HomeMy WebLinkAbout04.b. (Handout) Responses to Budget Related Comments Item 4.b.
Budget Related Comments by Member Paul Causey (Handout)
(DRAFT Answers as of 5/21/19)
1. Great job on the document!!! Enhancements were excellent- no comparison to my first
budget in 2013.
Response:
Thank you. We are committed to constantly improving the document.
2. Page 11, Embracing the future, 1st Para - don't agree with "allows significant reduction in
O&M" 2% not significant in my book-if we start by removing the 5.81VI from the 18/19
budget then how much is the change probably positive not negative. How much have
services and supplies been increased in this budget?And in Insurance and Debt? Page
42 also
Response:
• The $5.8 million cost savings from the transition is significant, representing 6.5%of the FY 2018-19
O&M budget. (See page 253 for a reconciliation of Bartel saving estimates vs. FY 19-20)
• Costs other than Salaries, Benefits, UAAL payments were held flat ($22,332,169 in FY18-19 and
$22,358,850 in FY 19-20).
• See page 249 for detail on 0&M Salaries, Benefits, UAAL.
• Normal salaries were up 4.7% (including COLA of 3.5%and other routine growth such as step
increases)
• We reverted to a vacancy factor of 2% instead 3.25% reflecting the trend resulting in an increase of
$573,000 in salaries and $370,000 in benefits.
• OT was increased $260,845 (see response to question 18 for detail)
• Current employee benefits were reduced by 10.4% ($1,829,285) due to the CalPERs medical
transition
• Capitalized Admin Overhead was increased by 11.8% due to more work on capital projects for
FY2019-20, as a result in a saving of$468,646 in O&M budget
• Retiree benefit costs and UAAL were down 14.2% ($2,723,837), due to the CalPERs medical
transition.
Overall changes in salaries, benefits and UAAL were down $2.162 million, or 3.2%, while other costs
were held flat.
From page 249, Table 2—Salaries, Benefits, Retiree and Unfunded Liabilities Detail (O&M)
Percentage shown in right column for your reference.
1
FY 2017-19 FY MIMS FY 2018.19 FY 2M9-2D Budget W
Budget Actual Budget Budget BudgetVariance
,Salaries $33,739,967 $32.313,704 $35,186429 %
, $36�839,790 ,653,761 4,7%
,SalaryVacancy 000) �
—
($1,1U,0001, ($539 Q) $573,400 -516%
:overtime S1,0%,66I $1,153,631 f $1,12.808 $1.381,653 5260,845 23.396
$1,8000.5%
:standby
Total Salaries $34,797,628 $33,847,471 i $3SSnA37 536,060,443 S2,4118,406 TOY.
Current Employee Benefi �15 81ZOIG ($1,929,295)
ts $17,776,358 10.4Yc
Benefit Vacancy ($1,149, $0 ($1,006,000) ($636,004) $374000 -36.894:
Total Benefits(Active Employees) $16,627,358 $166431,579 i $I6,635,295 $I5,176X0 MAURO
Total Salaries and Benefits("I kTptoyees) $SIA24,986 i $54279,050 $52,206,332 $53,236,453 $1.030,=
Capitalized Administrative O/H ($3,972,203) ($3,337,316) ($3,979,723) ($4,44$369) (W8,646) 1.8%
Total Salaries and Benefits(Active Employees) $47p52,783 $i�C7ii, $",2 ki $49,796,084 $561,475
after Capitalized Administrive O/H
L2%
.Retiree Benefit Costs 5 5,
$ 5,573,753 5 5,941
UAAU Unfunded Liabilities 5 14,179,261 $ 16,347,O10 $13,220,478 $ 12,436,841 ($783,63
Total Benefits and LiabifitiesforPast Service $2425,261 $22,924753 $19,161,678 $16,437,841 ($2,723)637) -14,2%
,lTotal Salaries,Benefits&Liabilities for Past $67,578,844 $68,862,488 $67"M $65,225,925 ($2,16Z,362)soo�24,2e (Active and Retiree) -3.2%
3. Page 12 can we get a copy of the benchmarking study. Page 84 says completed page 12
initiated
Response:
The benchmarking study is not yet completed. Page 84 will be corrected from "completed"to
"initiated" to reflect the actual status of the project and to be consistent with page 12.
4. Love the addition of the demographic information - largest employers needs Better breakdown in
the ranking though
Response:
Central San copied this table from the Contra Costa County Comprehensive Financial Annual
Report. Unfortunately, the exact number of employees by employer is not provided in the source
document, and all employers tied for second place ("T-2") are shown as having the same range of
employees (1,000-4,999). Staff will remove the "Rank" column, as it is superfluous.
S. Page 19 "11 Division Managers". Can't get this from the org chart looks like 14 not 11
Response:
The following clarifying sentence has been added after the paragraph mentioning the Division
Managers: "The chart on the right depicts the operating divisions and programs that are funded in
the budget."
2
6. Page 20 and 21, 5th Para - please explain why residential rates are below approved?
Does 218 now limit us to the lower numbers going forward?
Response:
.Per page 20 of the budget book:
"Additionally, during'FY 2018-19, staff presented an update of the financial plan and commenced a
discussion about the need for,rate adjustments. During the financial workshop in January 2019,
the Board provided staff with tentative direction to prepare a multi-year rate adjustment which
would be announced through a Proposition 218 notification process in March and a public hearing
on proposed rate adjustments on April 18. At that meeting; the Board adopted a four-year
schedule of adjustments, with increases of 5.5%, 5.2%, 4.9%, and 4.2%for single family residential
customers, which were elements of the 5.25%, 5.25%, 4.75%, and 4.75% average increases across
all customer classes. Annual public hearings will be conducted for years two through four to
determine if lesser rate adjustments are possible."
To elaborate on the underlined text, residential rate changes differ from the system-wide averages
noted. The system-wide average consists of a weighted blended average of both the increase in
residential rates and commercial rates approved by the Board in April.
The tables of rates adopted for the four years were based on the SSC amounts in dollars, not
percentage increases. The dollar changes were those specified in the financial plan.
7. Page 22 -do we have a formal definition for the use of contingency funds SOP?
Response:
The use of contingency funds is addressed in BP 037- Delegation of Authority to General Manager,
with relevant language is specified below. We are also tracking and reporting on capital project
transfers monthly, and in a quarterly report Which are both presented to the Board.
3
Ca itai Improvement Pro ram Authorization UmI
Action General Mananer Board of
Directors
Transfer ft.os io Ind Iu3:G .t ;oge!= I �,.S�Q or less` I I
TrarWer funds tr4nt Cl8 contsroenGy aCCBuni iG proiec;500.00OT4r 1255
imkmled in the CI8 pIUM Greater than�2t701300'
AWmm mjpWWW tunas to program budgets Not ink"�
ImSewer Ctnxwn Fund I
-
------------------- ---------------------------------------------
U< ited by the remaining balances a#the suohcaWe oroeram and contingent account
�Li—mj—_ . . _ �ininx balance of the apalieabte contingencsr AggUnt
Dig r f ' 1 1eiection of all biol MUSt gg Ig ft2fro ih i f h n r nd&WOfli undcr
t11e 6royt or.5 of the Cal"fornia Uniform EW&Construction Colt gccoynting Ag IUP� A )(0 22442 and 22p42,5i
'hsi hmill shall ke ratsed goncurrently with changes to the UPCCAA(Cal"fornta Public Contract Code 0220321a),
Etqrgsjnfinathethrelhold above yrhigh f®r
1 being ds reouired under the_tlPrC to
8. Page 29-what is the real O&M budget including debt and insurance as most agencies report? How
is this reported to state in annual budget reporting combined?
Response:
The table below shows changes year by year combining these 3 subfunds:
FY2015-16 ! FY2016-17 FY2017-18 FY2018-19 FY2019-20
O&M 87,464,864 89,810,918 89,713,587 89,720,456 87,584,775
i - Less Self Insurance in 1,500,000 920,000 585,000 779,500 825,000
I O&M (Appears as a
1 Revenue for SIF)
- l Subtotal O&M excluding 85,964,864 88,890,918 89,128,587 88,940,956 86,759,775
,
Self Insurance Funding 1
" I
+ ; Debt Service 3,822,330 3,790,807 30819,099 3,611,038 2,982,415
+ Self Insurance Spending ; 1,917 000 948,000 E 936,500 ' 924,500 1,073,700
1
i
s = Total O&M, Debt Service 91.704,194 93 629,725 93,884,186 { 93,476,494 i 90,815,890
3
&Self Insurance
1 Spending
� j
The reduction in O&M from the CalPERs transition and debt service from the September 2018 debt
refinancing comprises the change from FY2018-19 to FY 2019-20.
4
Annual expenditures are reported to the State Controller in a report specific to special districts, and
further specific to "waste disposal enterprises". The prescribed format does not include debt
service but does include Depreciation and Amortization as an element of Operating Expenses. See
also response to question 27.
9. Page 30, 3rd bullet-states&5.6M not$5.8
Response:
It is not an error, but the following explanation has been added following the V bullet, regarding
the apparent inconsistency between $5.6 million in savings and the $5.8 million in savings used
elsewhere: "The Financial Plan assumed $5.6 million in annual savings from a 2017 analysis
conducted by Central San's actuarial services consultant, Bartel Associates. In February 2019,
Bartel Associates provided an updated analysis showing the savings to be $5.8 million. An analysis
showing the reconciliation between the savings estimate provided by Bartel Associates and the
budget line items is shown in Table 6 of the Supplemental Financial Information section of this
budget document."
10. Page 30 last bullet-rate stabilization fund moving forward?Will Board reconsider this?
Response:
Bond Counsel suggested including the ability to create make use of a rate stabilization fund. They
can be useful to ensure debt service coverage requirements are met. Central San is presently not
facing any issues in the foreseeable future meeting debt service coverage ratio requirements. So,
there is no immediate need to pursue this. Rates have already been set for the next year to
provide for overall gradual growth and the avoidance of rate shock in any one year. Tools
including the prudent use of debt, temporarily funding the sewer construction reserve above the
currently required level are tools that have been used to smooth rates.
Study of the potential funding and use of a rate stabilization account may be undertaken in future
years, as part of the review of the fiscal reserve policy. Any changes, if proposed, would be
discussed with and approved by the Board. There are no immediate plans for such changes.
11. Page 33 -why is insurance fund up 16.1%Table 1 -given the PERS switch seems that
the -2.4% reduction should really be much larger for O&M- 5.8 eaten up by real
increases?What happens if an added $1M is added back to pretending? I think there is
a real increase in the O&M budget not a savings given all of the changes that have been
made to reduce the total budget-what is the impact when adding Insurance and debt to
the O&M program still a reduction.
5
Response:
Self-insurance fund expenditures are highlighted below:
�J
Table 1-Self Insurance Fund (SIF) Summary
AccountDescription FY 21 • Budget FY 2019-20
Budget
Expenditures:
Claims Adjusting $0 $2,000
Insurance Consulting $6,500 $0 .
Loss Payments $253,000 $275,000
Losses: Audit Adjustment for GASB10 $0
Legal Services $20,000 $80,000
Technical Services $75,000 $85,000
Insurance Premiums $570,000 $631,700
Total Expenses $924,500 $1,073,700
Budgeted self-insurance fund spending is up by$150K due to higher insurance premiums, loss
payments, legal expenses.
As to the $2.1 million net reduction in 0&M, see response to Question 2.
See response to Question 8 for a combined O&M, Debt Service and Self Insurance budget.
We are unsure about the question regarding the add back of$1M.
12. 'Figure 2 -why are property taxes so flat. Seems like property values are increasing far
greater- may an additional table of property tax changes over time earlier in the budget.
Only a 4%growth over previous year
Response:
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o In reviewing the property tax revenue we receive, it does not seem to steadily increase; it
seems to follow a pattern of larger increases every other year followed by smaller increases in
the off years.
o Over the last 5 years, our actual increase in property tax revenue has been about 6% per year
o Planning & Development staff have noted a slowing of applications for new construction at
the permit counter and this was taken into account when the forecast was made
o Like other budget forecasts, we also have a timing issue that we have to make property tax
revenue projections for the upcoming year before we get final numbers for the current year.
We take all of this into account when we do financial projections and ratemaking (i.e. once we have
confirmed there is a positive variance, we quickly incorporate it).
We will reconcile these numbers on an annual basis and any favorable variance will be presented
to the Board for disposition.
13.Table 2 page 37 -what do property value numbers growth?
Response:
Property tax was budgeted at $16,828,591 in FY2018-19 and $17,502,415 in FY 2019-20.
This represents 4%growth from budget to budget. Additional discussion regarding the current
outlook for Ad Valorem taxes related to the FY2018-19 project follows:
What is the projected ad valorem revenue outlook for Fiscal Year 2018-19?
The FY2018-19 budget anticipated $13.31VI in ad valorem revenue for the construction fund
and $3.5M for Debt Service for a total of$16.8M.
The February 2019 Revenue Report shows a favorable variance of$1.7M for ad valorem (Tax
Revenue) in the construction fund. The District collects ad valorem along with SSC revenue in
December and April; the December payment may be higher as residents can make a single tax
payment rather than splitting into two payments.
The property tax revenue is dependent upon property values and administered by the
County. This revenue does not increase steadily; rather staff has monitored the revenue and
noticed that it increases in a stepwise fashion with larger increases every other year.
The District received $17.65M for FY17-18. To account for the higher property tax revenues,
staff increased the financial model from a growth projection of 1.5%per year to 3%for
FY2019-20 and beyond.
Using the amount received in FY17-18, there is the potential for an additional $11M in Tax
Revenue as a favorable variance which could be used toward the sewer construction fund.
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14. Would be nice to have a table of the historical percentages of Salaries and benefits
against the total O&M budget.
Response:
Data source: Salary data is from page 249 of current year budget, page 16 of FY 2016-17 budget
FY2015-16 FY2016-17 FY2017-18 FY2018-19 FY2019-20
1 0&M 81,464,864 89,810,918 89,713,587 89,720,456 87,584,775
2 Salaries 30,943,085 33,158,707 34,797,628 35,571,037 38,060,443
3 Benefits Active 17,377,128 17,907,904 16,627,358 16,635,295 15,176,010
Employees
4 Capitalized (3,812,007) (3,744,593) (3,972,203) (3,979,723) (4,448,369)
Overhead
5= Salaries&Benefits 44,508,206 47,322,018 47,452,783 48,226,609 48,788,084
1+2+3+4 Net of Capitalized
Overhead
6=5/1 Salaries&Benefits 51% 53% 53% 54% 56%
Net of Capitalized
Overhead/O&M
7 Retiree benefits 5,258,400 5,362,300 5,946,000 5,941,200 4,001,000
8 UAAL 14,400,700 14,241,700 14,179,261 131220,478 12,336,841
9=5+7+8 Total of all above 64,167,306 66,926,018 67,578,044 67,388,287 65,125,925
10=9/1 Total of all above/ 73% 75% 75% 75% 74%
0&M
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15. Page 45 Delta Dental - seems there is another$50,000 savings here? 10.75% reduction.
Why has District experience mod gone up so high?What will be done to correct this?
43.2% increase?
Response:
Delta Dental: Certain benefit costs have to be estimated prior to the availability of quotes by
carriers;this has been a timing issue that has affected the budget development for numerous
years.
Staff are keeping a running list of expenses that are likely to be above or below budget; this one
fortunately is likely to be below budget. Others, including for HHW collection service, polymers,
and others are running above budget. As there will be ups and downs throughout the year after
any snapshot is taken, it is not practicable or necessary to update the budget for these minor
matters.
Workers' Comp.: We had six very expensive WC claims in FY 2017-18. The combined incurred cost
of those six cases exceeds $540,000 (thus far). The other years' claims history did not account for
the jump. These six added to the population of claims used to calculate ExMods created the
problem.
What we're doing about it:
• Joining the CSRMA Medical Provider Network effective 7/1/19
• Adding Company Nurse medical triage services effective 7/1/19
• Evaluating the use of internal WC cost allocation by department/division for FY 2020-21
16. Page 46, Section D utilities- PGE indications maybe a 25% increase due to bankruptcy
was this considered in budget development?
Response:
What have we assumed for any potential rate increases?
For the electrical budget, the methodology estimates the current budget based on electricity costs
for the previous five years. Other considerations are factored in, including; cogen maintenance,
wet weather pumping, furnace turnarounds, and importing for GHG. Cogen supplies 90%of the
plant electrical load. Our PG&E contact typically gives us notice of upcoming changes to our service
to minimize surprises for both the gas and electricity sides. Our contact checked with their rate
specialist, and they are not aware of a such a drastic 25% increase, but they will have a rate
communication going out in June to provide guidance on future rate forecasts.
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Do we normally.look at proposed rate increases in setting the energy budget?
Generally,we use existing rates, but would include formally approved rate adjustments. In the
past when our gas transport rates increased, our point of contact let us know beforehand, so the
gas budget could reflects those cost increases. PG&E changes their electrical rate schedule up to
four times per year, and over the past two years, it's averaged 3-4%year to year. The energy
budget is requested in early February, so it doesn't reflect late April developments. Electrical
expenses have remained in line with budgets for the past five years.
While several alternatives are conceivable for how to budget for energy costs, we use approach #2:
a. We base the budget on existing rates
b. We base the budget on any formally approved rate adjustments.
c. We base the budget on any formally proposed rates by PG&E, notwithstanding that the rates
the CPUC may approve are likely to differ
d. We base the budget on expected rates, including any proposed by PG&E either formally or
informally (such as "rates may increase 25%")
17. Page 46-what additional legal research and advice required?
Response:
The explanation relates to "Professional & Legal fees-This expense increased by$29,000 or 3.4%
due to a need for additional legal research and advice to District staff.
The FY 2018-19 budget for legal costs for this Division was $75,000. Year to date through
February, costs were$72,983, which equates to an annual run rate of$125,114. Accordingly,the
budget for this line item in GM/SOD division was increased by$25,000. The work specified in that
Division anticipates legal support for:
o Legal Research and Advice
o Conflict of Interest Statements & Participants
o Record Retention Policy
o Acceptance of Subpoenas
o Claims Processing
o PRA Procedures
o Records Retention Schedules
o Preparation for Potential Litigation
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18. Page 49- don't agree with proposed increase in OT-21%what is being done to hold the
line on this-$300,000 why justified?Where plant or collections?
Response:
Page 49 refers to an increase in overtime of"$0.3 million an increase of 21%". Page 249 shows the
specific (unrounded) increase at$260,845 for O&M, which is comprised of numerous changes by
separately tracked work area.
Budget (Current Projected Budget (Proposed Budget Budget to
Year) (FY18-19) Actual Year (FY19-20 (Variance of Budget Variance
(Current Current Year
Year) Budget-
Projected
Actual)
Total 1,120,808 1,207,800 1,381,653 -173,8531 -260,845
Of 35 separately tracked work units, seven had decreases in overtime, seven were flat, 13 had
increases less had less than $5000, six had increases from $5K to $20K, and two had increases more
than $20K. The two major contributors are Plant Operations (Operators) at $120,900 and
CSO/Field Operations/Construction at$69,000. Overall, CSO cost centers had an increase in
budgeted overtime costs of$88,000 (inclusive of the $69,000 for construction).
The increase at the Plant is due in part to increased CIP work and the increase at CSO is due in part
to the increase in cities doing street repairs, which requires us to go out and raise manholes.
19. Page 51 why aren't summer and interns listed as partial FTEs not whole FTEs? In future
pages also?Summer inter is 0.3 FTE?
Response:
Interns and summer students are not included in the overall staffing figures of full time 291
positions listed on page 51.
Interns and summer students are shown in the detailed budget discussions from page 59-126, but
are not converted (pro-rated)to partial figures based on the duration of their stay over the course
of a year. That is a refinement that could be done in the future but would require gathering some
additional information about their length of stays (particularly interns).
12
20. Page 51 cost of four reallocations?Auditor added also?
Response:
In the delegation of authority for the GM, Mr. Bailey has the authority to add/delete positions as
long as he does not add more positions or increase the budget. HR tracks the cost impact of any
implemented position changes/reallocations. The results are shown below:
• Contracts Analyst (Purchasing)to Contracts Specialist (Capital Projects) {NO COST IMPACT}
• Two Assistant Engineers (Capital Projects)to one Engineering Assistant 1/II (Capital Projects) and
one Associate Engineer (Capital Projects)
{MINOR COST IMPACT OR SAVINGS- Will depend on level of Engineering assistant it is filled
at: If we fill at the.'ll level it will be a net cost of$532.44. If we fill at the] level, cost savings.)
• Two Control Systems Engineers (Plant Operations)to Utility Systems Engineers (Plant
Operations)
(Title change only) (NO COST IMPACT)
• Transfer of One Associate Engineer to Utility System Engineer (Capital Projects) (updated) (NO
COST I M PACT',
Although the Internal auditor position will remain vacant for the current FY,the services are
budgeted in Finance Division at $190,000.
This position was included in the 291 budgeted FTEs to reflect the recommendations of the 2015
Staffing Assessment, where the position was approved.
21. Page 53 - how are the impacts of the capital program over the ten year financial plan on
O&M included?See 26 below.
Response:
Page 53 indicates as follows:
Impact of Capital Improvement Plan on Ongoing Operations& Maintenance Budget
Central San's Capital Improvement Budget and the extent to which FY 2019-20
nonrecurring capital
investments will affect the proposed or future years' operating budget are described
later in this
document. In general, given the nature and composition of the FY 2019-20 Capital
Improvement
Budget, these effects are minimal. Future capital projects could have more substantial
impacts (e.g.,
additional personnel costs, additional maintenance costs, or additional utility costs, or
conversely,
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anticipated savings such as reduced utility costs or lower maintenance costs) that would
be specified
further in the year such projects are budgeted.
We have included a paragraph on each project description in this CIB budget. For future Budget
books, we are working on including a section on a more detailed projected of any additional O&M
cost (labor, chemical, utilities, etc.).
22. Page 73/73 please explain accrued compensated absence expenses?
Response:
Certain costs relating to all Central San employees or retirees are centrally budgeted in the HR
Division. The following are items budgeted in HR but not specific to that division:
o Salaries &Wages includes $400,000 for Compensated Absences Accrual Payments
o Employee benefits includes $450,000 for Compensated Absences Accrual Payments and
$30,000 for Unemployment expenses
Compensated Absences Accrual and Unemployment expenses are budgeted solely in HR due to the
difficulty in predicting these expenses. Compensated Absences accruals and payments happen
regularly but it is difficult predict the distribution amongst the various cost center. So instead of
having numerous favorable/unfavorable variances occurring in many of the cost centers, it was
determined that a roll-up amount to a single cost center gives a more stable and accurate picture
of these expenses. Central Services used to house these expenses, but they were moved to HR a
few budget cycles ago to mirror our retiree healthcare consolidation.
There are two different codes related to compensated absences that slightly differ from one
another. GASB requires us to state on our financial statements the amount of outstanding liability
related to the cash value of earned accruals on the books. Each fiscal year end (FYE) staff review
the change in value of accruals on the books (almost always an increase) and record an expense to
the benefit code "Accrued Compensated Abs";the offsetting accounting entry is against a liability
account. Then, upon termination of an employee, any accrual payouts are charged to that liability
account (up to the previous FYE amount). The second code under Salaries &Wages, Comp Abs-
Accrual Payments, is used for any terminal accrual payout that is greater than the employee FYE
accrual total. This code is also used for any in-service vacation payouts.
Unemployment insurance payments are not common and could come from any of our 40+
different cost centers, and the cost is accordingly recorded centrally in HR for budget purposes.
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23. Page 89-what is Director of Finance included here when not discussed in the narratives
for the department
Response:
The Director of Finance and Administration does not have its own operating division budget, and the
position has historically been budgeted within the Office of General Manager. The position is mentioned
in the last paragraph of the Overview of the GM Operating Division on page 84; however,to add more
discussion in the narrative, staff has reworked and added,to the last paragraph in the GM's Operating
Division Overview to read as follows on page 84: "This office's staffing budget includes the administrative
staff supporting the General Manager, Finance Division, and the rest of the Administration Department,
as well as the Director of Finance and Administration, who provides oversight over the administrative
divisions of Information Technology, Finance, Purchasing and Materials Services, Communication
Services and Intergovernmental Relations, and Risk Management."
24. Page 126 Recycled Water-expenses $1.6 revenue$420,000 please explain movement
of expenses between plant and distribution?
Response:
O&M expenses did not change substantially from FY 2018-19 to FY 2019-20:
Recycled : e18-19 FY 2019-20 Budget to Percent
Expense Actual Budget Projected Budget Budget Variance
Vananc
Summary
Treatment Plant $572,878 $712,100 $718,800 $627,700 ($84,400) -12%
O&M
Distribution $450,880 $840,694 $603,433 $980,648 $139,954 17%
O&M
25. Page 126 value not charged -don't existing rate payers have an obligation here?Should
be billed to wastewater plant O&M -this section is murky to me.
Response:
This format of the budget book is generally unchanged from the past two years (FY17-18 and FY18-
19), except that trend information was added for FY18-19 and FY19-20. Planning and
Development presented an update on Recycled Water to the Board during 2017, and additional
reporting on the budget has been developed in an effort to provide continued transparency of that
nature.
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The top table on page 126 shows wastewater costs. The bottom table shows values, and includes
the "value not charged category". Up until a few years ago,these costs were not shown to the
public or the Board.
The "value not charged" is not included as an element of the O&M budget. An alternative
presentation would be to increase the O&M budget and our revenue projection, however they do
effectively cancel each other out. Since our current budget is based on actual expenditures and
not our recycled water rates multiplied by the volume used, the alternative presentation would
likely increase the budget with an offset of additional revenue. If the Board would like to pursue
this alternative presentation that could be done for the following year's budget; however
proceeding with broader changes to recycled water costs and revenues were not previously
supported by the Board.
Planning & Development will be looking at the rates we charge during the next fiscal year to have
them catch up to actual costs, and this topic could be further pursued at that time.
26. CIP Program project summaries should include real evaluations of O&M impact for the future.
Response:
For this Budget book, we have added a segment on the capital project description summary sheet
related to Operating Department Impact and Funding Sources. This is a good topic of discussion
and we will certainly add more details in the future. Life Cycle Cost is an important element of a
project. We will add more relevant and specific O&M details in future budget book.
27. Page 248 et seq-do the tables include debt and insurance fund salaries and benefits?
That is real O&M costs.
Response:
Utility revenue requirements and their composition differ across jurisdictions. For investor owned
utilities, O&M typically includes depreciation. Other utilities (Particularly not for profit/municipal
utilities) may use debt service as an element of the revenue requirement rather than
depreciation. In the experience of the Director of Finance &Administration, debt service costs are
typically presented as a separate element of the revenue requirement.
Self-insurance fund replenishment costs are included in the 0&M budget. From a spending
authorization standpoint, the Board separately approves the Self-Insurance fund budget which
includes all expenditures of the Self Insurance Fund.
See response to question 11.
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