Saskatchewan Province Of 18K/A Annual report (foreign governments) (amended) | SEC 29 Aug 13

Public Accounts

2012-13

Volume 1

Main Financial Statements

Government

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Saskatchewan

2012-13 Public Accounts

Volume 1 - Main Financial Statements

Contents

	3	Letters of Transmittal
	4	Introduction to the Public Accounts

Financial Statement Discussion and Analysis

	9	Introduction - Discussion and Analysis
	10	General Revenue Fund Financial Statements - Discussion and Analysis
	25	Growth and Financial Security Fund - Discussion and Analysis
	26	Summary Financial Statements - Discussion and Analysis
	44	Risks and Uncertainties

General Revenue Fund Financial Statements

	47	Statement of Responsibility
	49	Independent Auditor’s Report
	53	Financial Statements
	57	Notes to the Financial Statements
	67	Schedules to the Financial Statements

Summary Financial Statements

	83	Statement of Responsibility
	85	Independent Auditor's Report
	87	Summary Financial Statements
	91	Notes to the Summary Financial Statements
	104	Schedules to the Summary Financial Statements

Supplementary Information

	127	Growth and Financial Security Fund
	128	General Revenue Fund - Public Issue Debentures
	131	General Revenue Fund - Debentures Issued to the Minister of Finance of Canada
	132	Glossary of Terms

Letters of Transmittal

Regina, Saskatchewan

June 2013

To Her Honour

The Honourable Vaughn Solomon Schofield

Lieutenant Governor of the Province of Saskatchewan

Your Honour:

I have the honour to submit the main financial statements of the Government of the Province of Saskatchewan for the fiscal year ended March 31, 2013.

Respectfully submitted,

/s/ Ken Krawetz

Ken Krawetz

Deputy Premier

Minister of Finance

Regina, Saskatchewan

June 2013

The Honourable Ken Krawetz

Deputy Premier

Minister of Finance

We have the honour of presenting the main financial statements of the Government of the Province of Saskatchewan for the fiscal year ended March 31, 2013.

Respectfully submitted,

/s/ Clare Isman

Clare Isman

Deputy Minister of Finance

/s/ Terry Paton

Terry Paton

Provincial Comptroller

Government of Saskatchewan – 2012-13 Public Accounts 3

Introduction to the Public Accounts

Introduction

The 2012-13 Public Accounts of the Government of Saskatchewan are prepared in accordance with the Financial Administration Act, 1993 and consist of two volumes.

Volume 1

Financial Statement Discussion and Analysis provides users of the Government’s main financial statements with an overview of the Government’s performance by presenting comparative financial highlights and variance analysis.

General Revenue Fund Financial Statements account for the financial transactions of the General Revenue Fund (GRF). The GRF is comprised of all Ministries of the Government. This is the fund into which all revenues are paid, unless otherwise provided for by legislation, and from which all expenses are appropriated by the Legislative Assembly.

Summary Financial Statements consolidate the financial transactions of the GRF, Crown corporations, agencies, boards and commissions. These consolidated statements provide an accounting of the full nature and extent of the financial affairs and resources controlled by the Government.

Supplementary Information contains unaudited information on:

•	the Growth and Financial Security Fund;

•	GRF public issue debentures;

•	GRF debentures issued to the Minister of Finance of Canada; and

•	a glossary of terms used throughout.

Volume 2

Volume 2 contains details on the revenue and expense of the GRF. It also provides details on capital asset acquisitions of the GRF; a listing of suppliers who received $50,000 or more for goods and services and capital assets supplied to the GRF and Revolving Funds during the fiscal year; financial information on the assets, liabilities and residual balances of pension plans and trust funds administered by the Government; a listing of remissions of taxes and fees; and information on road-use fuel tax accountability.

The Public Accounts are available on the Internet at http://www.finance.gov.sk.ca/public-accounts/.

A Compendium is also available on the Internet at http://www.finance.gov.sk.ca/public-accounts/ that contains the financial statements of various government agencies, boards, commissions, pension plans, special purpose funds and institutions, as well as Crown corporations which are accountable to Treasury Board.

4 Government of Saskatchewan – 2012-13 Public Accounts

Introduction to the Public Accounts

Financial Reporting Structure

1	Examples of CIC Crown corporations are: SaskEnergy Incorporated, Saskatchewan Power Corporation, Saskatchewan Telecommunications Holding Corporation, Saskatchewan Government Insurance and Saskatchewan Transportation Company.

2	Examples of Treasury Board Crown corporations are: Agricultural Credit Corporation of Saskatchewan, Liquor and Gaming Authority, and Saskatchewan Housing Corporation.

Government of Saskatchewan – 2012-13 Public Accounts 5

Financial Statement Discussion and Analysis

The purpose of the Financial Statement Discussion and Analysis is to provide users of the Government’s main financial statements with an overview of the Government’s financial performance, as well as the Government’s accountability for the resources entrusted to it. This information should be read in conjunction with these main financial statements, the General Revenue Fund and Summary financial statements. The Government is responsible for the integrity and objectivity of this discussion and analysis.

General Revenue Fund (GRF) Financial Statements

v	How has the Government performed as compared to the Budget Estimates?

The GRF is the fund where all public monies are deposited to and disbursed from, as authorized by the Legislative Assembly. Exceptions to this principle must be authorized by law. Each year the Government presents a Budget for the GRF to the Legislative Assembly along with a detailed financial plan for the GRF called the Estimates. The GRF financial statements report on the performance of the Government against the Estimates. As a result, budget-to-actual analysis on the Government’s revenue and expense can be found in the GRF section of the Financial Statement Discussion and Analysis.

Summary Financial Statements (SFS)

v	How has the Government performed as a whole?

The SFS provide an accounting of the full nature and extent of the financial affairs and resources controlled by the Government. The SFS include the financial results of the GRF, Crown corporations, agencies, boards and commissions.

Government of Saskatchewan – 2012-13 Public Accounts 9

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Financial Highlights

(millions of dollars)										Change from
	2013						2012						2012
	Budget1			Actual2			Actual2			Budget1			Actual

Revenue		11,291			11,424			11,120			134			304
Expense		11,196			11,409			11,066			213			343
Pre-transfer surplus		95			16			55			(79	)		(39	)
Transfer to the Growth and Financial Security Fund		(47	)		(8	)		(27	)		40			19
Transfer from the Growth and Financial Security Fund		-			50			325			50			(275	)
Net transfer from (to) the Growth and Financial Security Fund		(47	)		42			298			90			(256	)
Surplus		47			58			352			10			(294	)
Financial assets					3,285			2,998						287
Less: Government general debt					(3,805	)		(3,808	)					(3	)
Other liabilities					(3,306	)		(2,750	)					556
Net debt					(3,826	)		(3,560	)					(266	)
Plus: Non-financial assets					3,723			3,413						310
Accumulated Deficit					(102	)		(146	)					44

Growth and Financial Security Fund Balance		756			666			708			(90	)		(42	)
Totals may not add due to rounding.

1	The Budget Estimates do not include a statement of financial position.

2	The Provincial Auditor’s report indicates that, in her opinion, there are certain adjustments required to the General Revenue Fund financial statements.

Surplus

The 2012-13 General Revenue Fund (GRF) financial statements report a $58 million surplus. Revenue exceeded expense by $16 million in 2012-13, and the GRF received a $42 million net transfer from the Growth and Financial Security Fund (GFSF).

The $58 million surplus is $10 million higher than budget as a result of a $134 million increase in revenue and a $90 million increase in the net transfer from the GFSF, partially offset by a $213 million increase in expense.

Compared to 2011-12, the GRF surplus is $294 million lower due to a $256 million reduction in the net transfer from the GFSF and a $343 million increase in expense, partially offset by a $304 million increase in revenue.

Growth and Financial Security Fund

The Government’s GFSF, established to safeguard Saskatchewan’s future, had an opening balance of $708 million in 2012-13. After a $50 million transfer to the GRF for highway infrastructure and an $8 million transfer from the GRF, representing half of the 2012-13 GRF pre-transfer surplus, the GFSF had a balance of $666 million at March 31, 2013.

Debt Reduction

Government general debt at March 31, 2013 is $3.80 billion, a decline of $3 million over the past year and the lowest level since 1988.

10 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Financial Highlights (continued)

Credit Rating

Saskatchewan continues to maintain a strong credit rating with all three major credit rating agencies. The Province’s credit rating from Standard & Poor’s is AAA, the highest level possible. In July 2012, Moody’s Investors Services Inc. improved the outlook on Saskatchewan’s credit rating to Aa1 (positive) from Aa1 (stable). The Dominion Bond Rating Service has assigned the Province a credit rating of AA. The Province’s credit rating reflects its solid financial position and is an independent confirmation of the strength of Saskatchewan’s economy. This is particularly noteworthy during a period when many credit ratings are being downgraded worldwide.

Government of Saskatchewan – 2012-13 Public Accounts 11

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Surplus

Annual Surplus - 10 Year Trend

*	Since 2004-05, tangible capital assets have been capitalized and expensed over their useful lives rather than being fully expensed in the year of acquisition.

Accumulated Deficit

The accumulated deficit represents the Government’s reported net economic resources. An accumulated deficit indicates that a government has financed past annual operating deficits by borrowing. In 2012-13, the GRF accumulated deficit improved from $146 million to $102 million.

Accumulated Deficit - 10 Year Trend

*	Since 2004-05, tangible capital assets have been capitalized and expensed over their useful lives rather than being fully expensed in the year of acquisition.

12 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Revenue

2012-13 Revenue by Source ($11.42 billion)

Revenue by Source - 5 Year Comparison

Government of Saskatchewan – 2012-13 Public Accounts 13

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Revenue (continued)

Total revenue was $11.42 billion in 2012-13, an increase of $134 million, or 1.2 per cent, from budget due to increases in all categories except non-renewable resources. Compared to 2011-12, GRF revenue increased $304 million, or 2.7 per cent. The increase from the previous year is due to higher taxation revenue and transfers from government entities, partially offset by lower non-renewable resources revenue, other own-source revenue and transfers from the federal government.

Revenue by Source – Comparison of Budget, Current Year and Prior Year

Taxation Revenue

Taxation revenue was $5.61 billion in 2012-13, an increase of $292 million from budget and $571 million from 2011-12. Both increases are largely the result of higher Individual Income Tax revenue, partially offset by lower Provincial Sales Tax revenue.

Individual Income Tax revenue was $2.41 billion in 2012-13, $322 million higher than budgeted primarily due to stronger-than-expected tax assessments for 2011 and stronger personal income growth in 2012. Compared to 2011-12, Individual Income Tax revenue was $509 million higher due to growth in the taxable income base, supplemented by an improvement in the prior-year adjustment between the two years and the impact of the adoption of a new tax revenue accounting standard in 2012-13 that resulted in the value of the Saskatchewan Low-Income Tax Credit ($84.9 million in 2012-13) being deducted from Provincial Sales Tax rather than Individual Income Tax.

Provincial Sales Tax (PST) revenue was $1.28 billion in 2012-13, a decrease of $64 million from budget largely due to lower-than-expected 2011-12 results and its resulting impact on the 2012-13 base, higher-than-budgeted accounting adjustments introduced in 2012-13 and lower-than-budgeted growth in the PST base. Compared to 2011-12, PST revenue decreased $37 million, primarily due to the adoption of a new tax revenue accounting standard in 2012-13 that resulted in the value of the Saskatchewan Low-Income Tax Credit

14 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Revenue (continued)

being deducted from PST rather than Individual Income Tax. This decrease was partially offset by continued economic growth and growth in the PST base.

Corporation Income Tax (CIT) revenue was $838 million in 2012-13, $21 million higher than budgeted. The increase is largely due to an acceleration of federal instalment payments for the 2013 taxation year, partially offset by a decline in the federal estimate of the national corporate tax base for the 2012 taxation year and higher-than-expected tax credit claims for 2011. Compared to 2011-12, CIT revenue was $44 million higher largely due to accelerated federal instalment payments in 2013.

Other tax revenue (including fuel, tobacco and other miscellaneous taxes) was a combined $12 million higher than budgeted. Compared to 2011-12, revenue from all other taxes increased a combined $55 million as a result of economic growth and a growing population.

Non-renewable Resources Revenue

Non-renewable resources revenue is one of the Government’s most volatile revenue sources because it is largely susceptible to external factors, particularly changes in market demand and commodity prices.

In 2012-13, revenue derived from oil, potash, Crown land sales and natural gas finished lower than both budget projections and 2011-12 results. These decreases were partially offset by an increase in Resource Surcharge revenue. In total, non-renewable resources revenue was $2.52 billion, $632 million lower than budget and down $306 million from 2011-12.

Oil revenue was $1.28 billion in 2012-13. This is a decrease of $317 million from budget and $245 million from 2011-12. The declines are primarily due to lower well-head prices resulting from lower West Texas Intermediate (WTI) oil prices and a higher light-heavy blend differential.

WTI oil prices averaged 92.07 U.S. dollars per barrel in 2012-13, a decrease of 8.43 U.S. dollars from the budget assumption of 100.50 U.S. dollars. In 2011-12, WTI oil prices averaged 97.33 U.S. dollars per barrel.

The light-heavy blend differential averaged 20.53 U.S. dollars per barrel in 2012-13, an increase of 5.45 U.S. dollars from the budget assumption of 15.08 U.S. dollars. In 2011-12, the light-heavy blend differential averaged 13.92 U.S. dollars per barrel.

Resource surcharge revenue was $628 million in 2012-13, an increase of $142 million from budget and $175 million from 2011-12, primarily due to the implementation of new federal rules and regulations which limit the deferral of income to future years through the use of partnerships.

Potash revenue was $364 million in 2012-13, a decrease of $341 million from budget. On a fiscal-year basis, the average mine netback (price) decreased from the budget assumption of 464 U.S. dollars per KCl tonne to 428 U.S. dollars per KCl tonne (from $761 to $702 per K2O tonne). Sales volumes decreased from the budget assumption of 10.2 million K2O tonnes to 8.8 million K2O tonnes.

Compared to 2011-12, potash revenue decreased $74 million. The decrease is largely due to a decrease in sales volumes.

Crown land sales revenue was $89 million in 2012-13, down $131 million from budget and $146 million lower than

2011-12. The decreases are a result of continued industry focus toward drilling and developing lands accumulated over the past several years.

Government of Saskatchewan – 2012-13 Public Accounts 15

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Revenue (continued)

Transfers from Government Entities

Transfers from government entities were $898 million in 2012-13, an increase of $259 million from budget. The GRF received $162 million in unbudgeted dividends from the Crown Investments Corporation of Saskatchewan (CIC), made possible by higher-than-expected net income at CIC in 2012 and proceeds related to the sale of APEX Investment Fund.

The Liquor and Gaming Authority (SLGA) net income increased by $38 million from budget, primarily due to an increase in the liquor segment and Saskatchewan Indian Gaming Authority net income. Transfers from other enterprises and funds increased $59 million from budget as a result of the return of surplus funds from several government entities.

Compared to 2011-12, transfers from government entities increased $117 million, largely due to higher CIC dividends and a higher net income at SLGA.

Other Own-Source Revenue

Other own-source revenue was $733 million in 2012-13, an increase of $131 million from budget.

Commercial operations accounted for $82 million of the increase from budget. Ministries with commercial operations are allowed to re-spend the revenue earned through these operations. Accordingly, the budget expense is shown net of revenue in the Estimates. In the Public Accounts, revenue and expense are reported on a gross basis to provide accountability for these operations. This results in variances between the budget and actual revenue being shown in the Public Accounts. However, including commercial revenue in the Public Accounts does not impact the GRF surplus because the equivalent, offsetting commercial expense is also reported in the GRF financial statements. Excluding commercial operations, total other own-source revenue was $49 million, or 8.2 per cent, higher than budget.

The remainder of the increase from budget was largely due to unbudgeted gains on the sale of investments and higher-than-expected refunds of prior year expenses.

Compared to 2011-12, other own-source revenue decreased $23 million primarily due to a decrease in interest, premiums, discounts and exchange earnings and lower sales, services and service fees revenue, partially offset by higher refunds of prior-year expenses and increased motor vehicle fees revenue.

Transfers from the Federal Government

Federal transfers were $1.67 billion in 2012-13, an increase of $84 million over budget but a decrease of $55 million compared to 2011-12. Funding for federal disaster assistance, while greater than budgeted, was lower than in 2011-12, a year of unusually high levels of flooding throughout the province. In addition, legislated increases in both Canada Health Transfer and Canada Social Transfer resulted in higher-than-budgeted federal transfer revenue as well as increases over 2011-12 funding for these programs.

16 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Expense

Expense is reported by ministry in the GRF Statement of Operations. Because the Government’s expense budget for the GRF is organized by ministry, this best provides a comparison of actual to budget. Schedules to the GRF financial statements also disclose expense by theme and by object, which provide information on the purpose for which the expense has been incurred. These best allow for comparison from year to year as programs maintain the same theme and object when the Government undergoes reorganization of ministries.

Expense by Ministry

2012-13 Expense by Ministry ($11.41 billion)

*	Key components of “other” include Finance (3%), Economy (2%) and Environment (1%).

Comparison to Budget

Total expense was $11.41 billion in 2012-13. This was $213 million, or 1.9 per cent, higher than budget, primarily due to weather factors, increased program utilization and an increase for teachers’ pensions and benefits. Key changes in expense reported by ministries are explained below.

Ministry of Government Relations expense was $114 million higher than budgeted, primarily due to claims under the Provincial Disaster Assistance Program as well as gaming agreement payments related to higher casino profits.

Commercial Operations accounted for $82 million of the increase from budget. Ministries with commercial operations are allowed to re-spend the revenue earned through these operations. Accordingly, the budget expense is shown net of revenue in the Estimates. In the Public Accounts, revenue and expense are reported on a gross basis to provide accountability for these operations. This results in variances between the budget and actual expense being shown in the Public Accounts. However, including commercial expense in the Public Accounts does not impact the GRF surplus because the equivalent, offsetting commercial revenue is also reported in the GRF financial statements. Excluding commercial operation, total expense was $130 million, or 1.2 per cent, higher than budget.

Ministry of Agriculture expense was $73 million higher than budgeted, primarily for the provincial contributions to AgriStability, AgriInvest and crop insurance premiums.

Ministry of Education expense was $57 million higher than budgeted, primarily due to increased requirements for the Teachers’ Superannuation Plan.

Ministry of Finance expense was $11 million higher than budgeted, primarily due to higher Research and Development Tax Credit claims.

Government of Saskatchewan – 2012-13 Public Accounts 17

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Expense (continued)

Ministry of Health expense was $105 million lower than budgeted, primarily due to lower-than-budgeted utilization in Physician Services and the Saskatchewan Prescription Drug Plan, as well as lower requirements for Regional and Provincial Health Services.

Enterprise Saskatchewan expense was $17 million under budget as a result of a transfer of programs and functions to the Ministry of the Economy.

Finance Debt Servicing expense was $9 million lower than budgeted, primarily due to lower-than-anticipated short-term interest rates.

Ministry of Environment expense was $9 million lower than budgeted, primarily due to savings and under-utilization in fire management, green initiatives and reforestation.

Expense by Theme

2012-13 Expense by Theme ($11.41 billion)

*	Key components of “other” include community development (4%), debt servicing (3%), economic development (2%) and environment and natural resources (2%).

18 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Expense (continued)

Expense by Theme - 5 Year Comparison

*	Key components of “other” include community development ($473 million), debt servicing ($391 million), economic development ($196 million) and environment and natural resources ($177 million).

Comparison to Previous Year

Total expense was $343 million higher than in 2011-12. Key changes in expense reported by theme are explained below.

Health increased by $175 million over the prior year primarily due to increases in operating and capital funding to regional health authorities (RHAs), medical education programs and funding to eHealth Saskatchewan. Increases in operating funding to the RHAs is primarily related to health care compensation, health system drug, medical and other non-salary operating costs and the Saskatchewan Surgical Initiative. Capital transfers increases were mainly for the replacement and maintenance of medical and diagnostic equipment, maintenance and repairs of health care facilities and the construction of six new RHA-owned long-term care facilities.

Education was $118 million higher than in 2011-12, primarily due to increases in teachers’ salaries, contributions to the Teachers’ Superannuation Fund, and post-secondary operating and capital funding for universities and colleges. The increase in post-secondary capital funding is primarily related to maintenance, as well as the Health Sciences Centre being built at the University of Saskatchewan.

Agriculture was $64 million higher than the prior year, primarily due to increases in provincial contributions for AgriStability, crop insurance premiums and AgriInvest. These increases are partially offset by a reduction in provincial contributions for the AgriRecovery program that experienced high 2011-12 contributions to the Canada-Saskatchewan Excess Moisture program as a result of spring flooding.

Social services and assistance expense increased by $62 million over 2011-12, primarily due to increases in the client base for the Saskatchewan Assured Income for Disability program, funding to disability community-based organizations, child and family community-based organizations, and community and family program maintenance and support. These increases are partially offset by a decrease in Saskatchewan Assistance Program utilization.

Protection of persons and property was $20 million lower than the prior year primarily due to a decrease in payments for the Provincial Disaster Assistance Program that had high program uptake in 2011-12 due to spring flooding. These savings were partially offset by increased costs for additional RCMP officers.

Environment and natural resource expense was $33 million lower than the prior year primarily due to reduced payments for the Emergency Flood Damage Relief Program and a decrease in green initiatives.

Government of Saskatchewan – 2012-13 Public Accounts 19

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Expense (continued)

Expense by Object

2012-13 Expense by Object ($11.41 billion)

*	The key component of “other” is amortization of tangible capital property.

Expense by Object - 5 Year Comparison

20 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Public Debt and Debt Servicing Costs

Public Debt

Public debt consists of gross debt net of sinking funds and includes:

•	government general debt, which is debt issued by the GRF to fund government spending;

•	Crown corporation general debt, which is debt issued by the GRF and subsequently loaned to a Crown corporation (primarily government business enterprises); and

•	government business enterprise specific debt, which is debt of self-sufficient Crown corporations issued by the GRF specifically on their behalf. The Government expects to realize the receivables from the government business enterprises and settle the external debt simultaneously.

The Government has undertaken initiatives to significantly reduce the government general debt outstanding and the costs to service this debt. The Government’s debt reduction strategy includes the following components:

•	paying down existing debt;

•	transferring debt borrowed for general government purposes to Crown corporations to meet their borrowing requirements; and

•	increasing sinking fund contributions.

At March 31, 2013, government general debt was $3.80 billion.

Public Debt - 10 Year Trend

Since 2003-04, the government general debt reported on the GRF Statement of Financial Position has declined by $4.23 billion from $8.03 billion to $3.80 billion.

Crown corporation general debt and government business enterprise specific debt have increased in recent years, primarily due to the need to upgrade and grow the Province’s utility infrastructure. The largest components of this debt include $3.35 billion for Saskatchewan Power Corporation, $977 million for SaskEnergy Incorporated and $653 million for Saskatchewan Telecommunications Holding Corporation.

Government of Saskatchewan – 2012-13 Public Accounts 21

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Public Debt and Debt Servicing Costs (continued)

Debt Servicing Costs

The GRF incurs interest and other costs to service general debt. The amount of these costs is determined by the amount of general debt and the interest rate attached to that debt. The average effective interest rate on gross debt during 2012-13 was 5.6 per cent (2011-12 - 6.2 per cent).

The Government’s debt reduction strategy has resulted in a decrease in debt servicing costs and an increase in interest revenue. While paying down existing debt reduces the cost of debt servicing, contributing to sinking funds increases interest earnings.

Net interest cost is calculated as debt servicing costs less interest earnings. It is a measure of the positive impact on the Province’s operations from reducing general debt.

Debt Servicing & Net Interest Costs - 10 Year Trend

Since 2003-04, both the amount of general debt and the level of interest rates have declined. As a result, the debt servicing costs reported by the GRF have decreased from $637 million in 2003-04 to $391 million in 2012-13. In addition, net interest costs have declined from $541 million in 2003-04 to $227 million in 2012-13.

22 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Investment in Infrastructure

The Government invests in infrastructure in two ways:

•	by providing grants to third parties for capital purposes. This includes grants for universities and hospitals; and

•	by investing in government-owned capital, such as highways.

During 2012-13, $780 million was invested in infrastructure.

Investment in Infrastructure - 5 Year Trend

*	Capital transfers for 2009 include $154 million which was subsequently permitted to be used by recipients for operations.

Government of Saskatchewan – 2012-13 Public Accounts 23

Financial Statement Discussion and Analysis

General Revenue Fund Financial Statements

Net Debt

Net debt represents the future revenue that is required to pay for past transactions and events. It is the difference between the GRF liabilities and financial assets.

During 2012-13, net debt increased by $266 million. This increase can be attributed to the GRF surplus of $58 million being exceeded by amounts invested in tangible capital assets and other non-financial assets.

Net Debt - 10 Year Trend

Since 2003-04, the net debt of the GRF has declined from $7.05 billion to $3.83 billion. A decreasing net debt is an indicator of increased flexibility over future spending.

24 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Growth and Financial Security Fund

The Growth and Financial Security Fund (GFSF) was established during 2008-09 under The Growth and Financial Security Act. This act requires:

•	the Government to balance the GRF budget each fiscal year;

•	the annual preparation of four-year financial plans and public debt management plans; and

•	that 50 per cent of the annual surplus in the GRF be transferred to the GFSF.

Growth and Financial Security Fund Balance - 5 Year Trend

The balance in the GFSF at March 31, 2013 was $666 million. This represents a $42 million decrease from the previous year, which is the net result of:

•	a transfer to the fund of $8 million, representing 50 per cent of the GRF pre-transfer surplus; and

•	a transfer from the fund of $50 million for highway infrastructure.

Growth and Financial Security Fund - Current Year Activity
(millions of dollars)	2013

Opening balance		708
Transfer from the GRF (50 per cent of GRF pre-transfer surplus)		8
Transfer to the GRF		(50	)
Closing balance		666

Government of Saskatchewan – 2012-13 Public Accounts 25

Financial Statement Discussion and Analysis

Summary Financial Statements

Financial Highlights

(millions of dollars)							Change
							from
	2013			2012			2012


Revenue		13,203			12,817			386
Expense		14,285			13,711			574
Deficit from government service organizations		(1,082	)		(894	)		(188	)
Income from government business enterprises		1,120			789			331
Surplus (Deficit)		37			(105	)		142
Financial assets		9,534			9,102			432
Less: Liabilities		(14,643	)		(13,646	)		(998	)
Net debt		(5,109	)		(4,543	)		(566	)
Plus: Non-financial assets		7,558			7,161			397
Accumulated Surplus		2,449			2,617			(169	)
Totals may not add due to rounding.

Reporting Entity

The Summary financial statements (SFS) include the financial activities of organizations controlled by the Government. These organizations are segregated into two classifications, government service organizations (GSOs) and government business enterprises (GBEs). GBEs are self-sufficient government organizations that have the financial and operating authority to sell goods and services to individuals and organizations outside the government reporting entity as their principal activity. All other organizations, including the General Revenue Fund, are GSOs. A complete listing of the organizations included in the government reporting entity is provided in schedule 18 of the SFS.

Surplus

Comparison to Previous Year

The surplus of $37 million in 2012-13 was a $142 million improvement over the $105 million deficit reported in 2011-12.

This improvement was primarily due to a $331 million increase in income from GBEs which was mainly the result of an increase in investment earnings, an improvement in the underwriting results reported in the insurance sector, and favourable fair market value adjustments due to fluctuations in natural gas pricing. These increases were partially offset by higher operating, fuel and depreciation costs.

The increase in income from GBEs was partially offset by a $188 million decline in the net operating results of GSOs. Revenue from GSOs increased in 2012-13 by $386 million. This was due to increases in taxation revenue ($567 million), transfers from the federal government ($95 million) and other own-source revenue ($30 million) that were partially offset by a decrease in non-renewable resources revenue ($306 million). At the same time, expense for GSOs increased in 2012-13 by $574 million, primarily in education ($361 million), health ($169 million) and agriculture ($49 million).

26 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Summary Financial Statements

Financial Highlights (continued)

Comparison to Budget

The Government prepares a Summary Financial Budget, which is based on the entities that are included in the SFS. In this budget, the categorization of organizations is aligned with the Cabinet Committee (CIC Board or Treasury Board) that examines an organization’s budget. There is also a category for Not-for-Profit Insurance organizations, which are intended to be actuarially sound over the long term. As the categorization is different than that used for reporting purposes in the SFS, actual results are most easily compared to budget based on the annual surplus/deficit.

2012-13 Surplus - Comparison to Budget							Change
(millions of dollars)	2013						from
	Estimated1			Actual1			Estimated


Treasury Board Organizations
General Revenue Fund		47			58			10
Growth and Financial Security Fund		47			(42	)		(90	)
Other Treasury Board Organizations		321			592			272
Less: Dividends included in General Revenue Fund surplus		(449	)		(543	)		(94	)
Adjustment for pension liability accrual		(232	)		(452	)		(220	)
		(266	)		(387	)		(122	)
CIC Board Organizations		347			471			125
Less: Dividends included in General Revenue Fund surplus		(153	)		(315	)		(162	)
		(72	)		(231	)		(159	)
Not-for-Profit Insurance Organizations		87			269			182
Surplus		15			37			23
Totals may not add due to rounding.

1	Presented on the basis of the Summary Financial Budget.

The 2012-13 SFS report a surplus of $37 million, a $23 million improvement over budget. This improvement was largely due to budget-to-actual variances in the not-for-profit insurance organizations where investment returns and claims experience were more favourable than expected. In addition, the adoption of a new government transfers accounting standard resulted in significant unbudgeted revenue recognition during the year. These increases were almost entirely offset by a higher-than-expected adjustment for the pension liability accrual resulting from a lower-than-expected discount rate.

Credit Rating

Government of Saskatchewan – 2012-13 Public Accounts 27

Financial Statement Discussion and Analysis

Summary Financial Statements

Surplus/Deficit

Annual Surplus (Deficit) - 10 Year Trend

*	Since 2003-04, tangible capital assets have been capitalized and expensed over their useful lives rather than being fully expensed in their year of acquisition.

Accumulated Surplus

The accumulated surplus represents the Government’s reported net economic resources. An accumulated surplus indicates that a government has net resources that can be used to provide future services.

Accumulated Surplus (Deficit) - 10 Year Trend

*	Since 2003-04, tangible capital assets have been capitalized and expensed over their useful lives rather than being fully expensed in their year of acquisition.

**	Includes a $1.58 billion increase for the first-time inclusion of the Boards of Education.

28 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Summary Financial Statements

Revenue

2012-13 Revenue by Source ($13.20 billion)

Revenue by Source - 5 Year Comparison

*	The increase in 2010 taxation revenue is primarily due to the impact of recording education property tax resulting from the first-time inclusion of Boards of Education.

Total revenue for the year was $386 million higher than the previous year. Changes in taxation, non-renewable resources and transfers from the federal government are mainly attributable to the results of the General Revenue Fund (GRF). Detailed variance analysis of GRF revenue is provided in the GRF section beginning on page 13 of the Financial Statement Discussion and Analysis.

Government of Saskatchewan – 2012-13 Public Accounts 29

Financial Statement Discussion and Analysis

Summary Financial Statements

Expense

Expense by Theme

2012-13 Expense by Theme ($14.29 billion)

*	Key components of “other” include debt charges (4%), community development (4%) and transportation (4%)

Expense by Theme as a Percentage of Total Expense - 5 Year Comparison

*	Key components of “other” include debt charges (4%), community development (4%) and transportation (4%).

30 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Summary Financial Statements

Expense (continued)

Expense by Theme - 5 Year Comparison

*	Key components of “other” include debt charges ($643 million), community development ($554 million) and transportation ($533 million).

Government of Saskatchewan – 2012-13 Public Accounts 31

Financial Statement Discussion and Analysis

Summary Financial Statements

Expense (continued)

Expense by Object

In addition to reporting expense by theme, the SFS also present expense by object, or major type of expense.

2012-13 Expense by Object ($14.29 billion)

*	The key component of “other” is amortization of tangible capital property.

Expense by Object - 5 Year Comparison

*	The increase in 2010 salaries and benefits expense and corresponding decrease in transfers expense are primarily due to the impact of the first-time inclusion of Boards of Education.

32 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Summary Financial Statements

Income from Government Business Enterprises

Government business enterprises are independently managed, profit-oriented organizations that are controlled by the Government.

Income from Government Business Enterprises - 10 Year Trend

Beginning in 2011-12, the financial statements of government business enterprises (GBEs) are prepared in accordance with International Financial Reporting Standards. Prior to this, the financial results of GBEs were presented on the basis of Canadian generally accepted accounting principles and have not been restated.

Income from GBEs increased by $331 million over the previous year mainly due to an increase in investment earnings, an improvement in the underwriting results reported in the insurance sector as insurance claims costs declined and premium revenues grew, and favourable fair market value adjustments due to fluctuations in natural gas pricing. These increases were partially offset by higher operating, fuel and depreciation costs.

Since 2003-04, this income source has experienced an overall increase of $386 million. The net income of the Liquor and Gaming Authority and Saskatchewan Telecommunications Holding Corporation has consistently contributed to this improvement in operating results for several years. Favorable operating results in the current year for the Workers’ Compensation Board (Saskatchewan), SaskEnergy Incorporated and Saskatchewan Government Insurance also add to the growth in GBE income over the past ten years.

Government of Saskatchewan – 2012-13 Public Accounts 33

Financial Statement Discussion and Analysis

Summary Financial Statements

Public Debt and Debt Charges

Public Debt

Public debt consists of gross debt net of sinking funds and includes:

•	general debt, which is:

▪

debt issued by the GRF and other government service organizations; and

▪

debt issued by government service organizations and subsequently loaned to government business enterprises; and

•	government business enterprise specific debt, which is debt issued by the GRF specifically on behalf of government business enterprises where the Government expects to realize the receivables from the government business enterprises and settle the external debt simultaneously.

Public debt on the Summary Statement of Financial Position is presented net of government business enterprise specific debt.

Public Debt - 10 Year Trend

At March 31, 2013, the SFS report public debt of $4.95 billion. Since 2003-04, public debt has declined $3.82 billion, from $8.77 billion to $4.95 billion.

At March 31, 2013, government business enterprise specific debt was $4.50 billion. Government business enterprise specific debt is included in the Investment in (or net assets of) Government Business Enterprises reported on the Summary Statement of Financial Position and disclosed in schedule 3 of the SFS. Since 2003-04, government business enterprise specific debt has increased from $3.17 billion to $4.50 billion. This increase has helped to finance the replacement of aging infrastructure as well as the building of new capacity to meet the demands of the recent population growth in the Province.

34 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Summary Financial Statements

Public Debt and Debt Charges (continued)

Debt Charges

The Government incurs interest and other costs to service its public debt. The amount of these costs is determined by the amount of public debt and the interest rate attached to that debt. The average effective interest rate on gross debt during 2012-13 was 5.6 per cent (2011-12 - 6.2 per cent).

Debt Charges - 10 Year Trend

Net Debt

Net debt represents the future revenue that is required to pay for past transactions and events. It is the difference between the SFS liabilities and financial assets.

During 2012-13, net debt increased by $566 million. This increase can primarily be attributed to the SFS surplus of $37 million being exceeded by the net investment in tangible capital assets and other non-financial assets.

Net Debt - 10 Year Trend

Since 2003-04, the net debt of the SFS has declined from $9.43 billion to $5.11 billion. Lower levels of net debt indicate increased flexibility over future spending.

Government of Saskatchewan – 2012-13 Public Accounts 35

Financial Statement Discussion and Analysis

Summary Financial Statements

Financial Assets

Financial assets represent the amount of resources that are available to the Government that can be converted to cash to meet obligations or fund operations.

Financial Assets - 5 Year Trend

*	In 2012-13, primarily accounts receivable ($1.69 billion), loans receivable ($.96 billion) and other investments ($.92 billion).

Liabilities

Liabilities represent the obligations that the Government has to others arising from past transactions or events.

Liabilities - 5 Year Trend

*	In 2012-13, primarily accounts payable ($2.32 billion).

From 2008-09 to 2012-13, liabilities increased by $1.56 billion. This is primarily a result of a $1.32 billion increase in pension liabilities and a $153 million increase in public debt. Information relating to public debt can be found in more detail in the public debt and debt charges section found on page 34.

The total pension liability has increased from $5.45 billion in 2008-09 to $6.77 billion in 2012-13. The increase is due to pension costs, including interest on the pension liabilities and amortization of actuarial losses, exceeding payments to the pension plans and retirees.

36 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Summary Financial Statements

Non-financial Assets

Non-financial assets typically represent resources that the Government can use to provide services in the future. Non-financial assets primarily consist of tangible capital assets but also include inventories held for consumption and prepaid expenses.

Tangible Capital Assets

The Statement of Financial Position reports the net book value of tangible capital assets held by government service organizations and does not include the capital assets held by government business enterprises. Capital assets held by government business enterprises is $9.31 billion at March 31, 2013 and are included in the Investment in (or net assets of) Government Business Enterprises reported on the Statement of Financial Position and disclosed in schedule 3 of the SFS. The net book value of capital assets of government service organizations in the past five years is as follows:

Net Book Value of Tangible Capital Assets - 5 Year Trend

*	The increase in net book value of tangible capital assets in 2010 is primarily due to the impact of the first-time inclusion of Boards of Education.

The net book value represents the original cost of capital assets net of accumulated amortization and write-downs in value. The net book value of capital assets held by the Government has steadily increased over the last five years illustrating how the Government is acquiring new or replacing existing tangible capital assets faster than these same assets are wearing out or becoming obsolete.

Acquisition of tangible capital assets in 2012-13 was $1.04 billion. These capital additions were mainly for buildings and improvements ($496 million), infrastructure ($306 million) and office and information technology ($106 million) primarily in the education, transportation and health sectors.

Government of Saskatchewan – 2012-13 Public Accounts 37

Financial Statement Discussion and Analysis

Summary Financial Statements

Credit Rating

The improvement in the Government’s finances has led to a series of upgrades in its credit ratings. One of the world’s leading credit rating agencies is Standard & Poor’s.

Standard & Poor’s Credit Rating from 2003-04 to 2012-13

At March 31, 2013, the credit ratings for Saskatchewan and each of the other jurisdictions are shown below. In May 2011, Standard & Poor’s upgraded Saskatchewan’s credit rating from AA+ to AAA. Then in July 2012, Moody’s Investors Service Inc. changed the outlook on the Province’s credit rating from Aa1 (stable) to Aa1 (positive). These upgrades come at a time when many credit ratings are being downgraded worldwide.

Credit Ratings - March 2013

	Rating Agency1
Jurisdiction	Moody's Investors Service Inc.	Standard & Poor's	Dominion Bond Rating Service
Alberta	Aaa	AAA	AAA
British Columbia	Aaa (neg)	AAA	AA(high)
Saskatchewan	Aa1 (pos)	AAA	AA
Manitoba	Aa1	AA	A(high)
Ontario	Aa2	AA- (neg)	AA (low)
Quebec	Aa2	A+	A(high)
New Brunswick	Aa2	A+	A(high)
Nova Scotia	Aa2	A+	A (pos)
Newfoundland & Labrador	Aa2	A+	A
Prince Edward Island	Aa2	A	A(low)

The rating agencies assign letter ratings to borrowers. The major A bracket categories, in descending order of credit quality, are: AAA/Aaa; AA/Aa; A. The ‘1’, ‘2’, ‘3’, ‘high’, ‘low’, ‘-’, and ‘+’ modifiers show relative standing within the major categories. For example, AAA exceeds AA, Aa1 exceeds Aa2 and AA exceeds AA-.

38 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Summary Financial Statements

Assessment of Financial Condition

Financial condition describes a government’s financial health or its ability to meet its existing financial obligations, both with respect to its service commitments to the public and its financial commitments to creditors, employees and others. The following assessment of the Government’s financial condition considers three elements: sustainability, flexibility and vulnerability.

Sustainability

Sustainability is the degree to which a government can maintain its existing service commitments and meet its existing financial obligations without increasing its debt or tax burden relative to the economy within which it operates.

Net Debt to the Province’s Gross Domestic Product

Gross domestic product (GDP) is a measure of the value of the goods and services produced during a year, indicating the size of the provincial economy. Net debt is the difference between a government’s liabilities and financial assets and represents the future revenue that is required to pay for past transactions and events. Net debt as a percentage of the Province’s GDP provides a measure of the level of financial demands placed on the economy by the Government’s spending and taxation policies. A higher ratio means the net debt of the Government is more onerous on the economy, which may not be sustainable. Therefore, a lower net debt to GDP ratio is desired and indicates higher sustainability.

Net Debt as a Percentage of the Province’s Gross Domestic Product - 10 Year Comparison

The overall downward trend illustrated by this ratio is a result of growth in the provincial economy together with a declining net debt over the ten-year period.

Government of Saskatchewan – 2012-13 Public Accounts 39

Financial Statement Discussion and Analysis

Summary Financial Statements

Assessment of Financial Condition (continued)

Net Debt to Total Revenue

Another measure of a government’s sustainability is net debt as a percentage of total revenue. Net debt provides a measure of the future revenue that is required to pay for past transactions and events. A lower net debt to revenue ratio indicates higher sustainability, as less time is required to eliminate net debt.

Net Debt as a Percentage of Total Revenue - 10 Year Comparison

When expressed as a percentage of total revenue, the Government’s net debt has declined from 135.7 per cent to 38.7 per cent of total revenue since 2003-04. The reduction in this ratio indicates that the Government’s annual revenue has been sufficient not only to pay for current transactions and events, but also to pay off a portion of past deficits.

40 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Summary Financial Statements

Assessment of Financial Condition (continued)

Flexibility

Flexibility is the degree to which a government can change its debt or tax burden and still meet its existing service commitments and financial obligations.

Debt Charges to Total Revenue

A debt charges to revenue ratio, often referred to as the interest bite, indicates the proportion of provincial revenue that is required to pay interest charges on public debt and therefore, is not available to pay for essential public services and programs. A lower ratio means that there is more money available to provide government services.

Debt Charges as a Percentage of Total Revenue - 10 Year Comparison

Over the last ten years, the interest bite has decreased due to both increased revenue and decreased interest costs. In 2012-13, the Government spent approximately 4.9 cents of each dollar of revenue on debt charges on public debt, compared to 13.4 cents in 2003-04. This reduction leaves more resources available to the Government to provide services without increasing its revenue.

Government of Saskatchewan – 2012-13 Public Accounts 41

Financial Statement Discussion and Analysis

Summary Financial Statements

Assessment of Financial Condition (continued)

Own-source Revenue to the Province’s Gross Domestic Product

This ratio measures the extent to which the Government is taking income out of the provincial economy, either through taxation, non-renewable resources revenue or user fees. An increase in this ratio indicates that the Government’s own-source revenue is growing faster than the economy, reducing the Government’s flexibility to increase revenue without slowing the growth of the provincial economy.

Own-source Revenue as a Percentage of the Province’s Gross Domestic Product - 10 Year Comparison

Own-source revenue as a percentage of GDP has remained relatively stable over the last ten years meaning that the Government has not significantly changed its demands on the provincial economy over this time. This indicates that the Government’s flexibility is largely unchanged over the last ten years.

42 Government of Saskatchewan – 2012-13 Public Accounts

Financial Statement Discussion and Analysis

Summary Financial Statements

Assessment of Financial Condition (continued)

Vulnerability

Vulnerability is the degree to which a government is dependent on sources of funding outside of its control or is exposed to risks that could impair its ability to meet its existing service commitments and financial obligations.

Transfers from the Federal Government to Total Revenue

The Government has no control over the amount of federal transfers that it receives each year. Transfers from the federal government as a percentage of total revenue is therefore an indicator of the degree of vulnerability the Government has as a result of reliance on the federal government for revenue. Generally, a decreasing ratio indicates that a government is less reliant on federal transfers to fund its programs, making it less vulnerable.

Transfers from the Federal Government as a Percentage of Total Revenue - 10 Year Comparison

In 2012-13, 17.5 per cent of the Government’s revenue came from transfers from the federal government with the remainder coming from Saskatchewan sources. The Government’s ability to fund essential programs and services from own-source revenue has remained fairly stable over the past several years.

Government of Saskatchewan – 2012-13 Public Accounts 43

Financial Statement Discussion and Analysis

Risks and Uncertainties

The Government is subject to risks and uncertainties that arise from variables which the Government can not directly control. These risks and uncertainties include:

•	changes in economic factors such as economic growth, commodity and non-renewable resource prices, inflation, interest rates, population growth, personal income and retail sales;

•	financial risks including interest rate risk, foreign exchange rate risk, credit risk and liquidity risk;

•	changes in transfers from the federal government;

•	utilization of Government services, such as crop insurance, health care and social services;

•	other unforeseen developments including natural and other disasters, changes in environmental liabilities and legal obligations; and

•	changes in accounting standards.

The Government has implemented strategies that limit its exposure to such risks and uncertainties. The key component of this fiscal management plan is The Growth and Financial Security Act (the Act), legislation that provides a fiscal framework to ensure balanced GRF budgets and the appropriate use of surplus revenue.

The Act imposes discipline into the budgetary process and reduces risk to external events by requiring annual program reviews and the tabling of balanced budgets and debt management plans, yet the fiscal framework has the flexibility to respond to sudden and rapid changes in factors beyond the Government’s influence or control. Specifically, the Act:

•	requires a four-year financial plan with balanced budgets to be prepared annually;

•	requires a four-year debt management plan to be prepared annually;

•	requires actual revenue in each fiscal year to be greater than actual expense;

•	requires deficits to be fully offset in the following fiscal year;

•	establishes the Growth and Financial Security Fund to assist in providing for financial security from year to year and to provide a source of funds available for use for promoting or enhancing the economic development of Saskatchewan;

•	requires 50 per cent of any GRF pre-transfer surplus to be transferred to the Growth and Financial Security Fund;

•	requires the remaining 50 per cent of any GRF pre-transfer surplus to be applied to the Debt Retirement Fund; and

•	contains provisions for extraordinary events, such as natural or other disasters, that lead to unanticipated spending or reduced revenue.

In addition, recognizing that Saskatchewan is heavily reliant on non-renewable resources and external events, the Government takes a prudent approach in developing its budget assumptions for macroeconomic variables and non-renewable resource prices. The Government makes use of a number of forecasts from national forecasting agencies and banks, private industry and private sector analysts when developing the underlying assumptions to fiscal forecasts both at budget and throughout the fiscal year.

The fiscal impact of changes in the underlying economic assumptions, including non-renewable resource prices, are estimated on a regular basis in order to quantify the risk associated with each forecast assumption. By understanding the size of the risk inherent in the fiscal projections, the Government is better able to make sound financial decisions.

Finally, the Government requires regular fiscal updates during the fiscal year. These updates are based on the continual monitoring of monthly financial results and current economic conditions, as well as the early identification of potential spending pressures. The Government publishes quarterly reports that contain revised fiscal and economic forecasts so that Saskatchewan residents are well-informed as to the Government’s current fiscal position and the risks and uncertainties associated with the Government’s fiscal plan.

Risk management specific to public debt is discussed in note 4 of both the GRF and Summary financial statements.

44 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund Financial Statements

General Revenue Fund

Responsibility for the General Revenue Fund Financial Statements

The Government is responsible for the General Revenue Fund Financial Statements. The Government maintains a system of accounting and administrative controls to ensure that accurate and reliable financial statements are prepared and to obtain reasonable assurance that transactions are authorized, assets are safeguarded, and financial records are maintained.

The Provincial Comptroller prepares these statements in accordance with the Government's stated accounting policies, using the Government's best estimates and judgement when appropriate.

The Provincial Auditor expresses an independent opinion on these statements. Her report, which appears on the following page, provides the scope of her audit and states her opinion.

Treasury Board approves the General Revenue Fund Financial Statements. The statements are tabled in the Legislative Assembly as part of the Public Accounts and referred to the Standing Committee on Public Accounts for review.

On behalf of the Government of the Province of Saskatchewan.

/s/ Ken Krawetz

Ken Krawetz

Deputy Premier

Minister of Finance

/s/ Clare Isman

Clare Isman

Deputy Minister of Finance

/s/ Terry Paton

Terry Paton

Provincial Comptroller

Regina, Saskatchewan

June 2013

Government of Saskatchewan – 2012-13 Public Accounts 47

General Revenue Fund

Independent Auditor’s Report

To the Members of the Legislative Assembly of Saskatchewan

I have audited the accompanying financial statements of the General Revenue Fund, which comprise the statement of financial position as at March 31, 2013, and the statements of operations, accumulated deficit, change in net debt, and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information. These financial statements are prepared to assist Treasury Board in meeting its reporting requirements included in Section 15 of The Financial Administration Act, 1993.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards for Treasury Board’s approval, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my adverse audit opinion.

Basis for Adverse Opinion

The Government through the General Revenue Fund is responsible for the liabilities of several pension plans and a disability benefit plan. Notes 1 and 5 state that the pension liabilities and a disability benefit liability are not recorded in these financial statements. Canadian public sector accounting principles require that the pension and disability benefit liabilities be recorded in the financial statements. Had the pension and disability benefit liabilities been recorded, liabilities and accumulated deficit would increase by $6,560 million (2012 - $6,124 million) as at March 31, 2013 and, for the year, expenses would increase by $436 million (2012 - $100 million), and the surplus would decrease by the same amount.

The Government records transactions between the General Revenue Fund and the Growth and Financial Security Fund (GFSF) as revenue or expense of the General Revenue Fund. The substance of the transactions between the General Revenue Fund and the GFSF is that the amounts held by the GFSF must be repaid by the GFSF to the General Revenue Fund. Canadian public sector accounting principles do not allow the General Revenue Fund to record changes in the amount due to the GFSF as revenue or expense of the General Revenue Fund.

Government of Saskatchewan – 2012-13 Public Accounts 49

General Revenue Fund

The financial statements show an expense (as a Transfer to the GFSF) of $8 million (2012 - $27 million) and a revenue (as a Transfer from the GFSF) of $50 million (2012 - $325 million). It is not appropriate to record an expense because the GFSF must return all amounts due to the General Revenue Fund. Likewise, it is not appropriate to record revenue for the amount the GFSF has returned to the General Revenue Fund in the year.

Instead of recording an expense or revenue, the financial statements should record an asset equal to the net amount paid to the GFSF. Had the Government properly recorded the transactions, total financial assets would increase by $666 million (2012 - $708 million) and accumulated deficit would decrease by the same amount as at March 31, 2013, and surplus for the year would decrease by $42 million

(2012 - decrease by $298 million).

The Government, through the General Revenue Fund, has established a practice of providing funding primarily to school divisions, regional health authorities, and universities, to enable them to repay certain of their loans with financial institutions. In substance, the General Revenue Fund has assumed the obligation to fund the principal and interest payments related to this debt. Canadian public sector accounting principles require transactions to be accounted for based on their substance and that loans expected to be repaid through future government funding to be accounted for as a liability and expense in the year that the expectation or promise is made.

Had these obligations been recorded properly, accumulated deficit as at April 1, 2012 would increase by $169 million, liabilities and accumulated deficit as at March 31, 2013 would increase by $270 million, current year expenses would increase by $101 million, and the current year surplus would decrease by the same amount.

During 2012-13, the Government recorded the General Revenue Fund’s financial contribution of $69 million to the construction of schools and long-term care facilities as tangible capital assets of the General Revenue Fund. These schools and long-term care facilities are being constructed under agreements between the Government and certain school divisions and regional health authorities. These agreements have not changed the substance of how the Government funds these types of capital assets. These assets continue to be held by the related school division and regional health authority. Canadian public sector accounting principles require transactions to be accounted for based on their substance.

Had the General Revenue Fund recorded its financial contributions properly, tangible capital assets would decrease and accumulated deficit would increase by $69 million at March 31, 2013, current year expenses would increase by $69 million, and the surplus would decrease by the same amount.

Adverse Opinion

In my opinion, because of the significance of the matters described in the Basis for Adverse Opinion paragraphs, the financial statements do not present fairly the financial position of the General Revenue Fund as at March 31, 2013, and its financial performance and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Restriction on Use and Usefulness of these Financial Statements is Limited

The primary purpose of the General Revenue Fund financial statements is to report the performance of the Fund against the Estimates. As a result, the financial statements are not be suitable for another purpose.

These financial statements contain significant departures from Canadian public sector accounting standards and only report transactions and events of the General Revenue Fund, a component of the Summary Financial Statements. Therefore, readers should not use the General Revenue Fund financial statements to understand and assess the Government’s overall management of public financial affairs and provincial resources. Rather, they should use the Summary Financial Statements of the Government of Saskatchewan.

The Government is comprised of over 270 different entities other than the General Revenue Fund. The extent

50 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

of the Government’s controlled financial activities outside of this Fund is significant. Consideration of the financial activities of these entities and adjusting for the qualifications to the General Revenue Fund has the following impact: total financial assets increase by $6,249 million (2012 - $6,105 million); total liabilities increase by $7,533 million (2012 - $7,088 million); net debt increases by $1,284 million (2012 - $983 million); total non-financial assets increase by $3,835 million (2012 - $3,747 million); accumulated deficit decreases by $2,551 million (2012 - $2,764 million); total revenue including net income from government business enterprises increases by $2,848 million (2012 - $2,161 million); total expense increases by $2,869 million (2012 - $2,618 million); and the annual surplus decreases by $21 million (2012 - $457 million).

Only the Summary Financial Statements report the full nature and extent of the overall financial affairs and resources of the Government of the Province of Saskatchewan.

/s/ Bonnie Lysyk

BONNIE LYSYK, MBA, CA

Provincial Auditor

Regina, Saskatchewan

June 18, 2013

Government of Saskatchewan – 2012-13 Public Accounts 51

General Revenue Fund

Statement of Financial Position
As at March 31, 2013
(thousands of dollars)

	2013			2012

Financial Assets
Cash and temporary investments (note 3)		237,264			241,429
Accounts receivable (schedule 1)		1,155,064			1,044,887
Deferred charges		(2,441	)		3,729
Loans to Crown corporations (schedule 2)		886,484			556,767
Other loans (schedule 3)		99,707			92,131
Equity investment in Crown Investments Corporation of Saskatchewan		908,889			1,058,889
Total Financial Assets		3,284,967			2,997,832
Liabilities
Accounts payable and accrued liabilities (schedule 4)		1,413,746			1,376,712
Deposits held (schedule 5)		904,223			709,881
Unearned revenue		95,628			100,387
Public debt
Government general debt (note 4)(schedule 6)		3,804,817			3,807,590
Crown corporation general debt (note 4)(schedule 6)		886,484			556,767
Unamortized foreign exchange gain		5,773			6,371
Total Liabilities		7,110,671			6,557,708
Net Debt		(3,825,704	)		(3,559,876	)
Non-Financial Assets
Prepaid expenses		7,311			13,789
Inventories held for consumption		127,649			124,096
Tangible capital assets (schedule 9)		3,588,286			3,275,566
Total Non-Financial Assets		3,723,246			3,413,451
Accumulated Deficit		(102,458	)		(146,425	)

Employee future benefits (note 5)
Contingencies (note 6)
Guaranteed debt (note 6)(schedule 8)
Contractual obligations (note 7)


The accompanying notes and schedules are an integral part of these financial statements.

Government of Saskatchewan – 2012-13 Public Accounts 53

General Revenue Fund

Statement of Operations
For the Year Ended March 31, 2013
(thousands of dollars)

	2013						2012
	Budget			Actual			Actual

Revenue
Taxation		5,315,000			5,606,526			5,035,307
Non-renewable resources		3,148,300			2,515,869			2,821,957
Transfers from government entities		639,400			898,222			781,545
Other own-source revenue		601,300			732,533			755,244
Transfers from the federal government		1,586,900			1,671,339			1,726,378
Total Revenue (schedule 10)		11,290,900			11,424,489			11,120,431
Expense (note 13)
Ministries and Agencies
Advanced Education		724,621			722,751			859,199
Agriculture		430,777			504,065			439,632
Central Services		35,564			32,687			9,666
Central Services - commercial operations (schedule 11)		-			75,625			80,683
Corrections, Public Safety and Policing		-			-			517,971
Economy		255,451			256,901			36,794
Education		1,596,067			1,653,460			1,564,240
Enterprise and Innovation Programs		-			-			24,578
Enterprise Saskatchewan		33,063			16,046			41,303
Environment		178,282			169,101			200,169
Executive Council		16,631			16,111			11,623
Finance		351,936			362,849			358,237
Finance Debt Servicing (schedule 14)		400,000			390,790			411,957
First Nations and Métis Relations		-			-			78,576
Government Relations		478,499			592,639			374,946
Government Relations - commercial operations (schedule 11)		-			3,156			2,383
Health		4,680,168			4,575,589			4,400,159
Highways and Infrastructure		425,910			433,004			443,479
Highways and Infrastructure - commercial operations (schedule 11)		-			3,526			14,061
Information Technology Office		-			-			20,921
Information Technology Office - commercial operations (schedule 11)		-			-			2,110
Innovation Saskatchewan		6,769			6,769			3,467
Justice		515,050			523,401			149,632
Labour Relations and Workplace Safety		17,489			17,036			16,948
Office of the Provincial Capital Commission		-			-			10,957
Office of the Provincial Secretary		-			-			3,133
Parks, Culture and Sport		96,288			99,820			91,715
Public Service Commission		38,541			39,451			37,050
Saskatchewan Research Council		18,983			18,983			18,133
SaskBuilds Corporation		-			2,000			-
Social Services		852,725			851,499			787,314
Legislative Assembly and its Officers
Advocate for Children and Youth		1,944			1,941			1,922
Chief Electoral Officer		2,471			2,465			16,341
Conflict of Interest Commissioner		145			131			128
Information and Privacy Commissioner		1,065			1,024			1,131
Legislative Assembly		26,067			24,387			24,186
Ombudsman		3,075			3,018			2,885
Provincial Auditor		8,332			8,330			8,134
Total Expense (schedules 12 and 13)		11,195,913			11,408,555			11,065,763
Pre-transfer surplus		94,987			15,934			54,668
Transfer to the Growth and Financial Security Fund		(47,494	)		(7,967	)		(27,334	)
Transfer from the Growth and Financial Security Fund		-			50,000			325,000
Surplus		47,493			57,967			352,334

The accompanying notes and schedules are an integral part of these financial statements.

54 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Statement of Accumulated Deficit
For the Year Ended March 31, 2013
(thousands of dollars)

	2013						2012
	Budget			Actual			Actual


Accumulated deficit, beginning of year		(146,425	)		(146,425	)		(498,759	)
Adjustment for sick leave benefit obligation (note 12)		-			(14,000	)		-
Surplus		47,493			57,967			352,334
Accumulated Deficit, End of Year		(98,932	)		(102,458	)		(146,425	)




Statement of Change in Net Debt
For the Year Ended March 31, 2013
(thousands of dollars)

		2013					2012
	Budget			Actual			Actual


Surplus		47,493			57,967			352,334
Tangible Capital Assets
Acquisitions (schedule 9)		(522,447	)		(513,056	)		(411,951	)
Amortization (schedule 9)		191,505			188,643			174,971
Net loss (gain) on disposal		1,600			(9,736	)		(7,521	)
Net transfers from government organizations		-			(2,427	)		(682	)
Proceeds on disposal		-			23,678			14,304
Write-downs (schedule 9)		-			178			460
Net Acquisition of Tangible Capital Assets		(329,342	)		(312,720	)		(230,419	)
Other Non-Financial Assets
Net use (acquisition) of prepaid expenses		-			6,478			(2,354	)
Net acquisition of inventories held for consumption		-			(3,553	)		(3,444	)
Net Use (Acquisition) of Other Non-Financial Assets		-			2,925			(5,798	)
(Increase) decrease in net debt		(281,849	)		(251,828	)		116,117
Net debt, beginning of year		(3,559,876	)		(3,559,876	)		(3,675,993	)
Adjustment for sick leave benefit obligation (note 12)		-			(14,000	)		-
Net Debt, End of Year		(3,841,725	)		(3,825,704	)		(3,559,876	)

The accompanying notes and schedules are an integral part of these financial statements.

Government of Saskatchewan – 2012-13 Public Accounts 55

General Revenue Fund

Statement of Cash Flow
For the Year Ended March 31, 2013
(thousands of dollars)

	2013			2012

Operating Activities
Surplus		57,967			352,334
Non-cash items included in surplus (schedule 15)		66,607			1,268
Net change in non-cash operating activities (schedule 15)		(82,807	)		(317,145	)
Cash Provided by Operating Activities		41,767			36,457
Capital Activities
Acquisition of tangible capital assets (schedule 9)		(513,056	)		(411,951	)
Proceeds on disposal of tangible capital assets		23,678			14,304
Cash Used for Capital Activities		(489,378	)		(397,647	)
Investing Activities
Loan advances		(436,912	)		(97,649	)
Loan repayments		59,072			141,209
Sinking funds
Contributions for general debt		(51,114	)		(52,546	)
Contributions received for Crown corporation general debt		3,587			5,828
Redemptions for general debt		1,039,846			96,992
Repayment of equity investment in Crown Investments Corporation of Saskatchewan		150,000			-
Cash Provided by Investing Activities (schedule 15)		764,479			93,834
Financing Activities
Proceeds from general debt		592,109			80,200
Repayment of general debt		(1,107,484	)		(335,536	)
Increase in deposits held		194,342			306,209
Cash (Used for) Provided by Financing Activities		(321,033	)		50,873
Decrease in cash and temporary investments		(4,165	)		(216,483	)
Cash and temporary investments, beginning of year		241,429			457,912
Cash and Temporary Investments, End of Year		237,264			241,429


The accompanying notes and schedules are an integral part of these financial statements.

56 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Notes to the Financial Statements

As at March 31, 2013

1. Significant Accounting Policies

Basis of accounting

These financial statements are prepared in accordance with Canadian public sector accounting standards, with the following exceptions:

•	transfers to and from the Growth and Financial Security Fund are included in the determination of surplus for the year; and

•	pension liabilities and a disability benefit liability are not recorded in the financial statements. The General Revenue Fund accounts for defined benefit pension plans and a disability benefit plan on a cash basis.

Reporting entity

The General Revenue Fund is the general fund, which receives all revenues unless otherwise specified by law. Spending from the General Revenue Fund is appropriated by the Legislative Assembly.

Other government entities such as revolving funds, special purpose funds, government business enterprises and other Crown corporations and agencies report separately in other financial statements. Only financial transactions to or from these other entities are included in the General Revenue Fund.

Government business enterprises are self-sufficient government organizations that have the financial and operating authority to sell goods and services to individuals and organizations outside the government reporting entity as their principal activity.

The Government’s Summary financial statements, which include the financial activities of the General Revenue Fund and other government entities, are provided separately.

Specific accounting policies

Financial assets

Financial assets are assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal course of operations.

Temporary investments are recorded at the lower of cost or market.

Deferred charges include issue costs and net discounts or premiums incurred on the issue of general debt and related derivative instruments. They are recorded at cost and amortized on a straight-line basis over the remaining life of the debt issue.

Loans to Crown corporations and Other loans generally have fixed repayment terms and are interest bearing. Promissory notes issued by Crown corporations are recorded at par; all other loans are recorded at cost. Loans to Crown corporations are presented net of amounts Crown corporations have contributed to sinking funds and net of government business enterprise specific debt.

Equity investment in Crown Investments Corporation of Saskatchewan is an advance to the corporation to form its equity capitalization and is recorded at cost.

Where there has been a loss in value that is other than a temporary decline, loans and equity investments are written down to recognize the loss.

Liabilities

Liabilities are present obligations to individuals and organizations outside of the General Revenue Fund as a result of transactions and events occurring prior to year-end, which will be satisfied in the future through the transfer or use of assets or another form of economic settlement. They consist of obligations to provide authorized transfers where eligibility criteria are met, to repay borrowings, to pay for goods and services acquired prior to year-end and to deliver goods or services in the future where payment has been received. Liabilities include contingencies when it is likely that a liability exists and the amount can be reasonably estimated.

Unearned revenue consists mainly of revenue for Crown mineral leases and motor vehicle fees that will be earned in a subsequent fiscal year.

Government of Saskatchewan – 2012-13 Public Accounts 57

General Revenue Fund

Notes to the Financial Statements

1. Significant Accounting Policies (continued)

Public debt is recorded at par, and is comprised of:

•	government general debt, which is debt issued by the General Revenue Fund to fund government spending;

•	Crown corporation general debt, which is debt issued by the General Revenue Fund and subsequently loaned to a Crown corporation; and

•

government business enterprise specific debt, which is debt issued by the General Revenue Fund specifically on behalf of government business enterprises, where the government expects to realize the receivables from the government business enterprises and settle the external debt simultaneously. Government business enterprises for which the government issues debt specifically are listed in schedule 6.

On the Statement of Financial Position, public debt is presented net of loans to Crown corporations for government business enterprise specific debt. Debt servicing costs on the Statement of Operations are presented net of reimbursements of interest for government business enterprise specific debt.

Certain debenture issues require contributions to a sinking fund. These obligations are recorded at principal less sinking fund balances where applicable. The General Revenue Fund is reimbursed by Crown corporations for all sinking fund contributions made for debt incurred on their behalf. Premiums and discounts on long-term investments within these sinking funds are amortized on a constant yield basis.

Debt issues and sinking fund investments held in foreign currencies are converted to the Canadian dollar equivalent at the exchange rate in effect at March 31.

Premiums, discounts and issue costs incurred on general debt are recorded as deferred charges. Premiums, discounts and commissions on government business enterprise specific debt are netted against reimbursements by these entities.

Unamortized foreign exchange gain or loss includes unrealized foreign exchange gains and losses resulting from conversion of general debt and sinking fund investments held in a foreign currency to the Canadian dollar equivalent at the exchange rate in effect at March 31. Unrealized foreign exchange gains and losses are amortized on a straight-line basis over the remaining life of the debt issue. Realized foreign exchange gains and losses resulting from general debt transactions are included in debt servicing costs.

Guaranteed debt includes guarantees by the Minister of Finance made through specific agreements or legislation to pay all or part of the principal and/or interest on a debt obligation in the event of default by the borrower. Loss provisions on guaranteed debt are recorded as a liability and an expense when it is likely that a loss will occur. The amount of the loss provision represents the best estimate of future payments net of recoveries.

Non-financial assets

Non-financial assets are acquired, constructed or developed assets that do not normally provide resources to discharge existing liabilities, but instead are normally employed to deliver government services, may be consumed in the normal course of operations and are not for sale in the normal course of operations.

Inventories held for consumption are recorded at cost and are expensed as they are consumed.

Tangible capital assets are recorded at cost and include all amounts directly attributable to the acquisition, construction, development or betterment of the asset but does not include interest. Tangible capital assets are generally amortized on a straight-line basis over the estimated useful life of each asset.

Revenue

Revenues are recorded on the accrual basis. For corporate and individual income taxes, cash received from the federal government provides the best estimate and is used as the basis for recording the tax revenue. Government transfers are recognized as revenue in the period during which the transfer is authorized and eligibility criteria are met.

Expense

Expenses are recorded on the accrual basis, except for costs related to defined benefit pension plans and a disability benefit plan, which are recorded on the cash basis. Government transfers are recognized as expenses in the period during which the transfer is authorized and eligibility criteria are met.

58 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Notes to the Financial Statements

1. Significant Accounting Policies (continued)

Future changes in accounting policies

A number of new standards and amendments to standards issued by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants are not yet effective and have not been applied in preparing these financial statements. The following standards for governments will become effective as follows:

PS 3260 Liability for Contaminated Sites (effective April 1, 2014), a new standard providing guidance on the recognition, measurement and disclosure of liabilities for the remediation of contaminated sites.

PS 3450 Financial Instruments (effective April 1, 2015), a new standard establishing guidance on the recognition, measurement, presentation and disclosure of financial instruments, including derivatives.

PS 2601 Foreign Currency Translation (effective April 1, 2015), replaces PS 2600 with revised guidance on the recognition, presentation and disclosure of transactions that are denominated in a foreign currency.

PS 1201 Financial Statement Presentation (effective in the period PS 3450 and PS 2601 are adopted), replaces PS 1200 with revised general reporting principles and standards of presentation and disclosure in government financial statements.

PS 3041 Portfolio Investments (effective in the period PS 3450, PS 2601 and PS 1201 are adopted), replaces PS 3040 with revised guidance on accounting for and presentation and disclosure of portfolio investments.

The Government plans to adopt these new and amended standards on the effective date and is currently analyzing the impact this will have on these financial statements.

2. Measurement Uncertainty

Uncertainty in the determination of the amount at which an item is recognized or disclosed in financial statements is known as measurement uncertainty. Such uncertainty exists when there is a variance between the recognized or disclosed amount and another reasonably possible amount.

Measurement uncertainty that may be material to these financial statements exists:

•	in corporate and individual income tax revenue of $3,244.5 million (2012 - $2,691.2 million) because final tax assessments may differ from initial estimates on which cash payments are based;

•	in oil and natural gas non-renewable resource revenue of $1,295.2 million (2012 - $1,546.2 million) because of price and production sensitivities in the royalty revenue structures;

•	in resource surcharge non-renewable resource revenue of $627.7 million (2012 - $452.8 million) because the final valuation of resource sales may differ from initial estimates on which installments are based;

•	in potash non-renewable resource revenue of $364.5 million (2012 - $438.4 million) because actual operating profits may differ from initial estimates;

•	in the Canada Health Transfer and Canada Social Transfer revenue of $1,300.4 million (2012 - $1,199.2 million) because of changes in the economic and demographic conditions in the Province and the country;

•	in agricultural income stability programs expense of $203.6 million (2012 - $83.4 million) because actual program uptake may differ from initial estimates which are based on farm income forecasts; and

•	in the disclosure of liabilities for defined benefit pension plans of $6,552.6 million (2012 - $6,114.4 million) because actual experience may differ from actuarial estimations and assumptions.

While best estimates are used for reporting items subject to measurement uncertainty, it is reasonably possible that changes in future conditions, occurring within one fiscal year, could require a material change in the amounts recognized or disclosed.

3. Cash and Temporary Investments

Temporary investments are recorded at $69.1 million (2012 - $110.8 million), consist of investment grade money market securities and are generally for less than 90 days. Due to their short-term nature, market value approximates cost.

Government of Saskatchewan – 2012-13 Public Accounts 59

General Revenue Fund

Notes to the Financial Statements

4. Risk Management of Public Debt

Funds are borrowed in both domestic and foreign capital markets by issuing Government of Saskatchewan securities. This borrowing activity finances government operations and the activities of Crown corporations. These transactions result in exposure to four types of risk: interest rate risk, foreign exchange rate risk, credit risk and liquidity risk.

To manage these risks, a preference for fixed rate Canadian dollar denominated debt is maintained. Where market conditions dictate that other forms of debt are more attractive, opportunities are sought to use derivative financial instruments to reduce these risks. A derivative financial instrument is a contract, the value of which is based on the value of another asset or index.

Interest rate risk is the risk that debt servicing costs will increase due to changes in interest rates. This risk is managed by issuing debt securities at predominantly fixed rates of interest rather than at floating rates of interest.

Floating rate debt is defined as the sum of floating rate debentures, short-term promissory notes, fixed rate debt maturing within one year and Saskatchewan Savings Bonds. Opportunities are sought to effectively convert floating rate debt into fixed rate debt through the use of interest rate swaps. There are interest rate swaps on a notional value of debt of $66.0 million (2012 - $66.0 million). At March 31, 2013, 80.2 per cent (2012 - 83.0 per cent) of the gross debt effectively carried a rate of interest that was fixed for greater than a one-year period.

Gross debt includes floating rate debt of $2,177.7 million (2012 - $1,854.1 million). A one percentage point increase in interest rates would decrease the surplus by $13.9 million in 2012-13.

Interest rate risk is also managed through the use of bond forward contracts. At March 31, 2013, obligations existed to sell $300.0 million of 4.00 per cent June 1, 2041 Government of Canada debentures (2012 - nil) for proceeds of $391.4 million (2012 - nil) by October 28, 2013.

Foreign exchange rate risk is the risk that debt servicing costs will increase due to a decline in the value of the Canadian dollar relative to other currencies. This risk is managed by maintaining a preference for issuing debt that is denominated in Canadian dollars. Where debt has been issued in foreign currencies, opportunities are sought to effectively convert it into Canadian dollar debt through the use of cross currency swaps. At March 31, 2013, 97.5 per cent (2012 - 97.5 per cent) of the gross debt is effectively denominated in Canadian dollars. A one cent change in the value of the U.S. dollar compared to the Canadian dollar from the March 31, 2013 level would have an insignificant effect on debt and debt servicing costs.

The following foreign denominated items have been hedged to Canadian dollars using cross currency swaps:

•	debentures totalling 825.0 million U.S. dollars (2012 - 1,225.0 million) fully hedged to $1,051.1 million Canadian (2012 - $1,619.3 million);

•	debentures totalling 300.0 million Swiss francs (2012 - 300.0 million) fully hedged to $274.7 million Canadian (2012 - $274.7 million); and

•	interest payments on debentures of 275.0 million U.S. dollars (2012 - 275.0 million) hedged to Canadian dollars at an exchange rate of 1.2325 (2012 - 1.2325).

In total, there are cross currency swaps on a notional value of debt of $1,939.3 million (2012 - $2,507.5 million). The effectiveness of these hedges is assessed on an ongoing basis by monitoring the credit ratings of the counterparties to the hedges.

Credit risk is the risk that a loss may occur from the failure of another party to meet its obligations under a derivative financial instrument contract. This risk is managed by dealing only with counterparties that have good credit ratings and by establishing limits on individual counterparty exposures and monitoring those exposures on a regular basis. At March 31, 2013, 100 per cent (2012 - 100 per cent) of counterparties held a Standard and Poor’s credit rating of A or higher.

Liquidity risk is a risk that financial commitments will not be met over the short term. This risk is managed by distributing debt maturities over many years, maintaining sinking funds on long-term debt issues and maintaining adequate cash reserves and short-term borrowing programs as contingent sources of liquidity.

60 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Notes to the Financial Statements

5. Employee Future Benefits

Pension plans

The Government sponsors several defined benefit pension plans and a defined contribution pension plan.

Pension fund assets of government sponsored defined benefit and defined contribution pension plans are invested in fixed income securities, equities, real estate and short-term monetary items. The investment in Government of Saskatchewan securities is insignificant for all plans.

Defined benefit plans

Defined benefit plans provide benefits based on length of service and pensionable earnings. A typical defined benefit plan provides pensions equal to 2.0 per cent of a member’s average five years highest salary, multiplied by the years of service to a maximum of 35 years. Members contribute a percentage of salary, which may vary based on age, to their plan. Pensions and contribution rates are integrated with the Canada Pension Plan.

The two main plans are the Teachers’ Superannuation Plan (TSP) and the Public Service Superannuation Plan (PSSP). Other plans include Judges of the Provincial Court Superannuation Plan (Judges), Saskatchewan Transportation Company Employees Superannuation Plan (STC), Anti-TB League Employees Superannuation Plan (ATB) and the Saskatchewan Pension Annuity Fund, an annuity underwriting operation. Obligations for allowances payable to members of the former Members of the Legislative Assembly Superannuation Fund (MLA) are part of the General Revenue Fund.

Actuarial valuations are performed at least triennially. An actuary extrapolates these valuations when a valuation is not done in the current fiscal year. Valuations are based on a number of assumptions about future events, such as inflation rates, interest rates, wage and salary increases and employee turnover and mortality. These assumptions reflect estimates of expected long-term rates and short-term forecasts. Estimates vary based on the individual plan.

The accrued benefit obligation is determined using the projected benefit method prorated on services. Pension fund assets are valued at market related values based on actual market values averaged over a four-year period. In the periods between valuations, the actuary estimates the market related value of pension fund assets using expected long-term rates of return for the individual plans.

The Government is required to match member current service contributions for all plans except the PSSP and Judges. Separate pension funds are maintained for all plans except the PSSP and the MLA. The PSSP member contributions are deposited into the General Revenue Fund. All pension obligations arising under the PSSP and the MLA are paid from the General Revenue Fund.

Information on the defined benefit plans is as follows:

	2013										2012
	TSP		PSSP			Others			Total		Total


Plan status	closed		closed			closed1				n/a		n/a
Member contribution rate (percentage of salary)		7.85		7.00-9.00	2		5.00-9.00	2		n/a		n/a
Number of active members		970		285			53			1,308		1,712
Average age of active members (years)		58.0		59.4			58.1			58.3		58.0
Number of former members entitled to deferred
pension benefits		4,234		75			8			4,317		4,507
Number of superannuates and surviving spouses		11,498		5,660			2,241			19,399		19,384
Actuarial valuation date	June 30/11		Dec. 31/11			Various				n/a		n/a
Long-term assumptions used
Rate of compensation increase (percentage)		3.50		3.50			3.50			n/a		n/a
Expected rate of return on plan assets (percentage)		5.00		n/a			5.50-5.85			n/a		n/a
Discount rate (percentage)		3.20		3.00			2.70-3.60			n/a		n/a
Inflation rate (percentage)		2.50		2.50			2.50			n/a		n/a
Expected average remaining service life (years)		3.5		0.3			0.9-7.3			n/a		n/a
Post-retirement index (percentage of annual increase in
Consumer Price Index)		80		70			70-75			n/a		n/a

1	Judges is open to new membership; all other plans are closed.

Contribution rate varies based on age upon joining the plan.

Government of Saskatchewan – 2012-13 Public Accounts 61

General Revenue Fund

Notes to the Financial Statements

5. Employee Future Benefits (continued)

Based on the latest actuarial valuations, extrapolated to March 31, 2013, the present value of accrued pension benefits and the market related value of pension fund assets are shown in the table below:

(thousands of dollars)	2013												2012
	TSP1			PSSP			Others			Total			Total

Accrued benefit obligation,
beginning of year		5,796,584			2,085,497			373,171			8,255,252			7,361,401
Current period benefit cost		23,397			2,477			6,582			32,456			39,255
Interest cost		205,787			72,791			13,657			292,235			343,018
Actuarial losses		259,067			126,732			26,353			412,152			994,278
Benefit payments		(340,571	)		(131,599	)		(23,082	)		(495,252	)		(482,700	)
Accrued Benefit Obligation, End of Year		5,944,264			2,155,898			396,681			8,496,843			8,255,252
Plan assets, beginning of year		751,164			-			216,500			967,664			1,217,380
Employer contributions		208,420			131,156			6,302			345,878			273,829
Employee contributions		4,726			443			589			5,758			8,387
Return on plan assets		37,638			-			10,245			47,883			81,068
Actuarial (losses) gains		-			-			10,445			10,445			(130,300	)
Benefit payments		(340,571	)		(131,599	)		(23,082	)		(495,252	)		(482,700	)
Plan Assets, End of Year 2		661,377			-			220,999			882,376			967,664
		5,282,887			2,155,898			175,682			7,614,467			7,287,588
Unamortized estimation adjustments3		(905,919	)		(126,732	)		(29,199	)		(1,061,850	)		(1,173,143	)
Total Pension Liabilities4		4,376,968			2,029,166			146,483			6,552,617			6,114,445

1	The TSP had an actual rate of return on plan assets of 5.5 per cent (2012 - 1.7 per cent).

2	At March 31, 2013, the market value of plan investments was $875.0 million (2012 - $962.3 million). Of this amount 59.2 per cent (2012 - 44.6 per cent) was invested in fixed income securities and 26.2 per cent (2012 - 42.1 per cent) in equity investments.

Unamortized estimation adjustments are amortized against the net obligation over periods ranging from 3.5 to 4.0 years for the TSP, 0.3 years for the PSSP and from 0.9 to 10 years for the other plans. These represent the expected average remaining service life of active plan members at the time the estimation adjustments arose.

Changes in assumptions can result in significantly higher or lower estimates of pension liabilities. A one percentage point decrease in the discount rate would result in a $787.1 million and $278.1 million increase in the pension liabilities for the TSP and the PSSP respectively, and a one percentage point increase would result in a $643.8 million and $228.5 million decrease in the pension liabilities for the TSP and the PSSP respectively.

Defined contribution plans

Defined contribution plans provide pensions based on accumulated contributions and investment earnings. Employees contribute a percentage of salary.

The Government sponsors the Public Employees Pension Plan (PEPP), a multi-employer defined contribution plan. Employers are required to provide contributions at specified rates for employee current service. The General Revenue Fund has fully funded its share of contributions. The General Revenue Fund also contributes to the Saskatchewan Teachers’ Retirement Plan (STRP), sponsored by the Saskatchewan Teachers’ Federation.

Information on the defined contribution plans to which the General Revenue Fund contributes is as follows:

	2013							2012
	PEPP			STRP¹		Total		Total

Plan status	open				n/a		n/a		n/a
Member contribution rate (percentage of salary)		5.00-9.00	2		n/a		n/a		n/a
Government contribution rate (percentage of salary)		6.00-9.00	2		n/a		n/a		n/a
Number of active members, all employers		25,930			n/a		25,930		25,454
General Revenue Fund participation
Number of active members		11,969			n/a		11,969		11,854
Member contributions (thousands of dollars)		56,698			n/a		56,698		54,776
Government contributions (thousands of dollars)		60,303			66,779		127,082		124,986

The STRP is a contributory defined benefit pension plan. The Government contributes an amount which is set through provincial negotiations.

Contribution rate varies based on employee group.

62 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Notes to the Financial Statements

5. Employee Future Benefits (continued)

Pension expense

Pensions are accounted for on a cash basis. The pension liabilities are not recorded in the financial statements.

(thousands of dollars)	2013		2012


Defined benefit plans		345,878		273,829
Defined contribution plans		127,082		124,986
Total Pension Expense		472,960		398,815

Other employee future benefits

The Government provides long-term disability benefits to members of the TSP. The disability benefit plan liability of $7.4 million (2012 - $9.6 million) is not recorded in the financial statements. An accumulated sick leave benefit of $14.0 million is recorded in accounts payable and accrued liabilities.

6. Contingencies

Guaranteed debt

The Minister of Finance has guaranteed the debt of others of $132.0 million (2012 - $93.9 million). Schedule 8 provides a listing of guaranteed debt.

Lawsuits

The Government is involved in various legal actions, the outcome of which is not determinable. Up to $344.5 million may be paid depending on the outcome of lawsuits in progress. The lawsuits in progress include aboriginal land claims, claims for damages to persons and property, disputes of taxes and funding and various other legal actions.

7. Contractual Obligations

Contractual obligations are as follows:

(thousands of dollars)	2014		2015		2016		2017		2018		Thereafter		Total
Construction and acquisition of tangible capital assets		428,501		83,295		11,595		4,503		396		-		528,290
Leases
Capital1		6,502		6,330		6,073		5,699		5,758		75,938		106,300
Operating		43,034		37,589		28,439		20,832		14,295		50,766		194,955
Computer and satellite service agreements		55,526		24,619		16,324		14,305		9,080		-		119,854
Agriculture research and development		17,811		14,909		12,140		10,348		9,919		4,895		70,022
Beverage container collection and recycling programs		22,752		22,000		22,000		-		-		-		66,752
Economic growth projects		6,649		7,546		7,545		2,465		1,165		13,320		38,690
Other transfers
Capital		2,434		52,090		25,802		162		-		-		80,488
Operating		49,213		21,512		-		-		-		-		70,725
Other		3,373		-		-		-		-		-		3,373
Total Contractual Obligations		635,795		269,890		129,918		58,314		40,613		144,919		1,279,449

1	These financial statements include capital lease obligations of $45.2 million representing aggregate payments of $106.3 million (reported above) net of interest and executory costs of $61.1 million.

Contractual obligations with no fixed maturity date include rural municipality and school division tax loss compensation of approximately $12.4 million as land achieves reserve status over the course of the agreements.

Government of Saskatchewan – 2012-13 Public Accounts 63

General Revenue Fund

Notes to the Financial Statements

8. Related Party Transactions

Included in these financial statements are transactions with various Saskatchewan Crown corporations, agencies, boards, and commissions related to the General Revenue Fund by virtue of common control by the Government of Saskatchewan.

Transactions include transfers to related parties of $5,308.5 million (2012 - $5,152.6 million).

Routine operating transactions with related parties are recorded at the rates charged by those organizations and are settled on normal trade terms. These transactions include:

•	payments to Saskatchewan Telecommunications Holding Corporation of approximately $22.1 million (2012 - $24.8 million); and

•	taxation and non-renewable resource revenue received from related parties during 2012-13 of approximately $111.5 million (2011-12 - $113.8 million). In addition, Saskatchewan Provincial Sales Tax and Fuel Tax are received from related parties on all taxable purchases.

Amounts due to or from related parties are described separately in these financial statements.

9. Trust Funds

The General Revenue Fund has no equity in trust fund assets. Trust fund assets held and administered but not owned by the General Revenue Fund are as follows:

(thousands of dollars)	2013		2012


Pension plans		8,435,470		7,809,106
Public Guardian and Trustee of Saskatchewan		177,922		163,730
Other		93,517		81,900
Total Trust Fund Assets1		8,706,909		8,054,736

1	Amounts are based on the latest financial statements of the funds closest to March 31, 2013, where available.

10. Debt Retirement Fund

This fund was established pursuant to The Growth and Financial Security Act and is an accounting of the surpluses of the General Revenue Fund commencing April 1, 2008. This Fund has no underlying assets.

(thousands of dollars)	Budget		Actual

Debt Retirement Fund, beginning of year		3,213,366		3,213,366
Surplus for the year		47,493		57,967
Debt Retirement Fund, End of Year		3,260,859		3,271,333

64 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Notes to the Financial Statements

11. Change in Accounting Policies

During 2012-13, the Government adopted new standards of accounting for government transfers and tax revenue recommended by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants.

Government Transfers

The new government transfers standard has been applied prospectively, and accordingly, comparative figures have not been restated. The accounting change did not have a significant impact on the current year financial statements.

Tax Revenue

Under the new tax revenue standard, the Saskatchewan Low-Income Tax Credit is netted against provincial sales taxation revenue, the type of tax revenue for which the credit is providing relief, rather than individual income taxation revenue. Additionally, penalties and interest collected on tax revenue are recorded separate from tax revenue, and commissions paid to retailers on the collection of taxes are recorded as an expense. The new standard has been applied prospectively, and accordingly, comparative figures have not been restated. The accounting change has no effect on the current year surplus but results in the reclassification of certain revenues and expenses as follows:

•	an increase in individual income taxation revenue of $84.9 million;

•	a decrease in provincial sales taxation revenue of $82.7 million;

•	an increase in interest revenue of $7.4 million;

•	an increase in penalties revenue of $4.1 million

•	a decrease in resource surcharge revenue of $4.1 million; and

•	an increase in goods and services expense of $9.8 million.

12. Adjustment to Accumulated Deficit

Accumulated Sick Leave Benefit Obligation

During 2012-13, a liability for an accumulated sick leave benefit obligation was reported in accordance with Canadian public sector accounting standards. The liability was accounted for retroactively without restatement of prior periods and resulted in an increase to accounts payable and accrued liabilities and a decrease to opening accumulated deficit of $14.0 million.

13. Government Reorganization

On May 25, 2012 and December 12, 2012, the Government announced organizational changes that resulted in responsibility for certain functions being transferred between ministries.

The 2013 budget and actual expenses in the Statement of Operations reflect the organizational changes.

The information below reconciles the 2013 budget and actual expenses presented in the Statement of Operations to the 2013 Estimates approved by the Legislative Assembly.

Government of Saskatchewan – 2012-13 Public Accounts 65

General Revenue Fund

Notes to the Financial Statements

13. Government Reorganization (continued)

(thousands of dollars)	2013 Budget							2013 Actual
	Approved					Statement of		Approved					Statement of
	Estimates		Adjustments			Operations		Estimates		Adjustments			Operations

Ministries and Agencies
Advanced Education1		890,598		(165,977	)		724,621		885,721		(162,970	)		722,751
Agriculture		430,777		-			430,777		504,065		-			504,065
Central Services2		14,542		21,022			35,564		13,002		19,685			32,687
Central Services - commercial operations2		-		-			-		72,602		3,023			75,625
Corrections, Public Safety and Policing3 4		374,731		(374,731	)		-		445,039		(445,039	)		-
Corrections, Public Safety and Policing - commercial operations3		-		-			-		3,156		(3,156	)		-
Economy1		43,037		212,414			255,451		50,618		206,283			256,901
Education		1,596,067		-			1,596,067		1,653,460		-			1,653,460
Enterprise and Innovation Programs1		27,347		(27,347	)		-		25,288		(25,288	)		-
Enterprise Saskatchewan		33,063		-			33,063		16,046		-			16,046
Environment1		178,462		(180	)		178,282		169,101		-			169,101
Executive Council5		16,572		59			16,631		16,111		-			16,111
Finance		351,936		-			351,936		362,849		-			362,849
Finance Debt Servicing		400,000		-			400,000		390,790		-			390,790
First Nations and Métis Relations1 3		81,943		(81,943	)		-		79,667		(79,667	)		-
Government Relations3 5		386,783		91,716			478,499		432,732		159,907			592,639
Government Relations - commercial operations3		-		-			-		-		3,156			3,156
Health		4,680,168		-			4,680,168		4,575,589		-			4,575,589
Highways and Infrastructure		425,910		-			425,910		433,004		-			433,004
Highways and Infrastructure - commercial operations		-		-			-		3,526		-			3,526
Information Technology Office2		16,681		(16,681	)		-		15,343		(15,343	)		-
Information Technology Office - commercial operations2		-		-			-		3,023		(3,023	)		-
Innovation Saskatchewan		6,769		-			6,769		6,769		-			6,769
Justice4		152,558		362,492			515,050		160,171		363,230			523,401
Labour Relations and Workplace Safety		17,489		-			17,489		17,036		-			17,036
Office of the Provincial Capital Commission2 5		14,715		(14,715	)		-		12,634		(12,634	)		-
Parks, Culture and Sport1		102,417		(6,129	)		96,288		107,984		(8,164	)		99,820
Public Service Commission		38,541		-			38,541		39,451		-			39,451
Saskatchewan Research Council		18,983		-			18,983		18,983		-			18,983
SaskBuilds Corporation		-		-			-		2,000		-			2,000
Social Services		852,725		-			852,725		851,499		-			851,499
Legislative Assembly and its Officers
Advocate for Children and Youth		1,944		-			1,944		1,941		-			1,941
Chief Electoral Officer		2,471		-			2,471		2,465		-			2,465
Conflict of Interest Commissioner		145		-			145		131		-			131
Information and Privacy Commissioner		1,065		-			1,065		1,024		-			1,024
Legislative Assembly		26,067		-			26,067		24,387		-			24,387
Ombudsman		3,075		-			3,075		3,018		-			3,018
Provincial Auditor		8,332		-			8,332		8,330		-			8,330
Total Expense		11,195,913		-			11,195,913		11,408,555		-			11,408,555

1	Economy assumed responsibility for Enterprise and Innovation Programs, employment and immigration from Advanced Education, business development from Environment, First Nations and Métis economic development from First Nations and Métis Relations and tourism from Parks, Culture and Sport.

2	Central Services assumed responsibility for the Information Technology Office and the Saskatchewan Archives Board from the Office of the Provincial Capital Commission.

3	Government Relations assumed responsibility for public safety from Corrections, Public Safety and Policing and First Nations and Métis relations from First Nations and Métis Relations.

Justice assumed responsibility for corrections and policing from Corrections, Public Safety and Policing.

5	Executive Council assumed responsibility for a position providing support for the Provincial Secretary from Government Relations and for capital commission operations from the Office of the Provincial Capital Commission.

14. Comparative Figures

Certain 2012 comparative figures have been reclassified to conform with the current year’s presentation. With regard to expenses, the figures are reported on the same basis as the Estimates for the prior year.

66 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Accounts Receivable	Schedule 1
As at March 31, 2013
(thousands of dollars)

	2013		2012


Taxation	248,522		228,751
Non-renewable resources	248,613		225,156
Transfers from government entities	111,850		113,556
Other own-source revenue	102,821		106,447
Transfers from the federal government	434,523		369,064
Other	64,087		57,161
	1,210,416		1,100,135
Provision for loss	(55,352	)	(55,248	)
Total Accounts Receivable1	1,155,064		1,044,887

1	Includes $135.8 million due from related parties (2012 - $136.1 million).



Loans to Crown Corporations								Schedule 2
As at March 31, 2013
(thousands of dollars)

						2013		2012

Promissory Notes
Information Services Corporation of Saskatchewan							9,935		9,935
Liquor and Gaming Authority							125,064		-
Municipal Financing Corporation of Saskatchewan							15,289		14,842
Saskatchewan Telecommunications Holding Corporation							157,000		14,200
Saskatchewan Water Corporation							16,203		18,961
SaskEnergy Incorporated							245,000		140,000
Total Promissory Notes							568,491		197,938

	Principal		Sinking
	Outstanding		Fund Equity
			(schedule 7)
Long-Term Loans
Saskatchewan Housing Corporation		52,004		(26,722	)		25,282		27,238
Saskatchewan Opportunities Corporation		36,684		(1,393	)		35,291		35,729
Saskatchewan Power Corporation		100,000		(4,697	)		95,303		96,547
Saskatchewan Water Corporation1		-		-			-		35,106
SaskEnergy Incorporated		170,000		(7,883	)		162,117		164,209
Total Long-Term Loans		358,688		(40,695	)		317,993		358,829
Total Loans to Crown Corporations2							886,484		556,767

During 2012-13, Saskatchewan Water Corporation was reclassified as a government business enterprise. As at April 1, 2012, loans to Saskatchewan Water Corporation decreased by $35.1 million as a result of debt issued specifically on behalf of Saskatchewan Water Corporation being reclassified from Crown corporation general debt to government business enterprise specific debt (schedule 6).

2	Loans to Crown corporations are presented net of government business enterprise specific debt of $4,487.9 million (2012 - $3,905.4 million) (schedule 6).

Government of Saskatchewan – 2012-13 Public Accounts 67

General Revenue Fund

Other Loans								Schedule 3
As at March 31, 2013
(thousands of dollars)

	2013				2012
Advanced Education
Saskatchewan Student Aid Fund				82,504					80,504

Agriculture
Short-term hog loans		2,104				3,289
Provision for loss		(983	)	1,121		(1,181	)		2,108

Economy
Economic development loans		1,521				1,760
Provision for loss		(896	)	625		(930	)		830

Grey Cup loan				6,200					-

Small business loans association		7,841				7,450
Provision for loss		(1,651	)	6,190		(2,037	)		5,413

Other				3,067					3,276
Total Other Loans				99,707					92,131

68 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Accounts Payable and Accrued Liabilities			Schedule 4
As at March 31, 2013
(thousands of dollars)

	2013		2012


Salaries and benefits		91,894		72,159
Transfers
Capital		154,106		150,757
Operating		429,677		335,418
Goods and services		96,072		150,569
Accrued interest		83,951		104,495
Equalization and Canada Health and Social Transfer repayable to the federal
government		204,095		227,530
Transfers to the federal government		125,503		144,277
Tangible capital assets		165,769		96,527
Other		62,679		94,980
Total Accounts Payable and Accrued Liabilities1		1,413,746		1,376,712

1	Includes $281.0 million payable to related parties (2012 - $251.5 million) and $336.5 million payable to the federal government (2012 - $412.8 million).

Deposits Held			Schedule 5
As at March 31, 2013
(thousands of dollars)

	2013		2012

Deposits held on behalf of government entities and others
Crop Reinsurance Fund of Saskatchewan		120,362		81,768
eHealth Saskatchewan		25,852		23,197
Enterprise Saskatchewan		8,842		18,341
Extended Health Care Plans		22,261		19,531
Financial and Consumer Affairs Authority of Saskatchewan		14,189		14,338
Innovation Saskatchewan		5,304		7,387
Liquor and Gaming Authority		120,309		40,020
Oil and Gas Orphan Fund		11,812		9,101
Public Employees' Dental Plan		31,624		32,606
Public Employees' Pension Plan		9,700		9,498
Public Guardian and Trustee of Saskatchewan		4,872		7,043
Queen's Bench Court Accounts		11,873		10,290
Saskatchewan Agricultural Stabilization Fund		2,385		14,897
Saskatchewan Apprenticeship and Trade Certification Commission		6,116		5,253
Saskatchewan Crop Insurance Corporation		414,819		322,248
Saskatchewan Student Aid Fund		12,890		16,138
School Division Tax Loss Compensation Fund		7,377		7,274
Transportation Partnerships Fund		8,230		6,912
Victims' Fund		9,390		8,298
Other		33,446		31,972
Conditional receipts		22,570		23,769
Total Deposits Held		904,223		709,881

Government of Saskatchewan – 2012-13 Public Accounts 69

General Revenue Fund

Public Debt											Schedule 6
As at March 31, 2013
(thousands of dollars)


	2013						2012
			Government						Government
			Business						Business
			Enterprise						Enterprise
	General		Specific		Public		General		Specific		Public
	Debt1		Debt1		Debt		Debt1		Debt1		Debt


Government		3,804,817		-		3,804,817		3,807,590		-		3,807,590

Crown Corporation
Information Services Corporation of
Saskatchewan		9,935		-		9,935		9,935		-		9,935
Liquor and Gaming Authority		125,064		-		125,064		-		-		-
Municipal Financing Corporation of
Saskatchewan		15,289		132,377		147,666		14,842		120,807		135,649
Saskatchewan Gaming Corporation		-		6,000		6,000		-		6,000		6,000
Saskatchewan Housing Corporation		25,282		-		25,282		27,238		-		27,238
Saskatchewan Opportunities Corporation		35,291		-		35,291		35,729		-		35,729
Saskatchewan Power Corporation		95,303		3,251,648		3,346,951		96,547		2,646,587		2,743,134
Saskatchewan Telecommunications
Holding Corporation		157,000		495,754		652,754		14,200		507,827		522,027
Saskatchewan Water Corporation ²		16,203		32,044		48,247		54,067		-		54,067
SaskEnergy Incorporated		407,117		570,055		977,172		304,209		624,171		928,380
Total Crown Corporation 3		886,484		4,487,878		5,374,362		556,767		3,905,392		4,462,159
Public Debt 4 5		4,691,301		4,487,878		9,179,179		4,364,357		3,905,392		8,269,749

1	General debt and government business enterprise specific debt are net of sinking funds.

During 2012-13, Saskatchewan Water Corporation was reclassified as a government business enterprise. As at April 1, 2012, $35.1 million of debt issued specifically on behalf of Saskatchewan Water Corporation was reclassified from Crown corporation general debt to government business enterprise specific debt.

3	On the Statement of Financial Position, public debt is presented net of loans to Crown corporations for government business enterprise specific debt of $4,487.9 million (2012 - $3,905.4 million).

4	Included in public debt is U.S. dollar debt converted to $3.9 million Canadian (2012 - $23.9 million) at the exchange rate in effect at March 31, 2013 of 1.0156 (2012 - 0.9991).

Public debt is comprised of gross debt net of sinking funds as follows:

	2013
	Gross		Sinking			Public
	Debta		Funds			Debt
			(schedule 7)

Government		5,025,494		(1,220,677	)		3,804,817
Crown Corporation
Information Services Corporation of Saskatchewan		9,935		-			9,935
Liquor and Gaming Authority		125,064		-			125,064
Municipal Financing Corporation of Saskatchewan		150,289		(2,623	)		147,666
Saskatchewan Gaming Corporation		6,000		-			6,000
Saskatchewan Housing Corporation		52,004		(26,722	)		25,282
Saskatchewan Opportunities Corporation		36,684		(1,393	)		35,291
Saskatchewan Power Corporation		3,748,741		(401,790	)		3,346,951
Saskatchewan Telecommunications Holding Corporation		743,600		(90,846	)		652,754
Saskatchewan Water Corporation		59,903		(11,656	)		48,247
SaskEnergy Incorporated		1,056,183		(79,011	)		977,172
Total Crown Corporation		5,988,403		(614,041	)		5,374,362
Public Debt		11,013,897		(1,834,718	)		9,179,179

The average effective interest rate on gross debt during 2012-13 was 5.6 per cent (2011-12 - 6.2 per cent), and includes the impact of foreign exchange and the amortization of any premiums and discounts associated with the debentures. The average term to maturity of gross debt is 12.0 years (2012 - 11.6 years).

70 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Public Debt (continued)

Schedule 6

5	Debt principal payment requirements in each of the next five years and thereafter are as follows:

	2013			2012


Year of Maturity

Short-term promissory notes		1,385,977			692,657
2012-13		-			1,157,076
2013-14		790,336			789,647
2014-15		946,155			946,427
2015-16		491,870			491,870
2016-17		390,601			390,601
2017-18		233,991			-
6-10 years		1,861,968			1,628,230
Thereafter		4,912,999			4,814,311
Gross debt a		11,013,897			10,910,819
Sinking funds		(1,834,718	)		(2,641,070	)
Public Debt		9,179,179			8,269,749

Gross debt includes Canada Pension Plan debentures of $745.1 million (2012 - $745.1 million). These debentures are callable in whole or in part before maturity at the option of the Minister of Finance of Saskatchewan.

Government of Saskatchewan – 2012-13 Public Accounts 71

General Revenue Fund

Sinking Funds												Schedule 7
As at March 31, 2013
(thousands of dollars)

	2012		2013
	Sinking									Currency		Sinking
	Funds		Contributions1		Earnings2		Redemptions3			Adjustment		Funds

Government		2,099,294		47,527		109,408		(1,039,846	)		4,294		1,220,677

Crown Corporation
Municipal Financing Corporation of Saskatchewan		2,097		392		134		-			-		2,623
Saskatchewan Housing Corporation		24,766		520		1,436		-			-		26,722
Saskatchewan Opportunities Corporation		955		367		71		-			-		1,393
Saskatchewan Power Corporation		353,788		26,723		21,279		-			-		401,790
Saskatchewan Telecommunications Holding
Corporation		78,773		7,366		4,707		-			-		90,846
Saskatchewan Water Corporation		8,594		2,517		545		-			-		11,656
SaskEnergy Incorporated		72,803		8,112		4,302		(6,206	)		-		79,011
Total Crown Corporation		541,776		45,997		32,474		(6,206	)		-		614,041
Total Sinking Funds4		2,641,070		93,524		141,882		(1,046,052	)		4,294		1,834,718

Annual contributions, established by Order in Council, are set at not less than one per cent of debentures outstanding. The aggregate amount of contributions estimated to be required in each of the next five years and thereafter to meet sinking fund requirements by debt classification are as follows:

	2014		2015		2016		2017		2018		Thereafter		Total
Government general debt		48,014		41,628		33,289		29,092		26,306		303,608		481,937
Crown corporation general debt		3,587		3,087		3,087		3,087		3,087		49,360		65,295
Government business enterprise
specific debt		42,902		41,880		41,380		40,782		39,779		585,098		791,821
Total Sinking Fund Contributions		94,503		86,595		77,756		72,961		69,172		938,066		1,339,053

2	Includes gains on investment sales of $80.3 million (2012 - $128.2 million).
3	The redemption value is based on the market value of the sinking fund units at the date of redemption.
4	The market value of total sinking funds is $1,834.0 million (2012 - $2,683.1 million).

Total sinking funds by debt classification are as follows:

	2012		2013
	Sinking									Currency					Sinking
	Funds		Contributions		Earnings		Redemptions			Adjustment		Reclassificationa			Funds

Government general debt		2,099,294		47,527		109,408		(1,039,846	)		4,294		-			1,220,677
Crown corporation general debt		43,559		3,587		2,143		-			-		(8,594	)		40,695
Total sinking funds of general debt		2,142,853		51,114		111,551		(1,039,846	)		4,294		(8,594	)		1,261,372
Government business enterprise
specific debt		498,217		42,410		30,331		(6,206	)		-		8,594			573,346
Total Sinking Funds		2,641,070		93,524		141,882		(1,046,052	)		4,294		-			1,834,718

Sinking fund assets have been invested as follows:

	2013		2012
Long-term investments in securities of:
Government of other provinces (coupon interest range 0.0% to 9.5%; maturing in 2.9 to 36.9 years)		859,692		1,292,057
Government of Saskatchewan (coupon interest range 0.0% to 9.4%; maturing in 1.0 to 28.8 years)		430,937		555,455
Government of the United States (coupon interest 2.8%; maturing in 29.6 years)		19,257		4,951
Government of Canada (coupon interest range 4.0%; maturing in 3.2 years)		8,002		54,566
Cash, short-term investments and accrued interest		516,830		734,041
Total Sinking Funds a		1,834,718		2,641,070

Includes U.S. dollar cash, investments and accrued interest converted to $275.4 million Canadian (2012 - $250.9 million) at the exchange rate in effect at March 31, 2013 of 1.0156 (2012 - 0.9991).

72 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Guaranteed Debt			Schedule 8
As at March 31, 2013
(thousands of dollars)

	2013		2012
Crown Corporation
The Crown Corporations Act, 1993
Federal immigrant investor loans		113,335		76,722
Total Crown Corporation		113,335		76,722

Other
The Farm Financial Stability Act
Breeder associations loan guarantees		9,990		9,481
Feeder associations loan guarantees		7,533		6,350
Feedlot construction loan guarantees		1,014		1,267
Individual cattle feeder loan guarantees		126		13
The Student Assistance and Student Aid Fund Act		16		21
Total Other		18,679		17,132
Total Guaranteed Debt1		132,014		93,854

1	In addition to the amount shown, there is a contingent liability for interest accrued on certain of these items.

Total guaranteed debt is net of a loss provision of $0.1 million (2012 - $0.7 million).

Federal Immigrant Investor Loans

The Minister of Finance provides a guarantee to the federal government with respect to the Province’s participation in the federal Immigrant Investor Program (IIP). Under this program, the federal government provides low interest loans to a Saskatchewan Crown corporation (the Saskatchewan Immigrant Investor Fund Inc.) that was established to administer the Province’s participation in the IIP. A condition of the agreement between the Province and the federal government is that the Minister of Finance must guarantee that the Saskatchewan Immigrant Investor Fund Inc. will repay the IIP loans to the federal government.

Breeder and Feeder Associations

The Minister of Finance provides guarantees to lenders who make loans to production associations. The Minister of Finance guarantees the repayment of 25 per cent of the outstanding loan balance at the time of a first default on any advance, plus accrued interest as of the time that payment is to be made on the guarantee. Guarantees for each cattle association are limited to $6 million under the breeder option. Guarantees for each bison and sheep association are limited to $6 million and $4 million respectively, under both the breeder and feeder options.

Government of Saskatchewan – 2012-13 Public Accounts 73

General Revenue Fund

Tangible Capital Assets					Schedule 9
As at March 31, 2013
(thousands of dollars)

	2013																		2012
	Land,									Office &
	Buildings &			Machinery &			Transportation			Information
	Improvements			Equipment			Equipment			Technology			Infrastructure			Total			Total
Estimated useful life (in years)	15 - indefinite				10-20			10-40			5-10			15-40

Opening Net Book Value of
Tangible Capital Assets1		676,109			85,802			173,722			78,702			2,261,231			3,275,566			3,045,147
Opening cost		1,041,189			162,464			285,069			155,442			4,169,590			5,813,754			5,444,439
Acquisitions		153,127			7,854			18,849			40,448			292,778			513,056			411,951
Transfers		984			(488	)		488			-			1,443			2,427			452
Write-downs		(1	)		-			-			(177	)		-			(178	)		(460	)
Disposals		(12,763	)		(3,101	)		(7,886	)		(808	)		(28,134	)		(52,692	)		(42,628	)
Closing Cost 2		1,182,536			166,729			296,520			194,905			4,435,677			6,276,367			5,813,754
Opening accumulated amortization		365,080			76,662			111,347			76,740			1,908,359			2,538,188			2,399,292
Annual amortization		24,262			8,151			19,098			8,382			128,750			188,643			174,971
Transfers		-			(120	)		120			-			-			-			(230	)
Disposals		(4,488	)		(2,542	)		(6,215	)		(764	)		(24,741	)		(38,750	)		(35,845	)
Closing Accumulated Amortization		384,854			82,151			124,350			84,358			2,012,368			2,688,081			2,538,188
Closing Net Book Value of
Tangible Capital Assets1		797,682			84,578			172,170			110,547			2,423,309			3,588,286			3,275,566

1	Net book value of tangible capital assets does not include the following:
	•	works of art and historical treasures, such as the Legislative Building;
	•	items inherited by right of the Crown, such as Crown lands, forests, water and mineral resources, which are not recognized in these financial statements; and
	•	intangible assets

2	Includes work-in-progress of $253.2 million (2012 - $164.7 million).

74 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Revenue			Schedule 10
For the Year Ended March 31, 2013
(thousands of dollars)

	2013					2012
	Budget			Actual		Actual

Taxation
Corporation income		817,200			838,275		793,790
Fuel		508,300			495,955		475,452
Individual income (note 11)		2,084,300			2,406,254		1,897,409
Provincial sales (note 11)		1,348,700			1,284,893		1,322,161
Tobacco		247,100			253,353		242,853
Other		309,400			327,796		303,642
Total Taxation		5,315,000			5,606,526		5,035,307

Non-Renewable Resources
Crown land sales		220,000			89,060		235,507
Natural gas		12,500			11,354		17,389
Oil		1,600,900			1,283,877		1,528,808
Potash		705,200			364,490		438,372
Resource surcharge		485,900			627,675		452,807
Other		123,800			139,413		149,074
Total Non-Renewable Resources1		3,148,300			2,515,869		2,821,957

Transfers from Government Entities
Crown Investments Corporation of Saskatchewan		150,000			312,000		110,000
- Special dividend		3,000			3,000		130,000
Liquor and Gaming Authority		439,900			478,090		465,917
Other enterprises and funds		46,500			105,132		75,628
Total Transfers from Government Entities		639,400			898,222		781,545

Other Own-Source Revenue
Fines, forfeits, and penalties		16,200			20,596		14,722
Interest, premiums, discounts, and exchange2		145,400			164,171		241,336
Motor vehicle fees		172,800			183,121		173,151
Other licences and permits		25,400			27,249		25,414
Sales, services, and service fees		124,600			112,992		132,039
Transfers from other governments		16,900			22,165		17,163
Commercial operations (schedule 11)		-			82,098		99,511
Other 3		100,000			120,141		51,908
Total Other Own-Source Revenue		601,300			732,533		755,244
Total Own-Source Revenue		9,704,000			9,753,150		9,394,053

Transfers from the Federal Government
Canada Health Transfer		902,900			933,400		846,771
Canada Social Transfer		363,700			366,968		352,420
Other		320,300			370,971		527,187
Total Transfers from the Federal Government		1,586,900			1,671,339		1,726,378
Total Revenue		11,290,900			11,424,489		11,120,431

1	Includes taxes of $447.6 million (2012 - $566.3 million).
2	Includes gains on investment sales of $70.2 million (2012 - $127.6 million).
3	Includes reversals and refunds of prior year expenses of $86.2 million (2012 - $21.6 million).

Government of Saskatchewan – 2012-13 Public Accounts 75

General Revenue Fund

Commercial Operations			Schedule 11
For the Year Ended March 31, 2013
(thousands of dollars)

	2013					2012
	Budget		Actual			Actual

Commercial Operations Revenue1
Recovery from external sources
Central Services		68,879		75,331			80,681
Government Relations		4,051		3,156			2,384
Highways and Infrastructure		4,000		3,788			14,570
Information Technology Office		-		-			2,115
Recovery of overhead costs2
Highways and Infrastructure		-		(177	)		(239	)
Commercial Operations Revenue (schedule 10)		76,930		82,098			99,511

Commercial Operations Expense
Central Services		68,879		75,625			80,683
Government Relations		4,051		3,156			2,383
Highways and Infrastructure		4,000		3,526			14,061
Information Technology Office		-		-			2,110
Commercial Operations Expense		76,930		82,307			99,237

Net Results
Central Services		-		(294	)		(2	)
Government Relations		-		-			1
Highways and Infrastructure		-		85			270
Information Technology Office		-		-			5
Net Results		-		(209	)		274

1	With the approval of the Lieutenant Governor in Council, revenues from commercial-type activities may be used to pay for the related costs without requiring an appropriation.

2	Where a portion of the revenue collected relates to the recovery of overhead costs (e.g. employee benefit cost) paid for by another ministry, the revenue is included in sales, services and service fees.

Expense by Object		Schedule 12
For the Year Ended March 31, 2013
(thousands of dollars)

	2013		2012


Salaries and benefits	1,082,149		1,065,239
Transfers
Capital (schedule 16)	267,114		200,362
Operating	8,825,157		8,524,697
Goods and services	639,986		666,943
Debt servicing (schedule 14)	390,790		411,957
Amortization of tangible capital assets (schedule 9)	188,643		174,971
Other	14,716		21,594
Total Expense	11,408,555		11,065,763

76 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Expense by Theme	Schedule 13
For the Year Ended March 31, 2013
(thousands of dollars)

	2013		2012


Agriculture		504,065		439,632
Community development		472,862		448,321
Debt servicing (schedule 14)		390,790		411,957
Economic development		196,138		195,118
Education		2,448,199		2,330,407
Environment and natural resources		176,753		209,668
Health		4,575,589		4,400,159
Protection of persons and property		595,797		615,632
Social services and assistance		964,041		901,749
Transportation		501,988		506,475
Other		582,333		606,645
Total Expense		11,408,555		11,065,763

Debt Servicing	Schedule 14
For the Year Ended March 31, 2013
(thousands of dollars)

		2013		2012


Total interest costs		638,731		638,827
Interest reimbursed for government business enterprise specific debt1		(250,872	)	(232,404	)
Net foreign exchange (gain) loss		(354	)	2,005
Other costs		3,285		3,529
Total Debt Servicing		390,790		411,957

1	Interest reimbursed for debt issued by the General Revenue Fund specifically on behalf of government business enterprises.

Government of Saskatchewan – 2012-13 Public Accounts 77

General Revenue Fund

Supplemental Cash Flow Information	Schedule 15
For the Year Ended March 31, 2013
(thousands of dollars)

	2013			2012

Non-Cash Items Included in Surplus
Amortization of tangible capital assets (schedule 9)		188,643			174,971
Net gain on disposal of tangible capital assets		(9,736	)		(7,521	)
Net gain on transfer of tangible capital assets		(2,427	)		(682	)
Write-downs of tangible capital assets (schedule 9)		178			460
Net gain on loans and investments		(289	)		(1,455	)
Amortization of foreign exchange (gain) loss (schedule 14)		(354	)		2,005
Earnings retained in sinking funds		(109,408	)		(166,510	)
Total Non-Cash Items Included in Surplus		66,607			1,268

Net Change in Non-Cash Operating Activities
Increase in accounts receivable		(110,177	)		(187,021	)
Decrease in deferred charges		6,170			3,399
Increase (decrease) in accounts payable and accrued liabilities (note 12)		23,034			(136,789	)
(Decrease) increase in unearned revenue		(4,759	)		9,064
Decrease (increase) in prepaid expenses		6,478			(2,354	)
Increase in inventories held for consumption		(3,553	)		(3,444	)
Net Change in Non-Cash Operating Activities		(82,807	)		(317,145	)

Other Supplemental Information
Cash interest paid during the year		404,738			411,299
Cash interest received during the year		100,425			117,407

	2013				2012
Investing Activities	Receipts		Disbursements		Receipts		Disbursements

Loans
Information Services Corporation of Saskatchewan		-		-		13,547		9,935
Liquor and Gaming Authority		-		125,064		-		-
Municipal Financing Corporation of Saskatchewan		-		447		-		8,593
Saskatchewan Telecommunications Holding Corporation		-		142,800		-		14,200
Saskatchewan Water Corporation		2,758		-		-		7,749
SaskEnergy Incorporated		-		105,000		70,000		-
Other		56,314		63,601		57,662		57,172
Total Loan Receipts and Disbursements		59,072		436,912		141,209		97,649
Sinking Funds (schedule 7)
Contributions		3,587		51,114		5,828		52,546
Redemptions		1,039,846		-		96,992		-
Total Sinking Fund Receipts and Disbursements		1,043,433		51,114		102,820		52,546
Equity Investment in Crown Investments
Corporation of Saskatchewan		150,000		-		-		-
Total Receipts and Disbursements		1,252,505		488,026		244,029		150,195
Net Receipts		764,479				93,834

78 Government of Saskatchewan – 2012-13 Public Accounts

General Revenue Fund

Capital Investment							Schedule 16
For the Year Ended March 31, 2013
(thousands of dollars)

	2013						2012
	Capital				Total		Total
	Asset		Capital		Capital		Capital
	Acquisitions		Transfers		Investment		Investment
	(schedule 9)		(schedule 12)


Ministries and Agencies
Advanced Education		1,383		12,240		13,623		5,509
Agriculture		181		4,178		4,359		2,874
Central Services		60,697		-		60,697		33,207
Corrections, Public Safety and Policing		-		-		-		10,661
Economy		6,856		-		6,856		11,253
Education		30,362		69,726		100,088		48,055
Environment		13,767		-		13,767		13,197
Executive Council		-		100		100		-
Finance		1,624		-		1,624		2,077
Government Relations		1,315		98,049		99,364		120,732
Health		42,676		38,154		80,830		6,646
Highways and Infrastructure		307,627		35,281		342,908		326,999
Information Technology Office		-		-		-		3,291
Justice		25,149		-		25,149		7,872
Labour Relations and Workplace Safety		29		-		29		-
Parks, Culture and Sport		9,207		6,692		15,899		10,503
Public Service Commission		-		-		-		80
Social Services		12,032		2,694		14,726		9,029
Legislative Assembly and its Officers
Advocate for Children and Youth		30		-		30		-
Legislative Assembly		101		-		101		328
Ombudsman		20		-		20		-
Total Capital Investment		513,056		267,114		780,170		612,313

Government of Saskatchewan – 2012-13 Public Accounts 79

Summary Financial Statements

Responsibility for the Summary Financial Statements

The Government is responsible for the Summary Financial Statements. The Government maintains a system of accounting and administrative controls to ensure that accurate and reliable financial statements are prepared and to obtain reasonable assurance that transactions are authorized, assets are safeguarded, and financial records are maintained.

The Provincial Comptroller prepares these statements in accordance with generally accepted accounting principles for the public sector, using the Government's best estimates and judgement when appropriate. He uses information from the accounts of the General Revenue Fund, Crown corporations and other government organizations to prepare these statements.

The Provincial Auditor expresses an independent opinion on these statements. Her report, which appears on the following page, provides the scope of her audit and states her opinion.

Treasury Board approves the Summary Financial Statements. The statements are tabled in the Legislative Assembly as part of the Public Accounts and referred to the Standing Committee on Public Accounts for review.

On behalf of the Government of the Province of Saskatchewan.

/s/ Ken Krawetz

Ken Krawetz

Deputy Premier

Minister of Finance

/s/ Clare Isman

Clare Isman

Deputy Minister of Finance

/s/ Terry Paton

Terry Paton

Provincial Comptroller

Regina, Saskatchewan

June 2013

Government of Saskatchewan – 2012-13 Public Accounts 83

Summary Financial Statements

Independent Auditor’s Report

To the Members of the Legislative Assembly of Saskatchewan

I have audited the accompanying financial statements of the Government of Saskatchewan, which comprise the summary statement of financial position as at March 31, 2013, and the summary statements of operations, accumulated surplus, change in net debt, and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Auditor's Responsibility

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of the Government of Saskatchewan as at March 31, 2013, and the results of its operations, changes in its net debt, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

/s/ Bonnie Lysyk

BONNIE LYSYK, MBA, CA

Provincial Auditor

Regina, Saskatchewan

June 13, 2013

Government of Saskatchewan – 2012-13 Public Accounts 85

Summary Financial Statements

Summary Statement of Financial Position
As at March 31, 2013
(thousands of dollars)

	2013			2012

Financial Assets
Cash and temporary investments (note 3)		1,814,961			2,228,622
Accounts receivable (schedule 1)		1,690,375			1,580,138
Inventories held for resale		4,060			2,933
Deferred charges		3,271			10,254
Loans receivable (schedule 2)		964,137			554,379
Investment in government business enterprises (schedule 3)		4,141,189			3,736,365
Other investments (schedule 4)		915,953			989,711
Total Financial Assets		9,533,946			9,102,402

Liabilities
Accounts payable and accrued liabilities (schedule 5)		2,319,626			2,065,962
Other liabilities (schedule 6)		401,893			312,403
Unearned revenue (schedule 7)		192,791			359,034
Public debt (note 4)(schedule 8)		4,948,746			4,584,786
Unamortized foreign exchange gain		5,773			6,371
Pension liabilities (note 5)(schedule 10)		6,774,483			6,317,047
Total Liabilities		14,643,312			13,645,603
Net Debt		(5,109,366	)		(4,543,201	)

Non-Financial Assets
Prepaid expenses		47,534			49,137
Inventories held for consumption		164,235			159,942
Tangible capital assets (schedule 11)		7,346,186			6,951,474
Total Non-Financial Assets		7,557,955			7,160,553
Accumulated Surplus		2,448,589			2,617,352

Contingencies (note 6)
Contractual obligations (note 7)


The accompanying notes and schedules are an integral part of these financial statements.

Government of Saskatchewan – 2012-13 Public Accounts 87

Summary Financial Statements

Summary Statement of Operations
For the Year Ended March 31, 2013
(thousands of dollars)

	2013			2012

Revenue
Taxation		6,192,800			5,626,093
Non-renewable resources		2,515,869			2,821,957
Other own-source revenue		2,184,664			2,154,563
Transfers from the federal government		2,309,378			2,214,562
Total Revenue (schedule 12)		13,202,711			12,817,175

Expense
Agriculture		1,107,553			1,058,638
Community development		553,624			528,019
Debt charges (schedule 14)		642,775			682,385
Economic development		302,419			273,021
Education		3,320,907			2,959,902
Environment and natural resources		221,093			255,994
Health		5,060,841			4,891,671
Protection of persons and property		673,167			686,542
Social services and assistance		1,158,792			1,146,893
Transportation		533,066			536,859
Other		710,862			691,492
Total Expense (schedule 13)		14,285,099			13,711,416
Deficit from government service organizations		(1,082,388	)		(894,241	)
Income from government business enterprises (schedule 3)		1,119,836			789,278
Surplus (Deficit) (schedule 15)		37,448			(104,963	)

The accompanying notes and schedules are an integral part of these financial statements.

88 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Summary Statement of Accumulated Surplus
For the Year Ended March 31, 2013
(thousands of dollars)

	2013					2012
	Estimated		Actual			Actual


Accumulated surplus, beginning of year		2,617,352		2,617,352			2,961,115
Adjustment to accumulated surplus (note 12)		-		(133,469	)		47,027
Surplus (deficit)		14,800		37,448			(104,963	)
Other comprehensive loss (schedule 3)		-		(72,742	)		(285,827	)
Accumulated Surplus, End of Year		2,632,152		2,448,589			2,617,352

Summary Statement of Change in Net Debt
For the Year Ended March 31, 2013
(thousands of dollars)

	2013							2012
	Estimated			Actual			Actual


Surplus (Deficit)		14,800			37,448			(104,963	)

Tangible Capital Assets
Acquisitions (schedule 11)		(1,184,400	)		(1,038,061	)		(899,750	)
Amortization (schedule 11)		508,500			485,206			471,399
Proceeds on disposal		-			77,025			21,485
Write-downs (schedule 11)		-			187			8,525
Net gain on disposal		-			(58,020	)		(7,719	)
Net Acquisition of Tangible Capital Assets		(675,900	)		(533,663	)		(406,060	)

Other Non-Financial Assets
Net use (acquisition) of prepaid expenses		-			1,475			(2,354	)
Net acquisition of inventories held for consumption		-			(4,561	)		(7,679	)
Net Acquisition of Other Non-Financial Assets		-			(3,086	)		(10,033	)

Increase in net debt		(661,100	)		(499,301	)		(521,056	)
Net debt, beginning of year		(4,543,201	)		(4,543,201	)		(3,783,345	)
Adjustment to accumulated surplus (note 12)		-			5,878			47,027
Other comprehensive loss (schedule 3)		-			(72,742	)		(285,827	)
Net Debt, End of Year		(5,204,301	)		(5,109,366	)		(4,543,201	)

The accompanying notes and schedules are an integral part of these financial statements.

Government of Saskatchewan – 2012-13 Public Accounts 89

Summary Financial Statements

Summary Statement of Cash Flow
For the Year Ended March 31, 2013
(thousands of dollars)

	2013			2012

Operating Activities
Surplus (deficit)		37,448			(104,963	)
Non-cash items included in the surplus (deficit)
Income from government business enterprises (schedule 3)		(1,119,836	)		(789,278	)
Other non-cash items included in the surplus (deficit) (schedule 16)		308,434			296,113
Net change in non-cash operating activities (schedule16)		368,325			(200,072	)
Dividends received from government business enterprises (schedule 3)		672,632			784,352
Cash Provided by (Used for) Operating Activities		267,003			(13,848	)
Capital Activities
Acquisition of tangible capital assets (schedule 11)		(1,038,061	)		(899,750	)
Proceeds on disposal of tangible capital assets		77,025			21,485
Cash Used for Capital Activities		(961,036	)		(878,265	)
Investing Activities
Net (increase) decrease in loans receivable		(386,545	)		58,167
Repayment of equity advances by government business enterprises		8,805			7,000
Acquisition of other investments		(723,387	)		(1,082,898	)
Disposition of other investments		799,927			1,238,199
Sinking fund contributions for general debt (schedule 9)		(51,114	)		(52,546	)
Sinking fund redemptions for general debt (schedule 9)		1,039,846			96,992
Cash Provided by Investing Activities		687,532			264,914
Financing Activities
Proceeds from public debt		656,281			180,100
Repayment of public debt		(1,134,640	)		(356,512	)
Net increase (decrease) in other liabilities		91,672			(79,413	)
Cash Used for Financing Activities		(386,687	)		(255,825	)
Decrease in cash and temporary investments		(393,188	)		(883,024	)
Cash and temporary investments, beginning of year		2,228,622			3,111,646
Adjustment to accumulated surplus (note 12)		(20,473	)		-
Cash and Temporary Investments, End of Year		1,814,961			2,228,622

The accompanying notes and schedules are an integral part of these financial statements.

90 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Notes to the Summary Financial Statements

As at March 31, 2013

1. Significant Accounting Policies

Basis of accounting

These Summary financial statements are prepared in accordance with Canadian public sector accounting standards.

Government reporting entity

The government reporting entity consists of government service organizations, government business enterprises and government partnerships.

Government service organizations and government business enterprises represent organizations that are controlled by the Government. Controlled organizations that are self-sufficient and have the financial and operating authority to sell goods and services to individuals and other organizations outside the government reporting entity as their principal activity are classified as government business enterprises. All other controlled organizations are government service organizations.

A government partnership exists when the Government has entered into a contractual arrangement with one or more partners outside the government reporting entity where these partners share, on an equitable basis, the significant risks and benefits associated with operating the partnership.

A listing of the organizations included in the government reporting entity is provided in schedule 18. Unless otherwise noted, the financial activities of all subsidiaries of these organizations have also been included.

Trust funds

Trust funds are administered but not controlled by the Government and, therefore, are excluded from the government reporting entity and are disclosed in note 10.

Method of consolidation

Government service organizations are consolidated after adjustment to a basis consistent with the accounting policies described in this note. Significant inter-organization balances and transactions are eliminated. Government service organizations in which a non-controlling interest exists are proportionately consolidated.

Government business enterprises are accounted for by the modified equity method. Using this method, the Government’s investment in government business enterprises, which is initially recorded at cost, is adjusted annually to include the Government’s proportionate share of net earnings or losses and certain other net equity changes of the enterprise without adjustment to conform with the accounting policies described in this note. With the exception of dividends declared by March 31, inter-organization balances and transactions are not eliminated.

Government partnerships are proportionately consolidated after adjustment to a basis consistent with the accounting policies described in this note and are disclosed in note 8. Significant inter-organization balances and transactions are eliminated.

Financial results of government organizations with fiscal year-ends other than March 31 are adjusted for transactions having a significant impact on these financial statements.

Specific accounting policies

Financial assets

Financial assets are assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal course of operations.

Temporary investments are recorded at the lower of cost or market.

Inventories held for resale are valued at the lower of cost and net realizable value.

Deferred charges include issue costs and net discounts or premiums incurred on the issue of debt and related derivative instruments. They are recorded at cost and amortized on a straight-line basis over the remaining life of the debt issue.

Government of Saskatchewan – 2012-13 Public Accounts 91

Summary Financial Statements

Notes to the Summary Financial Statements

1. Significant Accounting Policies (continued)

Loans receivable are initially recorded at cost. Where there has been a loss in value that is other than a temporary decline, the loan is written down to recognize the loss. Interest is recognized on the accrual basis; when collection is uncertain, it is recorded on the cash basis.

Other investments are accounted for by various methods as described below and are written down to their market value when there is evidence of a permanent decline in value.

Equities are investments in shares of private or public companies. Investments that are subject to significant influence but in which the Government has less than a controlling interest are accounted for by the modified equity method. Using this method, the Government’s investment, which is initially recorded at cost, is adjusted annually for the Government’s share of the investees’ net earnings or losses and is reduced by dividends and partnership distributions received from these investments. Investments that are not subject to significant influence are recorded at cost; dividends from these shares are recorded as income when receivable.

Pooled investment funds are recorded at market value.

All other investments are recorded at amortized cost.

Liabilities

Liabilities are present obligations to individuals and organizations outside the government reporting entity as a result of transactions and events occurring prior to year-end, which will be satisfied in the future through the transfer or use of assets or another form of economic settlement. Contingencies, including loss provisions on guaranteed debt, are recorded when it is likely that a liability exists and the amount can be reasonably estimated.

Liabilities consist of obligations to provide retirement benefits to employees, to repay borrowings, to provide authorized transfers where eligibility criteria are met, to pay for goods and services acquired prior to year-end and to deliver goods or services in the future where payment has been received.

Public debt is recorded at par, and is comprised of:

•	general debt, which is debt issued by government service organizations and includes issued amounts subsequently transferred to government business enterprises; and

•	government business enterprise specific debt, which is debt issued by, or specifically on behalf of, government business enterprises.

On the Statement of Financial Position public debt includes only general debt. Government business enterprise specific debt is listed separately on schedule 8.

Certain debenture issues require contributions to a sinking fund. These obligations are recorded at principal less sinking fund balances where applicable. Premiums and discounts on long-term investments within these sinking funds are amortized on a constant yield basis.

Debt issues and sinking fund investments held in foreign currencies are converted to the Canadian dollar equivalent at the exchange rate in effect at March 31.

Premiums, discounts and issue costs are recorded as deferred charges.

Unamortized foreign exchange gain or loss includes unrealized foreign exchange gains and losses resulting from the conversion of debentures due and sinking funds held in a foreign currency to the Canadian dollar equivalent at the exchange rate in effect at March 31. Unrealized foreign exchange gains and losses are amortized on a straight-line basis over the remaining life of the debt issue. Realized foreign exchange gains and losses are included in the surplus or deficit.

Pension liabilities are calculated using the projected benefit method prorated on services, except as otherwise disclosed in note 5. Pension fund assets are valued at market-related values. Changes in the pension liabilities that result from estimation adjustments due to experience gains and losses and changes in actuarial assumptions are amortized on a straight-line basis over the expected average remaining service life of the related employee group. Gains or losses resulting from plan amendments are recognized in the period of the plan amendment.

Non-financial assets

Non-financial assets are acquired, constructed or developed assets that do not normally provide resources to discharge existing liabilities, but instead are normally employed to deliver government services, may be consumed and are not for sale in the normal course of operations.

92 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Notes to the Summary Financial Statements

1. Significant Accounting Policies (continued)

Inventories held for consumption are recorded at cost and are expensed as they are consumed.

Tangible capital assets are recorded at cost and include all amounts directly attributable to the acquisition, construction, development or betterment of the asset. Tangible capital assets are generally amortized on a straight-line basis over the estimated useful life of each asset.

Revenue

Expense

Expenses are recorded on the accrual basis. Government transfers are recognized as expenses in the period during which the transfer is authorized and eligibility criteria are met.

Future changes in accounting policies

PS 3041 Portfolio Investments (effective in the period PS 3450, PS 2601 and PS 1201 are adopted), replaces PS 3040 with revised guidance on accounting for, and presentation and disclosure of, portfolio investments.

The Government plans to adopt these new and amended standards on the effective date and is currently analyzing the impact this will have on these financial statements.

2. Measurement Uncertainty

Measurement uncertainty, disclosed in aggregate for government service organizations and government business enterprises, that may be material to these financial statements exists:

•

in pension obligations of $7,364.3 million (2012 - $6,846.2 million), insurance claim obligations of $2,997.7 million (2012 - $2,737.4 million) and environmental obligations of $267.0 million (2012 - $258.1 million) because actual experience may differ significantly from actuarial or historical estimations and assumptions;

•	in corporate and individual income taxation revenue of $3,244.5 million (2012 - $2,691.2 million) because final tax assessments may differ from initial estimates on which cash payments are based;

•	in oil and natural gas non-renewable resource revenue of $1,295.2 million (2012 - $1,546.2 million) because of price and production sensitivities in the royalty revenue structures;

•	in resource surcharge non-renewable resource revenue of $627.7 million (2012 - $452.8 million) because the final valuation of resource sales may differ from initial estimates on which installments are based;

•	in potash non-renewable resource revenue of $364.5 million (2012 - $438.4 million) because actual operating profits may differ from initial estimates;

•	in the Canada Health Transfer and Canada Social Transfer revenue of $1,300.4 million (2012 - $1,199.2 million) because of changes in economic and demographic conditions in the Province and the country;

Government of Saskatchewan – 2012-13 Public Accounts 93

Summary Financial Statements

Notes to the Summary Financial Statements

2. Measurement Uncertainty (continued)

•	in unbilled utility revenue of $116.4 million (2012 - $111.0 million) because actual usage may differ from estimated usage; and

•	in agricultural income stability programs expense of $422.9 million (2012 - $132.1 million) because actual program uptake may differ from initial estimates which are based on farm income forecasts.

3. Cash and Temporary Investments

Temporary investments are $801.6 million (2012 - $1,069.3 million) and mature in less than one year. Due to the short-term nature of these investments, market value approximates cost. Cash and temporary investments includes $106.5 million (2012 - $119.6 million) restricted as a result of agreements with external parties.

4. Risk Management of Public Debt

The Government borrows funds in both domestic and foreign capital markets by issuing Government of Saskatchewan securities. As a result, the Government is exposed to four types of risk: interest rate risk, foreign exchange rate risk, credit risk and liquidity risk.

To manage these risks, the Government maintains a preference for fixed rate Canadian dollar denominated debt. Where market conditions dictate that other forms of debt are more attractive, the Government seeks opportunities to use derivative financial instruments to reduce these risks. A derivative financial instrument is a contract, the value of which is based on the value of another asset or index.

Interest rate risk is the risk that the Government’s debt charges will increase due to changes in interest rates. This risk is managed by issuing debt securities at predominantly fixed rates of interest rather than at floating rates of interest.

Floating rate debt is defined as the sum of floating rate debentures, short-term promissory notes, fixed rate debt maturing within one year and Saskatchewan Savings Bonds. The Government seeks opportunities to effectively convert floating rate debt into fixed rate debt through the use of interest rate swaps. The Government has interest rate swaps on a notional value of debt of $74.3 million (2012 - $76.0 million). At March 31, 2013, 80.5 per cent (2012 - 83.0 per cent) of the Government’s gross debt effectively carried a rate of interest that was fixed for greater than a one-year period.

Public debt includes floating rate debt of $2,204.8 million (2012 - $1,872.7 million). A one percentage point increase in interest rates would have decreased the surplus by $22.0 million.

Foreign exchange rate risk is the risk that the Government’s debt charges will increase due to a decline in the value of the Canadian dollar relative to other currencies. This risk is managed by maintaining a preference for issuing debt that is denominated in Canadian dollars. Where debt has been issued in foreign currencies, the Government seeks opportunities to effectively convert it into Canadian dollar debt through the use of cross currency swaps. At March 31, 2013, 97.5 per cent (2012 - 97.5 per cent) of the Government’s gross debt is effectively denominated in Canadian dollars. A one cent change in the value of the U.S. dollar compared to the Canadian dollar from the March 31, 2013 level would have an insignificant effect on debt and debt servicing costs.

The following foreign denominated items have been hedged to Canadian dollars using cross currency swaps:

•	debentures totalling 825.0 million U.S. dollars (2012 - 1,225.0 million) fully hedged to $1,051.1 million Canadian (2012 - $1,619.3 million);

•	debentures totalling 300.0 million Swiss francs (2012 - 300.0 million) fully hedged to $274.7 million Canadian (2012 - $274.7 million); and

•	interest payments on debentures of 275.0 million U.S. dollars (2012 - 275.0 million) hedged to Canadian dollars at an exchange rate of 1.2325 (2012 - 1.2325).

In total, the Government has cross currency swaps on a notional value of debt of $1,939.3 million (2012 - $2,507.5 million). The effectiveness of these hedges is assessed on an ongoing basis by monitoring the credit ratings of the counterparties to the hedges.

94 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Notes to the Summary Financial Statements

4. Risk Management of Public Debt (continued)

Credit risk is the risk that a loss may occur from the failure of another party to meet its obligations under a derivative financial instrument contract. This risk is managed by dealing only with counterparties that have good credit ratings and by establishing limits on individual counterparty exposures and monitoring those exposures on a regular basis. At March 31, 2013, 100 per cent (2012 - 100 per cent) of the Government’s counterparties held a Standard and Poor’s credit rating of A or better.

Liquidity risk is the risk that the Government will not be able to meet its financial commitments over the short term. This risk is managed by distributing debt maturities over many years, maintaining sinking funds on long-term debt issues and maintaining adequate cash reserves and short-term borrowing programs as contingent sources of liquidity.

5. Employee Future Benefits

Pension plans

The Government sponsors several defined benefit and defined contribution pension plans. The Government also participates in a joint defined benefit pension plan.

Actuarial valuations are performed at least triennially. When a valuation is not done in the current fiscal year an actuary extrapolates the most recent valuation. Valuations are based on a number of assumptions about future events, such as inflation rates, interest rates, wage and salary increases and employee turnover and mortality. These assumptions reflect estimates of expected long-term rates and short-term forecasts. Estimates vary based on the individual plan.

The accrued benefit obligation is determined using the projected benefit method prorated on services. Pension fund assets are valued at market related values based on the actual market values averaged over a four-year period. In the periods between valuations, the actuary estimates the market related value of pension fund assets using expected

long-term rates of return for the individual plans.

Joint defined benefit plans are governed by a formal agreement between the joint sponsors (i.e., employer and plan members), which establishes that the joint sponsors have shared control over the plan. Funding contributions are shared

mutually between the employer and plan members. The sponsors share, on an equitable basis, the significant risks of each plan. Accordingly, the Government accounts for only its portion of the plan. Plan assets and surpluses are restricted for member benefits or certain other purposes set out in the agreement. Plan benefits are determined on the same basis as defined benefit plans.

The accrued benefit obligation is determined using the projected accrued benefit actuarial cost method. Pension fund assets are valued at market related values by averaging the difference between the net investment income on a market value basis and the expected investment income determined by the actuary, over a five-year period.

Defined contribution plans provide pensions based on accumulated contributions and investment earnings. Employees contribute a percentage of salary. The Government provides contributions at specified rates for employee current service.

Pension fund assets of government sponsored defined benefit and defined contribution plans are invested in fixed income securities, equities, real estate and short-term monetary items. The investment in Government of Saskatchewan securities is insignificant for all plans.

Government service organizations

a) Defined benefit plans and joint defined benefit plan

The two main defined benefit plans are the Teachers’ Superannuation Plan (TSP) and the Public Service Superannuation Plan (PSSP). Other plans include Judges of the Provincial Court Superannuation Plan (Judges), Saskatchewan Transportation Company Employees Superannuation Plan, Anti-TB League Employees Superannuation Plan, Pension Plan for the Non-Teaching Employees of the Saskatoon School Division No. 13 (PPNTE), and the Saskatchewan Pension Annuity Fund, an annuity underwriting operation. Defined benefits are also payable to members of the former Members of the Legislative Assembly Superannuation Fund (MLA).

Government of Saskatchewan – 2012-13 Public Accounts 95

Summary Financial Statements

Notes to the Summary Financial Statements

5. Employee Future Benefits (continued)

The Government is required to match member current service contributions for all plans except the PSSP, Judges and PPNTE. Funding contributions are required for the PPNTE. Separate pension funds are maintained for all plans except the PSSP and the MLA, for which member contributions are received and pension obligations are paid directly by the Government.

The Government also participates in the Saskatchewan Healthcare Employees’ Pension Plan (SHEPP), a joint defined benefit plan for employees of the Regional Health Authorities. The Government contributes to the plan at the ratio of 1.12 to 1 of employee contributions. Any actuarially determined deficiency is the responsibility of participating employers and employees in the ratio of 1.12 to 1. The Government’s participating employer contributions for the SHEPP represents approximately 90 per cent of the total employer contributions to the plan.

Information on the defined benefit plans and the joint defined benefit plan of government service organizations is as follows:

	2013												2012
	TSP		PSSP			Others			SHEPP		Total		Total


Plan status	closed		closed			closed1			open			n/a		n/a
Member contribution rate (percentage of salary)		7.85		7.00-9.00	2		5.00-9.00	2		7.70-10.00		n/a		n/a
Number of active members		970		285			939			35,013		37,207		36,872
Average age of active members (years)		58.0		59.4			47.5			44.6		45.1		45.8
Number of former members entitled to deferred
pension benefits		4,234		75			166			1,579		6,054		6,203
Number of superannuates and surviving spouses		11,498		5,660			2,455			12,691		32,304		31,495
Actuarial valuation date	June 30/11		Dec. 31/11			Various			Dec. 31/10			n/a		n/a
Long-term assumptions used
Rate of compensation increase (percentage)		3.50		3.50			3.50			3.50		n/a		n/a
Expected rate of return on plan assets (percentage)		5.00		n/a			5.50-5.95			7.25		n/a		n/a
Discount rate (percentage)		3.20		3.00			2.70-5.95			7.25		n/a		n/a
Inflation rate (percentage)		2.50		2.50			2.50			2.50		n/a		n/a
Expected average remaining service life (years)		3.5		0.3			0.9-12.0			11.4		n/a		n/a
Post-retirement index (percentage of annual
increase in Consumer Price Index)		80		70			70-75		Ad hoc			n/a		n/a

1	Judges and PPNTE are open to new membership; all other plans are closed.
2	Contribution rate varies based on age upon joining the plan.

b) Defined contribution plans

The two main multi-employer defined contribution plans sponsored by the Government are the Public Employees Pension Plan (PEPP) and the Capital Pension Plan (Capital). The Government provides contributions to the plans at specified rates for employee current service. The Government also contributes to the Saskatchewan Teachers’ Retirement Plan (STRP) which is sponsored by the Saskatchewan Teachers’ Federation, as well as the Municipal Employees’ Pension Plan (MEPP) and the Regina Civic Employees’ Superannuation and Benefit Plan (RCESP). The Government has fully funded its share of contributions to the defined contribution plans.

96 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Notes to the Summary Financial Statements

5. Employee Future Benefits (continued)

Information on the defined contribution plans of government service organizations is as follows:

	2013														2012
	Government Sponsored
	PEPP			Capital			STRP 1		MEPP 2		RCESP 3		Total		Total

Plan status	open			open			open		open		open			n/a		n/a
Member contribution rate (percentage of salary)		5.00-9.00	4		5.00-7.50	4		7.80-10.00		7.40		8.42-13.96		n/a		n/a
Government contribution rate (percentage of salary)		5.00-9.00	4		5.50-7.50	4		7.00-9.00		7.40		8.42-13.96		n/a		n/a
Government service organization participation
Number of active members		15,837			631			14,387		9,645		2,137		42,637		42,132
Member contributions (thousands of dollars)		74,196			2,544			77,972		18,905		12,193		185,810		165,791
Government contributions (thousands of dollars)		78,204			3,121			66,779		18,905		21,399		188,408		173,904

Teachers employed by Boards of Education after July 1, 1980 participate in the STRP, a contributory defined benefit pension plan. The Government contributes an amount which is set through provincial negotiations.

Certain employees of Boards of Education and Regional Colleges participate in the MEPP, a multi-employer defined benefit plan. All costs, including costs of any actuarially determined deficiency, are equally shared by the employees and employers. At December 31, 2012, audited

financial statements for the MEPP reported an accrued benefit obligation of $1,394.3 million (2011 - $1,599.7 million) and pension fund assets at market value of $1,552.5 million (2011 - $1,366.9 million).

Certain employees of a Regional Health Authority and a Board of Education participate in the RCESP, a multi-employer defined benefit plan. All costs, including costs of any actuarially determined deficiency, are equally shared by the employees and employers. At December 31, 2012, audited financial statements for the RCESP reported an accrued benefit obligation of $1,243.0 million (2011 - $1,182.5 million) and pension fund assets at market value of $991.5 million (2011 - $889.5 million).

Contribution rate varies based on employee group.

c) Pension expense

Pension expense for government service organizations is primarily allocated to education expense, health expense and other expense. Pension interest expense is included in debt charges. The total pension expense of government service organizations includes the following:

(thousands of dollars)	2013			2012


Defined benefit plans
Current period benefit cost		37,006			43,600
Amortization of estimation adjustments		513,689			91,347
Employee contributions		(7,652	)		(9,804	)
Cost of financing unfunded pension obligation (pension interest expense)		244,836			262,270
Pension expense, defined benefit plans		787,879			387,413
Other plans
Pension expense, joint defined benefit plan		149,035			161,026
Pension expense, defined contribution plans		188,408			173,904
Total Pension Expense		1,125,322			722,343

Government business enterprises

a) Defined benefit plans

There are additional employee pension plans of government business enterprises which are accounted for in the investment in government business enterprises. The two main defined benefit plans of government business enterprises are the Power Corporation Superannuation Plan (SaskPower) and the Saskatchewan Telecommunications Pension Plan (SaskTel). Other plans include the Saskatchewan Government Insurance Superannuation Plan, the Liquor Board Superannuation Plan, and the Pension Plan for the Employees of the Saskatchewan Workers’ Compensation Board (WCB).

The Government contributes the amount necessary to fund the payment of pension benefits.

Government of Saskatchewan – 2012-13 Public Accounts 97

Summary Financial Statements

Notes to the Summary Financial Statements

5. Employee Future Benefits (continued)

Information on the defined benefit plans of government business enterprises is as follows:

	2013								2012
	SaskPower		SaskTel		Others		Total		Total


Plan status	closed		closed		closed			n/a		n/a
Number of active members		134		70		24		228		330
Number of former members, superannuates and surviving spouses		1,842		2,054		432		4,328		4,325
Member contributions (thousands of dollars)		104		39		44		187		660
Government contributions (thousands of dollars)		50		133		3,571		3,754		47,751
Benefits paid (thousands of dollars)		59,081		67,699		9,519		136,299		130,291
Actuarial valuation date	Sept. 30/12		Dec.31/10		Various			n/a		n/a
Long-term assumptions used
Rate of compensation increase (percentage)		2.00		3.00		2.50-3.50		n/a		n/a
Expected rate of return on plan assets (percentage)		6.75		6.75		3.75-5.75		n/a		n/a
Discount rate (percentage)		3.75		3.80		3.60-3.75		n/a		n/a
Inflation rate (percentage)		2.50		2.50		2.50		n/a		n/a
Post-retirement index (percentage of annual increase in
Consumer Price Index)		70		100		50-70		n/a		n/a

Based on the latest actuarial valuation with extrapolations to December 31, 2012, the present value of accrued pension benefits and the market value of pension fund assets are shown in the table below:

(thousands of dollars)	2013										2012
	SaskPower		SaskTel		Others			Total			Total

Accrued benefit obligation		1,036,007		1,180,586		141,157			2,357,750			2,254,315
Fair value of plan assets1		746,000		938,819		77,390			1,762,209			1,718,683
Plan deficit		290,007		241,767		63,767			595,541			535,632
Unamortized amounts2		-		-		(5,687	)		(5,687	)		(6,397	)
Pension Liabilities		290,007		241,767		58,080			589,854			529,235

At December 31, 2012, 34.0 per cent (2011 - 32.2 per cent) of pension plan assets were invested in fixed income securities and 53.1 per cent (2011 - 51.8 per cent) in equity investments.

All plans except WCB recognize all actuarial gains and losses arising from employee future benefit plans directly in other comprehensive income in the year of occurrence. For WCB, amounts are amortized over the average remaining service life of active employees.

b) Defined contribution plans

Information on the defined contribution plans of government business enterprises is as follows:

	2013						2012
	PEPP		Capital		Total		Total

Plan status	open		open			n/a		n/a
Member contribution rate (percentage of salary)1		4.00-7.25		4.00-5.50		n/a		n/a
Government contribution rate (percentage of salary)1		6.00-7.25		5.50-8.00		n/a		n/a
Government business enterprise participation
Number of active members		9,345		2,772		12,117		11,852
Government contributions (thousands of dollars)		43,422		9,078		52,500		49,731

Contribution rate varies based on employee group.

98 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Notes to the Summary Financial Statements

5. Employee Future Benefits (continued)

c) Pension expense

Pension expense and pension interest expense for government business enterprises are included in income from government business enterprises. The pension income is $6.7 million (2012 - $7.1 million) for the defined benefit plans and $52.5 million (2012 - $49.7 million) for the defined contribution plans. The total actuarial losses recognized in other comprehensive loss were $71.9 million (2012 - $282.7 million - restated).

Other employee future benefits

Government service organizations

Other employee future benefits of government service organizations include long-term disability benefit plans, accumulated sick leave benefits, a group life insurance plan providing waiver of premiums during disability and other benefits. The benefit liability of $147.6 million (2012 - $44.5 million) is recorded in accounts payable and accrued liabilities.

Government business enterprises

Other employee future benefits of government business enterprises include a defined benefit severance plan, a supplementary superannuation plan, two defined benefit service recognition plans, a defined benefit retiring allowance plan and a voluntary early retirement plan. The benefit liability is $103.4 million (2012 - $106.9 million).

6. Contingencies

Guaranteed debt

The Government has guaranteed the debt of others of $18.7 million (2012 - $24.0 million - restated).

Significant guarantees include $17.5 million (2012 - $15.8 million) provided to lenders who make loans to breeder and feeder production associations under The Farm Financial Stability Act. The Government guarantees the repayment

of 25 per cent of the outstanding loan balance at the time of a first default on any advance, plus accrued interest as of the time that payment is to be made on the guarantee. Guarantees for each cattle association are limited to $6 million under the breeder option. Guarantees for each bison and sheep association are limited to $6 million and $4 million respectively, under both the breeder and feeder options. These guarantees are net of a recorded loss provision of $0.1 million (2012 - $0.7 million).

Lawsuits

The Government is involved in various legal actions, the outcome of which is not determinable. Up to $377.3 million may be paid depending on the outcome of lawsuits in progress. The lawsuits in progress include aboriginal land claims, claims for damages to persons and property, disputes of taxes and funding and various other legal actions.

Government of Saskatchewan – 2012-13 Public Accounts 99

Summary Financial Statements

Notes to the Summary Financial Statements

7. Contractual Obligations

The Government has the following contractual obligations:

(millions of dollars)	2014		2015		2016		2017		2018		Thereafter		Total

Government Service Organizations
Construction and acquisition of tangible capital assets		709,449		86,990		3,386		396		396		-		800,617
Leases
Operating		65,866		59,310		46,882		36,009		27,916		33,028		269,011
Capital1		13,390		11,519		9,369		7,569		6,365		79,037		127,249
Housing subsidies, transfers and loans		127,573		35,039		12,158		12,064		12,013		-		198,847
Computer service agreements		102,129		26,791		16,324		14,305		9,080		-		168,629
Research and development		25,678		22,200		18,340		16,348		13,919		12,895		109,380
Beverage container collection and recycling programs		22,752		22,000		22,000		-		-		-		66,752
Economic growth projects		10,314		7,545		7,545		2,464		1,165		13,320		42,353
Other transfers
Capital		11,234		52,090		25,802		162		-		-		89,288
Operating		37,032		21,512		-		-		-		-		58,544
Other		40,094		13,211		13,143		3,973		549		3,848		74,818
		1,165,511		358,207		174,949		93,290		71,403		142,128		2,005,488

Government Business Enterprises
Forward purchase contracts
Power		155,903		111,463		110,826		112,981		115,178		2,026,676		2,633,027
Coal		196,954		112,724		116,841		64,058		64,942		474,972		1,030,491
Natural gas		112,133		99,178		95,001		86,225		88,933		335,693		817,163
Leases
Capital1		188,256		61,256		62,228		63,561		64,945		803,972		1,244,218
Operating		91,322		26,852		22,796		5,275		4,093		15,114		165,452
Construction, acquisition and maintenance of capital assets		656,157		28,682		3,611		-		-		-		688,450
Other		6,247		3,015		3,015		3,015		3,015		29,179		47,486
		1,406,972		443,170		414,318		335,115		341,106		3,685,606		6,626,287
Total Contractual Obligations		2,572,483		801,377		589,267		428,405		412,509		3,827,734		8,631,775

These financial statements report capital lease obligations of $639.1 million including:

•

$575.4 million for government business enterprises representing aggregate payments of $1,244.2 million (reported above) net of interest and executory costs of $668.8 million; and

•

$63.7 million (schedule 6) for government service organizations representing aggregate payments of $127.2 million (reported above) net of interest and executory costs of $63.5 million.

8. Government Partnerships

The Government has entered into various contractual arrangements with parties outside the government reporting entity resulting in shared control of certain organizations. The Government’s holdings in government partnerships include:

•	a 33.3 per cent interest in Foragen Technologies Limited Partnership, a venture capital fund which provides seed capital to technology corporations;

•	shared control of Prairie Diagnostic Services Inc., which provides veterinary diagnostic services to veterinary and livestock industries in the Province; and

•	a 45.5 per cent interest in Saskatchewan Entrepreneurial Fund Joint Venture, which assists with the development and growth of small business in the Province.

100 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Notes to the Summary Financial Statements

8. Government Partnerships (continued)

The Government’s pro-rata share of its government partnerships is as follows:

(thousands of dollars)	2013			2012

Financial assets		8,370			33,245
Liabilities		897			2,132
Net assets		7,473			31,113
Non-financial assets		547			534
Accumulated Surplus		8,020			31,647

Revenue		9,711			6,322
Expense		5,166			8,796
Surplus (Deficit)		4,545			(2,474	)
Accumulated partnership (losses) earnings, beginning of year		(148	)		18,186
Sale of partnership1		(7,906	)		-
Adjustment for accounting change2		-			(15,860	)
Accumulated partnership losses, end of year		(3,509	)		(148	)
Equity advances from government organizations		11,529			31,795
Accumulated Surplus		8,020			31,647

During 2012-13, the Government sold its 60 per cent interest in Apex Investment Limited Partnership for proceeds of $24.2 million resulting in a loss on sale of $3.0 million.

During 2011-12, it was determined that Meadow Lake Pulp Limited Partnership no longer met the definition of a government partnership and since then has been fully consolidated in these financial statements.

9. Non-controlling Interest

Government service organizations controlled by the Government may also have ownership by individuals or organizations outside of the government reporting entity. This outside ownership is a non-controlling interest. The 49.2 per cent non-controlling interest of Prairie Ventures Limited Partnership, a subsidiary of CIC Asset Management Inc., amounts to $5.8 million (2012 - $8.4 million) in accumulated surplus, which has been excluded from these financial statements.

10. Trust Funds

Trust fund assets held and administered by the Government are as follows:

(thousands of dollars)	2013		2012

Pension plans		11,362,580		10,609,344
Employee benefit plans		357,280		300,709
Public Guardian and Trustee of Saskatchewan		177,922		163,730
Other		61,674		52,216
Total Trust Fund Assets1		11,959,456		11,125,999

Amounts are based on the latest financial statements of the funds closest to March 31, 2013, where available.

11. Change in Accounting Policies

Government Transfers

The new government transfers standard recommends that the recognition of transfers revenue is only deferred when and to the extent that the transfer gives rise to an obligation that meets the definition of a liability. At March 31, 2012, unearned revenue of $113.7 million did not meet the definition of a liability. The new standard has been applied prospectively, and accordingly, comparative figures have not been restated. The effect of the accounting change,

Government of Saskatchewan – 2012-13 Public Accounts 101

Summary Financial Statements

Notes to the Summary Financial Statements

11. Change in Accounting Policies (continued)

recorded in the current year financial statements, includes a one-time decrease in unearned revenue of $113.7 million and a corresponding increase in transfers from the federal government.

Tax Revenue

Under the new tax revenue standard, tax credits are netted against the type of tax revenue for which the credit provides relief. This results in a decrease in provincial sales taxation revenue of $84.9 million and a corresponding increase in individual income taxation revenue. Additionally, penalties and interest collected on tax revenue are recorded separate from tax revenue, and commissions paid to retailers on the collection of taxes are recorded as an expense. The new standard has been applied prospectively, and accordingly, comparative figures have not been restated. The accounting change has no effect on the current year surplus but primarily results in the following reclassifications: a $14.4 million increase in other own-source revenue; a $4.1 million decrease in non-renewable resources revenue; and a $9.8 million increase in operating expense.

12. Adjustment to Accumulated Surplus

Reclassification of Saskatchewan Water Corporation

During 2012-13, Saskatchewan Water Corporation (SaskWater) was reclassified from a government service organization to a government business enterprise due to a change in its status over time. Accordingly, SaskWater is accounted for by the modified equity method and is no longer consolidated. Comparative figures have not been restated and the opening accumulated surplus has been reduced by $27.8 million as the accounting policies followed by SaskWater are no longer conformed to those of the Government.

Accumulated sick leave benefit obligation

At April 1, 2012, these financial statements were adjusted as follows:

(thousands of dollars)				Accumulated
	SaskWater			Sick Leave			Increase
	Reclassification			Benefit			(Decrease)
Financial assets
Cash and temporary investments		(20,473	)		-			(20,473	)
Accounts receivable2		(12,637	)		-			(12,637	)
Loans receivable		18,961			-			18,961
Investment in government business enterprises1		39,167			-			39,167
Liabilities
Accounts payable and accrued liabilites2		(8,332	)		105,647			97,315
Public debt3		(35,106	)		-			(35,106	)
Unearned revenue2 (schedule 7)		(40,887	)		-			(40,887	)
Other liabilities		(2,182	)		-			(2,182	)
Net debt		(111,525	)		105,647			(5,878	)
Non-financial assets
Tangible capital assets		(138,951	)		-			(138,951	)
Other2		(396	)		-			(396	)
Accumulated surplus		(27,822	)		(105,647	)		(133,469	)

Represents SaskWater’s opening retained earnings of $30.5 million and its equity advance of $8.7 million (schedule 3).

Represents the adjustment to non-cash operating activities of $69.5 million (schedule 16).

Public debt of $35.1 million (schedule 8) is shown net of SaskWater’s equity in a sinking fund of $8.6 million (schedule 9).

102 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Notes to the Summary Financial Statements

12. Adjustment to Accumulated Surplus (continued)

International financial reporting standards

During 2011-12, government business enterprises adopted International Financial Reporting Standards (IFRS). This resulted in the Government’s investment in government business enterprises increasing by $47.0 million during 2011-12 with a corresponding increase in the accumulated surplus and decrease in net debt. The net impact on government business enterprises’ financial statements was an increase in retained earnings of $280.1 million and a decrease in accumulated other comprehensive income (loss) of $233.1 million.

13. Information Services Corporation of Saskatchewan

On May 15, 2013, the Legislative Assembly of Saskatchewan enacted The Information Services Corporation Act which provides the Government with the authority to issue shares of the Information Services Corporation of Saskatchewan (ISC) to the public. ISC owns and operates the provincial land titles, personal property registry, survey, mapping and geographic information systems. The Government expects to retain 40% of the shares of ISC.

14. Comparative Figures

Certain 2012 comparative figures have been reclassified to conform with the current year’s presentation.

Government of Saskatchewan – 2012-13 Public Accounts 103

Summary Financial Statements

Accounts Receivable				Schedule 1
As at March 31, 2013
(thousands of dollars)

	2013			2012


Taxation		429,458			409,982
Non-renewable resources		248,613			225,156
Other own-source revenue		512,713			595,421
Transfers from the federal government		601,933			453,399
		1,792,717			1,683,958
Provision for loss		(102,342	)		(103,820	)
Total Accounts Receivable		1,690,375			1,580,138

Loans Receivable				Schedule 2
As at March 31, 2013
(thousands of dollars)

	2013			2012

Government business enterprises		815,976			429,798
Student loans		137,838			134,613
Agricultural loans		19,161			40,478
Other		62,881			25,461
		1,035,856			630,350
Provision for loss		(71,719	)		(75,971	)
Total Loans Receivable		964,137			554,379

Government Business Enterprises

Loans to government business enterprises are presented net of government business enterprise specific debt of $4.5 billion (2012 - $3.9 billion).

SaskEnergy Incorporated (SaskEnergy)

The Government has $415.0 million (2012 - $310.0 million) in loans receivable from SaskEnergy. Of this, $170.0 million (2012 - $170.0 million) is repayable over terms not exceeding 28 years and bears interest at rates between 4.5 and 4.9 per cent (2012 - 4.5 and 4.9 per cent). The remaining $245.0 million (2012 - $140.0 million) is repayable on demand at a floating rate of interest. The loans are recorded net of $7.9 million (2012 - $5.8 million) for SaskEnergy’s equity in sinking funds administered by the Government.

Saskatchewan Telecommunications Holding Corporation (SaskTel)

The Government has $157.0 million (2012 - $14.2 million) in loans receivable from SaskTel repayable on demand at a floating rate of interest.

Liquor and Gaming Authority (SLGA)

The Government has $125.1 million (2012 - nil) in loans receivable from SLGA repayable on demand at a floating rate of interest.

104 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Loans Receivable (continued)

Schedule 2

Saskatchewan Power Corporation (SaskPower)

The Government has $100.0 million (2012 - $100.0 million) in loans receivable from SaskPower repayable over 28 years and bearing interest at 4.8 per cent (2012 - 4.8 per cent). The loans are recorded net of $4.7 million (2012 - $3.4 million) for SaskPower’s equity in sinking funds administered by the Government.

Other government business enterprise loans

The Government has $31.5 million (2012 - $14.8 million) in loans receivable from other government business enterprises. The loans are repayable on demand at a floating rate of interest.

Student Loans

The program operates under the authority of The Student Assistance and Student Aid Fund Act, 1985. Loans are interest free until the discontinuance of full-time studies or graduation. Interest rates are prescribed by the Government and range between 3.0 and 7.3 per cent (2012 - 3.0 and 9.5 per cent). Student bursaries, study grants and other varieties of loan forgiveness are available to students who meet specific criteria.

The administration and delivery of the federal and provincial student loans programs is integrated. The Government approves applications for both provincial and federal loans. External agencies are contracted to disburse, administer and collect loans, and the federal government is responsible for collection of loans in default.

Student loans approved between August 1996 and July 2001 are lender financed, disbursed, managed and collected by a bank. The Government retained responsibility for loan approval during this period and pays a risk premium of 5.0 per cent to the bank when loans become repayable.

A loss provision of $63.6 million (2012 - $64.3 million) has been recorded on these loans.

Agricultural Loans

Short-term cattle loan program

The Government holds $12.4 million (2012 - $28.3 million) in loans under the short-term cattle loan program. These loans are repayable over terms not exceeding 4 years at a floating rate of interest between 1.0 and 1.1 per cent (2012 - 1.1 and 1.2 per cent). The loans are secured by general security agreements. The program operates under The Agricultural Credit Corporation of Saskatchewan Act. A loss provision of $2.8 million (2012 - $5.1 million) has been recorded on these loans.

Other agricultural loans

The Government holds $6.8 million (2012 - $12.2 million) in loans under various other agricultural loan programs. These loans are repayable over terms not exceeding 25 years and bear interest at rates between 0.0 to 12.0 per cent (2012 - 0.0 to 12.0 per cent). Generally, the loans are secured by promissory notes and, where applicable, by guarantees or general security arrangements. A loss provision of $1.9 million (2012 - $2.8 million) has been recorded on these loans.

Other

The Government’s loan portfolio also consists of numerous other loans at various interest rates with maturities not exceeding 16 years. Security on the loans may include promissory notes or charges against residential property. A loss provision of $3.4 million (2012 - $3.8 million) has been recorded on these loans.

Government of Saskatchewan – 2012-13 Public Accounts 105

Summary Financial Statements

Investment in Government Business Enterprises
As at March 31, 2013
(thousands of dollars)

	SaskEnergy			SaskPower			SaskTel			SaskWater		SGI
										(note 12)

Assets
Cash and cash equivalents		1,742			(61	)		3,466			8,251		13,854
Accounts receivable		119,448			265,822			129,776			9,660		146,265
Inventories		248,864			164,694			8,570			313		-
Prepaid expenses		-			12,169			23,101			150		124,843
Investments		-			82,292			3,485			-		751,096
Capital assets		1,500,598			6,030,611			1,335,155			157,569		32,353
Intangible assets		37,414			61,807			210,520			-		481
Sinking funds (schedule 8)		75,806			390,484			86,695			10,450		-
Other assets		53,219			3,209			9,275			-		4,706
Total Assets3		2,037,091			7,011,027			1,810,043			186,393		1,073,598
Liabilities
Accounts payable and accrued liabilities		104,664			376,682			158,874			7,931		48,392
Dividends payable to government organizations		10,736			-			22,881			-		41,993
Gross debt (schedule 8)		1,087,180			3,675,915			666,481			59,861		-
Unearned revenue		49,972			13,767			119,414			73,813		279,424
Provision for insurance claims		-			-			-			-		369,137
Other liabilities		89,245			1,086,489			263,536			2,572		53,661
Total Liabilities3		1,341,797			5,152,853			1,231,186			144,177		792,607
Net Assets (Debt)		695,294			1,858,174			578,857			42,216		280,991
Revenue
Operating		797,798			1,860,398			1,193,118			41,812		482,816
Investment income		-			11,930			1,978			25		33,055
Total Revenue3		797,798			1,872,328			1,195,096			41,837		515,871
Expense
Operating		650,734			1,512,490			1,042,524			37,071		188,337
Insurance claims		-			-			-			-		246,236
Debt charges4		40,521			206,938			22,946			1,717		-
Total Expense3		691,255			1,719,428			1,065,470			38,788		434,573
Income (loss) before non-recurring items		106,543			152,900			129,626			3,049		81,298
Non-recurring items		-			-			-			-		-
Net Income (Loss)		106,543			152,900			129,626			3,049		81,298
Retained earnings, beginning of year		544,296			1,203,541			321,882			30,467		173,710
Adjustment to retained earnings (note 12)		-			-			-			-		-
Dividends to government organizations		(27,236	)		(120,000	)		(84,257	)		-		(52,000	)
Transfer from accumulated other comprehensive income (loss)		-			(32,219	)		(38,394	)		-		(2,017	)
Retained earnings, end of year		623,603			1,204,222			328,857			33,516		200,991
Accumulated other comprehensive income (loss), beginning of year		257			(291	)		-			-		-
Adjustment to accumulated other comprehensive income (loss) (note 12)		-			-			-			-		-
Other comprehensive income (loss)		(97	)		(37,969	)		(38,394	)		-		(2,017	)
Transfer to retained earnings		-			32,219			38,394			-		2,017
Accumulated other comprehensive income (loss), end of year		160			(6,041	)		-			-		-
Equity advances from government organizations		71,531			659,993			250,000			8,700		80,000
Net Assets (Debt)		695,294			1,858,174			578,857			42,216		280,991

1	Net assets are restricted as disclosed on page 108.
2	Adjustments include:
	•	reclassification of SaskWater during the year (note 12);
	•	significant intervening period transactions; and
	•	elimination of unrealized gains and losses on transactions with government organizations.
3	Total assets includes $793.3 million (2012 - $636.3 million) due from or invested in government organizations; total liabilities includes $5,754.0 million (2012 - $4,651.5 million) in gross debt owing to government organizations and $242.7 million (2012 - $303.2 million - restated) in accounts payable or services due from government organizations; total revenue includes $180.3 million (2012 - $236.6 million - restated) from government organizations; and total expense includes $547.8 million (2012 - $486.4 million) paid and owing to government organizations.
4	Debt charges is reported net of sinking fund earnings. Interest in the amount of $246.8 million (2012 - $196.0 million) was paid and owing to government organizations.

106 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

																			Schedule 3



Auto Fund1			WCB1		SLGA			SGC			MFC		Adjustments2			2013			2012


	24,634			78,963		123,929			10,583			1		(81,065	)		184,297			109,802
	193,384			21,560		66,514			397			2,105		-			954,931			858,223
	3,446			-		27,434			320			-		-			453,641			418,597
	37,507			366		645			666			-		-			199,447			210,213
	1,520,694			1,508,278		-			-			154,174		(10,000	)		4,010,019			3,633,198
	41,046			12,420		111,570			66,721			-		20,390			9,308,433			8,216,650
	5,644			32,492		14,981			-			-		-			363,339			298,271
	-			-		-			-			2,542		-			565,977			506,684
	-			274		-			-			-		-			70,683			98,272
	1,826,355			1,654,353		345,073			78,687			158,822		(70,675	)		16,110,767			14,349,910

	21,893			29,346		69,798			16,530			1,027		-			835,137			727,032
	-			-		95,809			5,455			-		(81,065	)		95,809			185,813
	-			-		125,064			12,107			138,277		-			5,764,885			4,663,748
	352,687			-		-			-			-		(42,279	)		846,798			726,264
	1,280,402			1,005,443		-			-			-		-			2,654,982			2,558,692
	39,284			173,614		56,304			7,262			-		-			1,771,967			1,751,996
	1,694,266			1,208,403		346,975			41,354			139,304		(123,344	)		11,969,578			10,613,545
	132,089			445,950		(1,902	)		37,333			19,518		52,669			4,141,189			3,736,365

	804,716			296,215		1,055,854			137,249			-		(4,616	)		6,665,360			6,627,983
	74,838			127,322		-			-			6,063		-			255,211			45,762
	879,554			423,537		1,055,854			137,249			6,063		(4,616	)		6,920,571			6,673,745

	150,522			71,628		577,700			109,583			29		(808	)		4,339,810			4,347,343
	740,528			196,112		-			-			-		-			1,182,876			1,297,227
	-			-		64			1,355			4,508		-			278,049			231,321
	891,050			267,740		577,764			110,938			4,537		(808	)		5,800,735			5,875,891
	(11,496	)		155,797		478,090			26,311			1,526		(3,808	)		1,119,836			797,854
	-			-		-			-			-		-			-			(8,576	)
	(11,496	)		155,797		478,090			26,311			1,526		(3,808	)		1,119,836			789,278
	143,585			290,153		-			28,071			17,992		(83,997	)		2,669,700			2,668,483
	-			-		-			-			-		30,467			30,467			280,101
	-			-		(478,090	)		(21,049	)		-		110,000			(672,632	)		(784,352	)
	-			-		-			-			-		-			(72,630	)		(283,810	)
	132,089			445,950		-			33,333			19,518		52,662			3,074,741			2,669,700
	-			-		(7,637	)		-			-		-			(7,671	)		227,420
	-			-		-			-			-		-			-			(233,074	)
	-			-		5,735			-			-		-			(72,742	)		(285,827	)
	-			-		-			-			-		-			72,630			283,810
	-			-		(1,902	)		-			-		-			(7,783	)		(7,671	)
	-			-		-			4,000			-		7			1,074,231			1,074,336
	132,089			445,950		(1,902	)		37,333			19,518		52,669			4,141,189			3,736,365

Government of Saskatchewan – 2012-13 Public Accounts 107

Summary Financial Statements

Investment in Government Business Enterprises (continued)

Schedule 3

The investment in government business enterprises is comprised of the Government’s equity in the entities listed below. The financial statements of these entities are prepared in accordance with International Financial Reporting Standards.

SaskEnergy Incorporated (SaskEnergy)

SaskEnergy promotes, transports, stores and distributes natural gas in Saskatchewan.

Saskatchewan Power Corporation (SaskPower)

SaskPower generates, purchases, transmits, distributes and sells electricity and related products and services.

Saskatchewan Telecommunications Holding Corporation (SaskTel)

SaskTel markets and supplies a range of voice, data, internet, wireless, text, image, security and entertainment products, systems and services. Through interconnection agreements, SaskTel is part of the national and global communications network.

Saskatchewan Water Corporation (SaskWater)

SaskWater provides professional water and wastewater services to Saskatchewan communities as well as to industrial and commercial customers.

Saskatchewan Government Insurance (SGI) and Saskatchewan Auto Fund (Auto Fund)

SGI’s competitive general insurance business, SGI CANADA, offers a comprehensive line of home, tenant, farm, automobile extension and commercial coverages.

The Auto Fund, the provincial compulsory vehicle insurance program, is administered by SGI on behalf of the Government. Any net assets of the Auto Fund are held on behalf of Saskatchewan’s motoring public and cannot be used for any other purpose.

Workers’ Compensation Board (Saskatchewan) (WCB)

WCB provides workers’ compensation insurance to Saskatchewan workers and employers. Any net assets of the WCB cannot be used for any other purpose.

Liquor and Gaming Authority (SLGA)

SLGA’s mandate is to control the manufacturing and distribution of beverage alcohol throughout the Province, to oversee the licensing of all establishments selling alcohol in the Province and to maintain the integrity of all licensed gaming while ensuring maximum benefit to Saskatchewan charities.

To fulfill its mandate, SLGA operates retail liquor stores and video lottery terminals. It also owns and manages all slot machines at Saskatchewan Indian Gaming Authority casinos.

Saskatchewan Gaming Corporation (SGC)

SGC manages and operates Casino Regina and Casino Moose Jaw.

Municipal Financing Corporation of Saskatchewan (MFC)

MFC assists municipalities in financing their capital requirements.

108 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Other Investments			Schedule 4
As at March 31, 2013
(thousands of dollars)

	2013		2012


Bonds and debentures		668,356		754,402
Pooled investment funds		103,387		92,086
Equities		45,573		71,578
Loans and advances		11,686		19,827
Other		86,951		51,818
Total Other Investments		915,953		989,711

Bonds and Debentures

Bonds and debentures held by the Government have a market value of $680.1 million (2012 - $764.4 million), and include securities of:

	2013	2012

Corporations (coupon interest range 2.1% to 12.5%; maturing in 1.1 to 26.6 years)	254,381	298,901
Governments of other provinces (coupon interest range 1.2% to 5.7%; maturing in 1.1 to 24.2 years)	229,986	281,348
Government of Canada (coupon interest range 0.5% to 5.0%; maturing in 1.7 to 24.2 years)	108,541	50,195
Government of Saskatchewan (coupon interest range 4.5% to 5.8%; maturing in 3.4 to 15.9 years)	2,982	3,192
Other (coupon interest range 2.5% to 12.1%; maturing in 1.2 to 43.3 years)	72,466	120,766
Total Bonds and Debentures	668,356	754,402

Pooled Investment Funds

Pooled investment funds represent the Government’s investment in units of various funds consisting primarily of debt and equities.

Equities

Equities include $39.8 million (2012 - $60.1 million) invested in shares of private companies and $5.8 million (2012 - $11.5 million) invested in Canadian and international equity markets for which the quoted market value is $4.9 million (2012 - $12.4 million). Investments in equities include $32.7 million (2012 - $26.2 million) in investments subject to significant influence of which the Government has invested $14.7 million (2012 - $10.8 million) in the Meadow Lake OSB Limited Partnership (MLOSB). As a limited partner, the Government holds a 25 per cent interest in MLOSB, an oriented strand board facility near Meadow Lake.

Loans and Advances

Loans and advances include loan agreements between the Government and companies in which the Government holds shares.

Other

Other investments include various fixed rate securities having a market value of $87.7 million (2012 - $52.3 million).

Government of Saskatchewan – 2012-13 Public Accounts 109

Summary Financial Statements

Accounts Payable and Accrued Liabilities			Schedule 5
As at March 31, 2013
(thousands of dollars)

	2013		2012

Transfers
Operating1		779,332		616,280
Capital		52,055		32,155
Accrued salaries and benefits		671,770		537,326
Supplier payments		379,628		441,817
Equalization and Canada Health and Social Transfer repayable to the federal
government		204,095		227,530
Accrued interest		86,078		107,657
Other		146,668		103,197
Total Accounts Payable and Accrued Liabilities		2,319,626		2,065,962

Includes transfers to the federal government of $126.1 million (2012 - $145.0 million).

Other Liabilities		Schedule 6
As at March 31, 2013
(thousands of dollars)

	2013		2012

Funds held on behalf of government business enterprises and others
Liquor and Gaming Authority	120,309		40,020
Other	67,388		55,087
Environmental	91,627		95,867
Capital leases (note 7)	63,650		43,297
Other	58,919		78,132
Total Other Liabilities	401,893		312,403

Unearned Revenue		Schedule 7
As at March 31, 2013
(thousands of dollars)

	2013		2012


Motor vehicle licensing fees	58,832		61,692
Education contributions	47,119		48,846
Health contributions	31,821		37,776
Crown mineral leases	20,442		20,288
Housing contributions (note 11)	-		113,747
Water supply and infrastructure (note 12)	-		40,887
Other	34,577		35,798
Total Unearned Revenue	192,791		359,034

110 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Public Debt												Schedule 8
As at March 31, 2013
(thousands of dollars)

	2013								2012
				Government								Government
				Business								Business
				Enterprise								Enterprise
	General			Specific		Public			General			Specific		Public
	Debt1 2 3			Debt 2		Debt			Debt1 2 3			Debt 2		Debt

General Revenue Fund		3,804,817			-		3,804,817			3,807,590			-		3,807,590
Less amounts held by government organizations		(41,814	)		-		(41,814	)		(23,170	)		-		(23,170	)
Saskatchewan Power Corporation5		95,303			3,251,648		3,346,951			96,547			2,646,587		2,743,134
SaskEnergy Incorporated5		407,117			574,871		981,988			304,209			628,987		933,196
Saskatchewan Telecommunications Holding
Corporation5		157,000			495,754		652,754			14,200			507,827		522,027
Municipal Financing Corporation of Saskatchewan5		15,289			132,377		147,666			14,842			120,807		135,649
Liquor and Gaming Authority5		125,064			-		125,064			-			-		-
Saskatchewan Immigrant Investor Fund Inc.		107,558			-		107,558			71,738			-		71,738
Regional Health Authorities		91,014			-		91,014			81,690			-		81,690
Boards of Education		80,551			-		80,551			74,487			-		74,487
Saskatchewan Water Corporation4 5		16,203			32,044		48,247			54,067			-		54,067
Saskatchewan Opportunities Corporation		35,291			-		35,291			35,729			-		35,729
Saskatchewan Housing Corporation		31,761			-		31,761			35,037			-		35,037
Saskatchewan Watershed Authority		12,503			-		12,503			6,591			-		6,591
Saskatchewan Gaming Corporation5		-			11,769		11,769			-			13,090		13,090
Information Services Corporation of Saskatchewan		9,935			-		9,935			9,935			-		9,935
Other		1,154			-		1,154			1,294			-		1,294
Public Debt1 6		4,948,746			4,498,463		9,447,209			4,584,786			3,917,298		8,502,084

Public debt on the Statement of Financial Position includes only general debt.

General debt and government business enterprise specific debt are presented net of sinking funds.

General debt includes $81.5 million (2012 - $73.5 million) secured primarily by assets with a carrying value of $114.7 million (2012 - $106.8 million).

During 2012-13, $35.1 million in debt issued specifically on behalf of Saskatchewan Water Corporation was reclassified from general debt to government business enterprise specific debt (note 12).

Public debt of government business enterprises includes both general debt and government business enterprise specific debt. General debt of government business enterprises represents amounts transferred from the General Revenue Fund to government business enterprises and recorded as loans receivable (schedule 2). Government business enterprise specific debt represents debt issued by, or specifically on behalf of, government business enterprises.

Schedule 3 provides information on government business enterprises as presented in their audited financial statements closest to March 31, 2013. Public debt of government business enterprises shown above has been adjusted for transactions occurring from the audited financial statements to March 31, 2013 as follows:

	2013								2012
	Government
	Business
	Enterprise		Transactions				Public		Public
	Debt		to March 31				Debt		Debt
	(schedule 3)a

Saskatchewan Power Corporation		3,285,431		61,520				3,346,951		2,743,134
SaskEnergy Incorporated		1,011,374		(29,386	)			981,988		933,196
Saskatchewan Telecommunications Holding Corporation		579,786		72,968				652,754		522,027
Municipal Financing Corporation of Saskatchewan		135,735		11,931				147,666		135,649
Liquor and Gaming Authority		125,064		-				125,064		-
Saskatchewan Water Corporation		49,411		(1,164	)			48,247		-
Saskatchewan Gaming Corporation		12,107		(338	)			11,769		13,090
Total Government Business Enterprises		5,198,908		115,531		��		5,314,439		4,347,096

Includes gross debt net of sinking funds reported on schedule 3.

Government of Saskatchewan – 2012-13 Public Accounts 111

Summary Financial Statements

Public Debt (continued)

Schedule 8

6	Included in public debt is U.S. dollar debt converted to $3.9 million Canadian (2012 - $23.9 million) at the exchange rate in effect at March 31, 2013 of 1.0156 (2012 - 0.9991).

Public debt is comprised of gross debt net of sinking funds as follows:

	2013
	Gross			Sinking			Public
	Debt a			Funds			Debt
				(schedule 9)

General Revenue Fund		5,025,494			(1,220,677	)		3,804,817
Less amounts held by government organizations		(41,814	)		-			(41,814	)
Saskatchewan Power Corporation		3,748,741			(401,790	)		3,346,951
SaskEnergy Incorporated		1,060,999			(79,011	)		981,988
Saskatchewan Telecommunications Holding Corporation		743,600			(90,846	)		652,754
Municipal Financing Corporation of Saskatchewan		150,289			(2,623	)		147,666
Liquor and Gaming Authority		125,064			-			125,064
Saskatchewan Immigrant Investor Fund Inc.		107,558			-			107,558
Regional Health Authorities		91,014			-			91,014
Boards of Education		80,551			-			80,551
Saskatchewan Water Corporation		59,903			(11,656	)		48,247
Saskatchewan Opportunities Corporation		36,684			(1,393	)		35,291
Saskatchewan Housing Corporation		58,483			(26,722	)		31,761
Saskatchewan Watershed Authority		12,503			-			12,503
Saskatchewan Gaming Corporation		11,769			-			11,769
Information Services Corporation of Saskatchewan		9,935			-			9,935
Other		1,154			-			1,154
Public Debt		11,281,927			(1,834,718	)		9,447,209

The average effective interest rate on gross debt during 2012-13 was 5.6 per cent (2011-12 - 6.2 per cent) and includes the impact of foreign exchange and the amortization of any premiums or discounts associated with the debentures. The average term to maturity of gross debt is 11.8 years (2012 - 11.5 years)

Debt principal payment requirements in each of the next five years and thereafter are as follows:

	2013			2012
Year of Maturity

Short-term promissory notes		1,385,978			692,340
2012-13		-			1,198,743
2013-14		837,273			811,077
2014-15		928,382			945,699
2015-16		526,020			521,989
2016-17		464,579			464,466
2017-18		299,103			-
6-10 years		1,913,722			1,681,807
Thereafter		4,926,870			4,827,033
Gross debt a		11,281,927			11,143,154
Sinking funds		(1,834,718	)		(2,641,070	)
Public Debt		9,447,209			8,502,084

Gross debt includes Canada Pension Plan debentures of $745.1 million (2012 - $745.1 million). These debentures are callable in whole or in part before maturity, at the option of the Minister of Finance of Saskatchewan.

112 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Sinking Funds										Schedule 9
As at March 31, 2013
(thousands of dollars)

	2012		2013
	Sinking									Currency		Sinking
	Funds		Contributions1		Earnings2		Redemptions3			Adjustment		Funds

General Revenue Fund		2,099,294		47,527		109,408		(1,039,846	)		4,294		1,220,677
Saskatchewan Power Corporation		353,788		26,723		21,279		-			-		401,790
Saskatchewan Telecommunications Holding Corporation		78,773		7,366		4,707		-			-		90,846
SaskEnergy Incorporated		72,803		8,112		4,302		(6,206	)		-		79,011
Saskatchewan Housing Corporation		24,766		520		1,436		-			-		26,722
Saskatchewan Water Corporation		8,594		2,517		545		-			-		11,656
Municipal Financing Corporation of Saskatchewan		2,097		392		134		-			-		2,623
Saskatchewan Opportunities Corporation		955		367		71		-			-		1,393
Total Sinking Funds4		2,641,070		93,524		141,882		(1,046,052	)		4,294		1,834,718

	2014		2015		2016		2017		2018		Thereafter		Total

General debt		51,601		44,715		36,376		32,179		29,393		352,968		547,232
Government business enterprise
specific debt		42,902		41,880		41,380		40,782		39,779		585,098		791,821
Total Sinking Fund Contributions		94,503		86,595		77,756		72,961		69,172		938,066		1,339,053

2	Sinking fund earnings include gains on investment sales of $80.3 million (2012 - $128.2 million).

3	The redemption value is based on the market value of the sinking fund units at the date of redemption.

4	The market value of total sinking funds is $1,834.0 million (2012 - $2,683.1 million). Total sinking funds by debt classification are as follows:

	2012		2013
	Sinking									Currency		Reclassification			Sinking
	Funds		Contributions		Earnings		Redemptions			Adjustment		(note 12)			Funds

General debt		2,142,853		51,114		111,551		(1,039,846	)		4,294		(8,594	)		1,261,372
Government business enterprise
specific debt		498,217		42,410		30,331		(6,206	)		-		8,594			573,346
Total Sinking Funds		2,641,070		93,524		141,882		(1,046,052	)		4,294					1,834,718

Sinking fund assets have been invested as follows:

	2013		2012
Long-term investments in securities of:
Governments of other provinces (coupon interest range 0.0% to 9.5%; maturing in 2.9 to 36.9 years)		859,692		1,292,057
Government of Saskatchewan (coupon interest range 0.0% to 9.4%; maturing in 1.0 to 28.8 years)		430,937		555,455
Government of the United States (coupon interest 2.8%; maturing in 29.6 years)		19,257		4,951
Government of Canada (coupon interest 4.0%; maturing in 3.2 years)		8,002		54,566
Cash, short-term investments and accrued interest		516,830		734,041
Total Sinking Funds a		1,834,718		2,641,070

Includes U.S. dollar cash, investments and accrued interest converted to $275.4 million Canadian (2012 - $250.9 million) at the exchange rate in effect at March 31, 2013 of 1.0156 (2012 - 0.9991).

Government of Saskatchewan – 2012-13 Public Accounts 113

Summary Financial Statements

Pension Liabilities										Schedule 10
As at March 31, 2013
(thousands of dollars)

	2013												2012
	TSP1			PSSP			Others			Total			Total

Accrued benefit obligation,
beginning of year		5,796,584			2,085,497			663,892			8,545,973			7,614,413
Current period benefit cost		23,397			2,477			11,132			37,006			43,600
Interest cost		205,787			72,791			18,859			297,437			347,947
Actuarial losses		259,067			126,732			26,353			412,152			995,249
Joint defined benefit plan (SHEPP)2		-			-			18,999			18,999			30,938
Benefit payments		(340,571	)		(131,599	)		(29,743	)		(501,913	)		(486,174	)
Accrued Benefit Obligation, End of Year		5,944,264			2,155,898			709,492			8,809,654			8,545,973
Plan assets, beginning of year		751,164			-			296,403			1,047,567			1,293,591
Employer contributions		208,420			131,156			9,866			349,442			277,099
Employee contributions		4,726			443			2,483			7,652			9,804
Return on plan assets		37,638			-			14,963			52,601			85,677
Actuarial gains (losses)		-			-			7,124			7,124			(132,430	)
Benefit payments		(340,571	)		(131,599	)		(29,743	)		(501,913	)		(486,174	)
Plan Assets, End of Year3		661,377			-			301,096			962,473			1,047,567
		5,282,887			2,155,898			408,396			7,847,181			7,498,406
Unamortized estimation adjustments4		(905,919	)		(126,732	)		(40,047	)		(1,072,698	)		(1,181,359	)
Total Pension Liabilities5		4,376,968			2,029,166			368,349			6,774,483			6,317,047

The TSP had an actual rate of return on plan assets of 5.5 per cent (2012 - 1.7 per cent).

The joint defined benefit plan includes only the Government’s employer portion of the pension liability. At December 31, 2012, the SHEPP had a total accrued benefit obligation of $4,390.1 million (2011 - $4,089.0 million) and pension fund assets of $3,941.7 million (2011 - $3,675.6 million) at market related values and unamortized estimation adjustment gains of $16.9 million (2011 - $11.9 million). The pension liability would increase by $626.5 million or would decrease by $509.7 million if the discount rate was decreased or increased by one percentage point respectively. The market value of the pension fund investments was $4,047.8 million (2011 - $3,540.8 million). Of this amount, 32.0 per cent (2011 - 35.0 per cent) was invested in fixed income securities and 59.0 per cent (2011 - 57.0 per cent) in equity investments. The plan assets had an actual rate of return of 11.2 per cent (2011 - 2.9 per cent). The Government and member contributions to the plan totalled $130.0 million (2011 - $130.1 million) and $128.7 million (2011 - $128.8 million) respectively. Benefit payments from the plan totalled $178.5 million (2011 - $165.5 million).

At March 31, 2013, the market value of defined benefit plan investments was $952.4 million (2012 - $1,037.6 million). Of this amount, 56.8 per cent (2012 - 43.8 per cent) was invested in fixed income securities and 28.8 per cent (2012 - 43.3 per cent) in equity investments.

Unamortized estimation adjustments are amortized to pension expense over periods ranging from 3.5 to 4.0 years for the TSP, 0.3 years for the PSSP and from 0.9 to 12 years for the other plans. These represent the expected average remaining service life of active plan members at the time the estimation adjustments arose.

The total pension liabilities are based on the latest actuarial valuations extrapolated to March 31, 2013 for the defined benefit plans and December 31, 2012 for the joint defined benefit plan. Changes in assumptions can result in significantly higher or lower estimates of pension liabilities. A one percentage point decrease in the discount rate would result in a $787.1 million and $278.1 million increase in the pension liabilities for the TSP and the PSSP respectively, and a one percentage point increase would result in a $643.8 million and $228.5 million decrease in the pension liabilities for the TSP and the PSSP respectively.

114 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Tangible Capital Assets																					Schedule 11
As at March 31, 2013
(thousands of dollars)

		2013																						2012
		Land &			Buildings &				Machinery			Trans-			Office &
		Improve-				Improve-			&			portation			Information			Infra-
		ments				ments			Equipment			Equipment			Technology			structure			Total			Total
Estimated useful life (in years)	3-indefinite						2-80			2-33			3-40			2-25			3-60

Opening Net Book Value of
Tangible Capital Assets1			416,509				2,940,205			355,063			262,027			288,233			2,689,437			6,951,474			6,545,414
Opening cost			468,489				5,611,810			1,116,709			515,099			825,962			4,765,182			13,303,251			12,611,550
Adjustment3			(1,606	)			(2,522	)		(2,904	)		-			(945	)		(197,102	)		(205,079	)		-
Acquisitions			26,783				495,955			65,663			37,645			105,718			306,297			1,038,061			899,750
Write-downs			-				(5	)		(201	)		-			(3,311	)		-			(3,517	)		(23,717	)
Disposals			(6,505	)			(17,291	)		(32,726	)		(16,237	)		(35,911	)		(28,149	)		(136,819	)		(184,332	)
Closing Cost2			487,161				6,087,947			1,146,541			536,507			891,513			4,846,228			13,995,897			13,303,251
Opening accumulated amortization			51,980				2,671,605			761,646			253,072			537,729			2,075,745			6,351,777			6,066,136
Adjustment3			-				(1,262	)		(1,958	)		-			(687	)		(62,221	)		(66,128	)		-
Annual amortization			4,322				163,171			67,610			35,061			82,274			132,768			485,206			471,399
Write-downs			-				(1	)		(195	)		-			(3,134	)		-			(3,330	)		(15,192	)
Disposals			(185	)			(13,153	)		(30,785	)		(13,394	)		(35,550	)		(24,747	)		(117,814	)		(170,566	)
Closing Accumulated Amortization			56,117				2,820,360			796,318			274,739			580,632			2,121,545			6,649,711			6,351,777
Closing Net Book Value of
Tangible Capital Assets1			431,044				3,267,587			350,223			261,768			310,881			2,724,683			7,346,186			6,951,474

Net book value of tangible capital assets does not include the following:

•

works of art and historical treasures, such as the Legislative Building;

•

items inherited by right of the Crown, such as Crown lands, forests, water and mineral resources, which are not recognized in these financial statements; and

•

capital assets held by government business enterprises (schedule 3).

Closing cost includes work-in-progress of $664.0 million (2012 - $471.8 million).

During 2012-13, the net book value of tangible capital assets decreased by $139.0 million as a result of the reclassification of Saskatchewan Water Corporation (SaskWater) from a government service organization to a government business enterprise (note 12). The tangible capital assets of SaskWater are now reflected in the Government’s investment in government business enterprises (schedule 3).

Government of Saskatchewan – 2012-13 Public Accounts 115

Summary Financial Statements

Revenue			Schedule 12
For the Year Ended March 31, 2013
(thousands of dollars)

	2013			2012

Taxation
Individual income (note 11)		2,406,254			1,897,409
Provincial sales (note 11)		1,284,893			1,322,161
Corporation income		838,275			793,790
Property		586,274			590,786
Fuel		495,955			475,452
Tobacco		253,353			242,853
Other		327,796			303,642
Total Taxation		6,192,800			5,626,093
Non-Renewable Resources
Oil		1,283,877			1,528,808
Resource surcharge		627,675			452,807
Potash		364,490			438,372
Crown land sales		89,060			235,507
Natural gas		11,354			17,389
Other		139,413			149,074
Total Non-Renewable Resources1		2,515,869			2,821,957
Other Own-Source Revenue
Fees
Health care		252,383			249,334
Motor vehicle licensing		183,121			173,151
Education		144,290			137,283
Subsidized housing rental		103,894			100,325
Real property sales and leases		97,698			115,000
Registry		81,583			75,124
Other		292,561			293,279
Insurance		275,433			231,948
Investment income		219,066			276,201
Other2		534,635			502,918
Total Other Own-Source Revenue		2,184,664			2,154,563
Total Own-Source Revenue		10,893,333			10,602,613
Transfers from the Federal Government
Canada Health Transfer		933,400			846,771
Canada Social Transfer		366,968			352,420
Crop insurance contributions		235,731			197,945
Agricultural stability contributions		230,592			203,531
Housing subsidy (note 11)		177,233			91,485
Other		365,454			522,410
Total Transfers from the Federal Government		2,309,378			2,214,562
Total Revenue		13,202,711			12,817,175

1	Includes taxes of $447.6 million (2012 - $566.3 million).
2	Includes reversals and refunds of prior year expenses of $59.8 million (2012 - $18.0 million).

116 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Expense by Object	Schedule 13
For the Year Ended March 31, 2013
(thousands of dollars)

		2013	2012

Salaries and benefits		6,134,245	5,541,320
Transfers
Operating		4,208,806	4,122,239
Capital		212,465	289,981
Operating costs		2,079,841	2,112,631
Debt charges (schedule14)		642,775	682,385
Amortization of tangible capital assets (schedule 11)		485,206	471,399
Other		521,761	491,461
Total Expense		14,285,099	13,711,416

Debt Charges			Schedule 14
For the Year Ended March 31, 2013
(thousands of dollars)

	2013			2012

Total interest costs		890,716			909,255
Interest reimbursed from government business enterprises1		(250,872	)		(232,404	)
Net foreign exchange (gain) loss		(354	)		2,005
Other costs		3,285			3,529
Total Debt Charges		642,775			682,385

Interest reimbursed for debt borrowed by the Government specifically on behalf of government business enterprises.

Government of Saskatchewan – 2012-13 Public Accounts 117

Summary Financial Statements

Comparison of Estimated to Actual Results				Schedule 15
For the Year Ended March 31, 2013
(thousands of dollars)

	2013						2012
	Estimated1			Actual1			Actual

Treasury Board Organizations
General Revenue Fund		47,500			57,967			352,334
Growth and Financial Security Fund		47,500			(42,033	)		(297,666	)
Other Treasury Board Organizations2		(360,500	)		(402,931	)		(182,046	)
		(265,500	)		(386,997	)		(127,378	)
CIC Board Organizations2		193,500			155,956			167,183
		(72,000	)		(231,041	)		39,805
Not-for-Profit Insurance Organizations		86,800			268,489			(144,768	)
Surplus (Deficit)		14,800			37,448			(104,963	)

1	Presented on the basis of the summary financial budget.

2	Net of dividends paid to other government organizations.

118 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Supplemental Cash Flow Information	Schedule 16
For the Year Ended March 31, 2013
(thousands of dollars)

	2013			2012
Other Non-Cash Items Included in the Deficit
Amortization of tangible capital assets (schedule 11)		485,206			471,399
Write-downs of tangible capital assets (schedule 11)		187			8,525
Net foreign exchange (gain) loss (schedule 14)		(354	)		2,005
Net gain on other investments1		(2,782	)		(2,056	)
Net decrease to provision for loss on loans receivable		(4,252	)		(6,152	)
Net gain on disposal of tangible capital assets		(58,020	)		(7,719	)
Earnings retained in sinking funds (schedule 9)		(111,551	)		(169,889	)
Total Other Non-Cash Items Included in the Deficit		308,434			296,113
Net Change in Non-Cash Operating Activities
Increase in accounts receivable		(110,237	)		(164,828	)
Increase in inventories held for resale		(1,127	)		(887	)
Decrease in deferred charges		6,983			4,212
Increase (Decrease) in accounts payable and accrued liabilities		253,664			(149,963	)
Decrease in unearned revenue		(166,243	)		(19,825	)
Increase in pension liabilities		457,436			141,252
Decrease (Increase) in prepaid expenses		1,603			(2,354	)
Increase in inventories held for consumption		(4,293	)		(7,679	)
		437,786			(200,072	)
Adjustment to accumulated surplus (note 12)		(69,461	)		-
Net Change in Non-Cash Operating Activities		368,325			(200,072	)
Other Supplemental Information
Cash interest paid during the year		406,997			417,218
Cash interest received during the year		123,821			142,029

Net gain on other investments consists of:

	2013			2012


Provision for loss		23,510			9,981
(Income) loss from equities and pooled funds		(16,905	)		10,473
Gain on sale of bonds and equities		(10,790	)		(25,864	)
Amortization of bond premiums and discounts		1,403			3,354
Net gain on other investments		(2,782	)		(2,056	)

Government of Saskatchewan – 2012-13 Public Accounts 119

Summary Financial Statements

Segment Disclosure
For the Year Ended March 31, 2013
(thousands of dollars)

	Treasury Board Organizations1
	2013			2012

Revenue
Taxation		6,192,800			5,626,093
Non-renewable resources		2,515,869			2,821,957
Transfers from government organizations		315,000			240,000
Other own-source revenue		1,795,897			1,743,120
Transfers from the federal government		1,881,172			1,989,641
Total Revenue (schedule 12)		12,700,738			12,420,811
Expense
Agriculture		557,558			620,482
Community development		553,624			528,019
Debt charges (schedule 14)		643,998			680,043
Economic development		246,711			233,977
Education		3,320,907			2,959,902
Environment and natural resources		218,096			262,462
Health		5,060,841			4,891,671
Protection of persons and property		617,002			633,223
Social services and assistance		1,158,792			1,146,893
Transportation		504,302			506,981
Other		685,520			552,011
Total Expense (schedule 13)		13,567,351			13,015,664
(Deficit) surplus from government service organizations		(866,613	)		(594,853	)
Income (loss) from government business enterprises (schedule 3)		479,616			467,475
Surplus (Deficit) (schedule 15)		(386,997	)		(127,378	)

The segments of the Summary financial statements are based on the accountability and control relationships between the Government and the various organizations within the government reporting entity. Schedule 18 identifies the organizations included in each segment.

1	Treasury Board organizations include the General Revenue Fund, Growth and Financial Security Fund and organizations such as Regional Health Authorities, Boards of Education and Liquor and Gaming Authority.

2	CIC Board organizations are agencies that are responsible to the Crown Investment Corporation of Saskatchewan (CIC) and include organizations such as Saskatchewan Power Corporation, Saskatchewan Telecommunications Holding Corporation and CIC Asset Management Inc.

Not-for-profit insurance organizations are intended to be actuarially sound over the long term. These entities typically adjust rates to break even over the longer term and include Saskatchewan Auto Fund, Saskatchewan Crop Insurance Corporation, Crop Reinsurance Fund of Saskatchewan and Workers’ Compensation Board (Saskatchewan).

120 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

																				Schedule 17



CIC Board Organizations2						Not-for-Profit Insurance Organizations3					Eliminations						Total
2013			2012			2013		2012			2013			2012			2013			2012
											��

	-			-			-		-			-			-			6,192,800			5,626,093
	-			-			-		-			-			-			2,515,869			2,821,957
	-			-			326,294		206,596			(641,294	)		(446,596	)		-			-
	146,643			195,443			259,689		219,512			(17,565	)		(3,512	)		2,184,664			2,154,563
	-			-			428,206		224,921			-			-			2,309,378			2,214,562
	146,643			195,443			1,014,189		651,029			(658,859	)		(450,108	)		13,202,711			12,817,175

	-			-			890,001		645,829			(340,006	)		(207,673	)		1,107,553			1,058,638
	-			-			-		-			-			-			553,624			528,019
	2,630			4,777			-		-			(3,853	)		(2,435	)		642,775			682,385
	55,708			39,044			-		-			-			-			302,419			273,021
	-			-			-		-			-			-			3,320,907			2,959,902
	2,997			(6,468	)		-		-			-			-			221,093			255,994
	-			-			-		-			-			-			5,060,841			4,891,671
	56,165			53,319			-		-			-			-			673,167			686,542
	-			-			-		-			-			-			1,158,792			1,146,893
	28,764			29,878			-		-			-			-			533,066			536,859
	25,342			139,481			-		-			-			-			710,862			691,492
	171,606			260,031			890,001		645,829			(343,859	)		(210,108	)		14,285,099			13,711,416
	(24,963	)		(64,588	)		124,188		5,200			(315,000	)		(240,000	)		(1,082,388	)		(894,241	)
	495,919			471,771			144,301		(149,968	)		-			-			1,119,836			789,278
	470,956			407,183			268,489		(144,768	)		(315,000	)		(240,000	)		37,448			(104,963	)

Government of Saskatchewan – 2012-13 Public Accounts 121

Summary Financial Statements

Government Reporting Entity	Schedule 18
For the Year Ended March 31, 2013

Government Service Organizations (Consolidated)

General Revenue Fund

Forest Management Funds

Crown Agricultural Land Forest Fund

Government Organizations

Island Forests Management Fund

Agricultural Credit Corporation of Saskatchewan

Meadow Lake OSB Forest Management Trust Fund

Agricultural Implements Compensation Fund

Mee-Toos Forest Management Fund Trust

Boards of Education 6c

Mistik Forest Management Trust

Chinook School Division No. 211

North West Communities Wood Products Forest Management

Christ the Teacher Roman Catholic Separate School Division No. 212

Fund Trust

Conseil des écoles fransaskoises no. 310

Park Land Forests Management Fund

Creighton School Division No. 111

Sakaw Forest Renewable Trust Fund

Englefeld Protestant Separate School Division No. 132

Zelensky Bros. Forest Management Fund Trust

Good Spirit School Division No. 204

Global Transportation Hub Authority

Holy Family Roman Catholic Separate School Division No. 140

Government House Foundation

Holy Trinity Roman Catholic Separate School Division No. 22

Gradworks Inc. 6d 7a

Horizon School Division No. 205

Growth and Financial Security Fund

Ile-a-la Crosse School Division No. 112

Health Shared Services Saskatchewan 4b

Light of Christ Roman Catholic Separate School Division No. 16

Health Quality Council

Living Sky School Division No. 202

Horned Cattle Fund

Lloydminster Roman Catholic Separate School Division No. 89

Individual Cattle Feeder Loan Guarantee Provincial Assurance Fund

Lloydminster School Division No. 99

Information Services Corporation of Saskatchewan 6d 7a

North East School Division No. 200

Innovation Saskatchewan

Northern Lights School Division No. 113

Institutional Control Monitoring and Maintenance Fund

Northwest School Division No. 203

Institutional Control Unforeseen Events Fund

Prairie South School Division No. 210

Law Reform Commission of Saskatchewan

Prairie Spirit School Division No. 206

Livestock Services Revolving Fund

Prairie Valley School Division No. 208

North Sask Laundry and Support Services Ltd.

Prince Albert Roman Catholic Separate School Division No. 6

Northern Municipal Trust Account 6d

Regina Roman Catholic Separate School Division No. 81

Oil and Gas Orphan Fund

Regina School Division No. 4

Operator Certification Board

Saskatchewan Rivers School Division No. 119

Pastures Revolving Fund

Saskatoon School Division No. 13

Physician Recruitment Agency of Saskatchewan

South East Cornerstone School Division No. 209

Prairie Agricultural Machinery Institute

St. Paul's Roman Catholic Separate School Division No. 20

Prince of Wales Scholarship Fund

Sun West School Division No. 207

Public Employees Benefits Agency Revolving Fund

Century Plaza Properties (The Owners: Condominium Corporation

Public Employees Dental Fund 6d

No. 101100609)

Public Employees Disability Income Fund 6d

CIC Apex Equity Holdco Ltd. 3 6d 7a	Public Employees Group Life Insurance Fund 6d
CIC Asset Management Inc. 6d 7a	Queen’s Printer Revolving Fund

CIC Economic Holdco Ltd. 6d 7a

Regional Colleges 6a

Commercial Revolving Fund

Carlton Trail Regional College

Community Initiatives Fund

Cumberland Regional College

Correctional Facilities Industries Revolving Fund

Great Plains College

Criminal Property Forfeiture Fund

North West Regional College

Crop Reinsurance Fund of Saskatchewan 7b

Northlands College

Crown Investments Corporation of Saskatchewan (separate) 6d 7a

Pakland Regional College

eHealth Saskatchewan

Southeast Regional College

Enterprise Saskatchewan

Regional Health Authorities

Extended Health Care Plan for Certain Other Employees 6d

Cypress Regional Health Authority

Extended Health Care Plan for Certain Other Retired Employees 6d

Five Hills Regional Health Authority

Financial and Consumer Affairs Authority of Saskatchewan 4a

Heartland Regional Health Authority

First Nations and Métis Fund Inc. 6d 7a

Keewatin Yatthé Regional Health Authority

Fish and Wildlife Development Fund

Kelsey Trail Regional Health Authority

122 Government of Saskatchewan – 2012-13 Public Accounts

Summary Financial Statements

Government Reporting Entity (continued)

Schedule 18

Regional Health Authorities (continued)			Technology Supported Learning Revolving Fund 3
	Mamawetan Churchill River Regional Health Authority		Tourism Saskatchewan 2
	Prairie North Regional Health Authority		Training Completions Fund
	Prince Albert Parkland Regional Health Authority		Transportation Partnerships Fund
	Regina Qu'Appelle Regional Health Authority		University of Regina Crown Foundation
	Saskatoon Regional Health Authority		University of Saskatchewan Crown Foundation
	Sun Country Regional Health Authority		Victims’ Fund
	Sunrise Regional Health Authority		Water Appeal Board
Saskatchewan Agricultural Stabilization Fund
Saskatchewan Apprenticeship and Trade Certification Commission 6a
Saskatchewan Archives Board		Government Business Enterprises (Modified Equity)
Saskatchewan Arts Board			Liquor and Gaming Authority
Saskatchewan Association of Health Organizations Inc. 1			Municipal Financing Corporation of Saskatchewan 6d
Saskatchewan Cancer Agency			Saskatchewan Auto Fund 6d 7b
Saskatchewan Centre of the Arts Fund			Saskatchewan Gaming Corporation 6d 7a
Saskatchewan Crop Insurance Corporation 7b			Saskatchewan Government Insurance 6d 7a
Saskatchewan Development Fund Corporation 6d 7a			Saskatchewan Power Corporation 6d 7a
Saskatchewan Grain Car Corporation 6b			Saskatchewan Telecommunications Holding Corporation 6d 7a
Saskatchewan Health Research Foundation			Saskatchewan Water Corporation 5 6d 7a
Saskatchewan Heritage Foundation			SaskEnergy Incorporated 6d 7a
Saskatchewan Housing Corporation 6d			Workers’ Compensation Board (Saskatchewan) 6d 7b
Saskatchewan Immigrant Investor Fund Inc. 6d 7a
Saskatchewan Impaired Driver Treatment Centre Board of
	Governors	Government Partnerships (Proportionate Consolidation)
Saskatchewan Institute of Applied Science and Technology 6a			Foragen Technologies Limited Partnership
Saskatchewan Legal Aid Commission			Prairie Diagnostic Services Inc.
Saskatchewan Lotteries Trust Fund for Sport, Culture and			Saskatchewan Entrepreneurial Fund Joint Venture
	Recreation
	Saskatchewan Opportunities Corporation 6d 7a
	Saskatchewan Research Council
	Saskatchewan Snowmobile Fund
	Saskatchewan Student Aid Fund
	Saskatchewan Transportation Company 6d 7a
	Saskatchewan Watershed Authority 8
	Saskatchewan Western Development Museum
	SaskBuilds Corporation 1
	Sask911 Account
	School Division Tax Loss Compensation Fund

1	Organization established during 2012-13.

2	Changes in legislation during 2012-13 resulted in organization becoming part of the government reporting entity.

3	Organization wound up during 2012-13.

4	Organization’s name changed during 2012-13 from: a Saskatchewan Financial Services Commission Fund; b Saskatchewan Association of Health Organizations.

5	Organization reclassified from government service organization during 2012-13 (note 12).

6	The year-ends of certain organizations differ from March 31, 2013: a June 2012; b July 2012; c August 2012; d December 2012.

7	For segment disclosure (schedule 17) certain organizations are classified into categories other than Treasury Board Organizations as follows: a CIC Board Organizations; b Not-for-Profit Insurance Organizations.

8	Organization’s name changed to the Water Security Agency subsequent to March 31, 2013.

Government of Saskatchewan – 2012-13 Public Accounts 123

Supplementary Information (unaudited)

Supplementary Information

Growth and Financial Security Fund
Schedule of Transfers and Accumulated Balance
For the Year Ended March 31, 2013
(thousands of dollars)

	2013					2012
	Budget		Actual			Actual

Balance, beginning of year		708,302		708,302			1,005,968
Transfer from the General Revenue Fund		47,494		7,967			27,334
Transfer to the General Revenue Fund		-		(50,000	)		(325,000	)
Balance, End of Year		755,796		666,269			708,302

The Growth and Financial Security Fund (GFSF) was established May 14, 2008, by The Growth and Financial Security Act.

The purposes of the GFSF are:

•	to assist in the achievement of the Province’s long-term objectives by providing for financial security of the Government from year to year; and

•	to provide a source of funds that are available for programs that have been identified as promoting or enhancing the economic development of the Province.

In accordance with The Growth and Financial Security Act, the GFSF receives 50 per cent of the pre-transfer surplus of the General Revenue Fund (GRF) in any fiscal year. This legislation also permits Treasury Board to approve other transfers between the GFSF and the GRF.

Transfers to the GFSF from the GRF are statutory disbursements. Amounts transferred to the GRF from the GFSF are available for use subsequent to receiving required approval from the Legislative Assembly.

In accordance with The Growth and Financial Security Act, all earnings on the GFSF’s investments are credited to the GRF. For 2012-13, this amount was $19.4 million (2012 - $42.9 million).

The GFSF’s assets have been invested in fixed income securities as follows:

		2013		2012
Long-term investments in securities of:
	Government of Saskatchewan (coupon interest 0.0% to 4.5%; maturing in 1.0 to 3.4 years)		41,814		23,170
	Government of Canada (coupon interest range 1.7% to 1.8%; maturing in 4.7 to 5.2 years)		86,459		25,977
	Other provincial governments (coupon interest range 1.7% to 4.7%; maturing in 1.4 to 6.7 years)		224,883		319,320
	Corporations (coupon interest range 2.1% to 5.2%; maturing in 1.8 to 5.0 years)		104,602		102,640
Cash, accounts receivable, short-term investments and accrued interest			208,511		237,195
Total Growth and Financial Security Fund			666,269		708,302

The portfolio investments noted above are accounted for using the cost method. Under this approach, the GFSF earned a return of 2.8 per cent (2012 - 4.4 per cent).

The market value of the GFSF’s net assets at March 31, 2013 is $670.2 million (2012 - $711.4 million).

Government of Saskatchewan – 2012-13 Public Accounts 127

Supplementary Information

General Revenue Fund - Public Issue Debentures

As at March 31, 2013

(dollars)

Equity of

Sinking Fund

Date of

Interest

Purpose of

Amount

Total Issue

Applicable

Contribution

Issue

Maturity

Rate %

Payments

Currency

Issue

Outstanding

Sinking Fund

2012-13

June 17/03

June 17/13

4.75

Annual

Can.

GRF

195,000,000

MFC

5,000,000

200,000,000

124,577,264

2,000,000

(Euro medium term note; Non-callable; Payable in London)

July 20/93

July 15/13

7.375

Semiannual

U.S.

GRF

50,000,000

58,843,643

–

7.809

Can.

Sask Power

97,147,500

7.753

Can.

GRF

228,639,500

375,787,000

72,520,554

3,907,900

(175,000,000 U.S. dollars of the GRF's 225,000,000 U.S. dollar share of the

7.375% debenture issue has been swapped into Canadian dollars at an

interest rate of 7.753%. Interest payments on the remaining 50,000,000 U.S.

dollars have been swapped into Canadian dollars at an interest rate of 7.912%;

Sask Power's 75,000,000 U.S. dollar share of the 7.375% debenture issue

has been swapped into Canadian dollars at an interest rate of 7.809%;

Non-callable; Payable in New York)

July 15/08

July 15/13

2.50

Annual

Can.

GRF

2,513,000

–

(Savings Bond; Redeemable annually at the option of the holder or any time

on the death of the holder; The bonds pay a minimum interest rate of 2.50%;

The Province reserves the right to increase the interest rate after July 14, 2009)

Sept. 30/03

Dec. 3/13

4.90

Semiannual

Can.

GRF

150,000,000

SaskEnergy

50,000,000

200,000,000

23,819,536

2,000,000

(Non-callable; This book-based note is held in the Canadian Depository

for Securities)

March 14/91

April 10/14

10.25

Semiannual

Can.

GRF

583,916,000

289,197,663

5,839,160

(Non-callable; Payable at any Canadian branch of the Royal Bank of

Canada)

June 22/04

June 3/14

5.25

Semiannual

Can.

GRF

250,000,000

SaskEnergy

50,000,000

300,000,000

31,724,540

3,000,000

(Non-callable; This book-based note is held in the Canadian Depository

for Securities)

July 15/09

July 15/14

1.00

Annual

Can.

GRF

1,397,500

–

(Savings Bonds; Redeemable annually at the option of the holder or any time

on the death of the holder; The bonds pay a minimum interest of 1.00%;

The Province reserves the right to increase the interest rate after July 14, 2010)

June 3/05

Dec. 3/15

4.25

Semiannual

Can.

GRF

145,000,000

SaskEnergy

50,000,000

MFC

5,000,000

200,000,000

20,454,326

2,000,000

(Non-callable; This book-based note is held in the Canadian Depository

for Securities)

Nov.15/05

Jan. 15/16

4.305

Semiannual

Can.

GRF

274,654,700

23,752,080

2,746,575

(The original 2.125% 300,000,000 Swiss Franc debentures have been

swapped into Canadian dollars at an interest rate of 4.305%; Non-callable;

Payable in Zurich)

Aug. 23/06

Aug. 23/16

4.50

Semiannual

Can.

GRF

255,000,000

SaskEnergy

45,000,000

300,000,000

22,250,933

3,000,000

(Non-callable; This book-based note is held in the Canadian Depository

for Securities)

Sept. 17/96

Sept. 17/16

8.10

Semiannual

Can.

GRF

6,537,000

–

(Canadian medium term serial note; Payable in annual instalments;

Non-callable; Payable in Regina)

Sept. 5/07

Sept. 5/17

4.65

Semiannual

Can.

GRF

160,000,000

SaskEnergy

40,000,000

200,000,000

11,914,130

2,000,000

(Non-callable; This book-based note is held in the Canadian Depository

for Securities)

128 Government of Saskatchewan – 2012-13 Public Accounts

Supplementary Information

General Revenue Fund - Public Issue Debentures (continued)

Equity of

Sinking Fund

Date of

Interest

Purpose of

Amount

Total Issue

Applicable

Contribution

Issue

Maturity

Rate %

Payments

Currency

Issue

Outstanding

Sinking Fund

2012-13

June 17/04

June 17/19

5.50

Semiannual

Can.

GRF

33,000,000

4,078,669

330,000

(Canadian medium term note; After June 17, 2014, this note pays interest

at the three month bankers' acceptance rate less 0.245%; Non-callable;

This book-based note is held in the Canadian Depository for Securities)

Aug. 3/04

June 17/19

5.50

Semiannual

Can.

GRF

26,000,000

22,237,459

260,000

(Canadian medium term note; Non-callable; This book-based note is held

in the Canadian Depository for Securities)

July 28/10

July 28/20

3.90

Semiannual

Can.

GRF

150,000,000

SaskTel

150,000,000

300,000,000

9,790,286

4,500,000

(Non-callable; This book-based note is held in the Canadian Depository

for Securities)

Dec. 20/90

Dec. 15/20

9.375

Semiannual

U.S.

GRF

45,000,000

39,118,107

–

9.653

Can.

GRF

65,972,500

10.08

Can.

SaskTel

126,600,000

9.965

Can.

Sask Power

128,797,500

366,370,000

96,977,407

3,753,500

(55,000,000 U.S. dollars of the GRF's 100,000,000 U.S. dollar share of the

9.375% debenture issue has been swapped into Canadian dollars at an

interest rate of 9.653%. Interest payments on the remaining 45,000,000 U.S.

dollars have been swapped into Canadian dollars at an interest rate of

9.653%. SaskTel's 100,000,000 U.S. dollar share of the 9.375% debenture

issue has been swapped into Canadian dollars at an interest rate of 10.08%;

Sask Power's 100,000,000 U.S. dollar share of the 9.375% debenture issue

has been swapped into Canadian dollars at an interest rate of 9.965%;

Non-callable; Payable in New York)

Feb. 26/91

Feb. 15/21

9.254

Semiannual

Can.

GRF

147,600,000

24,900,929

2,460,000

9.125

U.S.

GRF

80,000,000

227,600,000

77,015,950

–

(120,000,000 U.S. dollars of this debenture issue has been swapped into

Canadian dollars at an interest rate of 9.254%. Interest payments on the

remaining 80,000,000 U.S. dollars have been swapped into Canadian

dollars at an interest rate of 9.254%; Non-callable; Payable in New York)

Feb. 4/92

Feb. 4/22

9.60

Semiannual

Can.

Sask Power

240,000,000

GRF

15,000,000

255,000,000

112,443,504

2,550,000

(Non-callable; Payable at any Canadian branch of the Royal Bank of

Canada)

July 21/92

July 15/22

8.50

Semiannual

U.S.

GRF

100,000,000

96,156,039

1,019,100

8.942

Can.

Sask Power

256,320,000

356,320,000

38,264,952

2,563,200

(Interest payments on the GRF's 100,000,000 U.S. dollar share of the 8.50%

debenture issue have been swapped into Canadian dollars at an interest

rate of 8.497%; Sask Power's 200,000,000 U.S. dollar share of the 8.50%

debenture issue has been swapped into Canadian dollars at an interest

rate of 8.942%; Non-callable; Payable in New York)

May 30/95

May 30/25

8.75

Semiannual

Can.

Sask Power

100,000,000

SaskEnergy

75,000,000

175,000,000

56,101,713

1,750,000

(Non-callable; Payable at any Canadian branch of the Royal Bank of

Canada)

Dec. 4/98

March 5/29

5.75

Semiannual

Can.

GRF

250,000,000

SaskTel

75,000,000

SaskEnergy

25,000,000

350,000,000

70,774,685

3,500,000

(Non-callable; This book-based note is held in the Canadian Depository

for Securities)

March 24/99

March 5/29

5.60

Semiannual

Can.

SaskTel

35,000,000

SaskEnergy

25,000,000

60,000,000

5,140,070

600,000

(Canadian medium term note; Non-callable; This book-based note is held in the

Canadian Depository for Securities)

Jan. 25/00

Jan. 25/30

6.35

Semiannual

Can.

GRF

199,995,000

38,406,429

2,000,000

(Canadian medium term note; This book-based note is held in the Canadian

Depository for Securities)

Government of Saskatchewan – 2012-13 Public Accounts 129

Supplementary Information

General Revenue Fund - Public Issue Debentures (continued)

Equity of

Sinking Fund

Date of

Interest

Purpose of

Amount

Total Issue

Applicable

Contribution

Issue

Maturity

Rate %

Payments

Currency

Issue

Outstanding

Sinking Fund

2012-13

Feb. 17/00	Jan. 25/30	6.25	Semiannual	Can.	GRF	25,000,000	25,000,000		4,938,220		250,000
(Canadian medium term note; Non-callable; This book-based note is held
in the Canadian Depository for Securities)

Dec. 10/01	Sept. 5/31	6.40	Semiannual	Can.	GRF	190,000,000
					Sask Power	300,000,000
					SaskEnergy	60,000,000	550,000,000		85,542,979		5,500,000
(Non-callable; This book-based note is held in the Canadian Depository
for Securities)

Feb. 13/02	Feb. 13/32	6.30	Semiannual	Can.	GRF	29,954,000	29,954,000		8,722,385		299,540
(Canadian medium term note; Non-callable; This book-based note is held
in the Canadian Depository for Securities)

May 12/03	Sept. 5/33	5.80	Semiannual	Can.	GRF	150,000,000
					Sask Power	300,000,000	450,000,000		54,569,771		4,500,000
(Non-callable; This book-based note is held in the Canadian Depository
for Securities)

June 10/03	Sept. 5/33	5.80	Semiannual	Can.	GRF	104,500,000	104,500,000		80,756,341		1,045,000
(Non-callable; This book-based note is held in the Canadian Depository
for Securities)

Aug. 12/04	Sept. 5/35	5.60	Semiannual	Can.	GRF	200,000,000
					Sask Power	200,000,000	400,000,000		41,613,209		4,000,000
(Non-callable; This book-based note is held in the Canadian Depository
for Securities)

Feb. 15/05	March 5/37	5.00	Semiannual	Can.	SaskEnergy	25,000,000
					Sask Power	400,000,000	425,000,000		41,305,084		4,250,000
(Non-callable; This book-based note is held in the Canadian Depository
for Securities)

May 26/06	June 1/40	4.75	Semiannual	Can.	GRF	325,000,000
					SaskEnergy	75,000,000
					Sask Power	650,000,000	1,050,000,000		55,265,345		10,500,000
(Non-callable; This book-based note is held in the Canadian Depository
for Securities)

Feb. 3/12	Feb. 3/42	3.40	Semiannual	Can.	GRF	100,000,000
					SaskEnergy	150,000,000
					Sask Power	400,000,000
					SaskTel	150,000,000	800,000,000		3,024,411		3,000,000
(This issue was reopened on November 15, 2012, and an additional
$300,000,000 of debentures were sold.The issue was reopened again on
February 28, 2013, and a futher $200,000,000 of debentures were sold; Non-
callable; This book-based note is held in the Canadian Depository for Securities)

Sept. 16/02	Sept. 5/42	5.70	Semiannual	Can.	GRF	50,000,000	50,000,000		7,012,743		500,000
(Canadian medium term note; Non-callable; This book-based note is held
in the Canadian Depository for Securities)

Adjustment							4,290,000	*	4,229,686	*	–
Total							8,882,834,200		1,757,441,042		85,623,975

*	Adjustment to reflect conversion of debentures and related sinking funds quoted in foreign currencies to Canadian dollars using the exchange rate in effect at March 31, 2013 (U.S. $1.0156).

**	Sinking fund contributions to U.S. dollar sinking funds are made in U.S. dollars. Contributions are shown at the cost in Canadian dollars to purchase U.S. dollars equal to the contribution amount.

130 Government of Saskatchewan – 2012-13 Public Accounts

Supplementary Information

General Revenue Fund - Debentures Issued to the Minister of Finance of Canada

As at March 31, 2013

(dollars)

							Equity of		Sinking Fund
Year of	Interest	Purpose of	Total		Total		Applicable		Contribution
Maturity	Rate %	Issue(s)	By Purpose		By Year		Sinking Fund			2012-13

2013-14	3.80	MFC		4,800,000
		Sask Water		5,000,000		9,800,000		–		–

2014-15	3.05	MFC		53,274,000
		Sask Gaming		6,000,000		59,274,000		–		–

2015-16	3.40	GRF		10,718,000
		Sask Water		4,807,000		15,525,000		3,240,849		392,500

2016-17	4.37	GRF		23,557,000
		MFC		10,000,000
		Sask Water		55,221,000		88,778,000		5,833,085		787,780

2017-18	4.48	MFC		7,400,000
		Sask Water		7,600,000
		SaskEnergy		18,991,000		33,991,000		4,960,199		817,010

6-10 Years	4.96	GRF		127,704,000
		MFC		33,996,000
		Sask Housing		52,004,000
		Sask Water		13,493,000
		SaskEnergy		66,971,000		294,168,000		50,886,840		2,403,256

Thereafter	4.31	GRF		128,536,000
		MFC		15,530,000
		SOCO		36,684,000
		Sask Tel		50,000,000
		Sask Water		12,800,000		243,550,000		12,355,585		3,499,870

Total						745,086,000		77,276,558		7,900,416

The average effective interest rate on debentures issued to the Minister of Finance of Canada is 4.45%.

Canada Pension Plan debentures have a 5-30 year maturity and are callable in whole or in part before maturity at the option of the Minister of Finance of Saskatchewan. Canada Pension Plan debentures are subject in part to annual sinking funds.

Government of Saskatchewan – 2012-13 Public Accounts 131

Supplementary Information

Glossary of Terms

Accrual Accounting

The method used to prepare the financial statements included in Volume 1 of the Public Accounts. Accrual accounting recognizes financial transactions at the time they occur, regardless of whether any cash is received or paid.

Accumulated Surplus/Deficit

One of the two measures of a government’s financial position (see net debt). The accumulated surplus/deficit is the amount by which revenue has exceeded expense/expense has exceeded revenue from the beginning of incorporation (1905) plus any adjustments that were charged directly to the accumulated surplus/deficit. It is calculated as the difference between assets and liabilities.

Budget

The amount presented in the Estimates and authorized by the Legislative Assembly.

Capital Transfer

A grant provided to a third party such as a university or municipality to acquire or develop capital assets.

Capital Investment

Capital investment includes capital transfers provided and tangible capital assets acquired by ministries and agencies during the year.

Consolidation

The method used to account for government service organizations in the Summary financial statements in which the accounts are adjusted to the basis of accounting described in note 1 of the Summary financial statements and then combined. Inter-organization balances and transactions are eliminated.

Debenture

A certificate of indebtedness where the issuer promises to pay interest and repay principal by a maturity date. It is usually unsecured, meaning there are no liens or pledges on any specific assets.

Debt

Terms used when describing debt include:

Government general debt is debt issued by the General Revenue Fund (GRF) to fund Government spending.

Crown corporation general debt is debt issued by the GRF and subsequently loaned to a Crown corporation.

Government business enterprise specific debt is debt issued by the GRF specifically on behalf of a government business enterprise where the government expects to realize the receivable from the government business enterprise and settle the external debt simultaneously.

Gross debt is borrowings through the issuance of debt instruments such as promissory notes and debentures.

Sinking funds are funds set aside for the repayment of debt.

Public debt is gross debt net of sinking funds.

General debt is public debt net of loans to Crown corporations for government business enterprise specific debt.

Guaranteed debt is the debt of others that the Government has agreed to repay if others default.

Total debt is public debt plus guaranteed debt.

Debt Retirement Fund

The fund, established pursuant to The Growth and Financial Security Act, to account for the surpluses of the GRF commencing April 1, 2008.

Derivative

A financial contract that derives its value from other underlying variables such as interest rates, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, and credit rates. It does not require an initial investment and is settled at a future date.

132 Government of Saskatchewan – 2012-13 Public Accounts

Supplementary Information

Glossary of Terms (continued)

Financial Asset

An asset that can be used to discharge existing liabilities or finance future operations and is not for consumption in the normal course of operations.

Financial Instrument

Any contract that gives rise to a financial asset of one party and a financial liability or equity instrument of another party.

Financial Liability

Any liability that is a contractual obligation to deliver a financial asset to another party, or to exchange financial instruments with another party under conditions that are potentially unfavourable to the entity.

General Revenue Fund (GRF)

The fund into which all revenues are paid, unless otherwise provided for by legislation, and from which all expenditures are appropriated by the Legislative Assembly.

Government Business Enterprise

A self-sufficient government organization that has the financial and operating authority to sell goods and services to individuals and organizations outside the government reporting entity as its principal activity. Government business enterprises are recorded in the Summary financial statements using the modified equity method.

Government Partnership

An investment by the Government where there is a contractual arrangement between the Government and one or more partners outside the government reporting entity and where the partners share, on an equitable basis, the risks and benefits of the partnership. Government partnerships are proportionately consolidated in the Summary financial statements.

Government Service Organization

An organization that is controlled by the Government, except those designated as government business enterprises. Government service organizations are consolidated in the Summary financial statements after adjustment to a basis consistent with the accounting policies described in note 1 of the Summary financial statements.

Gross Domestic Product (GDP)

The standard measure of the overall size of the economy, the value of all goods and services produced during a period.

Growth and Financial Security Fund

The fund established in May of 2008 to assist in the achievement of the Government’s long-term objectives by providing for financial security of the Government from year to year and to provide a source of funds that are to be available for appropriation to be used for government programs identified as promoting or enhancing the economic development of Saskatchewan.

Hedging

A strategy to minimize the risk of loss on an asset (or liability) from market fluctuations such as interest rate or foreign exchange rate changes. This is accomplished by entering into offsetting commitments with the expectation that a future change in the value of the hedging instrument will offset the change in the value of the asset (or liability).

Modified Equity

The method by which government business enterprises are accounted for in the Summary financial statements. The Government’s investment, which is originally recorded at cost, is adjusted annually to include the net earnings/losses and other net equity changes of the enterprise/partnership without adjustment to conform with the accounting policies described in note 1 of the Summary financial statements. Inter-organizational balances and transactions are disclosed but not eliminated.

Net Debt

One of the two measures of a government’s financial position (see accumulated surplus/deficit). Net debt is calculated as the difference between financial assets and liabilities.

Government of Saskatchewan – 2012-13 Public Accounts 133

Supplementary Information

Glossary of Terms (continued)

Non-financial Asset

An asset that is acquired, constructed or developed and does not normally provide resources to discharge existing liabilities.

Other Comprehensive Income/Loss (OCI)

OCI includes certain unrealized gains and losses of government business enterprises that are excluded from net income but recognized as a change in net debt and accumulated surplus/deficit during the period.

Pension Liability

An actuarial estimate of discounted future payments to be made to retirees under government pension plans, net of plan assets.

Premium/Discount

The amount by which the selling price of a security exceeds/is less than its par or face value.

Segment

A distinguishable activity or group of activities of a government for which it is appropriate to separately report financial information to help users of the financial statements identify the resources allocated to support the major activities of a government.

Summary Financial Statements (SFS)

The statements prepared to account for the full nature and extent of the financial activities of the Government. The SFS includes the financial activities of organizations controlled by the Government. These organizations are segregated into two classifications, government service organizations and government business enterprises, and are collectively referred to as the government reporting entity. Trusts administered by the Government are excluded from the government reporting entity.

Tangible Capital Asset

An asset with physical substance held by the Government that has an economic life extending beyond a year, is to be used on a continuing basis and is not for sale in the ordinary course of operations.

Transfer

A transfer of money from a government to an individual, an organization or another government for which the government making the transfer does not: receive any goods or services directly in return, as would occur in a purchase/sale transaction; expect to be repaid in the future, as would be expected in a loan; or expect a financial return, as would be

expected in an investment. Major types of transfers include entitlements, transfers under shared cost agreements and grants.

134 Government of Saskatchewan – 2012-13 Public Accounts

Saskatchewan Province Of 18-K/AAnnual report (foreign governments) (amended)