Correctional Service Canada : Quarterly Financial Report, for the quarter ended September 30, 2024

On this page

• 1. Introduction
  • 1.1 Basis of presentation
• 2. Highlights of fiscal quarter and fiscal year to date (YTD) results
  
  • 2.1 Significant changes to authorities
  • 2.2 Explanation of significant variances from previous year expenditures
• 3. Risks and uncertainties
• 4. Significant changes in relation to operations, personnel and programs
• 5. Approvals by senior officials
• 6. Statement of authorities (unaudited)
• 7. Departmental budgetary expenditures by standard object (unaudited)

1. Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the Main Estimates. This report has not been subject to an external audit or review.

The purpose of the federal correctional system, as defined by law, is to contribute to the maintenance of a just, peaceful and safe society by carrying out sentences imposed by courts through the safe and humane custody and supervision of offenders; and by assisting the rehabilitation of offenders and their safe reintegration into the community as law-abiding citizens through the provision of programs in penitentiaries and in the community (Corrections and Conditional Release Act, s.3). A summary description of Correctional Service Canada (CSC)’s program activities can be found in Part II of the Main Estimates and the Departmental Plan 2024 to 2025.

1.1 Basis of presentation

This quarterly report has been prepared using an expenditure basis of accounting. The accompanying Statement of authorities includes CSC’s spending authorities granted by Parliament and those used by the organization, consistent with the Main Estimates and Supplementary Estimates (as applicable). This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the Department. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

CSC uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on a cash expenditure basis.

CSC has an active Revolving Fund (CORCAN) that is included in the statutory authorities of the enclosed Statement of authorities. CORCAN's purpose is to aid in the safe reintegration of offenders into Canadian society by providing employment and training opportunities to offenders incarcerated in federal penitentiaries and, for brief periods, after they are released into the community. CORCAN has a continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund (CRF) for working capital, capital acquisitions and temporary financing of accumulated operating deficits, the total of which is not to exceed $11.0 million at any time during 2024 to 2025. Through Supplementary Estimates (A), 2020 to 2021^{Footnote 1} , the drawdown limit was increased from a previous amount of $5.0 million. The increase was requested as a consequence of reduced sales and operations resulting from the COVID-19 pandemic. The limit will decrease by a further $6.0 million during the 2025 to 2026 fiscal year, at which point it will return to the original $5.0 million threshold.

2. Highlights of fiscal quarter and fiscal year to date (YTD) results

The following graph provides a comparison of the net budgetary authorities and expenditures as of September 30, 2024 and September 30, 2023 for CSC’s combined operating, capital and budgetary statutory authorities.

2.1 Significant changes to authorities

As reflected in the Statement of authorities for the period ending September 30, 2024, CSC has seen an increase in total authorities of $92.4 million or 2.9% for the current fiscal year compared to the previous fiscal year.

Vote 1 - Operating

CSC’s Operating Vote increased by $78.3 million or 2.9% compared to the authorities at the end of September 2023, which is attributed to the net effect of the following significant items:

• an increase of $90.7 million related to compensation for the funded portion of collective agreement increases
• an increase of $45.6 million in funding to stabilize operations related to workplace injuries
• an increase of $42.0 million in funding to cover incremental expenditures due to changes in offender population volumes and price fluctuations
• an increase of $16.9 million in funding related to the operating budget carry forward
• an increase of $15.1 million in funding for equipment and licenses to maintain a hybrid workforce
• an increase of $11.6 million in funding related to Transforming Federal Corrections (Bill C-83)
• a decrease of $118.8 million related to funding for class action lawsuits
• a decrease of $28.3 million related to Refocusing Government Spending

Vote 5 - Capital

CSC’s Capital Vote increased by $24.2 million or 9.7% compared to the authorities at the end of September 2023, which is related to the net effect of the following significant items:

• an increase of $51.6 million in funding to maintain and repair correctional facilities
• an increase of $14.6 million in funding to reduce suspension points in correctional facilities
• an increase of $8.6 million in funding for essential network enhancements
• an increase of $6.2 million in funding to modernize existing security equipment infrastructure capability
• a decrease of $41.0 million related to funding from the capital budget carry forward
• a decrease of $15.0 million related to Refocusing Government Spending

Budgetary statutory authorities

CSC’s budgetary statutory authorities decreased by $10.1 million or -3.8% compared to September 2023, which is mainly related to the department’s allocation of the employer’s share of the employee benefit plan.

2.2 Explanation of significant variances from previous year expenditures

As reflected in the Statement of authorities for the period ending September 30, 2024, CSC has seen an increase in total net budgetary expenditures of $101.5 million or 7.2% for the current fiscal year compared to the previous fiscal year.

Vote 1 - Operating

CSC’s operating expenditures increased by $79.8 million, compared to the second quarter of 2023 to 2024, mainly due to the following:

• personnel expenditures increased by $58.5 million primarily due to the ratification of several collective agreements at the end of June last year, including various increases in allowances, overtime cost increases, and a minor increase in the number of employees
• professional and special services increased by $6.5 million primarily due to an increase in incremental expenditures which are due to changes in offender population volumes and price fluctuations
• utilities, materials and supplies increased by $8.1 million primarily due to an increase in incremental expenditures which is caused by changes in offender population volumes and price fluctuations, an increase in the allowance for footwear
• other subsidies and payments increased by $7.2 million primarily due to an increase in court ordered payments, out of court settlements, and Workers’ Compensation Boards (WCB) expenditures

Vote 5 - Capital

CSC’s capital expenditures increased by $30.2 million, compared to the second quarter of 2023 to 24, mainly due to the following:

• personnel expenditures increased by $5.7 million primarily due to new employees hired since June 2023 in relation to funding received following Budget announcements, as well as to the ratification of several collective agreements at the end of June last year 
• professional and special services increased by $3.4 million primarily due to an increase in information technology and telecommunications consultants fees
• acquisition of land, buildings and works increased by $2.4 million, mainly in construction projects to address aging critical infrastructure and to ensure the safety and security of CSC’s facilities
• acquisition of machinery and equipment increased by $18.7 million primarily due to essential investments to meet operational requirements

Budgetary statutory authorities

CSC’s statutory expenditures decreased by $8.5 million, compared to the second quarter of 2023 to 2024, mainly due to the following:

• a decrease of $4.5 million in expenditures related to the employer’s contributions to the employee benefit plan. This will be adjusted at year-end based on total salary expenditures
• a decrease of $2.1 million in expenditures in spending of proceeds from the disposal of surplus Crown assets mainly due to a delay in processing invoices
• an increase $1.8 million in CORCAN’s net revenues

3. Risks and uncertainties

CSC’s specific risks, as outlined in CSC’s Departmental Plan 2024 to 2025, are the increasingly complex and diverse profile of the offender population, the maintenance of required levels of operational safety and security in institutions and the community, the inability to implement its mandate and ensure the financial sustainability and modernization of the organization, the potential loss of support of partners delivering critical services and providing resources for offenders, the maintenance of public confidence in the federal correctional system, and the maintenance of a safe, secure, healthy, respectful, and collaborative working environment as established by its legal and policy obligations, mission, and values statement.

CSC will address existing financial challenges and will continue working on a modernization plan over the three-year planning period.

CSC continues to experience ongoing issues related to the Phoenix Pay System. Given the complexity of our workforce coupled with the operational nature of our organization, CSC has experienced a significantly high number of pay related issues. CSC is continuously working internally and with external stakeholders to resolve these issues.

CSC has put in place risk mitigation strategies to address the stated risks. The integrated approach allows CSC to handle risk-related challenges, ensure operational sustainability to fulfill its mandate.

CSC is working on a multi-year savings plan in order to meet the reduction targets resulting from Refocusing Government Spending.

4. Significant changes in relation to operations, personnel and programs

During the first quarter of 2024 to 2025, CSC experienced an unprecedented event as forest fires in the City of Port-Cartier (Quebec) which resulted in an evacuation order for the area. This led to the evacuation of 225 maximum security inmates from the Port-Cartier Institution to other federal institutions. It was a significant operation, requiring extensive work from staff and collaboration with various public safety partners. Given the urgency of this operation, CSC has experienced incremental costs associated with inmate transfers, including overtime and travel costs. Throughout the second quarter of 2024 to 2025, inmates were gradually transferred back to the institution which is no longer at risk of evacuation orders this season.

There have been no changes to key senior personnel in the second quarter of 2024 to 2025.

5. Approvals by senior officials

Original approved by:

Ottawa, Canada
November 17, 2024

6. Statement of authorities (unaudited)

7. Departmental budgetary expenditures by standard object (unaudited)