                    December 2010              March 2013                  3.50                 2.25               6.20

Local Authorities Pension Plan                            December 2011           December 2012               3.50                 2.25               5.80

Public Service Pension Plan                                 December 2011           December 2012               3.50                 2.25               6.40

Members of the Legislative Assembly

Pension Plan                                                         March 2012                 March 2013                      -                   2.25               4.25

Management Employees Pension

Plan                                                                   December 2009           December 2012                3.50                2.25               6.30

Provincial Judges and Masters in

Chambers Pension Plan                                    December 2008              March 2012                   3.50                2.25               5.80

Supplementary Retirement Plan for

Public Service Managers                                  December 2009           December 2012                3.50                2.25               5.50

Special Forces Pension Plan                               December 2011           December 2012               3.50                 2.25               6.20

 

(a)       The discount rate is the expected rate of return for plans with assets and is also the discount rate used tomeasure the actuarial liability.

 

The actual return on major funded plans' assets during the period ranges from 7 .8% to 12% (2011-12: 2 .1% to

7 .8%) .  This range includes returns for LAPP, Teachers' Post-1992 Plan, PSPP, MEPP, SFPP, and UAPP .

 

A separate pension plan fund is maintained for each pension plan except for the Teachers' Pre-1992 Pension Plan and the Members of the Legislative Assembly Pension Plan .  Each pension plan fund reports annually through financial statements .

 

Government business enterprises have recorded pension liabilities accounted for under International Financial Reporting Standards of $185 million (2012: $195 million) comprised of $148 million (2012: $124 million) for employees in the Public Service Pension Plan, Management Employees Pension Plan and the Supplementary Retirement Plan for Public Service Managers and $37 million (2012: $71 million) in other pension plans .

 

Long Term Disability Income Continuance Plans

 

The government administers two long-term disability income continuance plans .  As at March 31, 2013, the Bargaining Unit Plan reported an actuarial surplus of $51 .7 million (2012: surplus of $9 .1 million) and the Management, Opted Out, and Excluded Plan reported an actuarial surplus of $18 .3 million (2012: surplus of

$10 .5 million) .  At March 31, 2013, the government's share of the estimated accrued benefit liability for these plans has been recognized in these financial statements .


 

 

 

 

 

 

 

 

 

 

 

Historical Cost

Beginning of year

Additions

Transfers and adjustments (h)

Disposals including write-downs

 

Accumulated Amortization Beginning of year Amortization expense Transfers and adjustments

Effect of disposals

including write-downs

 


Net Book Value at

March 31, 2013

Net Book Value at

March 31, 2012


 

 

 

 

$      2,358    $


 

 

 

 

18,885    $


 

 

 

 

1,163    $


 

 

 

 

1,942    $


 

 

 

 

636    $


 

 

 

 

24,984    $


 

 

 

 

183    $


 

 

 

 

12,283    $


 

 

 

 

1,383    $


 

 

 

 

997    $


 

 

 

 

14,846


 

 

 

 

$    39,830


 

(a)       Land includes land acquired for parks and recreation, building sites, infrastructure and other program use. It does not include land held for resale or Crown lands acquired by right.

 

(b)       Construction in progress includes $166 million financed under the Alberta School Alternative Procurement Initiative (2012: $251 million). The cost of buildings under capital lease is

$140 million (2012: $140 million).

 

(c)       Equipment includes SuperNet, vehicles, heavy equipment, fire protection equipment, office equipment and furniture, and other equipment.

 

(d)       Other tangible capital assets include leasehold improvements (amortized over the life of the lease), rail cars and trailers.

 

(e)       Land improvements include parks development and grazing reserves.

 

(f)        Provincial highways and roads consist of original pavement, roadbed, drainage works and traffic control devices, and include secondary highways and bridges and some key arterial roadways within cities. Included in these numbers are $1,654 million in historical cost (2012: $1,421 million) and $71 million in accumulated amortization (2012: $46 million) for alternatively financed capital assets. The additions to work in progress related to new highway construction under Public Private Partnerships is $528 million (2012: $211 million).

 

(g)       Dams and water management structures include dams, reservoirs, weirs, canals, dikes, ditches, channels, diversions, cut-offs, pump houses and erosion protection structures.

 

(h)       Transfers and adjustments relate to post secondary institutions for accounting policy alignments and reclassifications between capital asset categories.





DEFERRED CAPITAL CONTRIBUTIONS



SCHEDULE 12






 

2013

In millions

 

Opening deferred capital contributions                                                                                                                                   $                 - Add: Adjustments for accounting policy change and deferred capital

contributions expended in the current year

2,529

Less: Deferred capital contributions recognized as revenue in the current year

(117)

Closing deferred capital contributions

$         2,412

 

 

pdf name: Sch. 12 Deferred Cap Contrb

 




GUARANTEES



SCHEDULE 13






 

 

 

 

 

Feeder Associations Guarantee Act Agriculture Financial Services Act Student Loan Act

 

Less estimated liability

Guarantees

2013

2012                   Date

In m

 

$          47

2

1

illions

 

$        45

6

2

 

 

Ongoing Variable Ongoing

50

 

 

-

53

 

 

-

$          50

$        53

 

Authorized loan guarantee limits are shown below where applicable . Where authorized loan guarantee limits are not noted, the authorized limits decline as guaranteed or indemnified loans are repaid .

 

Guarantee programs under the following Acts are ongoing:

 

Feeder Associations Guarantee Act (authorized guarantee limit set by Order in Council is $55 million),

 

Agriculture Financial Services Act, and

 

Student Loan Act .

 

The lender takes appropriate security prior to issuing to the borrower a loan which is guaranteed by the Province . The security taken depends on the nature of the loan .  Interest rates are negotiated with the lender by the borrower and typically range from prime to prime plus 2% .


LISTING OF ORGANIZATIONS                                                                                          SCHEDULE 14

 

The financial statements of the following entities are fully consolidated in these financial statements:

 

GOVERNMENT SECTOR ENTITIES

 

 

Offices of the Legislative Assembly

 

Support to the Legislative Assembly

Office of the Auditor General

Office of the Ombudsman

Office of the Chief Electoral Officer

Office of the Ethics Commissioner

Office of the Information and Privacy Commissioner

Office of the Child and Youth Advocate

Office of the Public Interest Commissioner (a)

 

Departments

 

Aboriginal Relations

Agriculture and Rural Development

Culture Education Energy

Enterprise and Advanced Education

Environment and Sustainable Resource Development

Executive Council

Health

Human Services

Infrastructure

International and Intergovernmental Relations

Justice and Solicitor General

Municipal Affairs

Service Alberta

Tourism, Parks and Recreation

Transportation

Treasury Board and Finance

 

Regulated Funds

 

Access to the Future Fund

Alberta Cancer Prevention Legacy Fund

Alberta Heritage Foundation for Medical Research Endowment Fund

Alberta Heritage Savings Trust Fund

Alberta Heritage Scholarship Fund

Alberta Heritage Science and Engineering Research Endowment Fund


LISTING OF ORGANIZATIONS                                                                       SCHEDULE 14 (continued)

 

Regulated Funds (continued)

 

Alberta Lottery Fund

Alberta Risk Management Fund

Alberta School Foundation Fund

Climate Change and Emissions Management Fund Environmental Protection and Enhancement Fund Historic Resources Fund

Land Stewardship Fund

Post-closure Stewardship Fund

Provincial Judges and Masters in Chambers Reserve Fund

Supplementary Retirement Plan Reserve Fund

Victims of Crime Fund

 

Provincial Agencies

 

Agriculture Financial Services Corporation

Alberta Capital Finance Authority Alberta Enterprise Corporation Alberta Foundation for the Arts

Alberta Historical Resources Foundation

Alberta Innovates - Bio Solutions

Alberta Innovates - Energy and Environment Solutions

Alberta Innovates - Health Solutions

Alberta Innovates - Technology Futures

Alberta Investment Management Corporation

Alberta Livestock and Meat Agency

Alberta Local Authorities Pension Plan Corp . Alberta Pensions Services Corporation

Alberta Petroleum Marketing Commission

Alberta Securities Commission

Alberta Social Housing Corporation

Alberta Sport, Recreation, Parks andWildlife Foundation

Alberta Transportation Safety Board

Alberta Utilities Commission

Calgary and Area Child and Family Services Authority

Central Alberta Child and Family Services Authority

East Central Alberta Child and Family Services Authority Edmonton and Area Child and Family Services Authority Energy Resources Conservation Board (b)

Human Rights Education and Multiculturalism Fund Metis Settlements Child and Family Services Authority Natural Resources Conservation Board

North Central Alberta Child and Family Services Authority

Northeast Alberta Child and Family Services Authority


LISTING OF ORGANIZATIONS                                                                       SCHEDULE 14 (continued)

 

Provincial Agencies (continued)

 

Northwest Alberta Child and Family Services Authority

Persons with Developmental Disabilities Calgary Region Community Board Persons with Developmental Disabilities Central Region Community Board Persons with Developmental Disabilities Edmonton Region Community Board Persons with Developmental Disabilities Northeast Region Community Board Persons with Developmental Disabilities Northwest Region Community Board Persons with Developmental Disabilities South Region Community Board Southeast Alberta Child and Family Services Authority

Southwest Alberta Child and Family Services Authority

The Government House Foundation

The Wild Rose Foundation

Travel Alberta

 

Government Organizations

 

Alberta Insurance Council

Gainers Inc .

N .A .  Properties (1994) Ltd . Safety Codes Council

 

CROWN-CONTROLLED SUCH SECTOR ORGANIZATIONS

 

 

School Jurisdictions and Charter Schools (c)

 

Almadina School Society

Aspen View Regional Division No .  19 (dissolved February 28, 2013)

Aspen View Public School Division No .  78 (established February 28, 2013) Aurora School Ltd .

Battle River Regional Division No .  31

Black Gold Regional Division No .  18

Boyle Street Education Centre

Buffalo Trail Public Schools Regional Division No .  28

Calgary Arts Academy Society

Calgary Girls' School Society

Calgary Roman Catholic Separate School District No .  1

Calgary School District No .  19

Calgary Science School Society

Canadian Rockies Regional Division No .  12

CAPE-Centre for Academic and Personal Excellence Institute

Cardiff Roman Catholic Separate School District No .  684 (dissolved June 30, 2012) Chinook's Edge School Division No .  73

Christ the Redeemer Catholic Separate Regional Division No .  3

Clearview School Division No .  71

Cunningham Roman Catholic Separate School District No .  704 (dissolved June 30, 2012)


LISTING OF ORGANIZATIONS                                                                       SCHEDULE 14 (continued)

 

School Jurisdictions and Charter Schools (continued)

 

East Central Alberta Catholic Separate Schools Regional Division No .  16

East Central Francophone Education Region No .  3

Edmonton Catholic Separate School District No .  7

Edmonton School District No .  7

Elk Island Catholic Separate Regional Division No .  41

Elk Island Public Schools Regional Division No .  14

Evergreen Catholic Separate Regional Division No .  2

Foothills School Division No .  38

Fort McMurray Public School District No .  2833

Fort McMurray Roman Catholic Separate School District No .  32

Fort Vermilion School Division No .  52

Foundations for the Future Charter Academy Charter School Society

Golden Hills School Division No .  75

Grande Prairie Roman Catholic Separate School District No .  28

Grande Prairie School District No .  2357

Grande Yellowhead Public School Division No .  77

Grasslands Regional Division No .  6

Greater North Central Francophone Education Region No .  2

Greater Southern Public Francophone Education Region No .  4

Greater Southern Separate Catholic Francophone Education Region No .  4

Greater St .  Albert Catholic Regional Division No .  29 (dissolved June 30, 2012)

Greater St .  Albert Roman Catholic Separate School District No .  734 (established June 30, 2012) High Prairie School Division No .  48

Holy Family Catholic Regional Division No .  37

Holy Spirit Roman Catholic Separate Regional Division No .  4

Horizon School Division No .  67

Lakeland Roman Catholic Separate School District No .  150

Lethbridge School District No .  51

Living Waters Catholic Regional Division No .  42

Livingstone Range School Division No .  68

Medicine Hat Catholic Separate Regional Division No .  20

Medicine Hat School District No .  76

Mother Earth's Children's Charter School Society

New Horizons Charter School Society

Northern Gateway Regional Division No .  10

Northern Lights School Division No .  69

Northland School Division No .  61

Northwest Francophone Education Region No .  1

Palliser Regional Division No .  26

Parkland School Division No .  70

Peace River School Division No .  10

Peace Wapiti School Division No .  76


LISTING OF ORGANIZATIONS                                                                       SCHEDULE 14 (continued)

 

School Jurisdictions and Charter Schools (continued)

 

Pembina Hills Regional Division No .  7 (including Alberta Distance Learning Centre) Prairie Land Regional Division No .  25

Prairie Rose School Division No .  8

Red Deer Catholic Regional Division No .  39

Red Deer Public School District No .  104

Rocky View School Division No .  41

St .  Albert Protestant Separate School District No .  6 (dissolved June 30, 2012) St .  Albert Public School District No .  5565 (established June 30, 2012)

St .  Paul Education Regional Division No .  1

St .  Thomas Aquinas Roman Catholic Separate Regional Division No .  38

Sturgeon School Division No .  24

Suzuki Charter School Society Valhalla School Foundation Westmount Charter School Society Westwind School Division No .  74

Wetaskiwin Regional Division No .  11

Wild Rose School Division No .  66

Wolf Creek School Division No .  72

 

Post Secondary Institutions

 

Alberta College of Art and Design

Athabasca University

Banff Centre

Bow Valley College

Grande Prairie Regional College Grant MacEwan University Keyano College

Lakeland College Lethbridge College Medicine Hat College Mount Royal University NorQuest College

Northern Alberta Institute of Technology

Northern Lakes College

Olds College Portage College Red Deer College

Southern Alberta Institute of Technology

University of Alberta University of Calgary University of Lethbridge


LISTING OF ORGANIZATIONS                                                                       SCHEDULE 14 (continued)

 

Alberta Health Services and Other Health Entities

 

Alberta Cancer Foundation Alberta Health Services Calgary Health Trust

Health Quality Council of Alberta

 

 

 

The following organizations are accounted for on the modified equity basis in these financial statements:

 

Government Business Enterprises

 

Alberta Gaming and Liquor Commission

ATB Financial

Credit Union Deposit Guarantee Corporation

 

 

(a)   The Office of the Public Interest Commissioner will be created as a new Office of the Legislative Assembly on

June 1, 2013 by the proclamation of the Public Interest Disclosure Act.

 

(b)  Upon proclamation of the Responsible Energy Development Act in June 2013, the newly established Alberta Energy

Regulator will supersede the Energy Resources Conservation Board (ERCB). The ERCB will be dissolved and all

its assets, liabilities, obligations, commitments and contingencies will be transferred to the Alberta Energy Regulator.

 

(c)  Under various Acts and other legislative authorities there were in year changes to school jurisdictions in Alberta.


GLOSSARY

 


Absolute return strategies: Absolute return strategies (hedge funds) encompass a wide variety of investments with the objective of realizing positive returns regardless of the overall market direction .

A common feature of many of these strategies is buying undervalued securities and selling short overvalued securities .  Some of the major types of strategies include long/short equity, merger arbitrage, fixed income arbitrage, macroeconomic strategies, convertible arbitrage, distressed securities and short selling .

 

Accrued interest: Interest income that has been earned but not paid in cash at the financial statement date .

 

Alternative investments: Investments considered outside of the traditional asset class of stocks, bonds and cash .  Examples include hedge funds, private equities, private income, timberland and asset-backed commercial paper .

 

Amortized cost: Amortized cost is the amount

at which a financial asset or a financial liability is

measured at initial recognition minus principal

repayments, plus or minus the cumulative

amortization using the effective interest method of

any difference between that initial amount and the

maturity amount, and minus any reduction (directly

or through the use of an allowance account) for

impairment or uncollectability .

 

Ask price: The price a seller is willing to accept for a security, also known as the offer price .

 

Asset mix: The percentage of an investment fund's assets allocated to major asset classes (for example

50% equities, 30% interest-bearing securities and

20% inflationsensitive and alternative investments) .

 

Bid price: The price a buyer is willing to pay for a security .

 

Call provision: An option included in a bond that gives the bond issuer the right to buy back all or part of a bond issue prior to maturity .

 

Cash equivalents: Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to insignificant risk of changes in value .  Cash equivalents are held for the purpose of meeting short tem cash commitments rather than for investing or other purposes .


Counterparty risk: The risk that the other party in an agreement will default .

 

Credit risk: The risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation .

 

Currency risk: The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates .

 

Debenture: A financial instrument showing a debt where the issuer promises to pay interest and repay the principal by the maturity date .  It is usually unsecured, meaning there are no liens or pledges on specific assets .

 

Debt servicing cost: Debt servicing costs consists of interest paid on various forms of government debt .

 

Deferred capital contribution: The unamortized portion of tangible capital assets or liabilities

to construct or acquire tangible capital assets from specific purpose funding received from the Government of Canada or by donation .  Deferred capital contributions are recorded in revenue over the estimated useful life of the underlying tangible capital assets once constructed or acquired by the Province .

 

Defined benefit pension plan: A pension plan that specifies either the benefits to be received by an employee, or the method of determining those benefits, such as a pension benefit equal to two

percent of the average of the five highest consecutive years' salary times the total years of service .

 

Derecognition: The removal of previously recognized financial assets or financial liabilities from a government's statement of financial position .

 

Derivative contract: Financial contracts, the value of which is derived from the value of underlying assets, indices, interest rates, or currency rates .  They usually give rise to a financial asset of one party and a financial liability or equity instrument of another party, require no initial net investment, and are settled at a future date .

 

Discount: The difference between the price paid for

a security and the security's par or face value .  Because

price fluctuateswith interest rates, price will differ

from the face value .  For example, if interest rates are

higher than the coupon rate, then the security is sold

at a discount .


Glossary (continued)

 


Emerging market: An economy in the early stages of development, with markets of sufficient size and liquidity, and receptive to foreign investment .

 

Endowment funds:Endowment funds generally are established by donor gifts and bequests to provide

a permanent endowment, which is to provide a permanent source of income, or a term endowment, which is to provide income for a specified period .  The endowments may or may not be restricted in how

they are used .

 

Fair value: The amount of consideration agreed upon in an arm's length transaction between knowledgeable, willing parties who are under no compulsion to act .  Fair value is similar to market value .

 

Financial asset: An asset that could provide resources to pay liabilities or finance future operations .  A financial asset could be cash, a right to receive cash or another financial asset from another party, a right to exchange financial instruments with another party under conditions that are potentially favourable, or equity of another entity .

 

First-in, first-out: A method of valuing inventory where the cost of the first goods purchased or acquired is the cost assigned to the first goods sold . Therefore, the cost allocated to the inventory items on hand at the end of the period is the cost of those items most recently acquired .

 

Fixed incomeinstrument: Interest bearing instrument that provides a return in the form of fixed periodic payments and eventual return of principal

at maturity, or money market instrument such as treasury bills and discount notes .

 

Floating rate: An interest rate that is reset periodically, usually every couple of months or sometimes daily .

 

Hedging: An activity designed to manage exposure to one or more risks . When management designates a hedging relationship, it must identify the specific items included in the hedging relationship, the risk that is being hedged, and the period over which

the hedging relationship is intended to be effective . The designation of the hedging relationship is documented formally in the entity's records when designation occurs .


Interest rate risk: The risk that the fair value or future cash flows of a financial instrument will fluctuate because of future changes in market interest rates .

 

Leveraging: The use of various financial instruments or borrowed capital to increase the potential return of an investment .

 

Liquidity: The ease with which an asset can be turned into cash and the certainty of the value it will obtain .

 

Market risk: The risk that the fair value or future cash flows of a financial instrument will fluctuate because

of future changes in market prices .

 

Net realizable value: The selling price less the estimated costs of completion and costs necessary to make the sale .

 

Par value: A value set as the face or principal amount of a security, typically expressed as multiples of $100 or $1,000 .  Bondholders receive par value for their bonds at maturity .

 

Prepaid expenses: An expenditure that is paid for in one accounting period, but which will not be entirely consumed until a future period .  Consequently, it is carried on the Consolidated Statement of Financial Position as an asset until it is consumed .

 

Present value: Today's value of one or more future cash payments, determined by discounting the future cash payments using interest rates .

 

Price risk: The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising

from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting

all similar financial instruments traded in the market .

 

Private equity: An ownership interest in a privately held company .

 

Public equity:An ownership interest in a publicly traded company .

 

Public private partnership (P3): A legally-binding contract between the Province and one or more public or private partners for the provision of

assets and the delivery of services that allocates responsibilities and business risks among the various partners .


Glossary (continued)

 


Realized gains and losses: Gains or losses are realized when investments are sold at a price over or below its book value and selling costs .

 

Refinancing risk: The risk that the fair value or future cash flows of a financial instrument will fluctuate due to refinancing .

 

Repurchase agreement (Repo): An agreement between two parties whereby one party sells the other a security at a specified price with a commitment

to buy the security back at a later date for another specified price .

 

Segment: A distinguishable activity or group of activities of a government for which it is appropriate to separately report financial information to help

users of the financial statements identify the resources allocated to support the major activities of the government .


Temporary loss: Determining when a loss is other than temporary is a matter of judgment, but it is generally presumed if a condition indicating a loss in value has persisted for a period of three or four years .

 

Unmatured debt: Unredeemed Government securities that have not matured and that are issued in respect of money raised under section 56(1)

of the Financial Administration Act, and the total outstanding borrowings of Alberta Social Housing Corporation .

 

Yield curve: A graphic line chart that shows interest rates at a specific point for all securities having equal risk, but different maturity dates .


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BLANK PAGE


 

 

 

 

 

 

 

 

 

 

 

 

MEASURING UP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77


TABLE OF CONTENTS

 

 

MEASURING UP

 

Management's Responsibility for Reporting  .     .     .     .     .     .     .     .    .     .     .     .     79

Readers' Guide  .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     80

Working Together   .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .       80

Government of Alberta Strategic Planning and

Results-Based Budgeting (RBB) Framewor .     .     .     .     .     .     .     .     .     81

Results Analysis by Goal .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .         82

Auditor's Report .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .          107

Performance Measures by Goal .     .     .     .     .     .     .     .     .     .     .     .     .     .     .    .     .         108

Sources and Notes   .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .     .    .     .     .       115


MANAGEMENT'S RESPONSIBILITY FOR REPORTING

 

 

 

 

 

Responsibility for the integrity and objectivity of the non-financial performance results reported in the province's annual performance report Measuring Up, a component of the Province of Alberta Annual Report, rests with the government .  Measuring Up is prepared by the Assistant Deputy Minister of Budget Development and Reporting under the general direction of the Deputy Minister of Treasury Board and Finance as authorized by the President of the Treasury Board and Minister of Finance pursuant to Section

10 of the Government  Accountability Act in effect March 31, 2013 .

 

Under Section 10, the government had to prepare and make public on or before June 30 of each year a consolidated annual report for the Province of Alberta for the fiscal year ended on the preceding

March 31 .  The annual report must include a comparison of the actual performance results to the targets included in the government business plan and an explanation of any significant variances .  As required by the Government Accountability Act, Measuring Up is published with the consolidated annual report of the Government of Alberta that forms part of the Public Accounts .

In order to meet government reporting requirements, the Assistant Deputy Minister of Budget Development and Reporting obtains performance results relating to each ministry as necessaryDeputy heads in each ministry are responsible for maintaining management and internal control systems to ensure that the information provided by their ministry for presentation in Measuring Up is prepared in accordance with the following criteria:

   Reliability- information used in applying performance measure methodologies agrees with underlying source data for the current and prior years' results .

   Understandability-the performance measure methodologies and results are presented clearly .

   Comparability-the methodologies for performance measure preparation are applied consistently for the current and prior years' results .