Background

Alberta Municipal Affairs is implementing a new performance measure for the ministry, and associated indicators for municipalities.

The ministry performance measure will calculate the percentage of municipalities that are deemed to be “not at risk” based on defined financial, governance, and community indicators.

The new ministry performance measure builds on the work of the Municipal Sustainability Strategy.

Although the ministry performance measure is reported as an aggregate percentage, the underlying municipal indicators provide each municipality and the department with useful information and alerts to emerging challenges.

Source data for the municipal indicators

The indicators are calculated using formulas applied to specific data collected by the ministry, including:

  • information provided by Alberta municipalities annually through audited Financial Statements and Financial Information Returns
  • municipal election results collected in accordance with the Municipal Government Act (MGA) and the Local Authorities Election Act
  • information provided by Alberta municipalities following the completion of a municipal census
  • a count of instances whereby the Minister was required to intervene because a municipality was operating in contravention of the MGA

The municipal indicators and what they measure

Each indicator measures a specific aspect of the municipality's governance, finances or community.

Each indicator has a defined benchmark. The benchmarks established for each indicator are rules of thumb that provide a general indication of acceptable risk.

However, a municipality may have unique circumstances or alternative strategies that justify a different result.

Find details of the 13 indicators in the Municipal Indicators document.

How the municipal indicators are used

We use the municipal indicators to calculate our performance measure for Outcome 1 of the Municipal Affairs business plan:

  • Albertans live in viable municipalities and communities with responsible, collaborative and accountable local governments.

The performance measure will be based on the percentage of municipalities that are deemed to be "not at risk". A municipality is deemed to be “not at risk” if it does not trigger the “audit outcome” or “legislation-backed ministry intervention” indicators, and does not exceed more than 2 of the other 11 indicators in the annual calculation.

If the municipality does not meet the criteria for being “not at risk”, it does not necessarily mean there is any cause for concern.

The municipality is encouraged to review the circumstances giving rise to the indicator results to ensure it is not exposed to potential or emerging risks.

Multiple indicator benchmark exceptions may indicate an increased concern for exposure to potential or emerging risks. In cases where multiple exceptions are triggered in a year, the department will offer advisory supports to the municipality.

In those rare situations where a municipality triggers on the defined number (or more) of indicators for 3 consecutive years, the ministry will initiate a viability screening, to determine whether a viability review should be initiated.

Publication of detailed municipal indicator results

In addition to the use of the aggregate performance measure in the ministry’s annual report, Alberta Municipal Affairs will publish the results of the municipal indicators for each municipality on the ministry’s website.

We review the indicator results internally for accuracy., but otherwise publish based on the calculated results without modification.

If a municipality is impacted by events beyond its control, the indicators will be allowed to reflect the impact of those events. For instance, if a municipality’s on-time financial reporting is delayed due to a natural disaster, the related “on-time financial reporting” indicator shows as an exception. This ensures full transparency of the current situation for all municipalities in Alberta, and reflects the possible elevation of risk regardless of cause.

An isolated indicator exception may serve as an alert that the municipality may be experiencing challenges in a specific aspect of its operation, but does not imply that the municipality is “at risk”.

The indicator results are based on high-level reporting, and further review is necessary before determining if there is a valid concern underlying an exception.

An exception to an indicator benchmark does not indicate fault or mismanagement on the part of a municipality.

An indicator may be triggered by events beyond the control of council and administration, or may result from circumstances that are being effectively managed.

For example, a decline in population may cause an exception to the associated “population change” indicator benchmark, but the municipality may be making adjustments to effectively accommodate for the change.

As another example, a municipality may exceed the benchmark for the “debt service to revenue percentage” indicator by using surplus funds to rapidly pay down its debt.

If the municipality has allowed for debt repayment in its 3 year financial plan and 5 year capital plan, the repayment may be a smart fiscal strategy.

Prior to publication of the indicator details, municipalities that do not meet the “not at risk” criteria will be advised of their indicator results by letter. This will allow the municipality to prepare in advance for related questions it may receive from its residents and business owners.

Municipal indicator reports

The annual municipal indicator reports are published on the Open Government Portal. Reports from the 2016 and 2017 years are now available.

Contact

Connect with the Municipal Capacity and Sustainability Branch:

Hours: 8:15 am to 4:30 pm (open Monday to Friday, closed statutory holidays)
Phone: 780-427-2225
Toll free: 310-0000 before the phone number (in Alberta)
Email: lgsmail@gov.ab.ca