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Home My WebLink About04.b. Receive May 2021 Budget-to-Actual Financial overview Page 1 of 6 Item 4.b. CENTRAL SAN July 27, 2021 TO: FINANCE COMMITTEE FROM: CHRISTOPHER THOMAS, FINANCE ADMINISTRATOR KEVIN MIZUNO, FINANCE MANAGER REVIEWED BY: PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION ROGER S. BAILEY, GENERAL MANAGER SUBJECT: RECEIVE MAY 2021 BUDGET-TO-ACTUAL FINANCIAL OVERVIEW Financial Highlights Attached is the Financial Overview Report summarizing Fiscal Year(FY) 2020-21 financial results for the Running Expense (O&M) and Sewer Construction (Capital)funds through the month of May 2021. The O&M Fund expenditure results are favorable at approximately$9.8 million (11.8%) under the year-to- date budget estimates. Compared to the prior month, this reflects a modest increase in the favorable spending variance of approximately$1.1 million or 0.3%. This relates primarily to timing issues in a relatively slow month of expenditures, and the favorable O&M spending variance is expected to significantly decrease following annual fiscal year-end close procedures, and the accrual of June expenditures paid in July. The recently adopted budget for FY 2021-22 projected that FY 2020-21 expenditures would be approximately$5.6 million under the adopted budget, and that remains the outlook at this time. Generally, Sewer Service Charges (SSC) are moved from the O&M fund to the Capital fund based on approved budget allocations. However, pursuant to the Board-approved decision to pay off the remaining unfunded actuarially accrued liability (UAAL) balance with CCCERA in June ($70.8 million), the SSC revenues were kept in the O&M fund after being received in April. Therefore, revenues for the O&M fund are above the year-to-date budget projections by approximately$27.0 million, or 58.2%. 1 n August, following the successful close of the FY 2020-21 books, staff plans to bring a budget amendment to the Board to amend the split of SSC revenues between the O&M and Sewer Construction funds to reflect the UAAL payoff and bond issuance transactions. The Sewer Construction Fund has spent$54.9 million through May 2021, representing 65.6% of the estimated year-to-date budget for capital project expenditures. At the end of May 2021, the Sewer Construction Fund reported a negative year-to-date revenue variance of $22.8 million (30.0%), due to the SSC revenues being kept in the O&M fund in order to pay off Central San's UAAL with CCCERA, as described previously. Refer to the attached Financial Overview for additional details on O&M and Sewer Construction fund budgetary results. July 27, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 91 of 100 Page 2 of 6 Stratedc Plan Tie-In GOAL THREE:Fiscal Responsibility Strategy 1—Maintain financial stability and sustainability, Strategy 2—Ensure integrity and transparency in financial management ATTACHMENTS: 1. May 2021 F I nancial Overview July 27, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 92 of 100 Wednesday,July 7,2021 To:The Board of Directors I `CENTRAL SAN From:Finance Division Subject:0&M Fund Budget-to-Actual Overview 5019 IMHOFF PLACE,MARTINEZ.CA 94555-A392 Timeframe:FY 2020-21 Year-to-Date(Through May 2021) YTD YTD Fav/(Unfav) Total YTD YTD Fav/(Unfav) Variance FY Budget Budgeted Actual Variance (%) Significant Variance Explanations Revenue: Operating Revenues $ 62,464,762 $ 43,667,856 $ 70,336,067 $ 26,668,211 61.1% Sewer Construction Fund portion of SSC revenue maintained in 0&M Fund in order to have sufficient cash available for potential UAAL payoff with CCCERA in June 2021. Non-Operating Revenues 2,967,400 2,720,117 3,028,291 308,175 11.3% Positive variance is due to higher than budgeted revenues from Side Sewer Inspection,Right of Way Fees,Lease Rental Income, and Miscellaneous Income through May 2021. Total Revenue $ 65,432,162 $ 46,387,973 $ 73,364,358 $ 26,976,386 58.2% Expenses: Salaries&Wages $ 39,543,191 $ 36,247,925 $ 32,946,334 $ 3,301,591 9.1% Savings result from higher than normal vacancy factor ranging from 4.5%-7.8%through May 2021. Positive variance decreased from 11.1%in March and should continue to shrink due to COLA adjustment. Employee Benefits 11,545,173 10,583,075 9,909,236 673,839 6.4% Savings result from higher than normal vacancy factor ranging from 4.5%-7.8%through May 2021. Positive variance decreased from 8.9%in March and should continue to shrink due to COLA adjustment and increased benefit premium. Unfunded Liabilities 15,827,016 14,508,098 13,823,075 685,023 4.7% Savings result from higher than normal vacancy factor ranging from 4.5%-7.8%through May 2021. Positive variance decreased from 7.1%in March and should continue to shrink due to COLA adjustment and increased benefit premium. Purchased Property Services 6,334,577 5,806,696 4,196,141 1,610,554 27.7% Largely attributable to YTD underspending in the treatment plant for repairs&maintenance through May 2021. Variance expected to contract by close of FY. Purchased Professional,Technical& 6,305,477 5,780,021 3,666,001 2,114,019 36.6% Spending on contracted technical services lower than projected Other Services in various divisions,including:Planning&Development Services, Environmental&Regulatory Compliance,and CSO. Supplies&Materials 9,466,300 8,677,442 7,641,412 1,036,030 11.9% Primarily attributable to savings in Treatment Plant Maintenance Division where YTD general supplies for repairs and maintenance are lower than projected. Other Expenses 1,644,604 1,545,054 1,141,734 403,320 26.1% Lower costs incurred to-date while COVID-19 risk mitigation measures remain in place. Total Expenses $ 90,666,338 $ 83,148,310 $ 73,323,933 $ 9,824,376 11.8% Abbreviations Legend, FY=Fiscal Year PY=Prior Year UAAL=Unfunded Actuarially Accrued Liability SSC=Sewer service Charges Pagel of4 July 27, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 93 of 100 Running Expense Fund(O&M)Total Expense YTD FY 20-21(Millions) $90 $83.1 $80 $75.6 $73.324 $70 $68.1 6.953 $60 $60.5 59.168 $50 $53.0 51.930 $45.5 5.632 $40 $38.0 8.888 $30 $30.5 31.784 5.624 $23.0 $20 18.652 $15.1 2.211 $10 $7.556 .460 July August September October November December January February March April May -Budget -Actual Page 2 of 4 July 27, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 94 of 100 Wednesday,July 7,2021 CENTRAL SAN 171-78032M To:The Board of Directors From:Finance Division Subject:Sewer Construction(Capital)Fund Budget-to-Actual Overview Timeframe:FY 2020-21 Year-to-Date(Through May 2021) YTD Total YTD YTD YTD Fav/(Unfav) Fav/(Unfav) FY Budget Budgeted Actual Variance Variance(%) Significant Variance Explanations Revenue: Sewer Service Charges-Capital $ 56,673,402 $ 54,229,318 $ 30,156,394 $ (24,072,924) -44.4% Sewer Construction Fund portion of SSC revenue maintained in 0&M Fund in anticipation of UAAL payoff to CCCERA in June 2021. Other Revenues 22,979,500 21,595,875 22,889,902 1,294,027 6.0% Attributable to the first property tax installment coming in higher than projected in budget. Capital Contributions 15,300,000 - - - Concord share of treatment plant capital billed at end of the FY. Total Revenue: $ 94,952,902 $ 75,825,193 $ 53,046,295 $ (22,778,898) -30.0% Expenses by Program: Collection System $ 49,686,784 $ 39,259,721 $ 30,042,330 $ (9,217,391) -23.5% Treatment Plant 39,194,584 29,101,611 15,023,581 (14,078,030) -48.4% General Improvements 6,108,365 5,252,206 4,805,029 (447,177) -8.5% Recycled Water 11,506,037 10,025,082 4,982,539 (5,042,543) -50.3% Contingency 2,100,000 - Total Expenses: $ 108,595,770 $ 83,638,620 $ 54,853,479 $ (28,785,141) -34.4% *Includes rollover of unspent capital project appropriations from prior year of$21.0 million. **Spent 65.6%of projected YTD budget. Abbreviations Legend: FY=Fiscal Year PY=Prior Year UAAL=Unfunded Actuarially Accrued Liability Page 3 of 4 SSC=Sewer Service Charges July 27, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 95 of 100 Sewer Fund(Capital)Spending FY 20-21(Millions) $90 $83 $80 $77. $75.27 $70 — $69 9.77 $63. 62.70 $60 — $5 .07 $54.85 $50 $50.9 0.38 3 .82 .63 $40 $41.343 37.209 38.47 $30 1.66 $28.5 4 $25.704 20.37 .670 $20 $ 18.339 6 $10 $8 .69 9.799 7 $3.632 .944 July August September October November December January February March April May —Projected(100%spend) —Actual —90%Target Page 4 of 4 July 27, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 96 of 100