Authority Sets 2022 Blue Box Steward Funding Obligation using new simplified methodology
The Resource Productivity and Recovery Authority has set the 2022 Blue Box Steward Funding Obligation at $171.9 million using a new simplified methodology that will ensure higher payouts to municipalities, First Nations and recycling associations participating in the Blue Box Program; reduce stewards’ administrative costs; and eliminate the complexities and contention associated with the previous methodology.
The Steward Funding Obligation is the total amount that stewards must pay to participating communities for operating the Blue Box Program. The 2022 Steward Funding Obligation was set using information obtained from the 2020 Datacall, which surveys municipalities, First Nation communities and recycling associations on costs and amounts of materials collected through the Blue Box Program.
The new simplified methodology sets the Steward Obligation at 50% of reported net costs and eliminates the cost-containment and non-obligated formulas. The calculation of the Net Cost to determine the Steward Obligation now only has three inputs:
- The Gross Cost incurred by participating communities as reported in the 2020 Datacall
- The Prior Year Adjustments (PYAs), limited to two prior years, and
- The Three-Year Average Revenue
The simplified methodology is based on a joint recommendation made to RPRA by the members of the Municipal-Industry Partnership Committee (MIPC) Transition Sub-Committee, which is comprised of representatives of the Association of Municipalities in Ontario, the City of Toronto, and Stewardship Ontario. The new methodology will be used starting in 2022 and through to the end of the Blue Box Program transition period in 2025.
The new approach agreed to in the joint recommendation will ensure municipalities, First Nations and recycling associations receive 50% of reported net costs compared to the historic average of 48% and allow stewards to realize administrative savings. All parties will benefit from the elimination of a complicated and adversarial process that will allow them to focus on transitioning the Blue Box Program to the new producer responsibility regulatory framework.
Separately, a one-time adjustment was also applied to the 2022 Steward Obligation due to a past change in the 2006 Datacall that undercalculated eligible municipal amortization expenses for capital assets.
| 2022 Steward Funding Obligation (2020 data year) | |
|---|---|
| Total Gross Cost | $403,004,112 |
| Three-year Average Revenue | -$61,029,715 |
| Prior Year Adjustments | $1,102,020 |
| Total Net Cost | $343,076,418 |
| 50% of Net Cost | $171,538,209 |
| Amortization Adjustment* | $445,401 |
| 2022 Steward Funding Obligation | $171,983,609 |
| *Adjustment only applies to the programs: Peel; Barrie; Bluewater Recycling Association; Bruce Area Solid Waste Recycling; Kingston; Kenora and Southgate. | |
The 2022 Municipal Funding Allocation Model (MFAM) has also been posted on the Authority’s website.
Following consultation with stakeholders earlier this summer, the Authority revised the 2022 MFAM by adopting a new simplified methodology. The MFAM now uses a fixed percentage approach that gives all municipalities, First Nation communities, and recycling associations the same percent funding of their reported net cost. The previous approach used a complicated methodology based on weighted percentages of calculations for total marketed tonnes and Best Practice scores, which would have required extensive adjustments as municipalities transitioned out of the Blue Box Program starting in 2023. The simplified MFAM will continue to apply to subsequent funding years until the program fully transitions at the end of 2025.