Costing Formula – Messaging / Q & A’s

Key Messages

  • The OPP polices 313 municipalities in Ontario, 180 on a Section 5.1 Police Services Act (non-contract) basis and 133 on a Section 10 PSA (contract) basis. All non-contract municipalities are being invoiced under the new Costing Formula, effective January 1, 2009, as are all municipalities renewing existing agreements or entering into new agreements on or after January 1, 2009. Municipalities currently in agreements will be invoiced under the new Formula when their agreements expire.
  • Correspondence to all OPP policed municipalities, dated December 29, 2008, over the signature of Commissioner Julian Fantino, advised municipalities of the application of the new Costing Formula.
  • On November 6, 2008, Ministry of Community Safety and Correctional Services (MCSCS) officials met with the Association of Municipalities of Ontario (AMO) to advise the association of the application of a new Costing Formula on January 1, 2008. The Formula was last updated in 2003.
  • On February 8, 2008, the Commissioner of the OPP advised OPP contracting municipalities that it was his intention to advocate to the Ministry that the Costing Formula be reviewed, updated and applied annually to all OPP policed municipalities. He also advised that the projected implementation date for the new formula would be in 2009.
  • The Ministry approved Costing Formula is a per officer cost that recovers expenditures for specific salary and benefit expenditures, support services and other direct operating expenses (ODOE). The formula also includes specific civilian component costs. The items included in the Formula are detailed in the cost schedule that is attached to all OPP financial statements provided to OPP policed municipalities.
  • Through Treasury Board/Management Board of Cabinet approval the OPP is mandated to apply the 2008 Costing Formula to OPP policed municipalities. Although the Formula is updated every two years to reflect current costs application it must still be approved by the government of the day. The last Formula update was completed in 2003 and an update was approved in 2008.
  • The Costing Formula meets the legislated requirements of the PSA to recover the cost of OPP policing services to municipalities policed on either a section 5.1 (non-contract) or section 10 (contract) basis.
  • Most OPP policed municipalities continue to express a high degree of satisfaction with OPP front-line service delivery and while some will continue to explore policing options available in the Police Services Act (PSA), other municipalities who maintain municipal police services are exploring the OPP policing option.
  • A significant component of increased policing cost is wage settlements. Control over salaries is a function of the collective bargaining process and comparisons to like-sized service providers. Negotiated compensation packages are standard business practice across the entire policing community. The three-year compensation package covering OPP uniform and civilian employees ended on December 31, 2008. A new agreement is undergoing ratification and any increase in salary costs will be applied to OPP policed municipalities, backdated to January 1, 2009. The previous agreement was comparable to wage settlements of other major police service providers in Ontario. Negotiations between municipal police services and police services boards use the same data as the basis for their negotiations.
  • The comprehensive package of infrastructure services, provided under the OPP policing umbrella, does afford savings to municipalities. For example, for municipalities under contract to the OPP there are considerable savings in costs and hidden costs of negotiating, ratifying and applying collective agreements.
  • OPP policed municipalities also benefit from the economies of scale in relation to the purchasing of uniforms, vehicles and equipment, as well as increased efficiencies and savings that are achieved through centralized communications.
  • A Costing Formula review is conducted every two years as directed by Management Board of Cabinet. The OPP notifies its client municipalities when increases are made to their policing costs, either through application of an updated Costing Formula or an increase due to wage settlements. Policing costs in Section 5.1 PSA policed municipalities can also be impacted immediately by an increase in workload. Section 10 municipalities experience more stability given that costs are based on a set complement.

Q and A’s

  1. What is the costing formula?
    The Costing Formula recovers the cost of providing OPP municipal policing services to municipalities across Ontario. The Formula is based on a per officer cost that recovers expenditures for specific salary and benefit expenditures, support services and other direct operating expenses (ODOE). The items included in the current formula are detailed in the cost schedule (Appendix A) and include: overtime percentage, shift premium, contractual payouts, OSS payroll and benefits, communications support and other direct operating expenses. An explanation of each component of the costing schedule is also attached (Appendix B). New cost components may be incorporated into future formulas. The change between the 2003 Formula and the 2008 Formula are also attached (Appendix C).
  2. Under what principles does the Ontario Provincial Police (OPP) effect cost recovery from Ontario’s municipalities?
    The OPP effects cost recovery under the following principles:
  3. A number of benefits accrue to the Province from the OPP’s provision of municipal policing services;
  4. Municipalities should only pay for expenditures relating to services provided to them by the OPP that are truly attributable to municipal police service delivery;
  5. The OPP treats non-contract, contract and non-OPP municipalities equitably where the provision of specialized and other provincial services are concerned.
  6. When was the Costing Formula first applied to all OPP policed municipalities?
  7. The costing formula was applied to all non-contracting municipalities on January 1, 1998, when the Police Services Amendment Act, 1997 came into effect. Prior to this change in the PSA 576 municipalities policed by the OPP did not pay directly for policing. Evolution from the previous costing formula to the 1997 Ministry approved formula was driven by these legislated amendments that brought equitable police financing to all of Ontario’s municipalities for the first time. Whereas the previous costing formula took an incremental approach in identifying the impact of the OPP providing municipal policing, the new (present) formula identifies these costs plus some of the structure and support costs associated to providing municipal policing in a contract environment.
  8. How often are unit costs within the formula revised or do they remain fixed over the life of the contract?
  9. Treasury Board / Management Board of Cabinet have directed that the costing formula be reviewed every two years to reflect recent costs. However, this does not mean the updated formula is applied every two years, as the decision to apply updated costs continues to rest with the government of the day. In 2008, following direction from Commissioner Julian Fantino, Contract Policing Section, in cooperation with Legal Services, included wording into the standard costing proposal and contract templates notifying municipalities that when approved, new formula costs would be applied on January 1st of the following year. The intent is to implement a fair, equitable and incremental fiscal application of the formula to all OPP policed municipalities, both contract and non-contract. The Commissioner is also advocating that government implement policy that would mandate an annual review of the costing formula. Ministry and Government approval is still required for implementation of these changes in policy. When implemented, contracting municipalities would no longer experience a significant escalation of costs upon renewal of their contracts, an issue that negatively impacted the budgets of many contracting municipalities.
  10. Are Section 10 (contract) costs different than Section 5.1 (non-contract) costs? Will the estimates the OPP provides in the fall be the same as the cost of a contract with the OPP?
  11. Contracts are tailored to meet the specific needs of a community and to take into account a community’s specific policing concerns and the level of service requested by the community. OPP municipal contracts are based on the most recently approved costing schedule, applied to the uniform and civilian complement contracted by the municipality. This same costing schedule is also applied to municipalities policed pursuant to Section 5.1 of the PSA. 5.1 staffing levels and costs fluctuate annually depending upon workload in the respective municipality proportionate to the entire detachment area. Section 10 (Contract) staffing levels remain stable at agreed upon, contracted levels.
  12. Are salary costs treated differently than the other component costs contained in the costing schedule?
  13. Yes, salaries are applied immediately (beginning of calendar year) upon ratification of the MOU with the Ontario Provincial Police Association (OPPA) for both civilian and uniform members. Uniform salaries are reconciled at calendar year-end to reflect actual salary expenditures for municipal billing purposes. The provincial Government receives full cost recovery for salaries.
  14. The Ontario Provincial Police (OPP) recently received confirmation from the Ministry of Community Safety and Correctional Services that the Uniform and Civilian Memorandum of Understanding (MOU) was ratified by Cabinet and the Ontario Provincial Police Association (OPPA). The new MOU is for a three year term commencing January 1, 2009 and extending to December 31, 2011. The agreement contains a clause allowing the OPPA an opportunity to re-negotiate the 2011 salaries.
  15. The uniform and civilian agreements include a base salary increase of 2.34% in 2009, 2.25% in 2010 and a 2.0% increase in 2011. The uniform agreement includes an increase in the Provincial Responsibility Incentive (PRI) rates for 2009 and 2010 only, being 1% higher than the 2008 rate. In 2011 the PRI reverts back to the 2008 rate. The civilian agreement includes a pay equity adjustment for various positions including detachment administrative clerks (OAG8). This OAG8 adjustment is equivalent to an additional 4.45% increase, resulting in a 6.79% increase overall for 2009.
  • The 2009 estimate that you have received was based on the 2008 salary rates. The reconciliation to actual policing costs for 2009 that will be completed by March 2010 will reflect the changes arising from the new collective agreements.

Appendix A

OPP Cost Schedule for Municipal Policing for the Year 2009 (Based on 2008 costing formula*)

The following categories are taken into consideration when preparing the costing proposal:

Item / 2009 Estimates
Uniformed Staff Salaries**
(Based on 2009 salary rates) / Inspector - $117,664
Staff Sergeant - $ 111,298 (Detachment Commander)
Staff Sergeant - $ 103,540 (Program Manager)
Sergeant - $ 91,883
Constable - $ 81,782
Part-time - $ 62,165
Civilian Salaries
(Based on 2009 salary rates) / OAG 8 - $ 51,615
OAG 6 - $ 44,927
Caretaker 2 - $ 45,126
Caretaker 1 - $ 43,705
Benefits / 25.1 % civilian staff
22.3 % uniformed staff
17.46 % for part-time uniform staff
2% overtime payments
Overtime Hours** / 8.8% of uniformed staff salaries
Shift Premium / $458 per uniformed member
Contractual Payouts (Vacation & Stats)** / $2,512 per uniformed member
OSS Payroll and Benefit / $394 per new FTE
Communications Support / $4,784 per uniformed member (Inclusive of Benefits)
Prisoner Guards/Expenses / $1,199 per uniformed member (Inclusive of Benefits)
Communication Centre / $220 per uniformed member
Operational Support / $1,449 per uniformed member (Training, Recruiting, Contract Policing)
Vehicle Usage / $9,707 per uniformed member
Telephone / $1,348 per uniformed member
Office Supplies & Equipment / $440 per uniformed member
Accommodation / $457 per uniformed member
Uniforms & Equipment / $1,202 per uniformed member
Cleaning Contract / $183 per uniformed member
Mobile Radio Maintenance / $732 per uniformed member
Office Automation / $2,503 per uniformed member
$1,351 per civilian member
RHQ Municipal Support / $1,657 per uniformed member
OSS Financial Services Fee / 1.15% of total ODOE

* The 2008 costing formula has been used to project ongoing costs for 2009 and throughout the term of this Agreement.
* Note, that upon approval of an updated costing formula, the new costing formula shall be applied in the following calendar year and costs shall be adjusted accordingly.

** Municipalities are billed for actual costs at year-end.

Proposal Wording

Salary, overtime and contractual payouts are reconciled at year-end to reflect the actual cost. A breakdown of the costs has been included, as well as the salary and cost schedule for the year 2009.

Appendix B

ODOE (OTHER DIRECT OPERATING EXPENSES) of Costing Schedule

Communications Centre / $5,004 per uniformed staff salaries
  • Is comprised of the salary & benefit dollars associated to the 5 Provincial Communication Centers staff that provides communication services.

Overtime hours / 8.8% of uniformed staff salaries
  • Overtime costs are based on detachment paid overtime to Constables, Sergeants and Staff Sergeants. Inspectors are not considered as they do not receive overtime. Overtime is reconciled to actual costs at year-end.

Shift premium / $458 per uniformed member
  • Average shift premium pay obtained by dividing the total paid by the total number of sergeants and constables in the detachment.

Contractual payouts / $2,512 per uniformed member
  • Average vacation and statutory holiday payouts to all uniform officers. The figure is reconciled to actual after year-end.

Ontario Shared Services Payroll & Benefit / $394 per new FTE
  • Applied to any new FTE added to the contract to create & maintain their payroll profile. These charges are annual and ongoing.

Operational support
(Training, Recruiting, Contract Policing, Quality Assurance) / $1,449 per uniformed member