Summary of KPMG meeting August 16th


Two meetings were held at the North Simcoe Sports and Recreation Center (NSSRC) Thursday night concerning the Management Study being conducted by KPMG Consultants.  The first meeting was an opportunity for the public to provide input. The second meeting was a presentation to Council of KPMG’s findings and options for cost savings.

The public input session was well attended.  The former Midland CAO and a former Midland Mayor who were in office when Midland approved building the NSSRC suggested that Midland operates efficiently with affordable services.  They disputed the fact that Midland is a low-income community with poor employment prospects and low assessment growth.

Moreland Lynn, also a former Mayor, made an excellent deputation in which he spoke of the need to enhance Midland’s economic development efforts by assigning the mandate to an Economic Development Office that is responsible only for this function.  He pointed to the apparent lack of success on the part of Midland and Penetanguishene in capitalizing on their shared status as an urban growth node.  Finally he chastised the petty behaviour of Council and its impact on Midland’s reputation.  His deputation is posted on the website.

The meeting also heard from several advocates for various recreation programs including minor hockey, lacrosse and the Askennonia Seniors Centre who expressed concern about NSSRC fee increases if the Town implements any recommendation to increase them.  Many said the Town should not increase rental rates even for non-residents due to low employment rates in North Simcoe and a high percentage of low-income users. made the case for ending runaway spending with 10 recommendations in a presentation entitled “The Imperative for Controlling Midland Town Spending” (posted on our website).  Staffing costs remain the elephant in the room that everyone seems reluctant to address.  Midland’s costs will increase about $600,000 (equivalent to a 3% tax increase) on January 1, 2013 and each following year just for wage and benefit increases for the Town’s current employees.

On Parks & Recreation, our deputation included several suggestions for reducing costs.  On user fees at the NSSRC, we suggested increasing fees for those who can afford them and providing subsidies for individuals who need financial assistance in order to participate.  It is a fact that most households in Midland pay hundreds of dollars each year in user fees without any subsidy for drinking water that everyone needs just to survive.  We have suggested those who can afford to pay more for their recreation wants should be required to pay more including the 50% of NSSRC users who benefit from the facilities but do not live in Midland.

Kevin Cowie also made an excellent case for better controls on spending and for rigorous follow-up to assess major projects and their financial performance.  Did the Council of the day know the NSSRC would have more than a $1million annual operating deficit when they approved building it?  Did Council make a bad decision or did it receive bad advice?  The kind of rigorous follow-up Kevin endorses would discourage overly optimistic projections that encourage projects that end up being financial disasters.  Kevin’s deputation is also posted on our website.

The second meeting saw KPMG present Council with a number of options for cost savings during a 3-hour session that began after the public input meeting concluded.  KPMG indicated that Midland has extremely high service levels generally and used the term ‘Cadillac’ several times when identifying cost-saving opportunities.  Payroll costs are a significant driver of costs (page 7 of KPMG’s presentation posted on our website).  Efforts to reduce this cost will be dealt with behind closed doors.  Fire stood out in particular with 16.7% annual payroll increases between 2008 and 2011 (page 34 of KPMG’s presentation).

Parks and Recreation also figured prominently in the presentation. Despite the fact over 50% of the users of the NSSRC are not Midland residents, Midland taxpayers are currently shouldering all principal and interest payments on the $5 million debt Midland incurred to build it as well as the operating deficit for the facility.

KPMG has suggested shifting about 50% of the debt costs to non-resident users of the NSSRC (page 22).  In coming weeks, we hope they will also examine our suggestion to sell surplus assets to reduce or eliminate the NSSRC debt entirely.  Eliminating that debt would reduce operating costs and free up money for worthy purposes, such as providing enhanced subsidies for local organizations and those with special needs.

Whatever choices are ultimately made on any of the ‘opportunities’ KPMG has identified, the fact remains Midland must find ways to reduce its ongoing costs.  You name it, Midland spends more for almost every service than most other municipalities in Simcoe County.  And we spend far too much once you recognize incomes in Midland are lower than anywhere else in the County.  Our future will remain bleak with no significant growth until Midland no longer has the highest taxes for new development in Simcoe County.

Council has directed Town staff to present the 2013 budget with three options, a 2% decrease in spending, a 0% flat budget and a 2% increase. With a year-over-year labour cost increase equivalent to a 3% tax increase, every one of these options requires spending reductions, ranging from a low of $408,000 (+2%) to a high of $1.09 million (-2%).

We urge citizens to support Council in staying the course in its efforts to control Town spending.  KPMG has indicated we have many ‘Cadillac’ service levels.  They have presented options that can result in large savings without taking needed services away from people.  We urge Council to carefully examine every option KPMG presents and put Midland on a proper course to a better future.

Stewart Strathearn and George Dixon on behalf of

Read the full KPMG-report-midland-august-2012 here.

4 Comments on "Summary of KPMG meeting August 16th"

  1. I would like to thank the members of this midland community group for taking the time to disseminate the information here on your website, for those who do not have the time to attend these meetings. I have read the report that you shared on your website provided by KPMG, and I noticed that there is some interesting numbers that were provided that you did not highlight.
    There is an interesting figure provided by KPMG regarding the potential savings in the police section. Having the municipality policed by the OPP constituted a $750 000 in potential savings yet this was not mentioned in your summary.
    There are also several large dollar savings found within the report that you have failed to mention.
    You have however, continued to highlight issues with the local fire department and the NSSRC, which has prompted me to do some homework.

    When speaking to people about the Rec centre, they highlited that the comparators used by KPMG put salaries of people who coordinate the programming within the budget lines of programming. This puts the numbers in the programming section up, conversely keeping there operations lower. It does not indicate that they provide more programs to the taxpayers than Midland currently offers. perhaps if midland did the same the numbers in the operations would be more in line as would the programming.

    I feel that the numbers with regards to the fire department are not a fair representation to the truth. The numbers for 2011 are consistent and appear to be accurate for the most part however, the 2008 numbers are not accurate, for those of you who follow the local media back in 2009, firefighters received an arbitrated settlement. This means that in 2008 they did not have a current,up to date contract. This means that the numbers used in 2008 were actually what the firefighters were getting paid in 2004 (as their contract expired in the end of 2003) so if you calculated the annual increases from 2004-2011 the percentage would be far less than double digits and probably appear much less alarming. Keep in mind that the last arbitration award was settled up to 2009 so any increases in salary and benefits shown in the KPMG study may not be accurate.

    I am encouraged that there is an interest in making this town a better place, but I would like people to consider what makes midland a great place, in the first place. And please take the time to do your homework, as I will continue to do.



    • Stewart Strathearn | August 23, 2012 at 11:54 am | Reply

      Thank you for taking the time to read the material on our website and to comment. While our summary attempts to hit the highlights, the KPMG report speaks for itself.

      We find the most important aspect of the evening was that Council directed Town staff to present the 2013 budget with three options: a 2% decrease in spending, a 0% flat budget and a 2% increase. With a year-over-year labour cost increase equivalent to a 3% tax increase, every one of these options requires spending reductions, ranging from a low of $408,000 (+2%) to a high of $1.09 million (-2%). KPMG has indicated we have many ‘Cadillac’ service levels. We spend far too much once you recognize incomes in Midland are lower than anywhere else in the County. They have presented options that can result in large savings without taking needed services away from people.

      KPMG identified a total ~$1,500,000 in cuts that could be made exclusive of any staff reductions. Significant reduction opportunities remain that do not have a value assigned. For example, savings in Corporate Service were not quantified. Still KPMG indicated the Town spends $1,800,000 while the PUC spends $1,200,000 on this activity. They suggested significant savings by consolidating Corporate Services under affiliate relationship agreements. Salaries comprise 67% of the $1,800,000 corporate service costs. Don’t forget, just for waking up on January 01, 2013 and every year thereafter, your taxes will increase 3% or ~$600,000.00 for contract salary increases.

      KPMG identified $750,000 in reduced policing costs if Midland moved to the OPP. However, KPMG noted that the numbers used for the OPP calculation were based on a 110 page OPP rates document that was somewhat vague. They also indicated that once out of the policing model it is unlikely Midland can afford the cost of re-establishing it’s own force. The implication seemed to be one of caution and that Midland do its homework prior to proceeding down the path of OPP policing .

      Parks and Recreation also figured prominently in the public presentation portion of the evening hence it figured prominently in our commentary. KPMG clearly stated that the Parks and Recreation function was heavily weighted to capital facilities with very little program content. Less than $25.00 collected from every household for Parks and Recreation goes to program funding compared to over $300.00 going to facilities. Debt servicing on the NSSRC consumes ~$440,000 in interest and principle per year. Eight years remain of a15-year, $5 million debenture with the Midland taxpayer paying for the entire debt. KPMG suggested shifting about 50% of the debt costs to neighbouring municipalities governments. Unfortunately sale of surplus assets to reduce or eliminate the NSSRC debt was not discussed.

      As for Fire Services, the short window used by KPMG can affect perceptions where large settlements involving retroactivity occur within the reporting period. That is why we used a 10 years event horizon for our deputation last fall. The 2000 – 2009 provincial FIR numbers provided by Midland showed a 97% in fire costs per household. Numbers debate aside, we suggest a volunteer model such as Port Hope employs instead of the mixed or composite model Midland uses. Midland’s costs for 2011 were $2,141,000 versus $953,000 for Port Hope.

      We all know Midland is a great place to live, work, and play; else why make this effort. So, thanks to you for making the effort to check KPMG’s numbers and reminding us all of Midland’s magic.

      Stewart Strathearn for

      • I too found the KPMG findings on savings of $750,000 for moving to the OPP jumping out at me when I read the report. All of the other municipalities/regions in the vicinity of Midland are patrolled by the OPP. Why would you possibly want to return after you have switched? Why not ask say Collingwood or other municipalities that have recently switched what their experience has been? Seems like a no brainer.

  2. Thank you for your response and providing some supplemental information. I agree that there are difficult decisions to be made, however, I will have to agree to disagree on your perspective regarding the Midland fire department. . Operating the fire department in a strictly volunteer model is NOT something that I feel would benefit the diverse group of people who make up the residents of Midland. After reviewing the Municipality of Port Hope’s fire department, annual reports, it is clear to me that these two departments are not even remotely similar.


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