HomeMy WebLinkAbout12.e. PUBLIC HEARING: FY 2015-16 Operations & Maintenance, Debt Service Fund, and Self-Insurance Fund BudgetsCentral Contra Costa Sanitary District
BOARD OF DIRECTORS
POSITION PAPER
Board Meeting Date: June 4, 2015
Subject. CONDUCT A PUBLIC HEARING TO RECEIVE PUBLIC COMMENT AND
CONSIDER ADOPTING THE FISCAL YEAR 2015 -16 OPERATIONS AND
MAINTENANCE BUDGET, DEBT SERVICE FUND BUDGET, AND
SELF - INSURANCE FUND BUDGET
Submitted By. Initiating Dept. /Div.:
David Heath, Director of Administration Administration
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
Kent Alm
o4rp- Roger S. Bailey
Counsel for the District
General Manager
ISSUE: It is the District's practice to hold a public hearing to receive comment on
the Operations and Maintenance Budget (O &M), Debt Service Fund Budget, and
Self - Insurance Fund Budget.
RECOMMENDATION: Conduct a public hearing and consider adopting the Fiscal Year
(FY) 2015 -16 O &M Budget, Debt Service Fund Budget, and Self- Insurance Fund
Budget.
FINANCIAL IMPACTS: The FY 2015 -16 O &M Budget was prepared using an
assumption that a $32 single family and $24 multi - family Sewer Service Charge (SSC)
rate increase will be approved by the Board. Approximately 89.7% of the SSC revenue
is allocated to the O &M Budget, and the remaining 10.3% is allocated to the Capital
Improvement Budget.
ALTERNATIVES /CONSIDERATIONS: At the Board meetings in January and
March 2015, staff presented various budget scenarios and options, and Board direction
has been incorporated into the recommended budgets.
BACKGROUND: The FY 2015 -16 O &M Budget and Debt Service Fund Budget were
distributed to the Board under separate cover for initial review on May 1, 2015.
A detailed presentation was made at the May 21, 2015, Board meeting. The
Self- Insurance Budget was reviewed by the Finance Committee on May 26, 2015, and
is included in the current agenda package under Item 4d. All three of these budgets will
be considered by the Board following the public hearing.
Staff has developed a 10 -year financial model for forecasting revenues, expenses and
fund balances that assist the District in setting and projecting SSC rates. The model
funds in the following order of priority: Debt Service, O &M /Self- Insurance and Sewer
Construction Fund. Additionally, a Wastewater Cost of Service Study and a Staffing
Needs Assessment was performed by Raftelis Financial Consultants, Inc. The results
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POSITION PAPER
Board Meeting Date: June 4, 2015
subject: CONDUCT A PUBLIC HEARING TO RECEIVE PUBLIC COMMENT AND
CONSIDER ADOPTING THE FISCAL YEAR 2015 -16 OPERATIONS AND
MAINTENANCE BUDGET, DEBT SERVICE FUND BUDGET, AND SELF -
INSURANCE FUND BUDGET
of the studies included changes to the organizational structure to align functions and
implementation of a revised rate structure to better comply with Proposition 218.
The proposed FY 2015 -16 O &M Budget includes an additional $2.5 million payment
towards the District's Unfunded Actuarial Accrued Liability (UAAL), and the allocation of
$7.9 million from the O &M Fund towards the unfunded liability associated with
Governmental Accounting Standards Board (GASB) 45 post - employment healthcare
benefits and current year retiree premiums. This amount is based on the most recently
completed two -year actuarial study by Bartel Associates. The $7.9 million includes an
approximate payment of $5.3 million for retiree medical, dental and life insurance
premiums annually and $2.6 million to be deposited in a GASB 45 Public Agency
Retirement Services (PARS) investment trust to fund future retiree benefit costs.
O &M Revenue: The following table compares Projected FY 2014 -15 to Budget
FY 2015 -16 O &M Revenue:
Total District O &M Revenue for FY 2014 -15 is projected to be $87.1 million compared to
the FY 2015 -16 Budget amount of $87.5 million, resulting in an increase of $0.4 million,
or 0.5 %. This is, due to the following:
• While the overall SSC amount is increasing by $0.3 million, the O &M allocation of
SSC is decreasing from 94.8% to 89.7% with the majority of the current rate
increase being allocated for capital improvements to replace aging infrastructure.
The City of Concord shares a flow portion of Treatment Plant, Environmental and
Regulatory Compliance, and Source Control expenses and is charged
administrative overhead and a finance charge. City of Concord revenue is
expected to be $0.1 million, or 0.7 %, more than Projected FY 2014 -15, mainly
due to flat treatment plant operating expenses in FY 2015 -16.
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Projected
Budget
Increase /Decrease ( -)
FY 2014 -15
FY 2015 -16
Variance $
Variance %
Sewer Service Charge
$ 70,051,000
$ 70,390,000
$ 339,000
0.5%
City of Concord
13,600,000
13,700,000
100,000
0.7%
All Other
3,445,867
3,402,300
(43,567)
-1.3%
Total
$ 87,096,867
$ 87,492,300
$ 395,433
0.5%
Total District O &M Revenue for FY 2014 -15 is projected to be $87.1 million compared to
the FY 2015 -16 Budget amount of $87.5 million, resulting in an increase of $0.4 million,
or 0.5 %. This is, due to the following:
• While the overall SSC amount is increasing by $0.3 million, the O &M allocation of
SSC is decreasing from 94.8% to 89.7% with the majority of the current rate
increase being allocated for capital improvements to replace aging infrastructure.
The City of Concord shares a flow portion of Treatment Plant, Environmental and
Regulatory Compliance, and Source Control expenses and is charged
administrative overhead and a finance charge. City of Concord revenue is
expected to be $0.1 million, or 0.7 %, more than Projected FY 2014 -15, mainly
due to flat treatment plant operating expenses in FY 2015 -16.
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POSITION PAPER
Board Meeting Date: .June 4, 2015
Subject: CONDUCT A PUBLIC HEARING TO RECEIVE PUBLIC COMMENT AND
CONSIDER ADOPTING THE FISCAL YEAR 2015 -16 OPERATIONS AND
MAINTENANCE BUDGET, DEBT SERVICE FUND BUDGET, AND SELF -
INSURANCE FUND BUDGET
O &M Expense: The following table compares Projected FY 2014 -15 to Budget
FY 2015 -16 O &M Expense:
Total District O &M Expenses are projected to be $87.0 million in FY 2014 -15 compared
to a FY 2015 -16 O &M budget of $87.5 million. This reflects a $0.5 million, or 0.5 %,
increase in expenses. Variances are discussed in detail below:
O &M Salaries: District O &M salaries are projected to be $28.0 million in FY 2014 -15
compared to a budget of $30.9 million in FY 2015 -16 resulting in an increase of
$3.0 million, or 10.7 %. This increase is due to the filling of vacant positions and a cost
of living adjustment consistent with the bargaining units' Memorandums of
Understanding.
Benefits Including Capitalized Administrative Overhead Credit: District O &M benefits,
including the capitalized administrative overhead credit for FY 2014 -15, are projected to
be $39.2 million compared to a budget of $33.2 million in FY 2015 -16, resulting in a
decrease of $6.0 million, or 15.3 %. This decrease is due primarily to a reduction of
retirement expenses of $4.4 million in FY 2015 -16.
Benefit rate assumptions are provided below:
• Kaiser — 2.82% rate decrease for active employees; 2.75% weighted average
retiree rate decrease.
•
Health Net — 6.50% rate increase in HMO for active employees; 6.61 % weighted
average retiree rate increase.
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Projected
Budget
Increase /Decrease ( -)
FY 2014 -15
FY 2015 -16
Variance $
Variance %
Salaries
$ 27,960,765
$ 30,943,085
$ 2,982,320
10.7%
Benefits & Cap O/H Credit
39,231,049
33,224,221
(6,006,828)
-15.3%
Chemicals
1,595,000
1,655,000
60,000
3.8%
Utilities
4,810,550
4,780,250
(30,300)
-0.6%
Repairs & Maintenance
4,275,006
5,369,900
1,094,894
25.6%
Hauling & Disposal
860,200
998,550
138,350
16.1%
Professional & Legal
440,500
640,300
199,800
45.4%
Outside Services
3,208,871
3,883,115
674,244
21.0%
Self- Insurance
650,000
1,500,000
850,000
130.8%
Materials & Supplies
1,906,725
2,210,045
303,320
15.9%
All Other
2,054,505
2,260,398
205,893
10.0%
Total
$ 86,993,171
$ 87,464,864
$ 471,693
0.5%
Total District O &M Expenses are projected to be $87.0 million in FY 2014 -15 compared
to a FY 2015 -16 O &M budget of $87.5 million. This reflects a $0.5 million, or 0.5 %,
increase in expenses. Variances are discussed in detail below:
O &M Salaries: District O &M salaries are projected to be $28.0 million in FY 2014 -15
compared to a budget of $30.9 million in FY 2015 -16 resulting in an increase of
$3.0 million, or 10.7 %. This increase is due to the filling of vacant positions and a cost
of living adjustment consistent with the bargaining units' Memorandums of
Understanding.
Benefits Including Capitalized Administrative Overhead Credit: District O &M benefits,
including the capitalized administrative overhead credit for FY 2014 -15, are projected to
be $39.2 million compared to a budget of $33.2 million in FY 2015 -16, resulting in a
decrease of $6.0 million, or 15.3 %. This decrease is due primarily to a reduction of
retirement expenses of $4.4 million in FY 2015 -16.
Benefit rate assumptions are provided below:
• Kaiser — 2.82% rate decrease for active employees; 2.75% weighted average
retiree rate decrease.
•
Health Net — 6.50% rate increase in HMO for active employees; 6.61 % weighted
average retiree rate increase.
N:\ADMINSUP\ADMIN \DIST- SEC \Position Papers\2015 \PP -PH to Adopt O &M, etc. Budgets 2015 -16 - 06 -04 -15 FINAL.docx
POSITION PAPER
Board Meeting Date: June 4, 2015
subject: CONDUCT A PUBLIC HEARING TO RECEIVE PUBLIC COMMENT AND
CONSIDER ADOPTING THE FISCAL YEAR 2015 -16 OPERATIONS AND
MAINTENANCE BUDGET, DEBT SERVICE FUND BUDGET, AND SELF -
INSURANCE FUND BUDGET
• Contra Costa Employees' Retirement Association (CCCERA) -Additional
$2.5 million payment towards the UAAL; 24% average rate decrease (change
from prior year's rate, not percentage of payroll) due to favorable assumption
changes and market gains.
• Delta Dental - Estimated 1.0% rate decrease.
• Long -Term Disability (LTD) - No change in rate.
• Employee Assistance Program (EAP) - 2.0% rate increase.
• Workers' Compensation - Estimated 10% rate increase.
• Life Insurance — No change in rate.
All Other O &M Expenses: The remaining O &M non -labor and benefit expenses total a
projected $19.8 million in FY 2014 -15 compared to a budgeted $23.3 million in
FY 2015 -16, resulting in an increase of $3.5 million, or 17.7 %. Expense category
variance explanations are provided in the budget document at a District and Department
level. The three largest expense category increases between Projected FY 2014 -15 to
Budget FY 2015 -16 are noted below:
• Repairs and Maintenance is $1.1 million higher in Budget FY 2015 -16 than
Projected FY 2014 -15. This is largely due to the Cogen repair and cathodic
protection expenses transferring from the Capital Improvement Budget to the
O &M Budget and several deferred maintenance expense items.
• Self- Insurance expenses are $0.9 million higher in Budget FY 2015 -16 than
Projected FY 2014 -15 due to larger than normal claims experience.
• Outside Services expenses are $0.7 million higher in Budget FY 2015 -16 than
Projected FY 2014 -15 due to the addition of a records management initiative, Job
Classification and Compensation Study, and increased cost for security and
emergency services.
Legal notices were published on May 21 and May 28, 2015, in the Contra Costa Times
and the San Ramon Valley Times for this public hearing.
COMMITTEE RECOMMENDATION: The Finance Committee reviewed the
FY 2015 -16 O &M Budget and Debt Service Budget on May 13, 2015. The Committee
scheduled a second review of the Budgets on May 26, 2015. The Self- Insurance
Budget was reviewed by the Finance Committee on May 26, 2015.
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POSITION PAPER
Board Meeting Date: ,June 4, 2015
subject: CONDUCT A PUBLIC HEARING TO RECEIVE PUBLIC COMMENT AND
CONSIDER ADOPTING THE FISCAL YEAR 2015 -16 OPERATIONS AND
MAINTENANCE BUDGET, DEBT SERVICE FUND BUDGET, AND SELF -
INSURANCE FUND BUDGET
RECOMMENDED BOARD ACTION: Conduct a public hearing and adopt the
FY 2015 -16 O &M Budget, Debt Service Fund Budget, and Self- Insurance Fund Budget.
Attached Supporting Document:
1. (Final) Draft FY 2015 -16 O &M and Debt Service Fund Budgets
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