HomeMy WebLinkAbout03. Receive April 2020 Financial Overview and Investment Portfolio Reports Page 1 of 8
Item 3.
,ek CENTRAL SAN
CENTRAL CONTRA COSTA SANITARY DISTRICT
June 4, 2020
TO: HONORABLE BOARD OF DIRECTORS
FROM: CHRISTOPHER THOMAS, FINANCE ADMINISTRATOR
KEVIN MIZUNO, FINANCE MANAGER
REVIEWED BY: PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
ANN SASAKI, DEPUTY GENERAL MANAGER
ROGER S. BAILEY, GENERAL MANAGER
SUBJECT: RECEIVE APRIL 2020 FINANCIAL OVERVIEW AND INVESTMENT
PORTFOLIO REPORTS
Attached for review is the financial overview for April 2020 providing a high level FY 2020-21 year-to-date
variance analysis for the Running Expense (O&M Fund) and Sewer Construction Funds (Attachment 1).
As the title implies, this is a financial overview and more in-depth budget-to-actual reports are provided to
the Board on a quarterly basis (ending March 31st, June 30th, September 30th, and December 31st). In
addition to the attached financial overview are the monthly Investment Portfolio Reports for the O&M Fund,
Sewer Construction, and Self-I nsurance funds (Attachment 2).
Financial Highlights
The O&M Fund expenditure results are favorable at approximately 75.9% of the total FY 2019-20 budget,
or 7.0% under the year-to-date budget target of 82.9%. O&M Fund revenues are also slightly above the
year-to-date target by$661,548 (0.9%), primarily attributable to favorable results for sewer service
charges. The slightly favorable results for sewer service charges results mainly from higher flows (based
on calendar year 2018 consumption)from non-residential customers as well as development activity being
slightly higher than projected in the FY 2019-20 budget.
The Sewer Construction Fund has spent$40.7 million or 87.9% of the total year-to-date budget for capital
project expenditures. While under the 90% target, this is still relatively favorable news considering the
pace of capital projects has slowed following the "shelter in place" order originally issued by Contra Costa
County Health Services on March 16, 2020 currently in effect until May 31, 2020. To further put the year-
to-date capital expenditure rate into perspective, the current year capital project expenditures pace through
April (5/6 of the fiscal year) is 61.5% of the adopted budget, compared to the rate for this same 10-month
timeframe in the prior fiscal year at 65.3%. While staff still expects the pace of several capital projects to
accelerate in the remaining two months (May through J une) of the fiscal year following the District's
expected "s-curve" trend for capital projects, the "shelter in place" order will inevitably cause some
disruption, the extent of which is not yet fully known. Most notably, construction for the following large
June 4, 2020 Regular Board Meeting Agenda Packet- Page 18 of 449
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capital projects is expected to ramp up in the final months of the fiscal year: Solids Handling Facility
Improvements (District Project (DP) 7348), Mechanical and Concrete Renovations (DP 7351),
Moraga/Crossroads Pump Station (DP 8436), and Enterprise Resource Planning Replacement (DP
8250) capital projects. On the revenue side, the Sewer Construction Fund is reporting a positive year-to-
date variance of $2,382,771 (4.6%). This relatively large positive year-to-date revenue variance is
predominantly attributable to facilities capacity fees generated from the large, 200-apartment Avalon Bay
development project in Pleasant Hill and other smaller developments coming in higher than projected in
the FY 2019-20 budget.
Investment Portfolio Highlights
In accordance with Section 53646 of the Califomia Govemment Code, staff shall submit an investment
report to the General Manager and Board of Directors. While state law mandates this reporting shall be
done at least quarterly, Central San's Investment Policy further stipulates this reporting shall be conducted
on a monthly basis. Accordingly, the attached is the investment portfolio report for the month of April 2020,
which was reviewed by the Finance Committee on May 18, 2020.
The investments held by Central San on April 30, 2020 are shown by fund in the attached Investment
Portfolio Report. Pursuant to the Investment Policy and state law, the Investment Portfolio Report reports
the following: type of investment, issuer, date of maturity, par(or face) and dollar amount invested on all
securities, as well as the current market value as of the date of the report. The following table provides a
summary of the highlights included in the attached Investment Portfolio Report:
Fund Total Total Market Wgtd. Wgtd. FY 2019-20 FY 2019-20
Face Value Avg. Avg. Actual Int. Budgeted Int.
Value Yield Maturity Rev. (YTD) Rev. (YTD)
O&M $30.1 M $30,451,682 1.66% N/A $554,488 $791,660
Sewer $32.OM $32,373,882 1.66% N/A $895,395 $561,660
Construction
Self-Insurance I $6.9M $6,980,618 1.66% N/A 1 $124,199 $149,910
O&M Fund investment earnings are significantly under the year-to-date budget due to the significant
decline in market yields for fixed income held-to-maturity investments following the Board's approval of the
FY 2019-20 budget. During the preparation of the FY 2019-20 budget in March/April 2019, the Running
Expense Fund was yielding approximately 2.48%, whereas the Fund's yield in April 2020 was only 1.66%,
reflecting an enormous 82 basis point drop (33% retraction). As a ramification of this market situation, staff
projects FY 2019-20 investment income of the O&M Fund to be approximately$790,000, falling short of
the total budget for this line item by$160,000, or 16.8%. Fortunately, positive variances in other
operational revenues of the Running Expense fund are expected to offset this revenue loss.
As of April 30, 2020, Central San's entire investment portfolio was held in the Local Agency Investment
Fund (LAI F) state pool at a book value of approximately$69 million,just under the maximum investment
threshold of $75 million. Central San was entirely invested in LAI F and under the maximum allowed cap
for two reasons. First, Central San was notified on March 13, 2020 that the Contra Costa County
Treasurer-Tax Collector(County)was discontinuing many investment services for Treasury Pool
participants as a result of staffing issues caused by the COVI D-19 pandemic. While transfers to and from
LAI F were still being processed, purchases and sales of securities were no longer being conducted by
the County. The County later notified Treasury Pool participants that investment activity was resuming on
April 20, 2020, shortly before monthly payroll and checks were being processed requiring additional
liquidity. The second reason for only being invested in LAI F as of April 30, 2020 is that the recent severe
financial market conditions caused by the COVI D-19 pandemic have resulted in increased investment risk
as well as substantial yield reductions in fixed income instruments authorized by Central San's investment
June 4, 2020 Regular Board Meeting Agenda Packet- Page 19 of 449
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policy making LAI F an optimal (and diversified) investment option for the time being.
Overall, the portfolio is in compliance with the Board's adopted policy regarding Central San's investments and
as of April 30, 2020. The attached Investment Portfolio report also indicates Central San will meet expenditure
requirements for the next six months from a combination of maturing investments and revenues from budgeted
operations.
Strategic Plan Tie-In
GOAL THREE: Be a Fiscally Sound and Effective Water Sector Utility
Strategy 2- Manage costs
ATTACHMENTS:
1. Financial Overview
2. 1 nvestment Reports
June 4, 2020 Regular Board Meeting Agenda Packet- Page 20 of 449
CENTRAL CONTRA COSTA SANITARY DISTRICT ATTACHMENT 1
May 11,2020
TO: THE BOARD OF DIRECTORS
VIA: KEVIN MIZUNO K'W1,�1" V- $S~
FROM: CHRIS THOMAS (6S I UKA&S
SUBJECT: O&M Variance Analysis
The following are brief year-to-date variance explanations through April 30,2020
YTD
Total FY YTD YTD Favl(Unfav)
O&M Revenues: Budget Budgeted Actual Variance Explanation
County SSC$1M above YTD variance. Direct SSC higher than budgeted due to increased
Total $ 89,560,370 $ 71,179,950 $ 71,841,498 $ 661,548 development and metered consumption.
O&M Expenses:
Total Labor Charges $ 52,789,084 $ 43,426,710 $ 40,787,313 $ 2,639,397 Some positions budgeted for in July are filled later in the fiscal year resulting in savings,
and charges of labor to capital projects higher than planned for in O&M budget.
Unfunded Liabilities 12,436,841 10,294,370 10,321,170 (26,800) No significant variances.
Chemicals 1,620,000 1,349,970 1,191,646 158,324 Invoice processing and payment delayed to due implementing electronic approvals as a
result of shelter in place. Variance expected to reduce by close of next fiscal period.
Utilities 4,209,350 3,507,730 3,465,522 42,208 No significant variances.
Repairs&Maintenance 5,242,867 4,368,830 3,426,769 942,061 Mainly due to Outside Repairs,General repairs&maintenance and CLOUD SAS being
lower than budgeted thus far in the fiscal year. Budget is spread evenly throughout the
year,however actual activity occurs sporadically every month.
Hauling&Disposal 1,186,175 988,420 772,074 216,346 Mainly due to hazardous waste disposal being lower than budgeted thus far in the fiscal
year. Budget is spread out evenly throughout the year,however actual activity occurs
sporadically every month.
Professional&Legal Services 874,300 728,500 295,463 433,037 Lower mostly due to lower Legal expenses thus far in the fiscal year.
Outside Services 3,639,547 3,094,762 1,908,546 1,186,216 Mainly due to technical services expenses being lower than budgeted thus far in the fiscal
year.
Materials&Supplies 2,152,127 1,793,165 1,689,955 103,210 Invoice processing and payment delayed to due implementing electronic approvals as a
result of shelter in place. Variance expected to reduce by close of next fiscal period.
Other Expenses 2,464,834 2,141,198 1,668,147 473,051 Mainly due to Public Information,BACWA expenses,being lower than budgeted thus far in
the fiscal year. Budget is spread evenly throughout the year,however actual activity
occurs sporadically every month.
All Other 969,650 945,530 951,263 (5,733) Minor variances for multiple account categories.
Grand Total O&M Expenses $ 87,584,775 $ 72,639,185 $ 66,477,868 $ 6,161,317
June 4, 2020 Regular Board Meeting Agenda Packet- Page 21 of 449
CENTRAL CONTRA COSTA SANITARY DISTRICT
May 11, 2020
TO: THE BOARD OF DIRECTORS
I��ivin. {'f?i�czwo
VIA: KEVIN MIZUNO /
FROM: CHRIS THOMAS r,I�VISt OwtAS
SUBJECT: Sewer Construction Variance Analysis
The following are brief year-to-date variance explanations through April 30, 2020:
YTD
Total FY YTD YTD Fav/(Unfav)
S/C Revenues: Budget Budgeted Actual Variance Explanation
SSC and Property Tax higher than budgeted. Facilities Capacity Fees
higher than budgeted due to payments received from Avalon Bay new
$ 65,598,130 $ 51,797,130 $ 54,179,901 $ 2,382,771 building-200 apartments and commercial development.
Total $ 65,598,130 $ 51,797,130 $ 54,179,901 $ 2,382,771
Total FY YTD YTD YTD
S/C Expenses: Budget* Budgeted Actual Remaining %Spent of Projected YTD Budget
Total $ 74,669,521 $ 46,314,948 $ 40,702,881 $ 5,612,067 87.88%
Includes 18/19 carry-over($8,493,521)
June 4, 2020 Regular Board Meeting Agenda Packet- Page 22 of 449
ATTACHMENT 2
CENTRAL CONTRA COSTA SANITARY DISTRICT
RUNNING EXPENSE FUND
TEMPORARY INVESTMENTS Page 6 of 8
APRIL, 2020
INVESTMENTS INTEREST INCOME
(cents omitted) (cents omitted)
DATE OF
Days to ANNUAL CASH B.O.M. PURCHASE E.O.M. E.O.M % of CURRENT B.O.M. E.O.M.
NO. ISSUER TYPE PURCHASE MATURITY Maturity YIELD OUTLAY FACE VALUE (MATURITY) FACE VALUE MKT VALUE Portfolio MONTH CUMULATIVE CUMULATIVE
519 State of Calif. LAW 10/99 - ------- 1 (1) $30,100,000 $30,100,000 $30,100,000 $30,451,682 100.00% $41,068 $265,301 $306,369
(3) $30,100,000 $30,100,000 $0 $30,100,000 $30,451,682 100.00% 41,068 265,301 306,369
(2)
163,029 163,029
$41,068 $428,330 $469,398
NOTE:(1) Annual yield of Local Agency Investment Fund (LAIF)varies with the composition of the Fund.
The estimated yield as of April, 2020 was 1.66°/x.
(2) The face value indicates the value of the investment if held until maturity, which is the usual District Practice.
(3) The weighted average yield of the total Running Expense portfolio is 1.6600%. The weighted average maturity is .15 years.
(4) The market value of the portfolio on April 30, 2020 was $30,451,682.
(5) All investments held by the Running Expense Fund comply with Central San's investment policy approved by the Board of Directors [California Government Code §53646(b)(2)]
(6) Sufficient liquidity and anticipated revenues are available for Central San to meet budgeted expenditures of the Running Expense fund for the next six (6) months [California Government Code §53646(b)(3)]
(7) Of the total investments held in the Running Expense Fund, $1,610,000 is restricted for the Rate Stabilization Fund.
June 4, 2020 Regular Board Meeting Agenda Packet- Page 23 of 449
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CENTRAL CONTRA COSTA SANITARY DISTRICT
SEWER CONSTRUCTION FUND
TEMPORARY INVESTMENTS
APRIL, 2020
INVESTMENTS INTEREST INCOME
(cents omitted) (cents omitted)
DATE OF Days to ANNUAL CASH B.O.M. PURCHASE E.O.M. E.O.M. %of CURRENT B.O.M. E.O.M.
NO. ISSUER TYPE PURCHASE MATURITY Maturity YIELD OUTLAY FACE VALUE (MATURITY) FACE VALUE MKT VALUE Portfolio MONTH CUMULATIVE CUMULATIVE
519 State of Calif. LAIF 8/86-2/90 ---- 1 (1) $32,000,000 $32,000,000 $32,000,000 $32,373,882 100.00% $43,660 $427,062 $470,722
(4) $32,000,000 $32,000,000 $0 $32,000,000 $32,373,882 100.00% 43,660 427,062 470,722
(3) (5)
388,216 388,216
43,660 $815,277 $858,938
NOTE: (1) Annual Yield of Local Agency Investment Fund (LAIF)varies with the composition of the Fund.
The estimated yield as of April, 2020 was 1.660%.
(2) The face value indicates the value of the investment if held until maturity, which is the usual District practice.
(3) The weighted average yield of the total Sewer Construction portfolio is 1.6600%. The weighted average maturity is .11 years.
(4) The market value of the portfolio on April 30, 2020 was$32,373,882.
GASB 31 requires adjusting investments to market value. The District will adjust annually, but report market values monthly.
(5) All investments held by the Sewer Construction Fund comply with Central San's investment policy approved by the Board of Directors[California Government Code §53646(b)(2)]
(6) Sufficient liquidity and anticipated revenues are available for Central San to meet budgeted expenditures of the Sewer Construction fund for the next six(6) months [California Government Code§53646(b)(3)]
(7) Of the total investments held in the Sewer Construction Fund, $1,000,000 is restricted for the Rate Stabilization Fund.
June 4, 2020 Regular Board Meeting Agenda Packet- Page 24 of 449
CENTRAL CONTRA COSTA SANITARY DISTRICT
SELF-INSURANCE FUND
TEMPORARY INVESTMENTS Page 8 of 8
April, 2020
INVESTMENTS INTEREST INCOME
(cents omitted) (cents omitted)
DATE OF
Days to ANNUAL CASH B.O.M. PURCHASE E.O.M. E.O.M % of CURRENT B.O.M. E.O.M.
NO. ISSUER TYPE PURCHASE MATURITY Maturity YIELD OUTLAY FACE VALUE (MATURITY) FACE VALUE MKT VALUE Portfolio MONTH CUMULATIVE CUMULATIVE
519 State of Calif. LAW 10/99 - ------- 1 (1) $6,900,000 $6,900,000 $6,900,000 $6,980,618 100.00% $9,414 $109,160 $118,574
(3) $6,900,000 $6,900,000 $0 $6,900,000 $6,980,618 100.00% 9,414 109,160 118,574
(2) (4)
5,272 5,272
$9,414 $114,432 $123,846
NOTE: (1) Annual yield of Local Agency Investment Fund (LAIF) varies with the composition of the Fund.
The estimated yield as of April, 2020 was 1.660%.
(2) The face value indicates the value of the investment if held until maturity, which is the usual District Practice.
(3) The weighted average yield of the total Self-Insurance portfolio is 1.6600°/x.
(4) The market value of the portfolio on April 30, 2020 was $6,980,618.
(5) All investments held by the Self Insurance Fund comply with Central San's investment policy approved by the Board of Directors [California Government Code §53646(b)(2)]
(6) Sufficient liquidity and anticipated revenues are available for Central San to meet budgeted expenditures of the Self Insurance fund for the next six (6) months [California Government Code §53646(b)(3)]
June 4, 2020 Regular Board Meeting Agenda Packet- Page 25 of 449