Schedule 5.3 - Deferred Capital Contributions Continuity

Deferred capital contributions are the liability arising from a capital transfer for the purpose of acquiring or developing a tangible capital asset for use in providing services for a defined number of years (as covered in Section 3410, PSA Handbook).

This schedule is used to track school boards’ deferred capital contributions (DCC). It shows how DCC relates to TCA. DCC is calculated as the portion of the depreciable TCA balance that has been supported by capital contributions. To arrive at DCC (item 2.3), the unsupported capital spending (items 2.1.3 and 2.2) is deducted from the depreciable TCA balance (item 2.0).

Depreciable TCA amounts at item 2.0 come from Schedule 3C (TCA Continuity). These amounts exclude the value of land, as it is not depreciable, and assets financed by Public Private Partnerships (P3). Per PS-3410, revenues received for the purchase of non-depreciable TCA would not be recorded in DCC.

Row Descriptions:

Item 2.0: Tangible Capital Assets Less Land and P3 (from Schedule 3C)

This row is calculated as the net book value of depreciable TCA from Schedule 3C (item 6.2, TCA - Non Land), excluding amounts related to Public Private Partnerships (P3) (item 7, TCA - Non-Land re: Public Private Partnerships (P3)).

Items 2.1.1 to 2.2: Unsupported Capital Spending

The unsupported capital spending is divided into two categories: pre-August 31, 2010 (item 2.1.3) and post-August 31, 2010 (item 2.2). The unsupported spending pre-August 31, 2010 is further split between unsupported spending pre-August 31, 2010 due to sinking fund interest to be earned (item 2.1.1) and other unsupported capital spending pre-August 31, 2010 (item 2.1.2).

Item 2.3: Total Deferred Capital Contributions

Item 2.3 is the total deferred capital contributions balance, calculated as item 2.0 less items 2.1.3 and 2.2.

Items 2.4 and 2.5: DCC related / not related to Third Parties

The purpose of items 2.4 and 2.5 is to determine the portion of the DCC balance at item 2.3 that relates to non-government reporting entity (GRE) (item 2.4) and GRE amounts (item 2.5).

• The government reporting entity relates to the Province of Ontario, and all entities that are consolidated within. For ministry consolidation purposes, certain GRE amounts must be eliminated.

• Non-GRE amounts are capital contributions from the federal government, school generated funds for capital, board level donations for capital (from Schedule 5.1, items 13.6, 13.8, and 13.9, respectively), and other third-party amounts. Other third-party amounts are those that the school board has specified on Schedule 5.1 at items 13.50 to 13.59 and COVID-19 Resilience Infrastructure Stream (CVRIS 80%) on Schedule 3A at item 3.2, column 8.1. The amount at item 2.5 (portion of DCC related to Provincial Legislative Grants) is calculated as the DCC amount (item 2.3) less the non-GRE contributions (item 2.4). Post-September 1, 2010, school boards must track DCC additions, disposals, and amortization on an asset-by-asset basis, so the information will be available. This includes the tracking of non-GRE capital contributions. See Table 2: Sample Sub-Ledger of Post-August 31, 2010 Capital Spending for an example of the information school boards should be collecting.

Items 3.0 and 3.1: Average Remaining Service Life

The average remaining service life (RSL) values on these rows are used in the calculation of amortization of unsupported pre-August 31, 2010 spending (item 2.1.3). If an amount is entered at item 3.1 as the adjusted RSL, this value is used in the calculation; if not, item 3.0 is used.

• The average RSL (in years) of the pre-August 2010 tangible capital assets is automatically calculated (at item 3.0). At August 31, 2010, the amount was the net book value as of August 31, 2010 for assets in service excluding land, construction in progress (CIP) and pre-acquisition costs, divided by the corresponding amortization in 2009-10.The value loaded to item 3.0 is equal to the value from the 2023-24 ministry-reviewed Financial Statements, item 3.0, minus two years.

• For some school boards, this automatically calculated number may not be representative of the average RSL of the pre-August 2010 assets on which there is unsupported spending. If this is the case, enter an amount for the adjusted average RSL relating to unsupported pre-August 2010 capital spending (at item 3.1). This adjusted amount should only be used when school boards are able to substantiate the assets that relate to the unsupported spending. The 2025-26 adjusted average RSL is usually calculated as the 2024-25 adjusted average RSL per the Revised Estimates less one year. However, if there is a disposal of unsupported assets that changed the RSL of the remaining assets, please report the proper RSL rather than following the above calculation.

Column Descriptions:

Column 1: Balance at September 1

The column 1 input cells have been preloaded from the board-submitted 2024-25 Revised Estimates closing balances, and can be adjusted if necessary.

At item 2.1.3 the pre-August 31, 2010 unsupported capital spending as at September 1, 2025 is shown. The portion that relates to sinking fund interest to be earned should be reported at item 2.1.1. The balance at item 2.1.2 (other unsupported capital spending pre-August 31, 2010) is calculated based on the amounts entered at item 2.1.3 and 2.1.1. In column 1, item 2.2, school boards should enter their post-August 31, 2010 unsupported capital spending as at September 1, 2025.

Column 2: Additions

In column 2, the non-land TCA additions at item 2.0, less any net transfers between asset class from non-land to land, are loaded from Schedule 3C. The current year unsupported capital spending is automatically loaded at item 2.2; this represents the portion of the 2025-26 TCA additions that have not been supported with capital contributions. This amount is loaded from Schedule 3A, item 5.2, column 20, and represents the school board’s total non-land capital shortfall in the year. In other words, if the capital additions exceed the capital contributions, there will be a capital shortfall. This means that the additions to DCC (column 2, item 2.3) will be less than the additions to TCA (column 2, item 2.0) by the capital shortfall (column 2, item 2.2).

Column 3: Prior Eligible Cap Exp

Column 3 is where the DCC is increased due to a retroactive capital grant and /or recognition of deferred revenue related to prior eligible capital expenditures. The total at column 3, item 2.3 is loaded as the sum of Schedule 5.1 total transfer to DCC related to prior year expenditures (Schedule 5.1, column 4, item 14) and Schedule 3.2 additional approved prior years’ non-land capital expenditures (Schedule 3.2, total in columns 8.2 and 8.3). The rationale for this calculation is explained under Schedule 5.1. Because this is an addition to the DCC related to prior years’ spending, it is reducing the unsupported capital spending opening balance; school boards should therefore enter a negative amount at item 2.2, column 3 to the extent that this relates to unsupported spending post-August 31, 2010. Any remaining amount will show as a negative value at item 2.1.3, reducing the unsupported spending pre-August 31, 2010. School boards should further distribute any portion of the amount at item 2.1.1 that relates to sinking fund interest to be earned.

Column 3.1: Prior Years Capital Grant adjustments

Column 3.1 is for reporting any previous years’ capital grant adjustments received in the current school year. For example, a 2024-25 regulation amendment made subsequent to the 2024-25 Financial Statements on a capital grant approval table will impact the grant entitlement in 2024-25 but the payment adjustment will be made in a subsequent school year. Therefore, an adjustment related to a prior year entitlement would be required to amend the DCC balance accordingly. Please note that for amounts paid through a capital grant, the accounts receivable in Schedule 5.2 (column 3) will also be affected in the same way.

Column 4: Subtotal before disposals and amortization

Column 4 calculates the sum of columns 1 to 3.1.

Column 5: Disposals and Transfer to Financial Assets

Column 5 is used to enter the disposals of DCC in the year. The disposals and transfers to financial assets of depreciable TCA are automatically loaded to item 2.0 from Schedule 3C.

Generally, it is expected that most assets that are disposed of will have an equal amount disposed from TCA and from DCC. This implies that the asset that was disposed was fully supported by capital contributions. In other words, there was no unsupported capital spending on that particular asset. A school board may, however, dispose of an asset where this is not the case. For example, a school board could dispose of a building that had no capital contributions, such as a daycare centre which was supported by daycare operator revenues (i.e. not capital contributions). In this case, the net book value (NBV) of the asset would be shown at column 5, item 2.0, and $0 would be shown as the amount disposed from DCC at column 5, item 2.3. To accomplish this on the form, the school board will need to enter the NBV of the TCA disposed as a negative amount at item 2.1.1, 2.1.2 or 2.2 (depending on which line the related unsupported spending had been reported previously). This is because now that the asset has been disposed, the unsupported portion of this asset has also been disposed; therefore, it is removed from the DCC schedule.

Column 6: Amortization

Column 6 is used to calculate the amortization of DCC that is recorded as revenue on Schedule 9, item 9.1.

• Rather than calculating the amortization of the DCC directly, this schedule calculates the amortization of the unsupported capital spending pre-August 31, 2010 (column 6, item 2.1.3), which along with the board-entered amortization of unsupported capital spending post-August 31, 2010 (column 6, item 2.2), is deducted from TCA amortization (column 6, item 2.0).

• The amortization amount at item 2.1.3 is calculated by dividing the amounts in col. 4 + col. 5 by the average remaining service life at item 3.0 (or item 3.1 if an adjusted amount is entered). Enter the portion of the amortization that relates to sinking fund interest to be earned at item 2.1.1. The amortization balance at item 2.1.2 (other unsupported capital spending pre-August 31, 2010) is calculated based on the amounts at items 2.1.3 and 2.1.1. Enter the amortization for unsupported capital spending post-August 31, 2010, at item 2.2, in column 6. The amortization amounts are then deducted from the TCA amortization (column 6, item 2.0 - loaded from Schedule 3C) to arrive at the DCC amortization (column 6, item 2.3).

• As explained in relationship to columns 1, 2 and 3, the unsupported capital spending is divided into two categories: pre-August 31, 2010 (item 2.1.3) and post-August 31, 2010 (item 2.2). The reason for this is that the amortization of DCC related to balances accumulated up to August 31, 2010, will be automatically calculated. Any new amounts after August 31, 2010, will be tracked by the board.

Amortization - pre-August 31, 2010

The amortization at column 6, items 2.1.2 and 2.1.3 is calculated as:

• Item 2.1.3: (sum of item 2.1.3, column 4 and item 2.1.3, column 5) ÷ item 3.0 or item 3.1 (if a value is entered at item 3.1)

• Item 2.1.2: Item 2.1.3 – item 2.1.1

The amortization of the unsupported capital spending at item 2.1.3 is calculated as the unsupported pre-August 2010 capital spending on depreciable assets, divided by the average remaining service life (RSL) of these assets.

If any pre-August 2010 unsupported spending relates to sinking fund interest to be earned, then the calculated value at item 2.1.3 should be allocated between items 2.1.1 and 2.1.2 by entering a value at item 2.1.1, column 6 (amortization of sinking fund interest to be earned). The remaining amortization, if any, will automatically be calculated at item 2.1.2.

Amortization - post-August 31, 2010

The amortization at column 6, item 2.2 is an input cell. To calculate this amount, school boards will keep a sub-ledger for capital spending post-August 31, 2010. Starting September 1, 2010, school boards are required to track DCC additions, disposals, and amortization on an asset by asset basis. This includes the tracking of non-government reporting entity (GRE) capital contributions. To the extent that information is available pre-September 1, 2010 for these amounts, school boards may track this information on an asset-by-asset basis. The unsupported spending on assets will be divided by the expected service life to determine the yearly amortization amount. The overspending amount will correspond to the non-land capital shortfall that is recorded on Schedule 3A, item 5.2, column 20. For ministry consolidation purposes, school boards will track the portion of the capital contribution that came from outside of the government reporting entity (described in Note 1 in the table below). A sample sub-ledger is shown in Table 2: Sample Sub-Ledger of Post-August 31, 2010 Capital Spending.

Table 2: Sample Sub-Ledger of Post-August 31, 2010 Capital Spending

Column 7: Balance at August 31

This closing balance column is the sum of columns 4, 5, and 6.

Relationship to other schedules:

• The total on Schedule 5.3, column 3, item 2.3 is loaded from the amount at Schedule 5.1,column 4, item 14 + Schedule 3.2 additional approved prior years’ non-land capital expenditures (all pages of Schedule 3.2, columns 8.2 + 8.3).

• The total on Schedule 5.3, column 2, item 2.2 is loaded from the total non-land capital shortfall from Schedule 3A, item 5.2, column 20.

• The total amortization of DCC into revenue at item 2.3, column 6 is loaded to Schedule 9, item 9.1.

• The amortization of third-party DCC into revenue (item 2.4, column 6) is loaded to Schedule 1.1, item 1.9.2. The amortization of DCC related to provincial legislative grants(item 2.5, column 6) is loaded to Schedule 1.1, item 1.9.1.