The Region of York and Its Local Municipalities Complete their Waste System Full Cost Accounting Study (CIF Project #975)

Ask any program manager about their operating budget and they can speak to it with confidence but ask them what portion of the Human Resources or central customer service costs are associated with waste management and it becomes a different discussion.

Yet if producers end up hiring municipalities to provide Blue Box services across Ontario, municipalities need to ensure these ‘soft costs’ are covered and understood. Full cost accounting is a process that can be deployed for this purpose. Simply put, cost accounting provides a comprehensive financial understanding of the waste management system and allows a municipality to break out specific components such as its Blue Box program. Even without transition to full producer responsibility, this type of information can help a program manager to:

  • York Region’s East Gwillimbury Blue Box and MHSW depot (Source:

    Know costs and sources of revenue to ensure sustainable financing of their solid waste management system;

  • Identify opportunities to reduce solid waste management system costs; and
  • Evaluate producer funding proposals as they may emerge.

Cost accounting experience in York Region

In 2013, the Regional Municipality of York (Region) and its nine local municipal partners developed an integrated waste management master plan, known as the SM4RT Living Plan (SM4RT). SM4RT sought to address the operating challenges the Region’s solid waste management services may face over the next 25 to 40 years. Since financing was identified as one of these challenges, SM4RT called for an initiative to explore alternative financing strategies that could be implemented to fund solid waste management operations.

In addition, with the impending transition of the Blue Box program and other diversion programs under the Waste-Free Ontario Act (WFOA), a better understanding of costs for designated materials was necessary. This understanding of the current costs of the programs and operations is critical to support future discussions and policies as the Region transitions.

To address the above two challenges, and with CIF support (Project #975), the Region and its local municipal partners completed a full cost accounting exercise. The Region retained a financial accounting consultant to identify costs and revenues associated with solid waste management activities of the municipalities and complete the accounting exercise.

Study approach and scope

The Region jointly operates the waste management system with local municipal partners who have varying responsibilities (e.g. transfer, processing, collection, P&E etc.). This diversity of responsibilities contributed to the complexity of collecting data. The table below lays out the types of costs/revenues considered in the study.

Cost TypeDefinition
Waste activity and contractsCosts directly attributable to a specific waste stream (e.g. collection, processing costs, depot operation costs)
Waste management overheadAdministrative costs within the waste management department (e.g. waste staff time & municipal waste collection calendar)
Municipal overheadE.g. IT, legal, HR, finance, etc. Portion allocated to waste department for services provided
DepreciationAnnual allocation for use of capital assets associated with waste management services (e.g. materials recovery facility and depots)
RevenueProducer funding (e.g. 50% blue box, MHSW, WEEE and Tires), marketing of recyclables, garbage tag sales, depot fees, blue box and green bin sales

The consultant collected historical data on costs, revenues, tonnages and qualitative information through the use of a data collection template and meetings with finance and waste staff at the Regional and local municipal level.

Allocating overhead costs was a surprising challenge

Consistent allocation of overhead costs (admin and salaries for staff and contractors) was one of the biggest challenges due to different approaches to tracking overhead and the availability of data among all municipalities. With a basic calculation and allocation among waste streams, overhead costs were allocated to single family vs. non-single family households based on the respective percentages of waste activity and contract costs.

Next steps

Baseline data from this study will help estimate impacts of potential changes in producer-funded waste diversion programs as municipalities transition to FPR.

For example, the cost allocation for depot staffing and overhead costs by waste stream provides a benchmark to evaluate producer-funding proposals for depot-based programs such as MHSW, WEEE and tires.

Breakdowns of curbside program costs by stream and cost type (e.g. contract costs, staffing, promotion, customer service, administration etc.) provides a clearer picture of the full cost to manage each stream. The Region and local municipalities can use this data to estimate impacts from different scenarios for transition to inform decision-making.

This study is also the first step in exploring alternative financing options for the Region’s integrated waste management system. As part of a five-year review and update of SM4RT, the data will be used to estimate cost and evaluate return on investment for new and existing programs. The recommendations from the update will determine whether the Region pursues additional work on alternative funding models.

Lessons learned

Important lessons from the York Region study:

  • It’s important to document data sources and assumptions throughout the process to ensure consistency in the event of staff turnover.
  • Decisions about assumptions, allocation methods and scope should be made collaboratively at the outset.
  • Finance and waste staff should be involved to ensure sound decision making about cost allocation between streams, quantifying relevant overhead costs, documenting the process and interpreting outcomes.

Is a cost allocation exercise right for your program?

It’s well worth considering, especially during the lull before FPR fully comes into force. Programs have time to gather the info and be ready to analyze opportunities and challenges that may arise in the future. With waste services, there are so many moving parts, and Julie Hordowick, Program Manager at the Region says “through this fulsome study, we were able to develop a better understanding of indirect costs such as customer service, legal, IT and finance for each of our curbside and depot-based programs, as well as capturing a baseline of direct costs. This information will help to inform decisions on continuous improvement of existing programs and transition to new programs under the Waste-free Ontario Act.”

For more information contact CIF staff or Julie Hordowick, York Region.