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Home My WebLink AboutAGENDA BACKUP 05-24-84 Central Contra Costa Sanitary District BOARD OF DIRECTORS NO. I VIA: ROGER J. DOLAN POSITION PAPER General Manager-Chief Engineer DATE May 24, 1984 TYPE OF ACTION SUBJECT RECEIVE 1984-1985 OPERATIONS AND MAINTENANCE BUDGET FOR REVI EW BUDGET REVIEW SUBMITTED BY Walter N. Funasaki. Finance Officer INITIATING DEPT./DIV. Administrative Deoartment ISSUE: The 1984-1985 Operations and Maintenance (0 & M) Budget is being submitted for review at the May 31, 1984 Board Meeting, and is scheduled for approval at the June 7, 1984 Board Meeting. BACKGROUND: THE 1984-1985 0 & M Budget expenses total $17,725,477 which is higher than the 1983-1984 projected actual expenses of $15,967,346 by $1,758,131, or 11.0 percent, and higher than 1983-1984 budgeted expenses of $16,335,184 by $1,390,293, or 8.5 percent. Explanations of departmental expense increases, or decreases, between 1984-1985 budgeted expenses and 1983-1984 projected actual expenses are provided within the attached budget document following each departmental expense summary. The 1984-1985 0 & M Budget revenues of $17,238,614 are composed of Environmental Qua 1 i ty Charge (EQC) revenues of $13,434,397, servi ce charges from the City of Concord of $3,250,000 and other revenues of $554,217. The budgeted EQC revenues are based on the existing $124 rate and projected increases in residential connections and increased usage volumes for commercial and industrial users during 1984-1985. The 1984-1985 budgeted revenues exceed 1983-1984 projected actual revenues of $16,816,798 by $421,816, or 2.5 percent. The following budgeting changes are reflected in the 1984-1985 0 & M Budget: o Contingency Account - A District contingency expense account of $300,000, representing 1.7 percent of budgeted expenses, is included in the Administrative Department budget. The procedures for controlling and administering the transfer of funds from the contingency account to other departments' expense account budgets are described in Attachment A, which is a document previously submitted to the Board of Directors with the District1s six month budget review. of 1983-1984 0 & M operations. The contingency account provides for salary and wage increases which may be authorized after expiration of the third year of the present agreements on May 1, 1985, major claims expenses resulting from sewer overflows, 1 ands 1 i des and other unforeseen damage c 1 aims, unanticipated utility rate increases, and higher than budgeted ash disposal expense, if ash is determined to be a hazardous material. o Compensated Absences Expense - Compensated absences are required to be recorded by public agencies beginning in the 1983-1984 fiscal year. The liability for accrued vacation and sick leave as of the beginning of the REVIEWED AND RECOMMENDED FOR BOARD ACTION INITIATING DEPT./DIV. GEN. MGR./CHIEF ENG. WNF PM RJD 1983-1984 fiscal year will be recorded as an adjustment of prior years as a charge against the retained earnings account. The increment, or reduct i on, in the 1 i abi 1 i ty account in each succeedi ng year wi 11 be recorded within an expense account titled Accrued Compensated Absences Expense; the projected actual amount for 1983-1984 and the budgeted amount for 1984-1985 are $242,000 and $228,000, respecti vely. Attachment B, which was also included in the six month review of 1983- 1984 0 & M expenses submitted to the Board of Directors on February 2, 1984, describes the compensated absences expense. A summary of actual, projected actual and budgeted expenses, revenues and reserves for the six fiscal years 1979-1980 through 1984-1985 is shown on Attachment C, with a presentation of EQC rates and EQC equivalent units for each fiscal year. Attachment D is a line chart which shows the major expense categories of labor, chemicals and utilities in relation to total budgeted expenses for each of the six fiscal years. Any revisions to the 1984-1985 0 & M Budget which may be determined at the May 31, 1984 Board Meeting will be incorporated in the budget to be submitted for approval at the June 7, 1984 Board Meeting in order that the following actions may be taken: o Approve the 1984-1985 0 & M Budget o Conduct a public hearing for the establishment of the 1984-1985 EQC rate. o Establish the 1984-1985 EQC rate. o Conduct a public hearing for the collection of the 1984-1985 EQC on the County tax rolls. RECOMMENDATION: Receive the 1984-1985 Operations and Maintenance Budget and provide District staff with comments and guidance for completion of the budget, and review estab 1 i shment of the 1984-1985 EQC rate and the 1 eve 1 of 0 & M reserves to be maintained. .EVlnED AND .ECDMMENDED I'D. BDAItD ACTIDN INITIATING DEPT./DIV. GEN. MGR.lCHIEF ENG. Attachment A o & M Contingency Budget Account It is proposed that an 0 & M contingency budget account procedure be instituted in the next fiscal year beginning July 1, 1984. The purpose of the contingency budget account is to provide a means of supplementing the budget of expense accounts which are extremely difficult to estimate, and thereby reduce a conservative bias in budgeting for these expenses; the Claims Expense account is an example of such an expense which is fortuitious and volatile. The contingency budget account is intended to be used for major, unforeseen expenses which could not reasonably have been anticipated during preparation of the budget, and is not provided for routine overexpenditures in expense accounts. The contingency budget account would be established and controlled by the Board of Directors. The procedure for establishing the contingency budget account and authorizing transfers of amounts from the account is described below: 1. A lump sum amount would be established by Board authorization within a contingency budget account in the Administrative Department's 0 & M Budget for each fiscal year. 2. Department Managers may request transfers of amounts from the contingency budget accounts to augment expense account budget balances where the amount to be transferred is at least $1,000, and justification for the augmentation is provided to either the General Manager-Chief Engineer or the Board of Directors based on the amount of the requested augmentation: o Requests of $5,000 and under may be approved by the General Manager-Chief Engineer o Requests greater than $5,000 require approval by the Board of Directors 3. When approved, Accounting will complete the transfer by reducing the contingency budget account balance and increasing the budget for the expense account to be augmented. 4. The budgeted amount of the expense account augmented will be footnoted in the financial statements in the month in which the transfer occurs. 5. Accounting will prepare a monthly report of the transactions within the contin- gency budget account showing the beginning account balance, details of each transfer made, and the resulting remaining balance in the contingency account. j:\ttachment B Accounting for Compensated Absences Accounting and financial reporting for state and local governments is guided by principles established by the National Council on Governmental Accounting (NCGA). NCGA Statement 1, which provides guidance for accounting and financial reporting for accumulated unused vacation and sick pay, was adopted on May 27, 1982 and is effective for fiscal years beginning after December 31, 1982. Although the recording of the liability for these compensated absences is required as of the 1983-1984 fiscal year, a calculation of the liability at the end of the 1982-1983 fiscal year was necessary to determine the cumulative liability which will be reported as a restatement of the Retained Earnings balance of the Running Expense Fund. The increase or decrease in the cumulative liability as of June 30, 1984 will be recorded as a charge or credit to 1983-1984 operations. As of June 30, 1983, the liability for compensated absences consisted of $519,000 for unused vacation and $1,044,000 for accumulated sick pay for a total of $1,563,000. The Running Expense Retained Earnings as of June 30, 1983 of $2,565,000 is sufficient to absorb the prior year charge of $1,563,000. 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May 7, 1 984 TO: FROM: PARKE BONEYSTEELE, NELS CARLSON, JOHN CLAUSEN, WILLIAM DALTON, ALAN STANLEY ~ ROGER DOLA~LT GOALS AND OBJECTIVES - 1984-1985 SUBJECT: Attached for your information please find the District-wide goals and objectives packets for the period beginning April 1, 1984. I will be covering this matter in my report at the May 17, 1984 Board meeting. If you have questions, please bring them up at that time. RD/lp