HomeMy WebLinkAbout08.a. Receive the 2011-12 O&M Budget Review for the six months ended 12-31-11Central Contra Costa Sanitary District �.
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BOARD OF DIRECTORS a"
POSITION PAPER
Type of Action: RECEIVE BUDGET REVIEW
Subject: RECEIVE THE 2011 -2012 OPERATIONS AND MAINTENANCE BUDGET
REVIEW FOR THE SIX MONTHS ENDED DECEMBER 31, 2011
Submitted By: Initiating Dept. /Div.:
Debbie Ratcliff, Controller Administrative Department
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
D. Ratcliff . M raves Ann Farrell James tW. Kelly,
General Manager
ISSUE: A report of the results of a comparative review of actual and budgeted
Operations and Maintenance (O &M) revenues and expenses for the first six months of
the 2011 -2012 fiscal year as well as full year projections are provided in this Position
Paper. In addition, any significant variances from budget for the first six months and
any significant full year projected variances are discussed.
RECOMMENDATION: Receive the 2011 -2012 Operations and Maintenance Budget
review for the six months ended December 31, 2011 and full fiscal year projections.
FINANCIAL IMPACTS:
Six -Month Review: For the first six months ended December 31, 2011, total O &M
revenues are $27,831,933 compared to a budget of $27,728,232 for a positive variance
of $103,701 or 0.4 %. Total O &M expenses for the first six months are $33,520,030
compared to a budget of $35,679,646 for a positive variance of $2,159,616 or 6.1 %.
The six -month status reflects the financial results at a certain point in time, as of
December 31, 2011, and looks favorable.
Annualized Proiections: The projected O &M revenues for the full year are $62,188,554
compared to a budget of $62,198,705 for a negative variance of $10,151 or - 0.02 %.
Total projected O &M expenses for the full year are $64,773,102 compared to a budget
of $66,540,660 for a favorable variance of $1,767,558 or 2.66 %. This favorable
variance is due to savings of $1,258,263 for labor and benefits, $225,000 for chemicals,
$91,115 for utilities, $93,926 for materials & supplies and $99,254 for all other expense
categories
ALTERNATIVES /CONSIDERATIONS: None
N:\ADMIN \FINANCE \6mopp 2012.DOC Page 1 of 3
POSITION PAPER
Board Meeting Date: February 16, 2012
Subject RECEIVE THE 2011 -2012 OPERATIONS AND MAINTENANCE BUDGET
REVIEW FOR THE SIX MONTHS ENDED DECEMBER 31, 2011
BACKGROUND:
Six -Month Review: The table on Attachment A compares actual O &M revenue and
expense for the first six months of the fiscal year to the six -month budget. Significant
variance explanations are included on the table.
Annualized Projections: Attachment B compares full year O &M projections to budget.
Anticipated significant projected variances from the annual 2011 -2012 O &M Revenue
and Expense budget are listed below:
Revenue:
Total O &M Revenue is projected to be $10,151 or 0.02% lower than
budgeted and essentially is on target.
Expense:
Salaries and Benefits: Salaries and Wages expense is projected to be
$962,415 under budget due to vacancies as a result of the number of
retirements exceeding the number of recruitments. Capitalized overhead
credit to O &M is $762,981 less than budget due to vacancies and capital
projects staff being assigned for non - capital work. Employee benefits
expense is expected to be under budget by $1,058,829 due to a large
number of potential retirements in the spring of 2012 leaving more vacant
positions and hiring lags; accrued compensated absence expense is
anticipated to decrease due to fewer Tier One employees with higher
accrual earnings than previous years.
Chemicals: Chemicals expense is projected to be $225,000 under
budget. A mild summer and fall weather conditions have reduced the use
of chemicals for the pumping stations. A favorable rebid of the
hypochlorite contract after the 2011 -2012 fiscal year budget was finalized
will result in savings. Plant polymer consumption is lower than expected
due to continued high quality effluent, resulting in additional anticipated
savings.
Hauling & Disposal: Hauling & Disposal expense is expected to be
$65,000 under budget. Ash disposal cost is $12 per ton less than
budgeted and Capital Projects paid for disposal during testing of the new
sludge storage facility.
Utilities: Utilities expense is projected to be $91,115 under budget due to
lower than anticipated prices of natural and landfill gas. Additionally,
landfill gas usage is expected to be lower than budgeted.
NAADMIN \FINANCE \6mopp 2012.DOC page 2 of 3
POSITION PAPER
Board Meeting Date: February 16, 2012
subject. RECEIVE THE 2011 -2012 OPERATIONS AND MAINTENANCE BUDGET
REVIEW FOR THE SIX MONTHS ENDED DECEMBER 31, 2011
Outside Services: Outside Services expense is projected to be $84,250
over budget resulting from continued usage of temporary services for
Administration (records retention) and CSO (filling in for vacant positions
and employees on medical leave).
Professional & Legal: Professional and Legal expense is projected to be
$47,000 over budget due to higher expenses for labor negotiations and
NPDES permit and actuarial work by John Bartel.
Materials & Supplies: Materials & Supplies expense is projected to be
$93,926 under budget due to fewer supplies ordered than was budgeted.
Operating fuel expense is expected to be $40,000 under budget as we do
not anticipate a purchase of any additional operating fuel this fiscal year.
Other Expense Categories: Other Expenses are projected to be $99,487
under budget. Technical training, conference, and meetings expense is
projected to be lower by postponing or not attending some of the
budgeted events. Savings is also anticipated from less equipment rental
expense for CSO than was budgeted
The Revenue over Expense budgeted for the 2011 -2012 fiscal year yielded a
decrease to the O &M Fund balance of $4,341,955. Although revenue is
projected to be slightly lower than budget, a reduction of $1,767,558 in expenses
will result in a full year projection that the O &M Fund balance will decrease by
$2,584,548 for a positive variance of $1,757,407.
RECOMMENDED BOARD ACTION: Receive the 2011 -2012 Operations and
Maintenance Budget Review for the six months ended December 31, 2011 and
projections for the full fiscal year.
NAADMINTINANCE %mopp 2012.DOC page 3 of 3
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1 O 1 F°-
ATTACHMENT B
Central Contra Costa Sanitary District
Operations and Maintenance
Revenue & Expense Account Summary
Projected for the Year Ending June 30, 2012
Variance
Variance
Projected
Budget
Amount
%
O &M REVENUES:
Sewer Service Charge
49,094,000
49,484,600
(390,600)
-0.79%
City of Concord
9,960,554
9,852,000
108,554
1.10%
Other
3,134,000
2,862,105
271,895
9.50%
Total Revenues
62,188,554
62,198,705
(10,151)
-0.02%
O &M EXPENSES:
Salaries & Wages
23,803,234
24,765,649
962,415
3.89%
Capitalized Overhead
(3,015,088)
(3,778,069)
(762,981)
20.19%
Employee Benefits
25,225,200
26,284,029
1,058,829
4.03%
Directors Fees & Expenses
190,000
232,017
42,017
18.11%
Chemicals
1,546,000
1,771,000
225,000
12.70%
Utilities
4,451,485
4,542,600
91,115
2.01%
Repairs & Maintenance
3,504,761
3,528,761
24,000
0.68%
Hauling & Disposal
1,023,250
1,088,250
65,000
5.97%
Professional & Legal
587,660
540,660
(47,000)
-8.69%
Outside Services
3,001,950
2,917,700
(84,250)
-2.89%
Self- Insurance
850,000
850,000
0
0.00%
Materials & Supplies
1,831,819
1,925,745
93,926
4.88%
Other Expenses
1,772,831
1,872,318
99,487
5.31%
Total Expenses
64,773,102
66,540,660
1,767,558
2.66%
To /(From) Reserves
(2,584,548)
(4,341,955)
1,757,407