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Section III
Supplementary Information

3.1 Electronic Tables

More information on Tables 1 to 9 can be found at: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 1	Sources of Respendable and Non-Respendable Revenues
Table 2	User Fees/External Fees
Table 3	Details on Transfer Payment Programs
Table 4	Up-Front Multi-Year Funding (formerly Foundations (Conditional Grants))
Table 5	Horizontal Initiatives
Table 6	Sustainable Development Strategy
Table 7	Green Procurement
Table 8	Response to Parliamentary Committees and External Audits
Table 9	Internal Audits and Evaluations

The financial statements which provide an accounting of Human Resources and Skills Development Canada's administration of its public financial affairs and resources to a variety of users both within the government and external to it are available on-line at:
http://www.hrsdc.gc.ca/eng/publications_resources/dpr/dpr/index.shtml

3.2 Financial Performance Overview - Human Resources and Skills Development Canada

In 2008-2009, the department was authorized to spend $88,520.2 million or $1,394.5 million more than the consolidated planned spending of $87,125.7 million. The variance is explained by:

• An increase of $1,473.5 million in Specified Purpose Accounts mainly due to an increase in Employment Insurance (EI) costs. The increase in EI costs is mostly due to an increase in EI benefits payments attributable to a higher number of beneficiaries than projected and higher weekly benefits.
• An increase of $119.7 million in net operating expenditures mainly due to;
  • Funding for collective agreements increase ($42.0 million). A considerable amount of collective agreements have been signed during 2008-2009 such as the Public Service Alliance of Canada (PSAC) agreement;
  • Operating budget Carry-forward from 2007-2008 ($17.1 million);
  • Realignment from EI Administrative costs to Consolidated Revenue Fund (CRF) ($14.9 million) to compensate for the reduction in administrative costs charged to the Employment Insurance account;
  • Paylist Requirements received through TB Vote 30 for maternity leave, severance pay and leave in lieu which are not included in the Planned spending ($17.1 million);
  • Funding for Canada Disability Savings Program to administer the new program ($9.3 million). Canada Disability Savings Program is to encourage long-term savings through Registered Disability Savings Plans to provide for the financial security of persons with severe and prolonged impairments in physical or mental functions by providing Government of Canada contributions (Canada Disability Savings Grants and Bonds) as an incentive to both open an Registered Disability Savings Plan and contribute to it;
  • New funding for Labour Program Integrity ($6.3 million) to stabilize core program activities of the Labour Program such as improving the quality and availability of mandated mediation services and creating policy capacity to support program development;
  • Funding for the 2008-2009 Government of Canada Advertising Plan ($5.5 million) for the advertising campaigns: Post-Secondary Education Financing - Students, Post-Secondary Education Financing - Parents, and Services to Newcomers;
  • Funding for the Federal Elder Abuse Initiative ($3.3 million) to help seniors and others recognize the signs and symptoms of elder abuse and to provide information on what support is available;
  • Funding to extend joint initiatives with provinces and territories under the Trades and Apprenticeship Strategy that aim to strengthen apprenticeship systems in the Red Seal trades, to promote Aboriginal participation in apprenticeships and the skilled trades, and for capital upgrades of the Interprovincial Computerized Examination Management System ($2.2 million);
  • Funding to conduct a national survey on the level of financial literacy of Canadians to assist in identifying required needs and to guide future investors education initiatives ($2.0 million).
• An increase of $81.6 million in loans disbursed under the Canada Student Financial Assistance Act mainly due to the actual amount of repayments being lower than anticipated. In a difficult economic context, students tend to stay in school longer and access debt management measures such as Interest Relief which would have an impact on repayment.
• An increase of $22.6 million in Grants and Contributions mainly due to:
  • The re-profiling of funds of $27.4 million from 2007-2008 to 2008 2009 for the Homelessness Partnering Strategy. This re-profile is necessary to honour federal/provincial commitments and the public disclosure of funding levels to municipalities and community groups across Canada;
  • The re-profiling of funds of $10.0 million from 2007-2008 to 2008 2009 for Enabling Accessibility Fund to allow the program to fund an exemplary large project to be fully accessible to all people with varying abilities and to serve as a model approach to accessibility in communities;
  • Other items ($0.8 million) such as a transfer from Department of Indian and Northern Affairs Canada for Kativik Regional Government, a transfer to Canada Industrial Relations Board relating to the relocation of Vancouver and Montreal regional offices, and to funding for the extension of the Trade and Apprenticeship Strategy;
  • Offset by a transfer of funds of $15.6 million between Vote 5 and Vote 1. This represents a technical adjustment within the department to offset HRSDC Vote 1 requirements in Supplementary Estimates (C) 2008-2009.
• Offset by a decrease of $302.9 million in the statutory payment authorities attributable to:
  • A decrease of $212.8 million in Old Age Security benefits, which include the Old Age Security pension, the Guaranteed Income Supplement and the Allowance. While there was an increase in Old Age Security pension payments ($13.5 million) due to a greater number of beneficiaries and lower amounts recovered through the OAS Recovery Tax, there was a decrease in Guaranteed Income Supplement payments ($184.5 million) and Allowance payments ($41.8 million) due to a lower number of beneficiaries than originally forecasted;
  • A decrease of $114.9 million from Planned spending for Registered Disability Savings Plan due to the late launch in December 2008 and limited marketing of the Plan;
  • $29.8 million in Payments related to the direct financing arrangement under the Canada Student Financial Assistance Act. Starting in 2008-2009, Canada Student Loans Program has entered into a new contract with one sole service provider including a brand new costing methodology. The revised fee structure leads to savings over the years. Also, a reduction in program costs due to lower than anticipated interest rates have led to a decrease in Alternative Payments;
  • $27.5 million for Wage Earner Protection Program. The Actual spending was lower than forecasted due to a number of factors, including: an implementation date four months after the start of the fiscal year; a delay in the receipt of Wage Earner Protection Program applications and information from trustees who were becoming familiar with the new Program and its process; and lower than anticipated demand for the Program in the early months of its implementation;
  • $21.3 million in Liabilities under the Canada Student Loans Act is due to the fact that actual spending is presented net of the recoveries on claims while the planned spending includes only the forecast expenditure of claims payments;
  • $7.3 million for Canada Education Savings Grant due to the decrease in Registered Education Savings Plans savings by Canadian families as the economic downturn started to take hold in the fall of 2008;
  • $1.2 million related to the provision of funds for interest payments and liabilities in the form of Risk Shared loans under the Canada Student Financial Assistance Act;
  • Offset by an increase of:
    • $77.8 million for Universal Child Care Benefit due to a higher number of recipients than projected and a slight increase in take up rates;
    • $16.2 million in the employee benefit plans mostly due to new collective agreements signed during 2008-2009;
    • $13.8 million for Canada Learning Bond due to Department's efforts to publicize the program to the Canada Learning Bond's target population;
    • $4.1 million related to other items such as Payments of compensation respecting government employees and merchant seamen.

The actual consolidated expenditures of $88,264.2 million were $256.0 million lower than the total consolidated authorities of $88,520.2 million. This was mainly due to

• Grants and contributions expenditures being $206.8 million less than the authorities, including $89.2 million of frozen resources due to reprofiles to future years:
  • The Apprenticeship Incentive Grant ($45.6 million) is mainly due to lower take-up than what was initially projected based on the 2003 Registered Apprenticeship Information System. Take-up issues were identified and were reviewed in the recent formative evaluation of the Apprenticeship Incentive Grant program;
  • Labour Market Agreements ($40.1 million) due to amounts reprofiled into future years to allow Provinces and Territories sufficient flexibility to effectively spend funding while putting new programming in place;
  • The Homelessness Partnering Strategy ($32.5 million), of which $20.2 million is to be reprofiled to 2009-2010 and $12.3 million to 2010-2011 to ensure that funds will be available for proposals that are developed for activities to alleviate homelessness;
  • Enabling Accessibility Fund ($22.7 million) which $22.2 million was reprofiled into future years to construct and renovate permanent structures and small projects to be fully accessible to all Canadians with varying abilities;
  • Targeted Initiative for Older Workers ($14.1 million) due to reprofiling into 2009-2010 to ensure that federal funding committed through agreements with provinces and territories remains available to them to offer older worker programming;
  • Adult Learning, Literacy and Essential Skills Program ($13.9 million) due to delays in financial engagement for several multi-year projects.
  • Workplace Skills Initiative ($13.3 million) was not in a position to take on new projects given the absence of future year funding;
  • Youth Employment Strategy ($12.6 million) due to delays in implementing Skills Link and Career Focus projects, as well as the inability of some employers to fill all the positions for which they were approved for Canada Summer Jobs funding and because some students left their jobs early;
  • Aboriginal Skills and Employment Partnerships ($3.7 million) due to deferral of projects into next fiscal year, mainly due to delays in project proposal start dates;
  • Sector Council Program ($1.5 million) due to deferral of projects into next fiscal year and delays in approved project start-up;
  • Labour Market Agreements for Persons with Disabilities ($1.5 million) due to funds being kept in reserve for the Territories, who have not as yet participated in the program;
  • New Horizons for Seniors Program ($1.3 million) due to delays in approvals and signing of agreements resulted in later than anticipated project start dates;
  • Labour Management Partnership Program ($1.2 million) due to a lower-than-projected number of approved projects;
  • Other lapses ($2.8 million) such as for Opportunities Fund for Persons with Disabilities and Foreign Credential Recognition.
• A net operating lapse of $25.1 million related to $2.3 million in frozen resources, $5.5 million in Special Purpose Allotments and $17.3 million in general lapse. The $17.3 million has been requested as a carry-forward to 2009-2010.
• The other actual expenditures were $24.1 million less than the authorities, mostly due to the variance in the Employment Insurance costs and in the Canada Pension Plan costs.

3.3 Specified Purpose Accounts

Introduction

Specified Purpose Accounts (SPA) are special categories of revenues and expenditures. They report transactions of certain accounts where enabling legislation requires that revenues be earmarked and that related payments and expenditures be charged against such revenues. The transactions of these accounts are to be accounted for separately.

HRSDC is responsible for the stewardship of four such accounts:
        the Employment Insurance (EI) Account;
        the Canada Pension Plan (CPP);
        the Government Annuities Account; and
        the Civil Service Insurance Fund.

The EI Account is a consolidated SPA and is included in the financial reporting of the Government of Canada. Consolidated SPAs are used principally where the activities are similar in nature to departmental activities and the transactions do not represent liabilities to third parties but, in essence, constitute Government revenues and expenditures.

The CPP is a SPA but is not consolidated as part of the Government of Canada financial statements. It is under joint control of the government and the participating provinces. As administrator, the government's authority to spend is limited to the balance in the Plan.

The Government Annuities Account is a consolidated SPA and is included in the financial reporting of the Government of Canada. It was established by the Government Annuities Act, and modified by the Government Annuities Improvement Act, which discontinued sales of annuities in 1975. The account is valued on an actuarial basis each year, with the deficit or surplus charged or credited to the Consolidated Revenue Fund.

The Civil Service Insurance Fund is a consolidated SPA and is included in the financial reporting of the Government of Canada. It was established by the Civil Service Insurance Act. Pursuant to subsection 16(3) of the Civil Service Insurance Regulations, the amount of actuarial deficits is transferred from the Consolidated Revenue Fund to the Civil Service Insurance Account in order to balance the assets and liabilities of the program.

The following information updates forecasted data on the EI Account and CPP that the Department provided in the 2008-2009 Report on Plans and Priorities⁴ . That report presented multi-year financial data and general information. Additional information on performance and year end data is available at the internet addresses provided in this section.

Employment Insurance Account

The table below summarizes the financial results for the EI Account from 2006-2007 to 2008-2009.

EI Account - Statement of Operationsa
	Actual
(millions of dollars)	2006-2007	2007-2008	2008-2009
Expenditures
Benefits	14,079	14,293	16,308
Administrative Costs	1,636	1,689	1,801
Doubtful Accountsb	99	81	27
Sub-Total	15,815	16,063	18,137
EI Premiums and Penalties
Premiums	17,109	16,877	17,217
Penalties	56	58	41
Sub-Total	17,165	16,935	17,258
Variance	1,351	872	(879)
Premium Rate(% of Insurable Earnings)	2007	2008	2009
Employee	1.80%	1.73%	1.73%
Employer	2.52%	2.42%	2.42%
a. The EI Account is a consolidated SPA and is included in the financial reporting of the Government of Canada. Consolidated SPAs are used principally where the activities are similar in nature to departmental activities and the transactions do not represent liabilities to third parties but, in essence, constitute government revenues and expenditures. b. Represents write-offs and estimates of uncollectible account receivables for benefit overpayments and penalties imposed.

Despite the reduction in the premium rate in 2008-2009, revenues from EI premiums increased due to the growth in employment and earnings. EI benefit payments increased in 2008-2009 due to an increase in the number of beneficiaries and higher weekly benefits. As a result, expenditures exceeded revenues by $0.9 billion. The revenue shortfall was offset by $1.0 billion in interest earned and $0.1 billion in additional funding for measures introduced in Budget 2009, resulting in the notional cumulative surplus in the EI Account increasing by $0.2 billion to $57.2 billion as of March 31, 2009.

More detailed information is reported in the 2008-2009 audited EI Account financial statements that are included in the 2009 Public Accounts of Canada, Volume 1, Section 4⁵. HRSDC also offers information on Employment Insurance on its website.⁶ It provides information on the authority, objectives and details of the program as well as links to Actuarial Reports and the EI Commission's annual Monitoring and Assessment Reports.

Canada Pension Plan

The following table summarizes the financial results for the Canada Pension Plan (CPP) from 2006-2007 to 2008-2009.

More information relating to 2008 2009 is reported in the Canada Pension Plan financial statements which can be found in the 2009 Public Accounts of Canada, Volume 1, Section 6.

Canada Pension Plan - Summary
	2006-20074	2007-2008	2008-2009
($ millions)	Actual		Forecast	Actual
Revenue
Contributions	32,355	35,346	34,023	36,506
Investment Income
Canada Pension Plan	9	11	7	6
CPP Investment Board1	12,788	(268)	-	(23,576)
CPP Investment Fund2	247	-	-	-
Total Investment Income	13,044	(257)	7	(23,570)
Total Revenue	45,399	35,089	34,030	12,936
Expenditures
Benefit Payments	26,115	27,536	28,993	29,005
Administrative Expenses3	574	599	627	694
Total Expenditures	26,689	28,135	29,620	29,699
Increase / Decrease	18,710	6,954	4,410	(16,763)
Year-end Balance	119,831	126,785	131,195	110,022
1 Canada Pension Plan Investment Board actual amounts are based on their audited financial statements. The CPP Investment Board invests mainly in equities and fixed income securities. The investment income is composed of realized gains and losses from investments, unrealized gains and losses on investments held at the end of the period (change in fair value) and foreign exchange gains and losses. For 2008-2009, there was a net investment loss. 2 The Canada Pension Plan Investment Fund was made up of provincial, territorial and government bonds. As of March 31, 2006, these were valued at fair value. Since May 2004, the rights and titles of the CPP Investment Fund bonds were being transferred, over a three year period and on a monthly basis, to the CPP Investment Board. After the last portion (36/36th at $630 million) of the Investment Fund was transferred to the CPP Investment Board on April 1, 2007, the CPP Investment Fund ceased to exist. 3 Administrative Expenses include CPP Administrative Expenses as well as CPP Investment Board Administrative Expenses. 4 The 2006-2007 actual figures have been restated. Please Note: All amounts from this table for 2006-2007 and 2007-2008 are the consolidated amounts found in the audited CPP annual financial statements.

Government Annuities Account

The table below summarizes the financial results for the Government Annuities Account from 2006-2007 to 2008-2009. Source of the figures is the Report of the Chief Actuary on the Government Annuities as at March 31, 2009.

Government Annuities Account - Statement of Operations and Actuarial Liabilities
	Actual
(millions of dollars)	2006-2007	2007-2008	2008-2009
Actuarial Liabilities –
Balance at Beginning of Year	347.2	319.4	292.9
Income	23.4	21.1	19.4
Payments and Other Charges	48.3	45.0	42.0
Excess of Payments and Other Charges Over Income for the Year	24.9	23.9	22.6
Actuarial Surplus	2.9	2.6	3.1
Actuarial Liabilities –
Balance at End of the Year	319.4	292.9	267.2

The annual report and financial statements for Government Annuities are available in the 2009 Public Accounts of Canada, Volume 1, Section 6⁷.

Civil Service Insurance Fund

The table below summarizes the financial results for the Civil Service Insurance Fund from 2006-2007 to 2008-2009.

Civil Service Insurance Fund - Statement of Operations and Balance
	Actual
(millions of dollars)	2006-2007	2007-2008	2008-2009
Opening Balance	6.3	6.0	5.9
Receipts and Other Credits	0.0	0.1	0.0
Payments and Other Charges	0.3	0.2	0.3
Excess of Payments and Other Charges Over Income for the Year	0.3	0.1	0.3
Balance at End of the Year	6.0	5.9	5.6

The annual report and financial statements for the Civil Service Insurance Fund are available in the 2009 Public Accounts of Canada, Volume 1, Section 6⁸ .

3.4 Statutory Annual Reports

Old Age Security

The Old Age Security program is one of the cornerstones of Canada's retirement income system. Benefits include the basic Old Age Security pension, the Guaranteed Income Supplement and the Allowance. The Old Age Security program is financed from Government of Canada general tax revenues.

The following tables present information on monthly benefits, beneficiaries and payments by province or territory.

Statutory Annual Reports: Summary of Maximum Monthly Benefits

(dollars)	Basic Pension	Income Supplement		Allowance
Fiscal Year		Single	Married	Regular	Survivor	Increase
Monthly benefit by fiscal year
2008-2009 Actuals
January 1, 2009	516.96	652.51	430.90	947.86	1,050.68	0.0%
October 1, 2008	516.96	652.51	430.90	947.86	1,050.68	2.2%
July 1, 2008	505.83	638.46	421.62	927.45	1,028.06	0.7%
April 1, 2008	502.31	634.02	418.69	921.00	1,020.91	0.0%
2008-2009 Estimates
January 1, 2009	511.39	645.50	426.28	937.67	1,039.39	0.1%
October 1, 2008	510.88	644.86	425.85	936.73	1,038.35	0.8%
July 1, 2008	506.83	639.74	422.47	929.30	1,030.11	0.7%
April 1, 2008	503.31	635.29	419.53	922.84	1,022.95	0.2%
2007-2008 Actuals
January 1, 2008	502.31	634.02	418.69	921.00	1,020.91	0.0%
October 1, 2007	502.31	634.02	418.69	921.00	1,020.91	0.9%
July 1, 2007	497.83	628.36	414.96	912.79	1,011.80	1.2%
April 1, 2007	491.93	620.91	410.04	901.97	999.81	0.0%
Maximum amount paid (annual benefits)
2008-2009 Actuals	6,126.18	7,732.50	5,106.33	11,232.51	12,450.99	2.4%
2008-2009 Estimates	6,097.23	7,696.17	5,082.39	11,179.62	12,392.40	1.9%
2007-2008 Actuals	5,983.14	7,551.93	4,987.14	10,970.28	12,160.29	3.4%

 

Statutory Annual Reports: Number of Persons Receiving Old Age Security Benefits by Province or Territory and by Type

	March 2008				March 2009
Province or Territory	Old Age Security (OAS) Pension	Guarantee Income Supplement (GIS)	Allowance	GIS as % of OAS	Old Age Security (OAS) Pension	Guarantee Income Supplement (GIS)	Allowance	GIS as % of OAS
Newfoundland and Labrador	72,546	45,411	4,533	62.60	74,884	45,766	4,360	61.12
Prince Edward Island	20,108	9,374	575	46.62	20,645	9,320	556	45.14
Nova Scotia	138,753	59,664	4,353	43.00	142,077	59,515	4,120	41.89
New Brunswick	110,215	54,582	4,299	49.52	112,962	54,434	4,194	48.19
Quebec	1,108,175	520,851	31,572	47.00	1,142,879	518,355	30,353	45.36
Ontario	1,647,106	485,298	27,805	29.46	1,690,561	479,751	26,741	28.38
Manitoba	161,191	59,436	3,395	36.87	163,581	58,026	3,299	35.47
Saskatchewan	146,431	57,601	3,223	39.34	147,341	55,326	3,144	37.55
Alberta	355,789	119,202	5,642	33.50	365,759	117,370	5,497	32.09
British Columbia	586,798	193,749	10,844	33.02	603,784	194,667	11,009	32.24
Yukon	2,501	803	45	32.11	2,638	806	55	30.55
Northwest Territoriesa	2,939	1,586	113	53.96	3,098	1,613	118	52.07
Internationalb	87,118	8,606	70	9.88	90,885	8,546	62	9.40
Total	4,439,670	1,616,163	96,469	36.40	4,561,094	1,603,495	93,508	35.16
a. Data for Nunavut are included. b. Persons receiving Canadian Old Age Security benefits under International Agreements on Social Security.

 

Statutory Annual Reports: Old Age Security Payments, by Province or Territory and by Type, Fiscal Year 2008-2009

(dollars)
Province or Territory	Old Age Security (OAS) Pension	Guaranteed Income Supplement (GIS)	Allowance	Total
Newfoundland and Labrador	451,926,895	194,919,910	26,404,359	673,251,163
Prince Edward Island	124,638,174	39,566,871	2,728,466	166,933,511
Nova Scotia	858,662,939	239,469,565	21,387,976	1,119,520,480
New Brunswick	682,490,393	227,710,075	23,188,246	933,388,714
Quebec	6,822,701,042	2,262,353,402	158,638,209	9,243,692,653
Ontario	9,740,356,539	2,436,221,662	162,312,914	12,338,891,115
Manitoba	982,467,436	242,013,710	18,331,068	1,242,812,214
Saskatchewan	899,296,755	229,577,568	17,671,104	1,146,545,426
Alberta	2,140,130,884	553,467,482	33,859,827	2,727,458,193
British Columbia	3,432,150,596	986,820,665	64,994,185	4,483,965,446
Yukon	15,695,391	3,558,918	275,273	19,529,582
Northwest Territoriesa	18,670,483	8,453,441	876,997	28,000,921
Internationalb	115,567,453	87,408,061	528,276	203,503,790
Total	26,284,754,980	7,511,541,329	531,196,900	34,327,493,209
Recovery tax portion of OAS	(950,233,271)	-	-	(950,233,271)
Total including recovery tax	25,334,521,709	7,511,541,329	531,196,900	33,377,259,938
a. Data for Nunavut are included. b. Persons receiving Canadian Old Age Security benefits under International Agreements on Social Security.

Consolidated Report on Canada Student Loans

In August 2000, the Canada Student Loans Program was shifted from the risk-shared financing arrangements that had been in place with financial institutions between 1995 and July 2000 to a direct student loan financing plan.⁹ This meant that the Program had to redesign the delivery mechanism in order to directly finance student loans. In the new arrangement, the Government of Canada provides the necessary funding to students a service provider is responsible to administer the loans.

Reporting Entity

The entity detailed in this report is the Canada Student Loans Program only and does not include departmental operations related to the delivery of the Canada Student Loans Program. Expenditures figures are primarily statutory in nature, made under the authority of the Canada Student Loans Act and the Canada Student Financial Assistance Act.

Basis of Accounting

The financial figures are prepared in accordance with generally accepted accounting principles and as reflected in the Public Sector Accounting Handbook of the Canadian Institute of Chartered Accountants.

Revenues

Two sources of revenue are reported: interest revenue on Direct Loans and recoveries on Guaranteed and Put Back Loans. Government accounting practices require that recoveries from both sources be credited to the government's Consolidated Revenue Fund. They do not appear along with the expenditures in the Canada Student Loans Program accounts, but are reported separately in the financial statements of Human Resources and Skills Development Canada (HRSDC) and the government.

Interest Revenue on Direct Loans

Borrowers are required to pay simple interest on their student loans once they leave full-time studies. At the time they leave school, students have the option of selecting a variable (prime + 2.5%) or fixed (prime + 5%) interest rate. The figures represent the interest accrued on the outstanding balance of the government-owned Direct Loans. Borrowers continue to pay the interest accruing on the guaranteed and risk-shared loans directly to the private lender holding these loans. The weekly loan limit is set at $210 per week of study.

Recoveries on Guaranteed Loans

The government reimburses the private lenders for any loans issued prior to August 1, 1995 that go into default (i.e., lenders claim any amount of principal and interest not repaid in full). The figures represent the recovery of principal and interest on these defaulted loans.

Recoveries on Put-back Loans

Under the risk-shared agreements, the government will purchase from the participating financial institutions any loans issued between August 1, 1995 to July 31, 2000 that are in default of payments for at least 12 months after the period of study, that in aggregate, do not exceed 3% of the average monthly balance of the lender's outstanding student loans in repayments. The amount paid is set at 5% of the value of the loans in question. The figures represent the recovery of principal and interest on these loans.

Canada Study Grants and Canada Access Grants

Canada Study Grants and Canada Access Grants improve access to post-secondary education by providing non-repayable financial assistance to post-secondary students. Four types of Canada Study Grants are available to assist: (1) students with permanent disabilities in order to meet disability-related educational expenses (up to $8,000 annually); (2) students with dependants (up to $3,120 for full-time students and up to $1,920 for part-time students, annually); (3) high-need part-time students (up to $1,200 annually); and (4) women in certain fields of Ph.D. studies (up to $3,000 annually for up to three years). Two Canada Access Grants are available since August 1, 2005, to assist: (1) students from low-income families entering their first year of post-secondary studies (50% of tuition, up to $3,000); and (2) students with permanent disabilities in order to assist with education and living expenses (up to $2,000 annually).

Collection Costs

These amounts represent the cost of using private collection agencies to collect defaulted Canada Student Loans. The loans being collected include: risk-shared and guaranteed loans that have gone into default and for which the government has bought back from the private lender; and Direct Loans issued after July 31, 2000, that are returned to HRSDC by the third party service provider as having defaulted. As of August 1, 2005 the Canada Revenue Agency Non Tax Collections Directorate undertook the responsibility for the administration of the collection activities of the guaranteed, risk-shared and direct student loans.

Program Delivery Costs

Canada Student Loans Program uses third party service providers to administer borrower authentication, in-study loan management, post-studies repayment activities and debt management. This item represents the cost associated with these contracted services.

Risk Premium

Risk premium represents part of the remuneration offered to lending institutions participating in the risk-shared program from August 1, 1995 to July 31, 2000. The risk premium represents 5% of the value of loans being consolidated which is calculated and paid at the time students leave studies and go into repayment. In return, the lenders assume the risk associated with non-repayment of these loans.

Put-Back

Subject to the provisions of the contracts with lending institutions, the government will purchase from a lender the student loans that are in default of payment for at least 12 months and that, in aggregate, do not exceed 3% of the average monthly balance of the lender's outstanding student loans in repayments. The amount paid is set at 5% of the value of the loans in question. The figures also include any refund made to participating financial institutions on the recoveries.

Administrative Fees to Provinces and Territories

Pursuant to the Canada Student Financial Assistance Act, the government has entered into arrangements with nine provinces and one territory to facilitate the administration of the Canada Student Loans Program. They administer the application and needs assessment activities associated with federal student financial assistance and in return they are paid an administrative fee.

In-Study Interest Borrowing Expense

The capital needed to issue the Direct Loans is raised through the Department of Finance's general financing activities. The cost of borrowing this capital is recorded in the Department of Finance's overall financing operations. The figures represent the cost attributed to Canada Student Loans Program in support of Direct Loans while students are considered in study status.

In-Repayment Interest Borrowing Expense

The capital needed to issue the Direct Loans is raised through the Department of Finance's general financing activities. The cost of borrowing this capital is recorded in the Department of Finance's overall financing operations. The figures represent the cost attributed to Canada Student Loans Program in support of Direct Loans while students are in repayment of their Canada Student Loans.

In-Study Interest Subsidy

A central feature of federal student assistance is that student borrowers are not required to pay the interest on their student loans as long as they are in full-time study and, in the case of loans negotiated prior to August 1, 1993, for six months after the completion of studies. Under the guaranteed and risk-shared programs, the government pays the interest to the lending institutions on behalf of the student.

Interest Relief

Assistance may be provided to cover loan interest and suspend payments on the principal of loans in repayment for up to 54 months for borrowers experiencing temporary difficulties repaying their loans. The shift from Guaranteed and Risk-Shared Loans to Direct Loans did not alter interest relief for loans in distress from the borrower's perspective; however, the method of recording associated costs changed. For loans issued prior to August 1, 2000, Canada Student Loans Program compensates lending institutions for lost interest equal to the accrued interest amount on loans under Interest Relief. For loans issued after August 1, 2000, an interest relief expense is recorded to offset the accrued interest on direct loans.

Debt Reduction in Repayment

Debt Reduction in Repayment assists borrowers experiencing long-term difficulties repaying their loans. Debt Reduction in Repayment is a federal repayment assistance program through which the Government of Canada reduces a qualifying borrower's outstanding Canada Student Loans principal to an affordable amount after Interest Relief has been exhausted and only after 5 years have passed since the borrower ceased to be a student. As of August 1, 2005, the maximum amount of Debt Reduction in Repayment assistance is $26,000, which is available to eligible borrowers in an initial deduction of up to $10,000, a second deduction of up to $10,000 and a final deduction of up to $6,000. For loans issued prior to August 1, 2000, Canada Student Loans Program pays the lending institutions the amount of student debt principal reduced by the Government of Canada under Debt Reduction in Repayment. For loans issued after August 1, 2000, the Government of Canada forgives a portion of the loan principal.

Claims Paid and Loans Forgiven

From the beginning of the program in 1964 until July 31, 1995, the government fully guaranteed all loans issued to students by private lenders. The government reimburses private lenders for any of these loans that go into default (i.e., subject to specific criteria, lenders may claim any amount of principal and interest not repaid in full, after which the Canada Revenue Agency's Collection Services will attempt to recover these amounts).¹⁰ The risk-shared arrangements also permitted loans issued from August 1, 1995 to July 31, 2000 to be guaranteed under specific circumstances. This item represents the costs associated with loan guarantees.

Pursuant to the Canada Student Loans Act and the Canada Student Financial Assistance Act, the government incurs the full amount of the unpaid principal plus accrued interest in the event of the death of the borrower or, if the borrower becomes permanently disabled and cannot repay the loan without undue hardship.

Bad Debt Expense

Under Direct Loans, the government owns the loans issued to students and must record them as assets. As a result, generally accepted accounting principles require a provision be made for potential future losses associated with these loans. The provision must be made in the year the loans are issued even though the losses may occur many years later. The figures represent the annual adjustment to the provisions for Bad Debt and Debt Reduction in Repayment on Direct Loans.

Alternative Payments to Non-participating Provinces and Territories

Provinces and territories may choose not to participate in the Canada Student Loans Program. These provinces and territories receive an alternative payment to assist in the cost of delivering a similar student financial assistance program.

Commitments

Starting March 17, 2008, the Canada Student Loans Program entered into a new agreement with one single Service Provider. For the 2009-2010 fiscal year, the expected cash flow for the service provider contract is $ 61.0 millions

Figure 1: Consolidated Canada Student Loans Programs - Combined

	Actual		2008-2009
(millions of dollars)	2006-2007	2007-2008e	Forecast	Actual
Revenues
Interest Revenue on Direct Loans	453.3	537.1	551.5	472.8
Recoveries on Guaranteed Loans	55.3	46.6	52.6	38.5
Recoveries on Put-Back Loans (RS)	14.5	13.5	15.2	13.1
Total Loan Revenue	523.1	597.3	619.3	524.4
Expenses
Transfer payment
Canada Study Grants and Canada Access Grants	146.4	161.5	142.9	143.2
Loan Administration
Collection Costs (All regimes)a	12.4	14.4	12.5	8.5
Program Delivery Costs (DL)	65.6	70.8	84.2	76.0
Risk Premium to Financial Institutions (RS)	1.8	1.3	1.3	0.7
Put-Back to Financial Institutions (RS)	4.7	3.8	5.2	3.8
Administrative Fees to Provinces and Territories (DL)	14.7	13.7	14.4	14.7
Total Loan Administration Expenses	99.2	104.0	117.6	103.7
Cost of Government Benefits to Students
In-Study Interest Borrowing Expense (Class A - DL)b	185.7	196.4	195.7	166.9
In Repayment Interest Borrowing Expense (Class B - DL)b	145.0	173.6	227.6	160.7
In-Study Interest Subsidy (RS & GL)	11.5	8.0	2.0	4.0
Interest Relief (All regimes)	84.2	93.2	101.3	82.6
Claims Paid & Loans Forgiven (All)	24.2	17.0	17.3	23.2
Total Cost of Govt Benefits to Students	470.7	502.5	550.7	448.0
Bad Debt Expensec
Debt Reduction in Repayment Expense (DL)	9.6	12.4	14.3	53.2
Bad Debt Expense (DL)	260.4	293.5	363.8	293.6
Total Bad Debt Expense	270.0	305.9	378.1	346.8
Total Loan Expenses	986.3	1,073.9	1,189.3	1,041.7
Net Operating Results	463.2	476.6	570.0	517.3
Alternative Payments to Non-Participating Provinces (DL)d	91.3	113.9	117.9	111.0
Final Net Operating Results	554.5	590.5	687.9	628.3
(DL) = Direct Loans (RS) = Risk-Shared Loans (GL) = Guaranteed Loans a. These costs are related to collection activities performed by the Canada Revenue Agency. b. These costs are related to Canada Student Direct Loans but reported by the Department of Finance. c. This represents the annual expense against the Provisions for Bad Debt and Debt Reduction in Repayment as required under Accrual Accounting. d. The figures represent the annual expense recorded under the Accrual Accounting as opposed to the actual amount disbursed to the Non-Participating Provinces. For 2007-2008, the total amount disbursed as Alternative Payments s $115,8 M. e. Actuals for 2007-2008 for Interest revenue on Direct Loans, In-Study Interest Borrowing Expense (Class A), In-Repayment Interest Borrowing Expense (Class B) and Bad Debt Expense have been adjusted following a revision of financial data.

 

Figure 2: Consolidated Canada Student Loans Programs -Risk Shared and Guaranteed Loans Only

	Actual		2008-2009
(millions of dollars)	2006-2007	2007-2008	Forecast	Actual
Revenues
Recoveries on Guaranteed Loans	55.3	46.6	52.6	38.5
Recoveries on Put-Back Loans (RS)	14.5	13.5	15.2	13.1
Total Loan Revenue	69.8	60.2	67.8	51.6
Expenses
Loan Administration
Collection Costsa	5.3	4.9	4.7	3.2
Risk Premium to Financial Institutions (RS)	1.8	1.3	1.3	0.7
Put-Back to Financial Institutions (RS)	4.7	3.8	5.2	3.8
Total Loan Administration Expenses	11.8	10.0	11.2	7.7
Cost of Government Benefits to Students
In-Study Interest Subsidy	11.5	8.0	2.0	4.0
Interest Relief	20.8	14.4	8.1	8.0
Debt Reduction in Repayment	20.1	14.3	6.8	10.6
Claims Paid & Loans Forgiven	17.0	9.8	7.5	9.7
Total Cost of Govt Benefits to Students	69.4	46.5	24.4	32.3
Total Loan Expenses	81.2	56.5	35.6	40.0
Final Net Operating Results	11.4	(3.7)	(32.2)	(11.6)
(RS) = Risk-Shared Loans a. These costs are related to collection activities performed by the Canada Revenue Agency.

 

Figure 3: Consolidated Canada Student Loans Programs -- Direct Loans Only

	Actual		2008-2009
(millions of dollars)	2006-2007	2007-2008e	Forecast	Actual
Revenue
Interest Revenue on Direct Loans	453.3	537.1	551.5	472.8
Total Loan Revenue	453.3	537.1	551.5	472.8
Expenses
Transfer payment
Canada Study Grants and Canada Access Grants	146.4	161.5	142.9	143.2
Loan Administration
Collection Costsa	7.1	9.5	7.8	5.3
Program Delivery Costs	65.6	70.8	84.2	76.0
Administrative Fees to Provinces and Territories	14.7	13.7	14.4	14.7
Total Loan Administration Expenses	87.4	94.0	106.4	96.0
Cost of Government Benefits to Students
In-Study Interest Borrowing Expense (Class A )b	185.7	196.4	195.7	166.9
In Repayment Interest Borrowing Expense (Class B )b	145.0	173.6	227.6	160.7
Interest Relief	63.4	78.8	93.2	74.6
Loans Forgiven	63.4	78.8	93.2	74.6
Total Cost of Govt Benefits to Students	401.3	456.0	526.3	415.7
Bad Debt Expensec
Debt Reduction in Repayment Expense	9.6	12.4	14.3	53.2
Total Bad Debt Expense	260.4	293.5	363.8	293.6
Total Loan Expenses	905.1	1,017.4	1,153.7	1,001.7
Net Operating Results	451.8	480.3	602.2	528.9
Alternative Payments to Non-Participating Provincesd	91.3	113.9	117.9	111.0
Final Net Operating Results	543.1	594.2	720.1	639.9
a. These costs are related to collection activities performed by the Canada Revenue Agency. b. These costs are related to Canada Student Direct Loans but reported by the Department of Finance. c. This represents the annual expense against the Provisions for Bad Debt and Debt Reduction in Repayment as required under Accrual Accounting. d. The figures represent the annual expense recorded under the Accrual Accounting as opposed to the actual amount disbursed to the Non-Participating Provinces. For 2008-2009, the total amount disbursed as Alternative Payments is $127,2M. e. Actuals for 2007-2008 for Interest revenue on Direct Loans, In-Study Interest Borrowing Expense (Class A), In-Repayment Interest Borrowing Expense (Class B) and Bad Debt Expense have been adjusted following a revision of financial data.

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