IceStorm 98 Study

Costs and financial record keeping

Ice storm ‘98 wasn’t all about rescue efforts, heroics in the field or helicopter rides. Behind the scenes, Kingston’s financial officers were carrying out the more mundane but equally important task of making sure they could account for the City’s emergency-related expenses after it was all over. Chief Financial Officer Denis Leger and one of his assistants came up with a purchase order system by the end of the first day that was designed to keep track of every dollar spent. But they quickly realized that City staff would be unable to keep up with the demands of documenting every transaction. With so many different people doing so many things, much of it by phone, Mr. Leger said it was impossible to maintain a seamless central purchasing system. This emergency was also more chaotic than most, he said, because there were many people volunteering who did not know exactly what they would be doing but who were, in some cases, authorized to make purchases. All of these factors made life difficult for the City’s financial staff until the departments and emergency ‘cells’ came into line, some by assigning certain individuals to keep track of costs:

Accountants take it for granted that things can be recorded and recorded with ease, but people being placed under those stressful situations could not keep up with our requests. But I think they knew well enough to set up key people in their departments to handle that kind of thing.

In the end, only major purchases were documented with a full set of purchase order forms, while most City staff and volunteers handed in bundles of receipts and hand-written notes about telephone transactions and donations. Debbie Bowen, from the clerk’s department, input all of these stray slips of paper into a log, while Sharon Simpkins (Bob McConachie’s secretary) maintained the log and kept it up to date. It was important to keep on top of the numbers at all times, Mr. Leger said, because Kingston knew the province would be calling “if not on a daily basis, [then] on a semi-weekly basis” to find out how much the emergency was costing. Without solid figures, Kingston might not be eligible for reimbursement, and wouldn’t know how much money to request from the federal and provincial governments.

Financial staff spent a large part of every day calling around to various departments and reminding people to keep track of what they spent. Mr. Leger said he felt “like a pest” sometimes, and City staff agreed. Utilities operation manager Nancy Taylor got so tired of hearing from the City’s accountants that she finally told Mr. Leger to send someone down to help them with the number crunching if he wanted it done so badly. No one at Utilities had time to closely track costs, she said, and Mr. Leger’s demands were getting in the way of her operation. Lance Thurston agreed there were times when the finance department seemed like an “enormous annoyance,” because “they were checking with us almost on a half-hour basis, [saying] ‘Are you filling out your log form? Are you filling out your log form?’” But he said most people recognized the importance of keeping track of expenses and did what they could to keep the numbers accurate.

One way of verifying the damage and estimating costs was by doing a helicopter flyover and surveying the damage with a video camera. This was carried out by visiting members of the Toronto fire department and the Metro Toronto police, who went up in a military helicopter about halfway through the emergency. They were looking not only at the infrastructurre damage in Kingston, but also damage to poles and infrastructurre on Wolfe Island and up to Seeley’s Bay. While the videotape showed quite a bit of damage, it was made a few days too late to be really useful. By the time crews got up in the air, a lot of the cleanup had already been carried out. “Had we been able to secure that helicopter maybe a little sooner, we may have gotten a better indication [of how bad things were],” Mr. Leger said. The main purpose of the visual record was to prove to the province how bad things were and substantiate the plea for financial assistance.

In mid-February, 1998, Mr. Leger notified the province that total damages within Kingston were in the area of $22 to $23 million. A large part of that was infrastructure costs needed to rebuild the City’s utility system. That figure alone was estimated at $10 to 11 million. These were not costs that had been incurred, but were estimates provided by engineers from Toronto who evaluated the utility infrastructure. [See Toronto Hydro study of Kingston’s electrical infrastructure, by Romano Sironi et al., on file with Ice Storm ‘98].

As of late April, the province had forwarded $2 million to Kingston. Some of that total arrived during the emergency and was used to help cover immediate relief costs. An emergency help fund was set up to provide food, shelter, batteries, and other things people needed immediately. Mr. Leger said the City probably spent about $500,000 on those immediate needs and used the remaining $1.4 million to help with emergency cleanup costs and food purchases. The City also spent about $133,000 on emergency costs for other municipalities.

Documents prepared by Mr. Leger’s office in February show that the City had spent $4.4 million and was projecting another $17 million in expenses related directly to the ice storm. A partial breakdown of costs included this information:

Incremental overtime .................................... $1,098,374
$500 projected additional
Emergency equipment rental .........................$230,000
$600,000 projected additional
Additional labour costs ..................................$660,000
$3.5 million projected additional
Charges from external organizations .............$1 million
$20,000 projected additional
Extraordinary debris clearance ......................$52,000
$1,000 projected additional
Other extraordinary expenses ........................$1.2 million
$6,500 projected additional
Public infrastructure ......................................$12.6 million projected additional
Impact on municipal operations ....................$182,000
Other projected future costs ..........................$710,000

Actual expenses to date (February, 1998): $4.4 million
Projected additional expenses: $17.5 million

All City staff interviewed for this study said they thought about lives and public safety first, and costs second. Senior administrators made this an explicit directive by telling Kingston staff to spend what they needed to spend on the relief effort and the City would worry about paying for it later. Gardner Church acknowledged that this approach left the City wide open to being defrauded, but he said he is certain this didn’t happen. There were instances in which the City lost track of what they were doing financially, he added, but not by any large amounts. (Mark Segsworth cites one relatively minor case of potential fraud: he believes utility and other crews stopped in Kingston and refuelled their vehicles for free before heading off to other destinations. Given how much help Kingston received from outside utilities -- much of which turned out to be free -- this may not be considered fraud at all, but a simple matter of directing resources toward the wider problem).

Despite being given permission to spend as needed, some staff felt guilty or were unable to turn off their long public service training in curbing costs. “It was a concern for me personally because I was used to budgeting, so when I was told to go out and start purchasing supplies I wondered if it would come back on me that I had spent all this money,” said Lynda Breen, who coordinated the shelters. She was never told to cut costs when supplying the City’s shelters, but she still took care to ask local grocery stores to sell them items at cost.

Lynne Jordon added there were limitations on what could be spent. For example, she and the others who worked in the call centre at City Hall would loved to have equipped the building with a brand new phone centre, complete with a system to record incoming calls, but they knew that wasn’t possible:

I think we’re all used to [limiting spending] ... having worked in the municipal sector for so long, we’re automatically geared up to ‘what’s the minimal we can do, how can we do it for less.’

Former public works and environment manager Brian Sheridan was one of the few people interviewed for this study who said money was a concern during the emergency. “Every decision was made in light of costs,” he said. “Did we not make decisions because of costs? No. But we were conscious of the cost implications when we made decisions. Priority was given to returning the community to a state of normal.”

There were some very big ticket expenses. As of late April, Utilities Kingston estimated its own costs at somewhere between $2.5 and $3 million dollars. That figure included labour, materials, accommodations and food, but did not take into account infrastructure needs resulting from the storm. Cleaning up the City’s devastated parks has also been a massive chore, and a major expense. As of late April, the cost was being estimated at $500,000 to $600,000, and that figure did not even address the issue of replanting dead trees or maintaining injured ones.

City Fleet and Equipment manager Cynthia Beach recalled that her group, which dealt with generators and cell phones, “got into some really major expenses.” But she said they were told at the time not to be concerned with money. “We were looking first at getting generators to places like old age homes or medical care facilities. The welfare of the people came before the cost, at that point, and it was really up to whoever was looking after the generators to make that call.”

Mark Segsworth said he has no idea how much his department spent on clearing the City’s roads, but said it’s “in the millions.” And he was one of the few to admit that costs, or at least the accounting function, occasionally “[got] out of control”:

It did get out of control. It got out of control with out- of-town crews, who had to be paid, and you couldn’t keep track of who was who or where people were from. That was rough. People were being sent here and sent there. Somebody would show up and say ‘this person sent me here, and I can do this.’ ... There were too many different people and too many different things. You didn’t know exactly who was doing what. But I think those of us that were delivering the hard services, I don’t think there was much of a problem there ... it was just a lot of other things on the periphery.

In addition to calculating costs, Denis Leger said his group was in “constant contact” with the Ministry of Municipal Affairs and Housing, Emergency Measures Ontario and the City’s insurers and insurance brokers, in order to determine their responsibility versus the City’s responsibility. The City has two insurers. Frank Cowan Co., which insures most of the municipalities in Ontario, and Mearie, which insures municipal utilities separately. The City had to determine the coverage for property damage and also what was covered from the point of view of the utility infrastructure. The City also needed to find out about the City’s responsibility for damage to third parties, such as trees falling on cars. Most of the damage caused would have been from City trees or from water, electriCity or sewage failures. This was a major concern for a time when it looked as if the water treatment plant might shut down completely due to inadequate back-up power, but fortunately the plant was brought back up to full power before that happened. “We kept our fingers crossed and that didn’t happen, so we were fortunate there,” Mr. Leger said.

The total cost of the emergency would have been substantially higher if all outside municipalities had charged full rates for sending their people to Kingston. Most municipalities provided trained staff at no cost to the City except for travel, hotel, food and in some cases the incremental payroll costs. “If they worked overtime and it was over and above what Toronto was prepared to pay, then we would bolster that,” Mr. Leger recalled. Kingston and Smiths Falls were twinned with the City of Toronto, and judging by the small number of bills Kingston had received from Toronto by late April, which amounted to $133,000, it looked as if Toronto would not be billing Kingston for its day-to-day costs. Toronto’s invoices seem to have been confined to travel and lodging, but Mr. Leger said Kingston expects to be billed for any incremental payroll costs. Some of the incremental payroll costs from other municipalities had arrived as of late April, but others had yet to show up, and Kingston was waiting for the province to issue directives on how to process those claims. Mr. Leger said he understands some of the utilities from other municipalities volunteered their time, with the expectation that Kingston would return the favour sometime in the future.