The URL can be used to link to this page

Home My WebLink About09.b. (Handout) Updated O&M Presentation PROPOSED CENTRAL SAN BUDGET r FISCAL YEAR 2019 =20 _ Presented by Philip R. Leiber, Director of Finance and Administration - Edgar J. Lopez, Capital Projects Manager Board Meeting May 16, 2019 Capital Presented to: Engineering and Operations Committee May 7, 2019 Operations and Maintenance to be presented to: Finance Committee . May 21, 2019 7v PRERENTATION OVERVIEW Budget Summary Funding Sources and Uses Operation and Maintenance Sewer Construction (Capital Improvements) Self-Insurance Debt Service Reserves Detailed Capital Improvement Presentation 1 f # e.Y i -.,airy&/ •. A 4-� B , IDGET SUMMARY FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 Variance from Percent Budget Budget Budget Budget * FY 2018-19 Variance Operations and $89,810,918 $89,713,587 $89,720,456 $87,584,775 $(2,135,681 ) -2.4% Maintenance Sewer $36,808,756 $42,774,000 $45,319,000 $66,176,000 $20,857,000 46.0% Construction Debt Service $3,790,807 $3,819,099 $3,611 ,038 $2,982,415 $(628,624) -17.4% Self-Insurance $948,000 $936,500 $924,500 $1 ,073,700 $149,200 16.1% Total Budget $131,358,481 $137,243,186 $139,574,994 $157,816,890 $18,241,896 13.1% * With contribution to reserves of $1,349,926 in FY 2019-20, total uses of funds is $159,166,815. THE PROPOSED BUDGET PROVIDES THE RESOURCES TO MEET THE GOALS OF THE ^Y 2019-20 STRATEGIC PLAN Provide exceptional customer service and maintain an excellent reputation in the community Strive to meet regulatory requirements Be a fiscally responsible and effective wastewater utility Recruit, develop and retain a highly trained and safe workforce Maintain a reliable infrastructure Embrace technology, innovation, and environmental sustainability 3 r, `' ADDRESSING 7 BUDGET PRIORITIES Challenge Primary Response ■ Provide exceptional customer service and maintain an excellent reputation in the community 1. Addressing concerns and Continue commitment to customer Public outreach, including continuing funding for the educating customersoutreach, prioritization of the Ten-Year highly successful Central San Academy, educating regarding required Capital Improvement Plan, balance students on pollution prevention, and publishing the revenue/resources to replace capital spending with affordability and Pipeline community newsletter. aging infrastructure • meet rate impact concerns. regulatory requirements GOAL TWO 1 Strive to meet regulatory requirements 2. Increasingly stringent air Anticipate changing regulations and plan Replacement of wet scrubber as part of the Solids regulationfor cost-effective alternatives to maintain Handing Facilities Improvement Project. J" reliability and meet requirements. responsibleGOALTHREE Be a fiscally • effective wastewater utility 3. Maintaining • • Offset infrastructure replacement, CalPERS health benefits transition, which will save rates at an affordable levregulatory responses, and other expenses approximately$5.8 million per year in healthcare- with cost-saving efforts, efficiencies, related costs without sacrificing benefits for optimizations, and innovations. employees. Steam and Aeration Blower Systems Replacement Study to optimize one of the major energy sources of the treatment process. .:1 1 4 ; `. ADDRESSING THE 7 BUDGET PRIORITIES ResponseFEF FosteringGOALFOUR'T Challenge Primary Recruit, develop and retain a highly trained and safe workforce 4. Recruit,train,and retain high quality Employee development programs such as internal leadership, to harness human talent to meet employees. Develop characteristics of training,and mentorship programs and outside conferences, facedthe challenges by Central San's company culture to reaffirm training,and professional association memberships to inspire Central San priorities, recognize employees,and continuous education and improvement. celebrate core values. Replace ERP software and undergo significant training to utilize this new technology at the core of Central San's business operations. Milli! P1 rm no • •_ . • Continue the effort which began in Major projects include the Solids Handling Facility Improvements, • FY 2018-19 to implement the Pumping Station Improvements, Outfall Pipeline Inspection and • recommendations of the Comprehensive Improvements, and Mechanical and Concrete Structures • Wastewater Master Plan with significantly Rehabilitation. • increased capital investment. • Partner with agencies to find water solutions The ongoing effort to bring to fruition a Recycled Water Exchange • benefiting the region and state. This includes with Contra Costa Water District and Santa Clara Valley Water • looking for creative solutions such as water District to utilize recycled water at nearby refineries in place of • • exchanges and increased interagency potable water to increase the amount of potable water available to • cooperation. the community. 7. Partnering . address ever- Test and plan for alternative processes, Continue piloting new treatment technologies and researching focusincreasing equipment, and technology that are potential solar energy projects. recoverysustainable and cost effective. CENTRA�'CPNTRi'D�• ^+gni Q � ToTAi R E U C S FY 2017-18 FY 2018-19 FY 2019-20 $130,532,599 $1-+/,300,/-0/ $159,166,815 $120,000,000 $101,310,000 $100,000,000 $95,000,00 $82,920, $80,000,000 $60,000,000 $26,200,000 $17,502,415 $40,000,000 $21,950,00 $16,828,591 $5,750,000 $8,404,400 $19,340,00 $14,828,31_ $5,900,000 $7,707,696 $20,000,000 . $6,0 00 $8,1 14 Sewer Service Charge City of Concord Property Tax Revenue Capacity Fees All Other Sources ■FY 2017-18 Budget ■FY 2018-19 Budget ■FY 2019-20 Budget Increase of $11 .8 million relates to: Sewer Service Charge (SSC) up $6.3 million due to 5.25% rate increase Concord up $4.3 million due to increase in CIP spending ($4.5 million) offset by lower reimbursement for Operations and Maintenance (O&M) ($0.2 million) Property Tax up $0.7 million Capacity Fees down $0.2 million All Other Sources up $0.7 million related to higher interest income 6 SEWER SERVICE CHARGE RATES AND REVENUES 2017=18 THROUGH FY 2019=20 FY FY FY SSC Rates 2017-18 2018-19 2019-20 Change % Increase Single Family $530 $567 $598 $31 5.5% Multi Family $513 $549 $566 $17 3. 1 % Other Charges Vary — See Ordinance No. 304 Change from Budget Budget Projected FY Budget FY 18-19 % Increase from FY 2017-18 FY 2018-19 2018-19 FY 2019-20 Projected* Projected SSC Revenues $89,188 $95,000 $96,310 $101,310 $5,000 5.2% from ($Thousands) systemwide average rate adjustment 7 , USE OF FUND FY 2017-18 FY 2018-19 FY 2019-20 $138,532,599 $147,386,28) $159,166,815 $87,584,775 $100,000,000 $89,720,456 $90,000,000 $89,810,918 $80,000,000 $70,000,000 $66,176,000 $60,000,000 $45,319, $50,000,000 $40,000,000 $36,808,756 $30,000,000 $2,982,415 $20,000,000 $3,611,038 $1,073,700 $10,000,000 $3,790,807 $924,500 $7,811,293 — $948,000 IAit349,926 $_ i I Operations and Sewer Construction(CIP) Debt Service Self-Insurance Contribution to Reserves Maintenance ■FY 2017-18 Budget ■FY 2018-19 Budget ■FY 2019-20 Budget Increase of $11 .8 million relates to: O&M Budget reduced $2.1 million $20.9 million increase in capital spending (excluding carryforwards) $0.6 million decrease in debt service (refinancing in FY 2018-19) $0.1 million increase in self-insurance funding $6.5 million decrease in contribution to reserves 8 _ � OPERATING FUND REVENUEF Budgeted ($MILLIONS) Budgeted FY 2018-19 FY 2019-20 $86.9 $89.6 Hazardous Household Other Hazardous City of Waste $0.9 $4.1 Household Other Concord 1% 5% Waste $1.0 $4.9 Sewer $14.8 Sewer City of 1% 6% Service Service Concord 17% Charge Charge $14.6 $67.1 16% $69.1 77% h- -000 Increase of $2.7 million: Higher allocation of SSC to O&M (shifts year to year); ends up increasing reserve $0.2 million decrease in Concord Sewer Service Charge $0.8 million increase in Other charges (including $0.6 million increase in Interest income) OPERATING FUND EXPENDITURES FY 2019-20 $87 .6 ($MILLIONS D.Self Insurance Fund, 825,000, D.Materials&Supplies, 2,152,127 3% 1% D.Other Expenses, 2,609,484,3% D.Outside Services, 3,639,547, 4% D.Professional&Legal Fees, 874,300,1% D. Hauling&Disposal,� 1,186,175,1% D.Repair&Maintenance, 5,242,867,6% A.Salaries&Wages, 38,060,443, 43% D.Utilities, 4,209,350,5%� D.Chemicals, 1,620,000,2% C.Additional UAAL Contributions,/ 1,250,000,1% C.Retirement UAAL/Unfunded Liabilities, 11,186,841,13% B.Benefits(Retirees),J 4,001,000,5% B.Benefits&Cap 0/H Credit, 10,727,641,12% Revenues of $89.6 million less expenditures of $87.6 million = Contribution to Reserve of $2.0 million 10 ' `' O& M SPENDING BY DIVISION 7EX&MMUS, GEEIGM 6-FY 2019-20 .--Change: • • c : • • - • • - of d Administration (Admin) $27,261 ,866 $27,737,657 $23,482,428 ($4,255,229) Engineering and $17,034,337 $17,033,406 $16,863,942 ($169,464) Technical Services Collection System $14,156,213 $13,960,060 $14,750,139 $790,079 Operations (CSO) Plant Operations, $29,942,529 $29,436,539 $30,879,918 $1 ,443,379 Maintenance and Safety Recycled Water $1 ,318,642 $1 ,552,794 $1 ,608,348 $55,554 • � : - . : O&M spending is reduced $2.1 million, with changes by Division as follows: Administration down $4.3 million (HR: Retiree benefits down $2 million, UAAL down $1 .6 million (CaIPERs transition), UAAL additional contributions down $1 .25 million; Salaries & Benefits & UAAL for Admin staff up $0.9 million; other costs in IT, Risk, Finance, Purchasing, GM/Secretary: down $0.4 million) Engineering down $0.2 million (Capital projects reduced O&M by $0.4 million as more time charged to capital projects; offset in part by $0.2 increase in Environmental & Regulatory Compliance (Disposal costs, salaries)) CSO up $0.8 million (due to Salaries & Benefits and UAAL, other costs flat) Plant Operations, Maintenance, and Safety up $1 .4 million (salaries/benefits up $1 .2 million, chemicals/utilities u $0.2 million) Recycled water up $0.1 million (costs adjusted based on actual FY 2018-19 experience) OPERATING EXPENSE COMPARISON $40,000,000 — $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 IIL $5,000,000 All$0iti ■.■N■ 1 VIII .... 11111 ------01MIL-bMw VI Y_ H VI pVU (V (O N V V VVI U ++ N Q U U _ E _ UJ t6 U) V m V u 3 fl 2 _ Q h0 VI V) X Q J U QS ) V N 66 lJJ CL _ V Q 06N t 0 Y U C N U V C p� f6 7 C C VI co V w .1 M 0 w y Q m j Q = 'N V) C CO V V L O J Cr O co Q d C6 O H ■FY 2017-18 Budget ■FY 2017-`1'8 Actual ■FY 2018-19 Budget FY 2018-19 Projected ■FY 2019-20 Budget Proposed O&M Budget spending down $2. 1 million vs. FY 2018-19 Salaries up $1 .7 million (4.7%), vacancy factor change costs $0.6 million (52%), overtime up $0.3 million (23%) Benefits for active employees down $1 .8 million (10.4%), related to CalPERs healthcare transition offset by benefit vacancy factor up $0.3 million. Capitalized overhead increases by $0.5 million (higher CIP spending)) Retiree benefits down $1 .9 million (327%l6l related to CalPERs healthcare transition Non-labor expenses flat at $22.4 million. inor Changes among categories: chemicals up $0.2 million, repairs and maintenance down $0.2 million 12 ' `' O&M BUDGET HIGHLIGHTS Labor Related Costs Salaries: Cost of Living Adjustment (COLA): 3.5%; vacancy factor reduced from 3.25% to 2% results in higher net salary costs. Higher capitalized labor cost by $0.5 million reduces costs in O&M. Net increase in salary and benefit costs for active employees is 1 .2%. Health: Transition to CalPERs saves $5.8 million per Bartel estimate. Delta Dental: Draft Budget assumes 3.75% increase. Carrier subsequently announced 7% reduction. Pension / Other Post-Employment Benefits (OPEB): CCCERA: Normal costs essentially flat at $5.3 million. Decrease of 1 % for Legacy, 3.3% for PEPRA; offset by higher wage base. UAAL: $10.7 million for FY2018-19 increases to $11.2 million for FY2019-20 Additional payment toward retirement/OPEB is reduced from $2.5 million to $1.25 million for FY 2019-20. Board may decide to make up balance from FY 2019-20 budget variances, if any. 4 $4 million funding for GASB 45 OPEB retiree health benefits ($4 million retiree health r0 contributed to trust toward unfunded liability).premiums, $ y). Reduced from $7.5 million t. budgeted for FY 2018-19. 1 b- PENSION AND OPEB LIABILITY AND FUNDING STATUS Pension OPER Million $160 100% Million $90 100% $140 90% $80 90% $120 80% $70 80% 70% $60 70% $100 60% 60% $50 ° $80 50% 50% $40 $60 40% 40% 30% $30 30% $40 20% $20 20% $20 100/ $10 10% $0 0% $0 0% ,y10 ,y'� ,y40 ,y� ,y'L ,y� ,LO ,y0 ,LO ,y0 ,LO ,y0 ,LO ,y0 ,y0 UAAL Funded% llllllllllllllllllllllllli UAAL Funded% r� Notes: * Pension:2018 valuation is released summer of 2019. ** OPEB-Valuations projected liabilities less assets as of June 30 of that year *** Pension funded percentage excludes Section 115 Trust Assets(established in FY 2017-18). now PAYROLL BENEFITS PERCENTAGE Employee Benefit Percentage for FY 2019-20 without Pension & OPEB UAAL Percentage per FY 2017-18 Audited Financials 75.30% Less: FY 2017-18 Pension UAAL -36.31 % FY 2019-20 Revised Percentage 38.99% Notes: This calculation uses the Administrative Overhead Benefits methodology approved by the Board in 2014, as recommended by Matrix Consulting This compares with 41 .65% for the prior year. f ! _3 f -- . 15 /r O&M BUDGET HIGHLIGHTS : PROVIDING NECESSARY STAFFING 291 full-time equivalent positions funded per Raftelis staffing analysis recommendation Reallocations : Contracts Analyst (Purchasing) to Contracts Specialist (Capital Projects) Two Assistant Engineers (Capital Projects) to one Engineering Assistant I/II (Capital Projects) and one Associate Engineer (Capital Projects) Two Control Systems Engineers (Plant Operations) to Utility Systems Engineers (Plant Operations) ( , Jft- C%hangE )nl� Transfer of One Associate Engineer to Utility System Engineer (Capital Projects) (_.pdated) 16 , may` CAPITAL BUDGET HIGHLIGHTS : INFRASTRUCTURE INVESTMENT Infrastructure Investment Over Past Ten Years: $306,200,000 $50.M $45.M 2.3 M $40.M 3.9 M $35.M — $30.M — 19.5 M $25.M 2.5M 2.M 20.3M 20.8 M $20.M — 12. $15.M — $10.M — M $5.M — $O.M FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 Projected HTP WCS RGI ❑RW FY 2019-20 investment increases to $66. 176 million 17 JAM CAPITAL IMPROVEMENT PROGRAM FUNDING SOURCES FY 2019-20 $65.6 MILLION Other Capacit City of $1.5 y Fees Concord 2% $5.8 $11.6 \ 18% - 9� Ad Valorem Tax $14.5 22% Sewer Service Charges .00 $32.2 49 Increase of $9.7 million from FY 2018-19: $4.3 million increase in Sewer Service Charge $4.5 million increase in Concord Sewer Service Charge $1 .2 million increase in Ad Valorem Taxes $0.5 million decrease in Capacity & Pumped Zone fees $0.2 million increase in Interest income & developer fees - 18 'r ` CAPITAL IMPROVEMENT PROGRAM EXPENDITURES FY 2019-20 $66. 176 MILLION Contingency $2.0� Recycled Water $4.5 3% 7% General Improvements $4.3� Treatment 6/ Plant $28.3 43% Collection System $27.1 Ingo 41% Increase in capital spending of $20.9 million from FY 2018-19 Collection System u $7.8 million Treatment Plant up $p11 .5 million General Improvement down $0.5 million Increase in Recycled Water Program of $1 .6 million Contingency up $0.5 million Revenues of $65.6 million less expenditures of $66.2 million = Reserve Draw of $0.6 million. 19 ' `' SELF INSURANCE BUDr.. r FY 2019 =20 Operating Revenue Operating Expense $1,026 $1,074 ($Thousands) ($Thousands) Legal Interest Services $180 Claims HHW Contribution r $80 I Technical Adjusting $21 Services $2 $85 Insurance Premiums $632 Expected Losses $275 moo O&M Fund Contribution $825 Revenues of $1 ,025,900 less expenditures of $1 ,073,700 = Draw from Reserve of $47,800 Self insurance Operating Expense of $1 .074 million compares to $0.925 million in FY2018-19 BT SERVICE BUDGET FY 2019 =20 Operating Revenue Operating Expense $2,982 $2,982 ($Thousands) ($Thousands) Interest Interest Payments Income $- $837 SNOW moo Ad Valorem Principal Tax $2,982 Payments $2,145 $629K decrease from FY 2018-19 due to lower debt service from 9/2018 refinancing No interest revenue as Debt Service Reserve Fund eliminated 21 ' `' RESERVE BALANCE PROJECTIONS=FY2019 Sewer M" Construction Self Insurance O&M Fund Fund (Capital) Fund Totals Reserve Policy Target end of $36,493,656 $33,088,000 $6,500,000 $76,081,656 June 30, 2019 1 Projected Balance as of June 30, 2019 1 $36,924,515 $56,148,243 $6,959,875 $100,032,633 Projected Balance Minus Reserve Policy $430,859 $23,060,243 $459,875 $23,950,977 Target at June 30, 2019 Takeaway: Reserves are projected to meet or exceed the policy required levels at year end. RESERVE BALANCE PROJECTIONS=FY2020 Sewer IL Construction Self Insurance O&M Fund Fund (Capital) _ Fund Totals -A Projected Balance as of June 30, 2019 $36,924,515 $56,148,243 $6,959,875 $100,032,633 Projected Balance as of June 30, 2020 $38,900,110 $55,570,373 $6,912,075 $101,382,55 Change in Reserve $119751595 ($577,870) ($47,800) $1,349,925 Reserve Policy Target end of $38,371,110 $32,048,551 $6,500,000 $76,919,661 June 30, 2020 Projected Balance Minus Reserve Policy $529,000 $23,521,822 $412,075 $24,462,89 arget at June 30, 2020 Net FY 2019-20 reserve contribution of $1 .3 million relates mainly to projected increase in O&M for FY 2020-21 per Financial Plan Consistent with 10 year financial plan and overall debt management policy requirements, reserves will be $24.5 million above policy required level as a result of setting aside funds to reduce borrowing needs in FY2020-21 . = _ 23 "� JUNIF 61 2019 PUBLIC HEARING Approve and Adopt Budgets 1 Operations & Maintenance 2 Capital Improvement 3 Self-Insurance 4 Debt Service 5 Separate motion for Bay Area Clean Water Agencies (BACWA) funding Insurance Renewal 24 mRla QUESTIONS 1 a