HomeMy WebLinkAbout10.a. Receive Fiscal Year 2012-13 BudgetsCentral Contra Costa Sanitary District
' BOARD OF DIRECTORS
POSITION PAPER
Board Meeting Date: May 17, 2012
Subject: RECEIVE THE FISCAL YEAR 2012 -13 OPERATIONS & MAINTENANCE
BUDGET; RECEIVE THE FISCAL YEAR 2012 -13 DEBT SERVICE FUND BUDGET
Submitted By: Initiating Dept/Div.:
Thea Vassallo, Provisional Finance Administrative /Finance & Accounting
Manager
REVIEWED AND COMMENDED FOR BOARD ACTION:
Vassallo K. Alm Ann Farrell,
General Manager
ISSUE: The fiscal year (FY) 2012 -13 Operations & Maintenance (O &M) Budget and
Debt Service Fund Budget are being submitted for review at the May 17, 2012 Board
Meeting, and are scheduled for approval and adoption at the June 7, 2012 Board
Meeting. The budget document was provided to the Board under separate cover
dated May 3, 2012.
RECOMMENDATION: Review the FY 2012 -13 O &M Budget and Debt Service Fund
Budget and provide District staff with comments and guidance leading to the public
hearing, approval, and adoption of the Budgets at the June 7, 2012 Board Meeting.
FINANCIAL IMPACTS: The FY 2012 -13 O &M Budget was prepared using the $30
Sewer Service Charge (SSC) rate increase previously approved by the Board on
June 2, 2011. The $371 SSC in FY 2012 -13 is allocated as follows: O &M $344; and
Capital $27 per Residential Unit Equivalent (RUE). The FY 2012 -13 SSC O &M
allocation is $42 /RUE higher than in FY 2011 -12 which produces $6.9 million in
additional O &M SSC revenue. The FY 2012 -13 O &M Budget results in an increase of
$1.9 million to O &M reserves, and total O &M reserves are projected to be $6.8 million
at the end of FY 2011 -12.
ALTERNATIVES /CONSIDERATIONS: At the Board Workshop in February, different
SSC rate scenarios were considered that impact District revenues as well as the fiscal
year -end reserve balances. All scenario premises used the $30 rate increase approved
by the Board on June 2, 2011.
BACKGROUND: Staff has developed a 10 -year financial model for forecasting
revenues, expenses and fund balance. The model assists the District in setting and
projecting SSC rates. The model funds in the following order: Debt Service, O &M /Self-
Insurance and lastly, the Sewer Construction Fund. In April, 2011, the District
ratepayers received a Proposition 218 Notice of Proposed Increase in Annual SSC of
up to $30 for FY 2011 -12 for a total up to $341 per year effective July 1, 2011, and up
to an additional $30 increase for FY 2012 -13, effective July 1, 2012, for a total of up to
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2012 -13 PP. DOC
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POSITION PAPER
Board Meeting Date: May 17, 2012
subject. RECEIVE THE FISCAL YEAR 2012 -13 OPERATIONS & MAINTENANCE
BUDGET; RECEIVE THE FISCAL YEAR 2012 -13 DEBT SERVICE FUND BUDGET
$371 per year. On June 2, 2011 the Board approved both rate increases for $30 per
year. The FY 2012 -13 O &M Budget was prepared using the $30 Sewer Service Charge
(SSC) rate increase previously approved by the Board on June 2, 2011. The $371
SSC in FY 2012 -13 is allocated as follows: O &M $344; and Capital $27 per Residential
Unit Equivalent (RUE).
The FY 2012 -13 proposed budget includes the allocation of $8.3 million from the O &M
Fund towards the unfunded liability associated with GASB 45 post - employment benefits
and current year retiree premiums. This amount is based on the most recently
completed two -year actuarial study by Bartel Associates. The $8.3 million includes an
approximate payment of $4.5 million for retiree medical, dental and life insurance
premiums annually and $3.8 million to be deposited in a GASB 45 PARS investment
trust to fund future retiree benefit costs.
This position paper focuses on variances between projected FY 2011 -12 expenses and
the proposed FY 2012 -13 Budget. The position paper also notes any significant
variances between the FY 2011 -12 and FY 2012 -13 Budgets. Attachment I
summarizes the Debt Service Fund Budget. Attachment II summarizes the O &M
revenues, expenses, and reserve balances for seven years - FY 2006 -07 through FY
2012 -13 (five years of actual expenses plus FY 2011 -12 projected and FY 2012 -13
proposed budget numbers).
O &M Revenue: The following table compares Projected FY 2011 -12 to Budget FY
2012 -13 O &M Revenue:
Total District O &M Revenue for FY 2011 -12 is projected to be $62.3 million compared
to the FY 2012 -13 Budget amount of $70.2 million, resulting in an increase of $8.0
million, or 12.8 %. This is due to:
• The O &M SSC allocation increases from $302 to $344; the SSC allocation to the
Sewer Construction Fund decreases from $39 to $27. The increased O &M
allocation of $6.9 million results in an increase to O &M SSC revenue of $7.1
million compared to Projected FY 2011 -12.
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Projected
Budget
Increase /Decrease ( -)
FY 2011 -12
FY 2012 -13
Variance
Variance %
Sewer Service Charge
$ 49,129,000
$ 56,205,500
7,076,500
14.4%
City of Concord
10,000,000
10,800,000
800,000
8.0%
3,137,500
3,230,800
93,300
3.0%
IIlOther
Total
$ 62,266,500
$ 70,236,300
7,969,800
12.8%
Total District O &M Revenue for FY 2011 -12 is projected to be $62.3 million compared
to the FY 2012 -13 Budget amount of $70.2 million, resulting in an increase of $8.0
million, or 12.8 %. This is due to:
• The O &M SSC allocation increases from $302 to $344; the SSC allocation to the
Sewer Construction Fund decreases from $39 to $27. The increased O &M
allocation of $6.9 million results in an increase to O &M SSC revenue of $7.1
million compared to Projected FY 2011 -12.
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POSITION PAPER
Board Meeting Date: May 17, 2012
subject RECEIVE THE FISCAL YEAR 2012 -13 OPERATIONS & MAINTENANCE
BUDGET; RECEIVE THE FISCAL YEAR 2012 -13 DEBT SERVICE FUND BUDGET
• Concord primarily shares a flow portion of Treatment Plant and Source Control
expenses and is charged administrative overhead and a finance charge. City of
Concord revenue is expected to be $800,000, or 8.0 %, more than Projected FY
2011 -12, mainly due to higher treatment plant operating expenses in FY 2012 -13
and an increase in the administrative overhead rate compared to FY 2011 -12.
O &M Expense: The following table compares Projected FY 2011 -12 to Budget FY
2012 -13 O &M Expense:
Salaries
Benefits & Cap O/H Credit
Chemicals
Utilities
Repairs & Maintenance
Hauling & Disposal
Professional & Legal
Outside Services
Self- Insurance
Materials & Supplies
I All Other
� Ti otal
Projected
FY 2011 -12
$ 23,822,228
21,953,299
1,617,000
3,905,300
3,569,111
1,033,550
550,260
2,920,900
Budget
FY 2012 -13
23,891,546
25,123,748
1,581,000
3,906,150
3,644,811
1,039,800
590,900
3,248,970
Increase /Decrease ( -)
Variance
Variance %
69,318
0.3%
3,170,449
14.4%
(36,000)
-2.2%
850
0.0%
75,700
2.1%
6,250
0.6%
40,640
328,070
850,000
850,000 -
1,873,255
1,970,805 97,550
1,866,824
2,458,734 591,910
$ 63,961,727
68,306,464 4,344,737
7.4%
11.2%
0.0%
5.2%
31.7%
6.8%
Total District O &M Expenses are projected to be $64.0 million in FY 2011 -12 compared
to a FY 2012 -13 O &M budget of $68.3 million. This reflects a $4.3 million, or 6.8 %,
increase in expenses. Variances are discussed in detail below:
O &M Savings for FY 2011 -12: Total FY 2011 -12 expenses are projected to be under -
budget by $2.6 million largely due to staff vacancies and associated benefit cost
savings along with our ongoing commitment to achieve expense savings. This
increases the variance explanations when comparing the above Projected FY 2011 -12
to Budget 2012 -13.
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POSITION PAPER
Board Meeting Date: May 17, 2012
subject. RECEIVE THE FISCAL YEAR 2012 -13 OPERATIONS & MAINTENANCE
BUDGET; RECEIVE THE FISCAL YEAR 2012 -13 DEBT SERVICE FUND BUDGET
O &M Salaries: District O &M salaries are projected to be $23.8 million in FY 2011 -12
compared to a budget of $23.9 million in FY 2012 -13 resulting in an increase of
$69,000, or 0.3 %. This small increase is mainly due to normal merit increases and
personnel advancements for current employees, offset by the large number of open
positions being filled by new employees at a lower wage /step, and a 3% salary vacancy
factor reducing expenses by $690,000.
Benefits Including Capitalized Administrative Overhead Credit: District O &M benefits
including the capitalized administrative overhead credit for FY 2011 -12, are projected to
be $22.0 million compared to a budget of $25.1 million in FY 2012 -13 resulting in an
increase of $3.1 million, or 14.4 %. This is mainly due to the CCCERA rate increase of
13.79% applied to salaries.
The GASB 45 OPEB contributions for FY 2012 -13 remain the same as in FY 2011 -12,
$8.3 million. The amount budgeted for contribution to the PARS trust is $3.8 million, a
decrease of $740,000 from FY 2011 -12. The decrease is due to an increase in both
the number of retirees receiving post - employment benefits and a rise in health care
premiums.
Benefit rate assumptions are provided in the following bulleted list:
• Kaiser — 14.55% estimated rate increase for active and retired employees; rates
are not yet final
• HealthNet — 5.75% rate increase for actives employees; 6.62% weighted
average retiree rate increase
• CCCERA — 13.79% rate increase due to CCCERA de- pooling, five -year
smoothing of 2008 market losses and for normal operating costs
• Delta Dental — 5.9% rate decrease; this is the second year of a two -year contract
• Long -Term Disability (LTD) — No rate increase
• Employee Assistance Program (EAP) — 1.9% rate increase
• Workers' Compensation — estimated 4% rate increase; rates are not yet final
• Life Insurance — No rate increase
All Other O &M Expenses: The remaining O &M non -labor and benefit expenses total
$18.2 million in FY 2011 -12 compared to $19.3 million in FY 2012 -13 resulting in an
increase of $1.1 million, or 6.1 %. Expense category variance explanations are provided
in the budget document at a District and Department level. The two largest expense
category variances between Projected FY 2011 -12 and Budgeted FY 2012 -13 are
noted below:
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POSITION PAPER
Board Meeting Date: May 17, 2012
subject RECEIVE THE FISCAL YEAR 2012 -13 OPERATIONS & MAINTENANCE
BUDGET; RECEIVE THE FISCAL YEAR 2012 -13 DEBT SERVICE FUND BUDGET
• Outside Services are $328,070 higher in FY 2012 -13 than Projected FY 2011 -12,
largely due to additional studies associated with the new National Pollutant
Discharge Elimination System permit and new air regulations for the multiple
hearth furnace, and an increase in outside temporary staffing to cover vacancies.
• All Other expenses are $591,910 higher in Budgeted FY 2012 -13 compared to
Projected FY 2011 -12. This is largely due to election expenses of $350,000.
Any revisions to the FY 2012 -13 O &M Budget determined at the May 17, 2012 Board
Meeting will be incorporated in the Budget submitted for approval at the June 7, 2012
Board Meeting, at which the following actions are scheduled for Board consideration:
• Conduct a public hearing to receive comments on the FY 2012 -13 O &M Budget,
Self- Insurance Fund Budget, and Debt Service Fund Budget.
• Approve and adopt the FY 2012 -13 O &M Budget, Self- Insurance Fund Budget,
and Debt Service Fund Budget.
RECOMMENDED BOARD ACTION: Review the FY 2012 -13 O &M Budget and Debt
Service Fund Budget and provide District staff with comments and guidance leading to
the approval and adoption of the Budgets at the June 7, 2012 Board Meeting.
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2012 -13 PP.DOC Page 5 of 5
CENTRAL CONTRA COSTA SANITARY DISTRICT
DEBT SERVICE FUND
FY 2012 -13
Debt Service Revenue:
Sewer Service Charge
Reserve Account Bond Interest Income (Including Premium)
Ad Valorem Tax (portion alllocated to Debt Service)
Total Debt Service Revenue
Debt Service Expense:
2009 Bond Interest Payment and Amortized Costs, less Tax Subsidy on BAB
Recycled Water Loan Interest Payment
Total Interest Payment and Amortization Costs
2009 Bond Principal Payment
Recycled Water Loan Principal Payment
Total Principal Payments
Total Debt Service Interest, Amortized Costs and Principal Payments
Fund Balance - Beginning of Year
Revenue over Expense
Transfer from /(to) O &M or Capital
Fund Balance - End of Year
Attachment I
217,630
5,349,866
$ 5,567,496
$ 1,775,376
26,708
$ 1,802,085
$ 3,605,000
160,411
$ 3,765,411
$ 5,567,496
O &M Revenues:
Sewer Service Charge (O &M Only)
City of Concord
Other
Total Revenues
O &M Expenses:
Administrative
Engineering
Collection System Operations
Plant Operations
Pumping Stations
Total Net Expenses (1)
Revenues Over (Under) Expenses
O &M Fund Balance - Beginning of Year
Revenues Over (Under) Expenses
O &M Fund Balance - End of Year (3)
FY 2006 -07
Actual
35,057,668
9,043,215
3,862,690
47,963,573
14,742,224
5,472,707
8,033,498
21,438,368
2,299,234
51,986,031
(4,022,458)
13,790,205
(4,022,458)
9,767,747
CENTRAL CONTRA COSTA SANITARY DISTRICT
O & M REVENUES, EXPENSES AND RESERVES
FISCAL YEARS 2006 -07 THROUGH 2012 -13
FY 2007 -08
Actual
40,207,157
8,206,860
3,722,807
52,136,824
15,828,966
6,332,834
8,219,757
22,054,206
2,685,703
55,121,466
(2,984,642)
9,767,747
(2,984,642)
6,783,105
FY 2008 -09
Actual
43,087,454
8,755,857
3,414,478
55,257,789
16,304,462
6,834,323
9,064,672
22,927,971
2,752,950
57,884,378
(2,626,589)
6,783,105
(2,626,589)
4,156,516
FY 2009 -10
Actual
48,692,520
8,664,668
2,899,485
60,256,673
16,468,495
6,898,357
8,949,125
21,467,827
2,773,800
56,557,604
3,699,069
4,156,516
3,699,069
7,855,585
FY 2010 -11
Actual
49,141,000
8,560,000
2,823,007
60,524,007
18,635,406
6,765,061
8,951,535
22,183,706
3,033,629
59,569,337
954,670
7,855,585
954,670
8,810,255
FY 2011 -12
Projected
49,129,000
10,000,000
3,137,500
62,266,500
19,896,216
7,610,341
9,592,049
23,874,620
2,988,501
63,961,727
(1,695,227)
8,810,255
(1,695,227)
7,115,028
FY 2011 -12
Budget
49,484,600
9,852,000
2,862,105
62,198,705
Attachment II
FY 2012 -13
Budget
56,205,500
10,800,000
3,230,800
70,236,300
20,931,190 21,123,745
7,792,366 8,186,764
9,926,740 10,905,445
24,752,505 25,272,977
3,137,859 2,817,533
66,540,660 (2) 68,306,464
(4,341,955) 1,929,836
7,115,028
1,929,836
9,044,864
Sewer Service Charge Rate - O &M
213
242
260
292
300
302
344
Sewer Service Charge Rate - Capital /Debt
76
58
51
19
11
39
27
Sewer Service Equivalent Units
164,590
166,145
165,721
166,755
163,803
162,679
163,388
Notes: (1) Net Expenses include Operating and Maintenance expenses only and do not include any capital salaries or benefits.
(2) $2,617,788 of Budget to Budget increase due to increased benefit amounts.
(3) Prudent fund balance assumed to be approximately 10% of annual expense.
gmtemp 2012 -13 Attachmentll