toronto catholic district school board · toronto catholic district school board years ended august...

Consolidated Financial Statements of

TORONTO CATHOLIC DISTRICT SCHOOL BOARD

Years ended August 31, 2012 and 2011

MANAGEMENT'S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements of the Toronto Catholic District School Board

("Board") are the responsibility of the Board's management and have been prepared in accordance

with the Financial Administration Act, supplemented by Ontario Ministry of Education memorandum

2004:B2 and Ontario Regulation 395/11 of the Financial Administration Act, as described in note 1 to

the consolidated financial statements.

The preparation of consolidated financial statements necessarily involves the use of estimates based

on management's judgment, particularly when transactions affecting the current accounting period

cannot be finalized with certainty until future periods.

The Board's management maintains a system of internal controls designed to provide reasonable

assurance that assets are safeguarded, transactions are properly authorized and recorded in

compliance with legislative and regulatory requirements, and reliable financial information is available

on a timely basis for preparation of the consolidated financial statements. These systems are

monitored and evaluated by management.

The Board meets with management and the external auditors to review the consolidated financial

statements and discuss any significant financial reporting or internal control matters prior to their

approval of the consolidated financial statements.

The consolidated financial statements have been audited by KPMG LLP, Chartered Accountants,

independent external auditors appointed by the Board. The accompanying auditors' report outlines

their responsibilities, the scope of their examination and their opinion on the Board's consolidated

financial statements.

KPMG LLP Telephone (416) 228-7000 Chartered Accountants Fax (416) 228-7123 Yonge Corporate Centre Internet www.kpmg.ca 4100 Yonge Street Suite 200 Toronto ON M2P 2H3 Canada

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP

INDEPENDENT AUDITORS' REPORT

To the Board of Trustees of the Toronto Catholic District School Board

We have audited the accompanying consolidated financial statements of the Toronto Catholic District School Board, which comprise the consolidated statements of financial position as at August 31, 2012 and 2011, the consolidated statements of operations and accumulated surplus, changes in net debt and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation of these consolidated financial statements in accordance with the basis of accounting described in note 1 to the consolidated financial statements, 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.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we 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 our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation 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.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Toronto Catholic District School Board as at and for the years ended August 31, 2012 and 2011 are prepared, in all material respects, in accordance with the basis of accounting described in note 1 to the consolidated financial statements.

Emphasis of Matter

Without modifying our opinion, we draw attention to note 1 to the consolidated financial statements, which describes the basis of accounting used in the preparation of these consolidated financial statements and the significant differences between such basis of accounting and Canadian public sector accounting standards.

Chartered Accountants, Licensed Public Accountants November 20, 2012 Toronto, Canada

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TORONTO CATHOLIC DISTRICT SCHOOL BOARD Consolidated Statements of Financial Position (In thousands of dollars) August 31, 2012 and 2011 2012 2011

Financial Assets Cash and cash equivalents $ 54,324 $ 82,944 Accounts receivable 78,714 65,434 Accounts receivable - Government of Ontario -

approved capital (note 3) 341,193 301,688 Investments (note 2) 502 1,077 Restricted investment (note 2) 10,564 10,564 485,297 461,707

Financial Liabilities Accounts payable and accrued liabilities

(notes 10(d) and 12(b)) 110,718 100,343 Net long-term debt (note 7) 268,508 275,035 Deferred revenue (note 4) 109,821 82,760 Employee future benefits payable (note 10) 113,814 169,056 Deferred capital contributions (note 5) 763,571 721,430 1,366,432 1,348,624 Net debt (881,135) (886,917) Non-financial assets:

Prepaid expenses 700 1,101 Tangible capital assets (note 9) 973,677 927,505 974,377 928,606

Commitments and contingencies (note 12) Subsequent event (note 17) Accumulated surplus $ 93,242 $ 41,689

See accompanying notes to consolidated financial statements.

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TORONTO CATHOLIC DISTRICT SCHOOL BOARD Consolidated Statements of Operations and Accumulated Surplus (In thousands of dollars) Years ended August 31, 2012 and 2011 Budget Actual Actual 2012 2012 2011 (Unaudited -

note 1(m)) Revenue:

Provincial grants: Student needs $ 561,884 $ 585,226 $ 545,206 Other 23,976 27,025 21,781

Local taxation 419,854 417,565 416,541 School-generated funds 22,205 27,608 29,145 Investment 400 1,004 3,477 Ontario Youth Apprenticeship Program 164 164 176 Other fees and revenue 15,621 20,236 27,146 1,044,104 1,078,828 1,043,472

Expenses (note 11):

Instruction 816,008 780,453 790,541 Administration 23,101 24,289 24,821 Transportation 26,492 27,009 25,286 Pupil accommodation 133,445 137,548 133,687 School-generated funds 22,205 27,226 28,694 Ontario Youth Apprenticeship Program 164 164 176 Other 25,583 30,586 26,355 1,046,998 1,027,275 1,029,560

Surplus (deficit) (2,894) 51,553 13,912 Accumulated surplus, beginning of year 41,689 41,689 27,777 Accumulated surplus, end of year $ 38,795 $ 93,242 $ 41,689


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TORONTO CATHOLIC DISTRICT SCHOOL BOARD Consolidated Statements of Changes in Net Debt (In thousands of dollars) Years ended August 31, 2012 and 2011 2012 2011 Operating activities:

Surplus $ 51,553 $ 13,912 Tangible capital asset activities:

Purchase of tangible capital assets (84,177) (90,193) Amortization of tangible capital assets 37,517 33,281 Proceeds on sale of tangible capital assets 3,350 37,565 Gain on sale of tangible capital assets (2,862) (32,282) (46,172) (51,629)

5,381 (37,717) Other non-financial asset activities:

Change in prepaid expenses 401 600 Increase (decrease) in net debt 5,782 (37,117) Net debt, beginning of year (886,917) (849,800) Net debt, end of year $ (881,135) $ (886,917)


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TORONTO CATHOLIC DISTRICT SCHOOL BOARD Consolidated Statements of Cash Flows (In thousands of dollars) Years ended August 31, 2012 and 2011 2012 2011 Cash provided by (used in): Operating activities:

Surplus $ 51,553 $ 13,912 Non-cash items:

Amortization of tangible capital assets 37,517 33,281 Amortization of deferred capital contributions (35,545) (32,652) Gain on sale of tangible capital assets (2,862) (32,282)

Change in non-cash assets and liabilities: Accounts receivable (13,280) 2,116 Prepaid expenses 401 600 Accounts payable and accrued liabilities 10,375 21,996 Deferred revenue operating 5,711 (348) Employee future benefits payable (55,242) 6,641

(1,372) 13,264 Capital activities:

Purchase of tangible capital assets (84,177) (90,193) Proceeds on sale of tangible capital assets 3,350 37,565 (80,827) (52,628)

Financing activities:

Debt repayment and sinking fund contributions (9,309) (12,898)

Increase in accounts receivable - Government of Ontario approved capital, net (39,505) (42,912)

Additions to obligations under capital lease 2,782 – Additions to deferred capital contributions 78,060 80,578 Transfer from deferred capital contributions to

deferred revenue (374) (2,579) Increase in deferred revenue capital, net 21,350 32,578 53,004 54,767

Investing activities:

Decrease (increase) long-term investments 575 (10,991) Increase (decrease) in cash and cash equivalents (28,620) 4,412 Cash and cash equivalents, beginning of year 82,944 78,532 Cash and cash equivalents, end of year $ 54,324 $ 82,944


TORONTO CATHOLIC DISTRICT SCHOOL BOARD Notes to Consolidated Financial Statements (In thousands of dollars) Years ended August 31, 2012 and 2011

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1. Significant accounting policies:

The consolidated financial statements are prepared by management in accordance with the

basis of accounting described below:

(a) Basis of accounting:

The consolidated financial statements have been prepared in accordance with the Financial

Administration Act supplemented by Ontario Ministry of Education memorandum 2004:B2

and Ontario Regulation 395/11, Accounting Policies and Practices Public Entities

("Regulation 395/11"), of the Financial Administration Act.

The Financial Administration Act requires that the consolidated financial statements be

prepared in accordance with the accounting principles determined by the relevant Ministry

of the Province of Ontario ("Province"). A directive was provided by the Ontario Ministry of

Education within memorandum 2004:B2 requiring school boards to adopt Canadian Public

Sector Accounting Standards ("PSAB") commencing with their year ended August 31, 2004

and that changes may be required to the application of these standards as a result of

regulation.

In 2011, the government passed Regulation 395/11 of the Financial Administration Act.

Regulation 395/11 requires that contributions received or receivable for the acquisition or

development of depreciable tangible capital assets and contributions of depreciable

tangible capital assets for use in providing services, be recorded as deferred capital

contributions and be recognized as revenue in the statements of operations and

accumulated surplus over the periods during which the asset is used to provide service at

the same rate that amortization is recognized in respect of the related asset.

Regulation 395/11 further requires that if the net book value of the depreciable tangible

capital asset is reduced for any reason other than depreciation, a proportionate reduction of

the deferred capital contribution along with a proportionate increase in the revenue be

recognized. For Ontario school boards, these contributions include government transfers,

externally restricted contributions and, historically, property tax revenue.

TORONTO CATHOLIC DISTRICT SCHOOL BOARD Notes to Consolidated Financial Statements (continued) (In thousands of dollars) Years ended August 31, 2012 and 2011

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1. Significant accounting policies (continued):

The accounting policy requirements under Regulation 395/11 are significantly different from

the requirements of Canadian Public Sector Accounting Standards which requires that:

(i) government transfers, which do not contain a stipulation that creates a liability, be

recognized as revenue by the recipient when approved by the transferor and the

eligibility criteria have been met in accordance with Public Sector Accounting Standard

PS3410;

(ii) externally restricted contributions be recognized as revenue in the period in which the

resources are used for the purpose or purposes specified in accordance with Public

Sector Accounting Standard PS3100; and

(iii) property taxation revenue be reported as revenue when received or receivable in

accordance with Public Sector Accounting Standard PS3410.

As a result, revenue recognized in the consolidated statements of operations and

accumulated surplus and certain related deferred revenue and deferred capital

contributions would be recorded differently under Canadian Public Sector Accounting

Standards.

Regulation 395/11 was released in the fall of 2011 requiring that the Toronto Catholic

District School Board ("Board") comply with the related accounting policy requirements

described above. Prior to the release of Regulation 395/11, the consolidated financial

statements as at and for the year ended August 31, 2011 were originally prepared under a

special purpose framework as directed by the Ministry of Education. As a result, these are

the first consolidated financial statements of the Board prepared in accordance with the

Financial Administration Act supplemented by Ontario Ministry of Education memorandum

2004:B2 and Regulation 395/11 of the Financial Administration Act ("new financial reporting

framework"). The Board has applied this new financial reporting framework retrospectively

to the comparative information in these consolidated financial statements. There are no

changes to accumulated surplus on the consolidated statement of financial position as at

August 31, 2011 or the annual surplus on the consolidated statement of operations for the

year ended August 31, 2011 as a result of the transition to this new financial reporting

framework.


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(b) Reporting entity:

The consolidated financial statements reflect the assets, liabilities, revenue and expenses

of the reporting entity. The reporting entity is comprised of all organizations accountable for

the administration of their financial affairs and resources to the Board and which are

controlled by the Board.

School-generated funds, which include the assets, liabilities, revenue and expenses of

various organizations that exist at the school level and which are controlled by the Board,

are reflected in the consolidated financial statements.

Interdepartmental and inter-organizational transactions and balances between these

organizations are eliminated.

(c) Trust funds:

Trust funds and their related operations administered by the Board are not included in the

consolidated financial statements as they are not controlled by the Board.

(d) Cash and cash equivalents:

Cash and cash equivalents comprise cash on hand, demand deposits and short-term

investments. Short-term investments are highly liquid, subject to insignificant risk of

changes in value and have a short maturity term of 90 days or less.

(e) Investments:

Temporary investments consist of marketable securities, which are liquid short-term

investments with maturities of between three months and one year at the date of

acquisition, and are carried on the consolidated statements of financial position at the lower

of cost or fair value.

Long-term investments consist of investments that have maturities of more than one year.

Long-term investments are recorded at cost and assessed regularly for permanent

impairment.


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(f) Deferred revenue:

Certain amounts are received pursuant to legislation, regulation or agreement and may

only be used in the conduct of certain programs or in the delivery of specific services and

transactions. These amounts are recognized as revenue in the fiscal year the related

expenses are incurred or services are performed.

(g) Deferred capital contributions:

Contributions received or receivable for the purpose of acquiring or developing a

depreciable tangible capital asset for use in providing services, or any contributions in the

form of depreciable tangible assets received or receivable for use in providing services, are

recorded as deferred capital contributions as defined in Regulation 395/11. These amounts

are recognized as revenue in the consolidated statements of operations and accumulated

surplus at the same rate as related tangible capital assets is amortized. The following

items fall under this category:

(i) government transfers received or receivable for capital purposes;

(ii) other restricted contributions received or receivable for capital purpose; and

(iii) property taxation revenue which were historically used to fund capital assets.


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(h) Retirement and other employee future benefits:

The Board provides defined retirement and other future benefits to specified employee

groups. These benefits include pension, life insurance and health care benefits, dental

benefits, retirement gratuity, worker's compensation and long-term disability benefits. On

September 11, 2012, the Government of Ontario passed Bill 115, Putting Students First

Act, which included changes to the Board's retirement gratuity plan, sick leave plan and

retiree health, life and dental plan. The Board has adopted the following policies with

respect to accounting for these employee benefits:

(i) The costs of self-insured retirement and other employee future benefit plans are

actuarially determined using management's best estimate of salary escalation,

accumulated sick days at retirement, insurance and health care costs trends, disability

recovery rates, long-term inflation rates and discount rates. In prior years, the cost of

retirement gratuities that vested or accumulated over the periods of service provided by

the employee were actuarially determined using management's best estimate of salary

escalation, accumulated sick days at retirement and discount rates. As a result of the

plan change, the cost of retirement gratuities are actuarially determined using the

employee's salary, banked sick days and years of service as at August 31, 2012 and

management's best estimate of discount rates. The changes resulted in a plan

curtailment and any unamortized actuarial gains and losses are recognized as at

August 31, 2012. Any future actuarial gains and losses arising from changes to the

discount rate will be amortized over the expected average remaining service life of the

employee group.

For self-insured retirement and other employee future benefits that vest or accumulate

over the periods of service provided by employees, such as retirement gratuities and

life insurance and health care benefits for retirees, the cost is actuarially determined

using the projected benefits method prorated on service. Under this method, the costs

are recognized over the expected average service life of each employee group. The

changes to the retiree health, life and dental plans resulted in a plan curtailment and

any unamortized actuarial gains and losses associated with the employees impacted

by the change are recognized as at August 31, 2012.


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For those self-insured benefit obligations that arise from specific events that occur from

time to time, such as obligations for workers' compensation, long-term disability and life

insurance and health care benefits for those on disability leave, the cost is recognized

immediately in the year the events occur. Any actuarial gains and losses that are

related to these benefits are recognized immediately in the year they arise.

(ii) The cost of multi-employer defined pension plan benefits, such as the Ontario

Municipal Employees Retirement System ("OMERS") pensions, is the employer's

contributions due to the plan during the year.

(iii) The costs of insured benefits are the employer's portion of insurance premiums owed

for coverage of employees during the year.

(i) Tangible capital assets:

Tangible capital assets are recorded at historical cost less accumulated amortization.

Historical cost includes amounts that are directly attributable to acquisition, construction,

development or betterment of the asset, as well as interest related to financing during

construction. When historical cost records were not available, other methods were used to

estimate the costs and accumulated amortization.

Leases that transfer substantially all of the benefits and risks incidental to ownership of

property are accounted for as leased tangible capital assets. All other leases are

accounted for as operating leases and the related payments are charged to expenses as

incurred.


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Tangible capital assets, except land, are amortized on a straight-line basis over their

estimated useful lives as follows:

Land improvements with finite lives 15 years Buildings and building improvements 40 years Portable structures 20 years Other buildings 20 years First-time equipping of schools 10 years Furniture 10 years Equipment 5 - 15 years Computer hardware 5 years Computer software 5 years Vehicles 5 - 10 years Leasehold improvements Over lease term

Assets under construction and assets that relate to pre-acquisition and pre-construction

costs are not amortized until the asset is available for productive use.

Land permanently removed from service and held for resale is recorded at the lower of cost

and estimated net realizable value. Cost includes amounts for improvements to prepare

the land for sale or servicing. Buildings permanently removed from service and held for

resale cease to be amortized and are recorded at the lower of carrying value and estimated

net realizable value. Tangible capital assets which meet the criteria for financial assets are

reclassified as assets held for sale on the consolidated statements of financial position.

(j) Government transfers:

Government transfers, which include legislative grants and local taxation, are recognized in

the consolidated financial statements in the year in which events giving rise to the transfer

occur, providing the transfers are authorized, any eligibility criteria have been met, and

reasonable estimates of the amount can be made.

Government transfers for capital that meet the definition of a liability are referred to as

deferred capital contributions. Amounts are recognized into revenue as the liability is

extinguished over the useful life of the asset.


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(k) Investment income:

Investment income is reported as revenue in the year earned.

When required by the funding government or related act, investment income earned on

externally restricted funds, such as pupil accommodation, educational development

charges and special education is added to the deferred revenue and forms part of the

respective deferred revenue balances.

(l) Long-term debt:

Long-term debt is recorded net of related sinking fund balances.

(m) Budget figures:

Budget figures have been provided for comparison purposes and have been derived from

the budget approved by the Board of Trustees ("Trustees"). The budget approved by the

Trustees is developed in accordance with the provincially mandated funding model for

school boards and is used to manage program spending within the guidelines of the

funding model. The budget figures are unaudited.

(n) Use of estimates:

The preparation of consolidated financial statements in conformity with the basis of

accounting described in (a) requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure of contingent assets and

liabilities at the dates of the consolidated financial statements, and the reported amounts of

revenue and expenses during the years. Accounts subject to significant estimates include

accrued liabilities and employee future benefits. Actual results could differ from these

estimates.


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2. Investments:

Temporary investments of $48,103 (2011 - $77,500) are included in cash and cash equivalents

and comprise 30-day cashable guaranteed investment certificates bearing interest rates

ranging from 1.00% to 2.50% (2011 - 1.20% to 1.45%). Based on the nature of these

instruments, cost approximates market value.

Long-term investments, including restricted investment, are comprised of step-up deposit notes

and interest-bearing fixed income securities that are recorded at cost. These investments are

assessed regularly for impairment and are written down if a permanent impairment exists.

3. Accounts receivable - Government of Ontario:

The Province replaced variable capital funding with a one-time debt support grant in 2009-

2010. The Board received a one-time grant that recognizes capital debt as of August 31, 2010

that is supported by the existing capital programs. The Board receives this grant in cash over

the remaining term of the existing capital debt instruments. The Board may also receive yearly

capital grants to support capital programs which would be reflected in this account receivable.

The Board has an account receivable from the Province of $341,193 as at August 31, 2012

(2011 - $301,688) with respect to capital grants.

4. Deferred revenue:

Revenues received and that have been set aside for specific purposes by legislation, regulation

or agreement are included in deferred revenue and reported on the consolidated statements of

financial position.


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4. Deferred revenue (continued):

Deferred revenue set aside for specific purposes by legislation, regulation or agreement as at

August 31 is comprised of:

Externally restricted revenue Revenue Transfers to Balance, and recognized deferred Balance, beginning investment during the capital end of 2012 of year income year contributions year Pupil accommodation $ 11,500 $ 14,427 $ (4,839) $ (6,279) $ 14,809 Education development charges 27,911 11,957 (116) – 39,752 Proceeds of disposition 22,111 4,132 (108) – 26,135 Energy efficient 10,135 – – (6,737) 3,398 Financial contributions 2,305 – – – 2,305 Other 8,798 181,943 (162,244) (5,075) 23,422 $ 82,760 $ 212,459 $ (167,307) $ (18,091) $ 109,821

Externally restricted revenue Revenue Transfers to Balance, and recognized deferred Balance, beginning investment during the capital end of 2011 of year income year contributions year Pupil accommodation $ 6,763 $ 14,457 $ (2,345) $ (7,375) $ 11,500 Education development charges 15,507 12,921 (517) – 27,911 Proceeds of disposition 11,804 38,067 (14,613) (13,147) 22,111 Green schools pilot 709 – – (709) – Energy efficient 5,012 9,880 (716) (4,041) 10,135 Financial contributions 2,305 – – – 2,305 Other 8,430 160,701 (154,938) (5,395) 8,798 $ 50,530 $ 236,026 $ (173,129) $ (30,667) $ 82,760


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5. Deferred capital contributions:

Deferred capital contributions include grants and contributions received that are used for the

acquisition of tangible capital assets in accordance with Regulation 395/11 that have been

expended by year end. The contributions are amortized into revenue over the life of the asset

acquired.

2012 2011 Balance, beginning of year $ 721,430 $ 676,083 Additions to deferred capital contributions 78,060 80,578 Revenue recognized in the year (35,545) (32,652) Transfer to deferred revenue (374) (2,579) Balance, end of year $ 763,571 $ 721,430

6. Temporary borrowing:

The Board has an operating line of credit available to a maximum of $65,000 to address

operating requirements. No amounts have been drawn as at August 31, 2012 (2011 - nil).

Interest on the operating facility is at the bank's prime lending rate minus 0.65%, which is due

on demand.


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7. Net long-term debt:

Net long-term debt reported on the consolidated statements of financial position comprise the

following:

Interest rate Maturity date 2012 2011 Debenture CIBC Mellon

Trust Series 2002-A2 5.900 October 11, 2027 $ 77,938 $ 80,947 Debenture CIBC Mellon

Trust Series 2003-A2 5.800 November 7, 2028 40,366 41,796 Debenture CIBC Mellon

Trust Series 2003-A1 sinking fund 5.300 November 7, 2013 38,956 38,956

Debenture Ontario Financing Authority ("OFA") Series 2009-A2 5.347 November 15, 2033 22,033 22,570

Debenture OFA Series 2009-A4 5.105 May 15, 2029 19,882 20,603 Debenture OFA Series 2007 4.560 November 15, 2031 12,493 12,885 Debenture OFA Series 2009-A3 5.062 March 13, 2034 12,052 12,349 Debenture CIBC Mellon

Trust Series 2002-A1 sinking fund 5.700 October 11, 2017 11,858 11,858

Debenture OFA Series 2010-A345 5.232 April 13, 2035 11,122 11,369 Debenture OFA Series 2008 4.900 March 3, 2033 10,736 11,028 Debenture OFA Series 2009-A5 4.672 May 15, 2024 4,657 4,940 Debenture CIBC Mellon

Trust Series 2000-A1 7.200 June 9, 2025 4,686 4,898 Debenture OFA Series 2010-A1 4.762 November 15, 2029 3,813 3,951 Debenture OFA Series 2009-A1 4.766 November 15, 2024 3,364 3,557 Debenture OFA Series 2010-A2 4.337 November 15, 2024 1,445 1,531 275,401 283,238 Less sinking fund assets 9,675 8,203 265,726 275,035 Capital leases with maturities ranging from

2014 to 2017 at an interest rate of 2.35% 2,782 – Balance, end of year $ 268,508 $ 275,035


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7. Net long-term debt (continued):

Principal, sinking fund contributions and interest payments on the debenture debt due over the

next five years and thereafter are as follows:

Principal and Capital sinking fund Interest lease Fiscal year contributions payments payments Total

2012/2013 $ 9,341 $ 15,081 $ 921 $ 25,343 2013/2014 39,691 13,555 921 54,167 2014/2015 9,482 12,005 636 22,123 2015/2016 10,001 11,470 261 21,732 2016/2017 10,550 10,919 43 21,512 Thereafter 186,661 70,895 – 257,556

$ 265,726 $ 133,925 $ 2,782 $ 402,433

Sinking fund assets are administered by the Ontario School Board Financing Corporation and

have a fair value of $10,274 (2011 - $8,623). Sinking fund assets comprise short-term notes

and deposits, government and government-guaranteed bonds and debentures and corporate

bonds.

Interest on net long-term debt amounted to $15,316 (2011 - $15,765).

8. Debt repayment and sinking fund contributions:

The expenditure for debt charges, capital loans and capital leases includes principal, sinking

fund contributions and interest payments as follows:

2012 2011

Principal payments on net debt, including contributions to sinking funds $ 8,901 $ 5,793

Principal payments on capital leases 590 – Interest payments on net debt 15,448 16,070 Interest payments on capital leases 95 – Sinking fund debenture maturities – 6,537

$ 25,034 $ 28,400

Included in debt repayment and sinking fund contributions on the consolidated statements of

cash flows in total of $9,309 (2011 - $12,898) are principal payments on net debt, including

contributions to sinking funds, of $8,901 (2011 - $5,793) and sinking fund debenture maturities

of nil (2011 - $6,537) and sinking fund interest revenue of $408 (2011 - $568).


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9. Tangible capital assets:

Net book Cost Accumulated amortization value Disposals Balance, Additions Balance, Balance, write-offs, Balance, September 1, and August 31, September 1, and August 31, August 31, 2011 transfers Disposals 2012 2011 Amortization adjustments 2012 2012

Land $ 193,666 $ 33 $ (114) $ 193,585 $ – $ – $ – $ – $ 193,585 Land improvements 7,119 1,320 – 8,439 521 548 – 1,069 7,370 Buildings 1,014,632 69,599 (1,030) 1,083,201 343,887 31,750 (655) 374,982 708,219 Furniture and equipment 67,360 2,447 (32,765) 37,042 50,366 4,107 (32,765) 21,708 15,334 Construction-in-progress 39,366 6,680 – 46,046 – – – – 46,046 Capital leased assets 1,461 4,148 – 5,609 1,325 1,161 – 2,486 3,123

$ 1,323,604 $ 84,227 $ (33,909) $ 1,373,922 $ 396,099 $ 37,566 $ (33,420) $ 400,245 $ 973,677 Net book Cost Accumulated amortization value Disposals Balance, Additions Balance, Balance, write-offs, Balance, September 1, and August 31, September 1, and August 31, August 31, 2010 transfers Disposals 2011 2010 Amortization adjustments 2011 2011

Land $ 182,609 $ 13,800 $ (2,743) $ 193,666 $ – $ – $ – $ – $ 193,666 Land improvements 2,331 4,788 – 7,119 108 413 – 521 6,598 Buildings 984,951 35,948 (6,267) 1,014,632 319,951 27,662 (3,726) 343,887 670,745 Furniture and equipment 64,893 2,467 – 67,360 45,255 5,111 – 50,366 16,994 Vehicles 195 – (195) – 195 – (195) – – Construction-in-progress 6,175 33,191 – 39,366 – – – – 39,366 Capital leased assets 1,461 – – 1,461 1,230 95 – 1,325 136

$ 1,242,615 $ 90,194 $ (9,205) $ 1,323,604 $ 366,739 $ 33,281 $ (3,921) $ 396,099 $ 927,505


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9. Tangible capital assets (continued):

Assets under construction:

Assets under construction have a value of $46,046 (2011 - $39,366) and have not been

amortized. Amortization of these assets will commence when the asset is put into service.

10. Retirement and other employee future benefits:

Other employee Pension Retirement future 2012 benefits benefits benefits Total

Accrued benefit obligation: Balance, beginning of year $ 2,719 $ 129,479 $ 50,227 $ 182,425 Employer current service cost 110 7,539 2,138 9,787 Interest on accrued benefit

obligation 109 5,274 2,001 7,384 Benefits paid (233) (13,242) (4,698) (18,173) Actuarial loss 1,386 12,557 929 14,872 Curtailment gain (621) (31,778) (49,115) (81,514)

Balance, end of year $ 3,470 $ 109,829 $ 1,482 $ 114,781

Plan assets: Fair value, beginning of year $ – $ – $ – $ – Employer contributions 233 13,242 4,698 18,173 Benefits paid (233) (13,242) (4,698) (18,173)

Fair value, end of year $ – $ – $ – $ –

Funded status: Plan deficit $ 3,470 $ 109,830 $ 1,482 $ 114,782 Unamortized net actuarial loss – – (968) (968)

Accrued benefit liability $ 3,470 $ 109,830 $ 514 $ 113,814

Retirement and other employees' future benefits expenses(i):

Current year benefit costs $ 110 $ 7,539 $ 2,138 $ 9,787 Interest on accrued benefit

obligation 109 5,274 2,001 7,384 Amortization of net actuarial loss 148 319 980 1,447 Curtailment gain (621) (31,778) (49,115) (81,514) Recognition of unamortized

actuarial losses on plan curtailments 2,387 15,542 7,899 25,828

Employee future benefits expenses(i) $ 2,133 $ (3,104) $ (36,097) $ (37,068)


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10. Retirement and other employee future benefits (continued):

Other employee Pension Retirement future 2011 benefits benefits benefits Total Accrued benefit obligation:

Balance, beginning of year $ 2,569 $ 123,309 $ 48,122 $ 174,000 Employer current service cost 100 6,694 1,856 8,650 Interest on accrued benefit

obligation 122 5,955 2,262 8,339 Benefits paid (234) (6,544) (4,738) (11,516) Actuarial loss 162 65 2,725 2,952

Balance, end of year $ 2,719 $ 129,479 $ 50,227 $ 182,425 Plan assets:

Fair value, beginning of year $ – $ – $ – $ – Employer contributions 234 6,544 4,738 11,516 Benefits paid (234) (6,544) (4,738) (11,516)

Fair value, end of year $ – $ – $ – $ – Funded status:

Plan deficit $ 2,719 $ 129,479 $ 50,227 $ 182,425 Unamortized net actuarial

loss (1,149) (3,303) (8,917) (13,369) Accrued benefit liability $ 1,570 $ 126,176 $ 41,310 $ 169,056 Retirement and other

employees' future benefits expenses(i):

Current service costs $ 100 $ 6,694 $ 1,856 $ 8,650 Interest on accrued benefit

obligation 122 5,955 2,262 8,339 Amortization of net

actuarial loss 129 313 727 1,169 Employee future benefits

expenses(i) $ 351 $ 12,962 $ 4,845 $ 18,158

(i)

Excluding pension contributions to OMERS, a multi-employer pension plan described below.


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The amounts of the employee future benefit liabilities for the retirement gratuity plans and other

post-employment benefits are based on actuarial valuations for accounting purposes as at

August 31, 2012. These actuarial valuations were based on assumptions about future events.

The economic assumptions used in these valuations and the Board's best estimates of

expected rates are as follows:

Retirement benefits Other employee future benefits 2012 2011 2012 2011 Discount on accrued

benefit obligations 3.00% 4.00% 3.00% 4.00% Wage and salary

escalation 2.50% 3.00% 2.50% 3.00% Insurance and

health care 8.10% per annum n/a 8.10% per annum 9.00% per annum cost escalation grading down to grading down to grading down to an ultimate rate an ultimate rate an ultimate rate of 4.50% of 4.50% of 4.50%

(a) Plan changes:

On September 11, 2012, the Government of Ontario passed Bill 115, Putting Students First

Act. As a result, employees eligible for retirement gratuity will receive payout upon

retirement based on their accumulated vested sick days under the plan, years of service

and salary as of August 31, 2012. All accumulated non-vested sick days are eliminated as

of September 1, 2012, and are replaced with a new sick leave and short-term disability plan

with no provisions for accumulation of unused days.

Retirement life insurance and health care benefits have been grandfathered to existing

retirees and employees who will retire in 2012-13. Effective September 1, 2013, any new

retiree accessing retirement life insurance and health care benefits will pay the full

premiums for such benefits and will be included in a separate experience pool that is self-

funded.


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(b) Retirement gratuity plans:

The Board provides retirement gratuities to certain groups of employees hired prior to

specified dates. The Board provides these benefits through an unfunded defined benefit

plan. The benefit costs and liabilities related to this plan are included in the Board's

consolidated financial statements. In the prior year, the amount of gratuities payable to

eligible employees at retirement was based on their salary, accumulated sick days, and

years of service at retirement. As a result of the plan change, the amount of the gratuities

payable to eligible employees at retirement is now based on their salary, accumulated sick

days, and years of service at August 31, 2012. The changes to the Board's retirement

gratuity plan resulted in a one-time decrease to the Board's obligation of $16,236 and a

corresponding curtailment gain was reported in the consolidated statement of operations

and accumulated surplus as at August 31, 2012.

Retirement gratuity benefits paid in the year were $2,054 (2011 - $1,288).

(c) Sick leave accumulation:

As a result of the plan changes, the Board's liability related to compensated absences from

sick leave accumulations has been eliminated, resulting in a one-time reduction to the

obligation of $41,216 and a corresponding curtailment gain was reported in the

consolidated statement of operations and accumulated surplus as at August 31, 2012.

(d) Workplace Safety and Insurance Board ("WSIB"):

The Board is a Schedule 2 employer under the Workplace Safety and Insurance Act

("WSI Act") and, as such, assumes responsibility for the payment of all claims to its injured

workers under the WSI Act. The Board does not fund these obligations in advance of

payment made under the WSI Act. The benefit costs and liabilities related to this plan are

included in the Board's consolidated financial statements. WSIB amounts paid in the year

were $133 (2011 - $127). A liability of $5,417 (2011 - $5,307) is included in accounts

payable and accrued liabilities.


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(e) Post-employment benefits:

Certain senior staff who retire or leave under a voluntary exit plan may elect, if their

contractual arrangements permit, to continue coverage of health insurance and/or dental

insurance and life insurance. The Board will pay 100% of the cost and the coverage

terminates when the employee reaches age 65. In addition, supervisory office, non-union,

office, clerical, technical and custodial staff are eligible for a $5 life insurance benefit if they

retire on or after age 65. Post-employment benefits paid in the year were $233 (2011 -

$234).

(f) Ontario Teachers' Pension Plan:

Teachers and related employee groups are eligible to be members of the Ontario Teachers'

Pension Plan. Employer contributions for these employees are provided directly by the

Province. The pension costs and obligations related to this plan are a direct responsibility

of the Province. Accordingly, no costs or liabilities related to this plan are included in the

Board's consolidated financial statements.

(g) Ontario Municipal Employees Retirement System:

All non-teaching employees of the Board are eligible to be members of OMERS, a multi-

employer pension plan. The plan provides defined pension benefits to employees based

on their length of service and rates of pay. Employees contribute up to 8.8% of their

earnings and the Board matches the employee contributions to the plan. During the year

ended August 31, 2012, the Board contributed $12,678 (2011 - $10,226) to the plan. As

this is a multi-employer pension plan, these contributions are the Board's pension benefit

expenses. No pension liability for this type of plan is included in the Board's consolidated

financial statements.


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11. Expenses by object:

The following is a summary of the expenses reported on the consolidated statements of

operations and accumulated surplus by object:

Budget Actual Actual 2012 2012 2011 (Unaudited - note 1(m)) Salary and wages $ 740,522 $ 766,926 $ 726,701 Employee benefits 111,959 66,337 114,492 Staff development 2,540 1,197 1,035 Supplies and services 79,351 85,741 89,543 Debt charges and interest 16,657 15,316 15,765 Rental 2,183 4,821 3,593 Fees and contract services 59,412 45,427 41,185 Other 302 3,993 3,965 Amortization 34,072 37,517 33,281 $ 1,046,998 $ 1,027,275 $ 1,029,560

12. Commitments and contingencies:

(a) Commitments:

(i) Construction commitments:

Commitments on incomplete construction contracts for various school building projects

amounted to approximately $37,105 (2011 - $37,247) as at August 31, 2012.

(ii) Letters of credit:

The Board has 50 (2011 - 52) bank letters of credit outstanding in favour of the local

government totalling $6,540 (2011 - $5,960) as at August 31, 2012, pertaining to

construction projects. The latest expiry date is August 2013.


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12. Commitments and contingencies (continued):

(iii) Operating leases and maintenance contracts:

The Board has operating leases and maintenance contracts with the following annual

payments:

2012/2013 $ 9,159 2013/2014 5,744 2014/2015 2,790 2015/2016 1,802 2016/2017 1,661 Thereafter 11,745 $ 32,901

(iv) Gas contracts:

The Board has entered into forward contracts to purchase natural gas for consumption

by its schools. The commitment is to purchase 700 Gigajoule of natural gas over a

period from September 1, 2011 to August 31, 2012. The value of these contracts as at

August 31, 2012 was $2,391.

(b) Contingencies:

In the normal course of operations, various claims are brought against the Board. The

Board contests the validity of these claims and management believes any settlement

amounts required will not have a material effect on the consolidated financial position of the

Board.

Employee benefits:

Included in accounts payable and accrued liabilities is $23,616 (2011 - $25,126),

representing the estimated fully funded contingency for future benefits on the Board's self-

funded health benefits, which may be payable to eligible employees. Management

believes an unknown portion of this balance may not ultimately be payable. The amount

accrued represents management's best estimate of the maximum potential liability.


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13. Trust funds:

Trust funds administered by the Board amounting to $631 (2011 - $649) have not been

included in the consolidated statements of financial position nor have their operations been

included in the consolidated statements of operations and accumulated surplus.

14. Ontario School Board Insurance Exchange ("OSBIE"):

The Board is a member of OSBIE, a reciprocal insurance company licensed under the

Insurance Act. OSBlE insures general public liability, property damage and certain other risks.

Liability insurance is available to a maximum of $24,000 per occurrence.

The ultimate premiums over a five-year period are based on both the reciprocal's and the

Board's actual claims experience. Periodically, the Board may receive a refund or be asked to

pay an additional premium, based on its pro rata share of claims experience. The current

five-year term expires in December 2016.

15. Repayment of The "55 School Board Trust" funding:

On June 1, 2003, the Board received $50,415 from The "55 School Board Trust" for its capital

related debt eligible for provincial funding support pursuant to a 30-year agreement it entered

into with the Trust. The "55 School Board Trust" was created to refinance the outstanding not

permanently financed ("NPF") debt of participating boards that are beneficiaries of the Trust.

Under the terms of the agreement, The "55 School Board Trust" repaid the Board's debt in

consideration for the assignment by the Board to the Trust of future provincial grants payable to

the Board in respect of the NPF debt.

As a result of the above agreement, the liability in respect of the NPF debt is no longer reflected

in the Board's consolidated financial position. Included in provincial grants (student needs) is

$3,765 related to the funding for the Trust. The same amount is included in other expenses.


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16. Toronto Transportation Group:

On September 21, 2011, the Toronto Transportation Group was created as a Membership

Agreement between the Board and the Toronto District School Board in order to provide

common administration of student transportation in the region. This agreement was executed

in an effort to increase delivery efficiency and cost effectiveness of student transportation for

each of the school boards. Under the agreement, decisions related to this financial and

operating activities of the Toronto Transportation Group are shared. No party is in a position to

exercise unilateral control.

17. Subsequent event:

On September 11, 2012, the Government of Ontario passed Bill 115, the Putting Students First

Act, that was introduced August 27, 2012. The requirements of this new legislation were used

by the actuaries in the calculations of the Board's estimates for Retirement and Other

Employee Future Benefits obligations. The impact of the changes to the various plans has

been disclosed in note 10.

18. Comparative figures:

Certain comparative figures have been reclassified to conform with the financial statement

presentation adopted in the current year.

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