515TH MEETING, NOVEMBER 16, 17, 2017
At the November 2017 meeting, Council approved PEO’s new 2018-2020 Strategic Plan, its associated objectives and the communications rollout for the document.
In June 2016, Council set out to create a new strategic plan to focus PEO’s activities for the next three years. Over the subsequent 17 months, staff, volunteers, government ministries and PEO’s partners in the engineering community deliberated on the association’s strengths and weaknesses and the perceived opportunities and threats it would face over the plan period (see “Developing PEO’s next strategic plan,” Engineering Dimensions, July/August 2017). Vision and mission statements as well as PEO’s core values were reconfirmed and strategic objectives were articulated.
As approved, the focus areas and strategic objectives set by the plan will determine the priorities for PEO programs and initiatives, and provide guidance for Council, committees, task forces and staff. The focus areas and objectives are:
Protecting the public interest
- Refine the delivery of the PEAK program
- Heighten delivery and awareness of PEO’s enforcement efforts
- Enhance PEO’s public image
- Engage chapters as a valuable regulatory resource
- Increase influence in matters regarding the regulation of the profession
Advancing PEO’s mission
- Augment the applicant and licence holder experience
- Redefine the volunteer leadership framework
- Create a seamless transition from student member to EIT to licence holder
- Enhance corporate culture
The strategic plan is not intended to be an action plan or work plan. Rather, it is a forward-looking blueprint to provide PEO with a common direction. Specific strategies and action plans, with targeted completion dates, will flow from the plan.
Council will monitor the plan’s ongoing progress and the strategies to realize the plan’s strategic objectives will be reviewed annually as part of PEO’s budget-planning process.
The approved 2018-2020 Strategic Plan can be found at www.peostratplan.ca.
Council has approved the 2018 operating and capital budgets, as recommended by the Finance Committee. Despite efforts by management to reduce costs, the current version of the operating budget is projected to have a deficit of $203,000. This deficit will be funded from the operating reserve of $7.3 million, which is above the minimum cash balance requirement of $4.5 million. Some of the reasons for the deficit are:
- the absence of membership fee increases since 2008, and revenues from the growth in the number of licence holders, applications, examinations, etc. have not been adequate to keep pace with inflation, which has increased cumulatively by 15.8 per cent since 2009;
- an increase in the backlog of applications in 2017 that await processing, which is largely due to staff absences resulting from accidents and long-term disability (steps have been taken to hire additional resources to deal with this backlog); and
- an increase in the scope and breadth of PEO’s operations—several programs have been added and become part of regular operations over the course of the last several years, such as the Practice Evaluation and Knowledge (PEAK) program and an increase in the contribution for the Ontario Professional Engineers Awards gala.
In the draft operating budget, total revenues are budgeted at $25.9 million, representing an increase of $461,000 or 1.8 per cent over the 2017 forecasted revenue. This increase is largely due to:
- an increase in application, registration, exam and other fees of $327,000 or 5.1 per cent due to an increase in certificate of authorization, application, exam and EIT revenues;
- an increase in P.Eng. revenue dues of $256,000 or 1.6 per cent due to growth in P.Eng. membership;
- an increase in advertising revenues by $60,000 or 20 per cent due to an expected improvement in market conditions; and
- a decrease in 40 Sheppard Avenue building revenues of $187,000 compared to 2017 due to a large payout for the early termination of a lease by a tenant in 2017.
P.Eng. licence fees will remain frozen for the 10th consecutive year. All other fees remain frozen for the seventh consecutive year. The current version of the 2018 budget assumes all fees remain unchanged.
The 2018 budget expenses are planned to be $26.2 million, which represents an increase of $977,000 or 4 per cent over 2017 forecasted expenses. The increase is largely due to:
- an increase in employee salaries and benefits and retiree and future benefits of $411,000 over the 2017 forecast due to a 3 per cent increase in staff salary for merit increases and CPI adjustment;
- an increase in costs for computers and telephones of $300,000 due to web hosting expenses for the PEAK program application, support contracts for various IT infrastructure services and teleconferencing costs for the regional candidate meetings approved by Council;
- an increase of $191,000 in purchased services largely due to higher costs for the electronic voting agent, costs for event meals and related expenses for the Order of Honour and various events, and costs for producing the ethics video for the PEAK program;
- an increase of $63,000 for two new contract staff—one for assisting in clearing up the current application backlog and one for helping clean up member data;
- an increase of $50,000 for professional development courses for staff and volunteers compared to the 2017 forecast;
- an increase of $36,000 in volunteer business expenses due to higher costs for meals, mileage, accommodation and travel-related expenses for attending various events, committee meetings and conferences; and
- an increase of $31,000 in amortization due to the completion of IT projects.
The increased expenses were partially offset by reductions of:
- $142,000 in legal costs primarily due to lower legal expenses for small claims-related litigation and employment-related matters;
- $26,000 in costs for consultants largely due to no costs for consultations for the public information campaign in 2018 as the relevant work is expected to be completed in 2017, no consulting costs for the elections audit in 2018, lower costs for IT consultants, etc. These decreases are partially offset by an increase in costs for consultants for the PEAK program, Succession Planning Task Force, Government Liaison Program, etc.; and
- $13,000 in postage and courier costs as members are being encouraged to download receipts and related correspondence directly from the web portal.
The capital budget for 2018 is $2.52 million, which comprises capital improvements to PEO headquarters ($2.13 million), information technology ($342,000) and facilities ($45,000). Capital improvements planned for 40 Sheppard include security improvements in the reception area, replacement of the emergency generator, elevator upgrades, and replacing exterior windows and heat pumps. Significant IT expenditures for the year include upgrading the PEO website and portal, and updating the SQL server, Aptify, financial system and hardware. The planned facilities expenditure for 2018 include replacing furniture and aging audio-visual equipment and upgrading the phone system.
Council carried a motion to renew PEO’s borrowing policy, which includes an operating line of credit and corporate credit cards with Scotiabank, until January 31, 2019. Council approved an operating overdraft for an amount not to exceed $250,000, and use of corporate credit cards with an aggregate limit not to exceed $120,000. Council was told PEO has an adequate cash flow to meet its business requirements on a regular basis, and the overdraft facility is only for contingency purposes. Corporate credit cards provide convenience to senior volunteers and senior staff for PEO business expenditures. The credit card balances are paid off every month.
AGM SUBMISSION APPROVED
At its November meeting, Council directed the registrar to issue a call for volunteers for appointment to a seven-member Phase 1 Governance Working Group (GWGP1), comprised of four current councillors and three additional members at large, with preference given to members who have formal governance education. Council also directed the chair to develop terms of reference and approved a $40,000 budget for the working group to complete its work and deliver a report to Council before the 2019 Annual General Meeting, or earlier.
This motion was a result of a member submission that was passed at PEO’s 2017 Annual General Meeting that suggested “PEO engage an external governance expert to advise Council independently on how to modernize the governance of the organization in order to ensure self-regulatory status and that the principles of the new governance model be presented to Council for approval before the next AGM.” The submission later evolved to suggest the creation of a governance working group as a first phase before committing to an external expert.
The purpose of the new GWGP1 is to develop a clear definition and understanding of the issue and evaluate the risk of PEO losing its self-regulatory status and remaining relevant as a regulator. Work of the recent governance-related task forces, such as the Council Term Limits Task Force, Succession Planning Task Force and Council Composition Task Force, will be considered. The group will also develop a Request for Submission to engage a regulatory governance expert to review PEO’s current governance model, and to provide input on the desired qualifications of the governance expert and bid evaluation criteria.
The GWGP1 is expected to provide a progress report to Council prior to the 2018 Annual General Meeting, which will include timing for the delivery of its final report to Council. The report will confirm if an external governance review is warranted. If not, no further action is needed.