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Home My WebLink AboutFinance MINUTES 05-09-23Page 2 of 30 110ENTRAL SAN REGULAR MEETING OF THE BOARD OF DIRECTORS: BARBARA D. HOCKETT CENTRAL CONTRA COSTA President SANITARY DISTRICT MARIAHN. LAURITZEN President Pro Tent FINANCE COMMITTEE MICHAEL R. MCGILL TAD J PILECKI FLORENCE T. WEDINGTON MINUTES Tuesday,M9, 2023 PHONE: (925) 228-9500 a y FAX.- (925) 372-0192 9:30 a.m. www.centralyan.org rnmmittaa Chair Barbara Hockett Member Mariah Lauritzen Staff. - Katie Young, Secretary of the District Philip Leiber, Deputy General Manager Edgar Lopez, Provisional Director of Engineering and Technical Services (arrived during Item 3.b.) Neil Meyer, Provisional Director of Operations Danea Gemmell, Planning and Development Services Division Manager Kevin Mizuno, Finance Manager Thomas Brightbill, Senior Engineer Christopher Thomas, Accounting Supervisor Olivia Ruiz, Accounting Supervisor Stacey Durocher, Administrative Services Assistant 1. Call Meeting to Order Chair Hockett called the meeting to order at 9:30 a.m. Chair Hockett advised that Items 3.b. and 3.c. would be heard first. 2. Public Comments None. 3. Items for Committee Recommendation to the Board a.* Review proposed Fiscal Year (FY) 2023-24 Central San Operations and Maintenance, Self -Insurance, and Debt Service Budgets May 18, 2023 Regular Board Meeting Agenda Packet - Page 442 of 480 Page 3 of 30 Finance Committee Minutes May 9, 2023 Page 2 Mr. Leiber and Mr. Mizuno provided an in-depth review of the agenda materials, including updated presentation (attached) information that was also provided immediately afterwards to the agenda materials available on the District's website. Staff responded to several questions posed during the discussion of the various budgetary sections. Strategic Plan: As it pertained to the slides regarding Strategic Plan priorities that reflect on the budgetary aspects to achieve the goals, Mr. Leiber explained that one of the updates to the presentation was the addition of a column on the right side to reflect what elements are new compared to the prior fiscal year. Budget Summary: Mr. Leiber advised that the Operations and Maintenance (O&M) is up $5.9 million from the current year and the Capital Budget is down $19.7 due to a higher carry -forward from the current and prior years that is to be spent down. Regarding a question posed by Member Lauritzen about the decrease in self-insurance, Mr. Mizuno advised that the District saw a large increase in last year's budget, while this year the insurance markets have become more stable in contrast. Mr. Mizuno provided the Committee with a Budget change log (Attached) and advised that one of the items on the log was a $300,000 difference. The Financial Summary (in the front of the book) is lower than the Capital Improvement Project (CIB) portion in the back of the book due to a project added to CIB later in the budget development process. Member Lauritzen expressed her dissatisfaction with the use of the 3-D pie charts as the areas shown can appear visually different than the true proportions reflected by the data. Source of Funds: Mr. Leiber stated that the large source of funds is contributed from the 2.9 percent increase proposed for the Sewer Service Charge (SSC), 2.2 percent is from the rate increase and the remaining amount balance from natural growth in residential equivalent units, and the fact that current year collections were higher than budgeted. Mr. Leiber highlighted that an anticipated $43 million was budgeted to be drawn from the State Revolving Fund (SRF) loan this year, which was May 18, 2023 Regular Board Meeting Agenda Packet - Page 443 of 480 Page 4 of 30 Finance Committee Minutes May 9, 2023 Page 3 acquired for the original Solids Handling Facility Improvements Project. Staff anticipates and additional $14 million to be drawn from that source during FY 2023-24. The Property Tax revenue contributes to the source of funds seeing a 9 percent increase, or $2 million, with continued growth in property values. Sewer Service Charge (SSC) Overview: Mr. Leiber advised that the pending SSC rate increase for a single-family resident is $7 (from $690 to $697) and for multi -family a decrease of $24 a year. The overall increase in revenue from all customer classes would be 2.9 percent, with 2.2 percent from the proposed rate increase. Mr. Leiber stated that prevailing wages for services provided to Central San by contractors have begun to be reflected as per a recent court case and contributed to some of the cost pressure seen in the O&M budget. There was a lengthy discussion regarding the possibility of cross training plant operators to fill in and be utilized at the pumping stations. Chair Hockett expressed full support of providing the opportunity for staff to cross train to elevate them and become more versatile. Mr. Leiber advised that Optimization Manager Nitin Goel will be pursuing the idea of more cross training and more versatility in use of staff for the benefit of the employees as well as the agency. Member Lauritzen requested that the definitions for all acronyms be included at the bottom of the slides of the presentation. Unfunded Actuarial Accrued Liability (UAAL) Mr. Mizuno advised that there is no material net change in aggregated UAAL costs, which has been substantially reduced for OPEB due to the large cost savings the District received transferring to CalPERS for healthcare, and the additional discretionary payments made over the past decade. Regarding the discussion of taking District's treasury function in-house, Member Lauritzen inquired if the County will still collect the sewer service charges on the property taxes. Ms. Gemmell confirmed that answer. Member Lauritzen inquired about switching to a two-year budget. Discussion ensued, resulting in a future agenda item request. Member Lauritzen emphasized that there is no immediate urgency to transition from a one-year to a two-year budget cycle, but that she would be interested in getting the discussion agendized sooner rather than later given the planning efforts that May 18, 2023 Regular Board Meeting Agenda Packet - Page 444 of 480 Page 5 of 30 Finance Committee Minutes May 9, 2023 Page 4 would be required by staff should it be approved by the Board. Beyond budget system configuration changes and associated testing efforts, Mr. Mizuno also emphasized that Finance has some other priority projects such as the in-house treasury transition project and the Enterprise Performance Management (EPM) capital budgeting system implementation underway currently and into next fiscal year. Lastly, Mr. Leiber emphasized that should a two-year budget be implemented, that it should coincide with Central San's two-year Strategic Plan. The Committee was satisfied with the responses provided by staff to their questions. COMMITTEE ACTION: Received the information and provided input to staff. Upon conclusion of this item, the agenda moved to Item 4. b.* Review draft Position Paper to conduct a public hearing on June 1, 2023 at 2:30 p.m. to receive public comment and consider adopting uncodified Ordinance No. _ amending the Schedule of Capacity Fees, Rates and Charges replacing Ordinance No. 324 in accordance with District Code, Chapter 6.12 This item was heard as the first order of business. Mr. Brightbill reviewed the presentation included in the agenda materials. In reviewing Slide 7 of the presentation, Mr. Brightbill provided the Committee with the key issues including the inconsistency between one Sewer Service Charge (SSC) for the whole district and having a separate Capacity Fee for the pumped zones. Increased capital spending on pump stations projects recovered through SSC and other charges paid by all Central San customers was making this a more significant issue in recent years. For these reasons, staff believes reviewing the fee methodologies is appropriate. Chair Hockett expressed her concerns regarding equity issues. In response to that concern, Mr. Brightbill and Ms. Gemmell advised that staff, District legal counsel and District consultant Raftelis believe this is a practical solution to eliminate separate pumped zone and gravity Capacity Fees purposes, to charge a single capacity rate. Mr. Brightbill further explained that new customers must pay for their "fair share" with the equity buy -in approach used for capacity fees, and a concern that Central San is effectively charging all customers in the district for pump zone costs. Hence for consistently, it makes sense to move to a single capacity fee approach. May 18, 2023 Regular Board Meeting Agenda Packet - Page 445 of 480 Page 6 of 30 Finance Committee Minutes May 9, 2023 Page 5 There was a discussion regarding discouraging the use of pumping zones. It was mentioned that Central San prefers the use of gravity to move the flow, but ultimately Central San cannot control where projects are built. Mr. Brightbill provided a picture (Attached) and explanation of a development with neighbors who are in a pumping zone verses gravity usage right next to each other. Member Lauritzen inquired about whether the cost differentials were impacting developers' decisions, which she believed should be the case. Mr. Leiber stated that there is no impact to the existing SSC customers to the change in capacity fee approach. The capacity fees would be the same for gravity and pumped zone areas, which is how the sewer service charge is charged. At the conclusion of the questions and discussion, the Committee concurred to conduct the public hearing to consider the proposed Ordinance to amend the capacity fees as presented. COMMITTEE ACTION: Recommended to conduct the public hearing. C. Review draft Position Paper to conduct a public hearing on June 1, 2023 at 2:30 p.m. to receive public comment and consider adopting uncodified Ordinance No. _ amending the Schedule of Environmental and Development -Related Fees and Charges replacing Ordinance No. 321 in accordance with District Code, Chapter 6.30 Mr. Brightbill reviewed the draft Position Paper included in the agenda materials. It was noted that the changes in cost are a result of the need to recoup changes in labor, mileage, and other costs including administrative overhead. A public hearing has been scheduled for June 1, 2023 to discuss these proposed changes. Ms. Gemmell advised that there are two new fees related to work being performed that need to be charged for including: 1) a fee to restart an application after it has expired; and 2) expansion of recycled water charge for cross connection testing. Member Lauritzen inquired about the expiration date of an application. Ms. Gemmell responded that applications expire after a year with no movement and customers can extend one to two times upon request. At the conclusion of the questions and discussion, the Committee concurred to conduct the public hearing to consider the proposed Ordinance to amend the fees as presented. COMMITTEE ACTION: Recommended to conduct the public hearing. May 18, 2023 Regular Board Meeting Agenda Packet - Page 446 of 480 Page 7 of 30 Finance Committee Minutes May 9, 2023 Page 6 At the conclusion of Item 3.c., the agenda reverted back to the original order, beginning with Item 3.a. 4. Announcements This item was heard immediately following Item 3.a. There were no announcements. 5. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items Member Lauritzen requested a future agenda item regarding the consideration of a two-year budget in the future. COMMITTEE ACTION: Received the list and provided input to staff. 6. Future Scheduled Meetings Tuesday, May 23, 2023 at 9:30 a.m. Tuesday, June 20, 2023 at 9:30 a.m. Tuesday, July 18, 2023 at 9:30 a.m. 7. Adjournment — at 11:41 a.m. *Attachment May 18, 2023 Regular Board Meeting Agenda Packet - Page 447 of 480 Page 8 of 30 ITEM 3.a. I 2 Table of Contents Budget Timeline Accomplishments Nexus to Strategic Priorities Budget and Economic Overview Fund -Level Budget Highlights Reserves Analysis Next Steps and Conclusion WIN May 18, 2023 Regular Board Meeting Agenda Packet - Page 448 of 480 1 Page 9 of 30 3 4 Budget Timeline January 12: Board Financial Workshop January -March: Budget data collection, calculations, analysis, and internal review/approval March -April: Budget book development May 4: Draft budget released May 8: E&O Committee review of capital May 9: Finance Committee review of O&M May 18: Budget Presentation June 1: Scheduled Budget Approval June 21: SSC Rate Public Hearing and Special Board Meeting Accomplishments Received 94% customer satisfaction rating for the North Orinda Sewer Renovations, Phase 8 construction project. Received a 4.0 out of 4.0 average customer service rating for collection system emergency calls (as of Q2). Opened a new Recreational Vehicle (RV) Wastewater Receiving Station at no -charge for customers as part of a three-year pilot program. Won the 2022 Uptime Award for Best Work Execution Program —third in five years received by the Plant Maintenance Division. Maintained eligibility for the NACWA Peak Performance Award Platinum status for the 25th consecutive year, recognizing 100% compliance with discharge permit. Responded to 12 sanitary sewer overflows (as of Q2) —the 2nd lowest ever recorded number. Launched Central San's Diversity, Equity, and Inclusion (DEI) initiative. Achieved five consecutive years of receiving the GFOA Distinguished Budget Presentation Award, for the FY 2022-23 Budget. Achieved 22 consecutive years of receiving the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting. 2 May 18, 2023 Regular Board Meeting Agenda Packet - Page 449 of 480 Page 10 of 30 N. Accomplishments (continued) Co -hosted a Recycled Water Townhall in Lafayette. Hosted the fifth session of citizens' academy, Central San Academy. Completed a wastewater cost of service study and recommended a new rate class for accessory dwelling units for Board consideration. Administration Department, Engineering Department, and Plant Operations Division achieved zero lost workdays. Replaced or rehabilitated over six miles of pipes in Alamo, Walnut Creek, Lafayette, Pleasant Hill, and Orinda. Completed the updated Asset Management Plan. Created the Operations Optimizations Division to improve efficiencies and effectiveness in all dimensions of performance at Central San. Continued ongoing optimization and improvement of the new enterprise resource planning (ERP) software, including commencing planning, design, and test phases for Enterprise Performance Management (EPM) capital project management. r May 18, 2023 Regular Board Meeting Agenda Packet - Page 450 of 480 3 Page 11 of 30 7 8 Addressing 9 Strategic Priorities STOMER AND COMMUNITY Provide exceptional service Continue commitment to educating customers about Public outreach, including the highly successful Central San Academy, Unchanged required revenue and resources needed to replace aging student education programs, facilities tours, Pipeline community from FY 2022-23 infrastructure and meet regulatory requirements newsletter, and social media engagement ENVIRONMENTAL STEWARDSHIP Meet regulatory requirements, promote sustainability, and Identify and reduce contributions to climate change 1 tr of vir=-rpv!Ar ,I Anticipate changing regulations and plan for ahernatives to Develop a Fleet Electrification Strategic Plan to meet new state r rquircmcnp maintain reliability and meet requirements requirements for zero -emission vehicles New Achieve new Environmental Laboratory Accreditation Program (ELAP) accreditation standard to maintain self -monitoring and reporting competency 3. treirnmainr<x ri.si�t:I-:i�rr Partnerwith agencies to find creative water solutions Continue exploring partnerships with Contra Costa Water District w srer eup,:rr benefiting the region and state, and identify ways to (CCWD), Santa Clara Valley Water District (Valley Water) and San Updated to maximize cost-effective resource recovery and sustainability Francisco Public Utilities Commission (SFPUC) to advance the Refinery mention Recycled Water Exchange Project to utilize recycled water at nearby focus refineries in place of raw Delta water to increase the amount of drinking beyond water available to the community, and collaborate with East Bay Refinery Municipal Utility District (EBMUD) on a potable reuse study Exchange Addressing 9 Strategic Priorities FY 2023-24 Budgeted Project(s) l 'f WORKFORCE DIVERSITY AND DEVELOPMENT Recruit, educate, empower, and retain a workforce from diverse backgrounds -. = • �:rrg e+rrptnyee Develop, retain, and equip high quality Employee recognition, training and development programs, Unchanged I,-fornuncr And +rw-vidlttC employees with the tools needed to succeed, so Central outside conferences, and professional association memberships to from FY ..:Otlrnr r San may become a preferred employer inspire continuous education and improvement 2022-23 -.. rv- . _ :ure at 4!ve.1 .11, Continue investing in the development of Central San's Retention of the services of a DEI consulting firm to help guide the a.•d-0i,trn•' 1D5r1 DEI initiative efforts of Central San's Task Force, Including Implementing findings of the DEI assessment conducted in FY 2022-23 New i� •' GOVERNANCE AND FISCAL RESPONSIBILITY Uphold integrity, transparency, and wise Financial management in an effective governing model •_. Maursauting respvrmnie Balance capital spending with affordability and rate Financial planning to forecast needs and sensible spending, as well Unchanged ire" an.afkmbb*;IerN impact concerns, and offset infrastructure replacement, as the continued push to become a more cost-effective and efficient from FY regulatory responses, and other expenses with cost -saving operation 2022-23 efforts, efficiencies, optimizations, and innovations Operations Optimization Division established Now SAFETY AND SECURITY Provide a safe, secure, and healthful workplace that foresees and addresses threats Increase security at the treatment plant to address Projects to construct and provide safety upgrades and to Unchanged ._ cur,ty of twin peop!e anc increased contractor and construction activity, and contract with a consultant to help develop and implement the ft. FY :nstts implement an Process and Technology Optimization (PTO) Process and Technology Optimization (PTO) Strategic Plan 2022-23 Strategic Plan with cy6ersecurity in mind May 18, 2023 Regular Board Meeting Agenda Packet - Page 451 of 480 4 Page 12 of 30 Addressing 9 Strategic Priorities IFY r INFRASTRUcrURE RELIABILITY Maintain facilities i and equipment to be dependable, resilient, and long lasting 1rlfr:rtnY:LIM and Make investments In capital improvements and internal Major projects include the Solids Handling Facilities Improvements and Unchanged resources to deliver on increased levels of capital spending Filter Plant and Uearwell Improvements from FY 2022-23 INNOVATION AND AGILITY Optimize operations for continuous improvement, and remain flexible and adaptable i.�fLlR '1 of CrmrAi Continue to champion and initiate projects through the PTO Identify and implement process, chemical and energy efficiency Refined sonwide biasirrrsi anti Strategic Plan. improvements. language trNtntan[ P!cxesse7. aeyl Advance overall business and decision support processes to Continue to work with internal stakeholders to optimize Infrastructure Relined nralert wordflier ana improve efficiencies and effectiveness in all dimensions of (e.g., retrofitting the existing aeration basins to address nutrient tong -age del.+try through. performance at Central San. mitigation, developing a new electrical substation to address redundancy t*•hNA"y and reliability concerns, and evaluating the feasibility of the steam Focused effort on the Operations Department to improve turbine generator as a means to convert steam surplus to electricity). existing operations and develop new and innovative programs, projects, and training activities. Continue to work with Internal stakeholders to develop the long-term Newly plan for the Solids Phase 2 project. added PTO Strategic Plan, including SMART' utility initiatives and technology Newly (e.g., geographic information systems (GIS) and SCADA) roadmaps. added 0 10 5 May 18, 2023 Regular Board Meeting Agenda Packet - Page 452 of 480 Page 13 of 30 Budget Main Points Continued commitment to Excellence and High Level of Service Continued higher inflation impacts several expenditure categories (contributing to overall O&M increase of 7%) Capital Budget reduced in FY 2023-24 due to re - prioritization of projects recognition of carryforward Following slides show funding uses and sources at the fund level Budget Summary Operations & $90,666,338 $79,520,131 $85,019,046 $90,946,671 $5,927,625 7.0% Maintenance Sewer Construction $88,024,000 $107,955,000 $90,976,000 71,202,000 (19,774,000) -21.7% (Capital Budget) Debt Service $2,517,605 $12,891,059 $13,251,922 9,160,142 (4,091,780) -30.9% Self -Insurance $1,153,500 $1,285,000 $2,170,000 2,160,000 (10,000) -0.5% Total Budget" $182,361,443 $201,651,190 $191,416,968 $173,468,813 $(17,948,155) -9.4% *As amended "a cluding contributions to reserves 12 May 18, 2023 Regular Board Meeting Agenda Packet - Page 453 of 480 0 Page 14 of 30 Inflation Trends and Forecast Percent Year -Over -Year inflation Year -Over -Year Inflation, CPI 0 a 7 kMW 6 6 9 2 t 2= =21 2022 CHs0�PAXLV a. 0 13 District -Wide: Use of Funds 2m 202E m FY 2021-22 FY 2022-23 FY 2023-24 $201,651,190 $213,536,900 $194,026,300 $1 10,000.000 $100,000,000 $90,000,000 $80,000,000 $70,000,000 $60,000.000 $50,000.000 $40,000,000 $30,000.000 $20,000,000 $I0,000,000 Operations & Maintenance Sewer Construction Debt Service w FY 21-22 m FY 22-23 r FY 23-24 Budget Budget Budget 14 Self -Insurance Contribution to Reserves May 18, 2023 Regular Board Meeting Agenda Packet - Page 454 of 480 7 Page 15 of 30 District -Wide: Sources of Funds FY 2021-22 FY 2022-23 FY 2023-2�} $201,651,190 $213,536,900 $194,026,300 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 11 I ■ I I Sol i Sewer Service Debt Proceeds City of Concord Tax Revenue Capacity Fees Use of Reserves All Other Revenue Charges Sources ■ FY 2021-22 ■ FY 2022-23 ■ FY 2023-24 15 Sewer Service Charge Rates and Revenues FY FY FY SSC Rates 21-22 22-23 23-24 Change ($) Change I Single Family $660 $690 $697 $7 1.0% Multi Family $625 $654 $622 -$32 -4.9% Other Classes -----Charges Vary — See Ordinance No. 304----- Budget Budget Budget FY 21-22 FY 22-23 FY 23-24 Change Change (i') SSC Revenues ($Thousands) $107,944 $114,657 $117,980 $3,323 2.9%' *Higher than rate increase due to dwelling unit growth, commercial water volume growth and baseline budget estimate in FY 2022-23 lower than actual. —Mod 16 May 18, 2023 Regular Board Meeting Agenda Packet - Page 455 of 480 N. Page 16 of 30 5. Fund -Level Budgetary Highlights 17 0&M Fund Expenditures Other Expenses, 1.9% Other Purchased Poo — Services, 8.0% Purchased Property f: Salaries & Wages, Services, 8.5% Additional UAAL 15.0% Contributions, 1.1% OPEB UAAL UAAL, 0.2% Pension UAAL UAAL, 0.1% f 18 w May 18, 2023 Regular Board Meeting Agenda Packet - Page 456 of 480 Page 17 of 30 0&M Fund Expenditure Trend $50,000,000 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $,000,000 $5 $s,000,osoc Salaries & Wages Employee Benefits N— 0 FY 21-22 Budget 19 E tls�. c9. tea! I It-J._SV Pension UAAL OPEB UAAL Additional UAAL Purchased Other Purchased Contributions Property Services Services M FY 21-22 Actual ■ FY 22-23 Budget ■ FY 22-23 Projection Supplies & Other Expenses Materials ■ FY 23-24 Budget --A 0&M Fund Spending by Department $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 _ i $10,000,000 $5,000,000 SD Executive � Engineering & Collection System Recycled Water Governance Administration Technical Services Operations* Plant Operations** Program* FIFY 21-22 Budget $2,454,169 $19,901,049 $14,880,026 $12,865,365 $27,808,771 $1,610,750 LJFY 22-23 Budget $2,778,212 $20,283,342 $15,208,366 $13,480,048 $31,571,861 $1,697,217 r _. _•: Budget $3,169,121 $21,906,201 $15,257,107 $14,391,917 $34,297,520 $1,924,804 "Function shown separately given significance of service and for comparability with PY budgets "•Includes Office of the Director of Operations, Plant Operations, Plant Maintenance, and Operations Optimization Functions 2 20 10 May 18, 2023 Regular Board Meeting Agenda Packet - Page 457 of 480 Page 18 of 30 Budgeted Staffing Staffing of 298 proposed full-time equivalent positions Conducted exhaustive search to assess feasibility of moving positions from other divisions Four new FTE additions included: HHW Technician (Environmental & Regulatory Compliance) Pumping Stations Operator (Plant Maintenance) System Administrator (Information Technology) I Management Analyst (Finance) , Creation of separate Operations Optimizations Division and m accompanying staffing transfers jo Reclassification of two Department Directors to create two Deputy ,r General Manager positions 21 0&M Labor -Related Budget Highlights Salaries & Wages: Overall increase of $2.4 million (5.6%) COLA is 3.75% (at ceiling) for all bargaining units based on February 2023 SF -Oakland- _ { _ Hayward annual CPI of 5.3% Assumed vacancy factor of 3.0%. Increase in total headcount by 4 positions to a total of 298 Benefits (Current Employee Costs): Overall increase of $1.3 million (10.9%) r CCCERA (Normal Cost) contributions (as % of payroll) increasing 0.63%for legacy employees to 17.51% and increasing 0.21% for PEPRA employees to 11.67% (per December 2021 actuarial valuation) Base plan medical premium increase of 6.5% (based on 2022 to 2023 rates) Capitalized administrative overhead increasing by $0.1 million (1.9%) to $5.7 million 22 11 May 18, 2023 Regular Board Meeting Agenda Packet - Page 458 of 480 Page 19 of 30 O&M Labor -Related Budget ' • 1 Highlights (Continued) UAAL Costs �a'V Overall decrease of $0.2 million (13.0%) , OPEB: Significant decrease in UAAL component of ADC by $1.2 million (89.3%) r F a.• Retiree healthcare premiums estimated at $4.2 million, reflecting a 8.7% decrease from the prior year.` Retiree healthcare costs in excess of ADC budgeted to be reimbursed from OPEB f trust consistent with the prior years Pension (CCCERA) Near elimination of UAAL payments to CCCERA following issuance of 2021 COPs in June 2021 and payoff of pension UAAL UAAL contribution rate of only 0.15% for admin charges to CCCERA Debt service of COPs reported in Debt Service fund Budget includes $1.0 million for "additional UAAL trust contribution" in consideration of market turmoil in 2022 �. 23 Additional UAAL Trust Contribution History Pension Fiscal CCCERA Prefunding Year Trust Trust OPEB Trust Total Source of Funds 2013-14 5.0 5.0 Budgeted 2014-15 5.0 5.0 Budgeted 2015-16 2.5 - 2.5 Budgeted 2016-17 - 2.5 2.5 Budgeted, subsequent Board direction 2017-18 3.4 - 3.4 Board direction on fav variances 2017-18 2.0 2.0 Board direction on fav variances 2017-18 - 2.5 2.5 Budgeted, subsequent Board direction 2018-19 2.5 - 2.5 Budgeted, subsequent Board direction Budgeted, subsequent Board direction; Board direction on 2019-20 1.3 1.3 2.5 favorable variances Budgeted, subsequent Board direction; Board action on UAAL 2020-21 70.8 1.3 - 72.1 payoff 2021-22 - - 1.3 1.3 Budgeted, subsequent Board direction 2022-23 - - 1.0 _ 1.0 Budgeted, subsequent Board direction _ 83.3 10.4' 8.5 102.2 - 'Balance of approximately $12.8 million (including investment gains) utilized to help finance payoff of pension UAAL balance June 2021 24 12 May 18, 2023 Regular Board Meeting Agenda Packet - Page 459 of 480 Page 20 of 30 Pension t OPEB Funding Status Pension Actuarial Results $160 $140 2 $120 0 $100 E $80 c $60 $20 $0 ryO.y'L ryoy3 'L01a 'L01h ryO.y6 'L011 ti0�0 �Oy9 'LOtiO ry0.4'L Year ended 12/31 �UAAL —Funded% 25 0&M Funding Sources Total FY 2023-24 revenue of $89.7 million Largest source of revenue is sewer service charges City of Concord proportion to flow to plant and changes in non - collection O&M expenditures Investment income captured in "other" reflecting growth in Fed rates IT OPEB Actuarial Results 100% $90 100% 90% $80 90% 80% c $70 _ 80% 70% $60 70% 60%E $50 60% 50% $40 50% 40% 30% a $30 40% 30% 20% :< $20 20% 10% $10 ' 10% 0% $0 - 0% O'1'L O.y^� ti ti 01b 01°j 01b Oy`� 010 01q o-ya O'L1 O'I�' O'1�' ti ti ti ti ti ti ti ti ti ti Year ended 6/30 �UAAL —Funded% Permits & Inspection Fees $1.8 2% _HHW $1.0 1% ins) May 18, 2023 Regular Board Meeting Agenda Packet - Page 460 of 480 13 Page 21 of 30 Concord Reimbursement Revenue Analysis (O&M) $24 $22 1. $20 `% •/ $16 $12 0�1 F\,��8 Fy1�� Fy'La� fL'Lp11 ft'10y1 4y10� ft'Lp1p ft'Lp1y �10� �1D1'1 fy'lpls fL" �10'� Actual ProjectedNo UAAL Payoff P.Jected• With UAAL Payoff . hl i T 27 Capital Budget Highlights Infrastructure Investment Over Past 10 Years: $465.6 Million $I ID.D $100.0 '$lo8.0-�--� $90.0 SBBA §91.0 $80.0 E11 $70.0 $66.2 $60.0 $E0,0 $4§.3 E41.2 $42,8 � M.0 $40.0 ~ $Ib F30 f • i E30.0 19.6 E2E! i..- 53.6 so Ir�i F� $2L`9WOP:3 §0.6 0.0 $io §0 - .3 $10.0 ..SIYf !Ml $t•nn $0.0 1p11.1A Fv 10\,t.NS FY 10ty\6 \y.\1 FY 10\7.LB y0\8.19 FY 10\y.10 F� 1p10.1\ 101\.11 l��pecsdi 1� Collection System Program aaTreatment Plant Program F(101 Recycled Water Program =General Improvements Program f Budget C.Estimated Expenditures" prior to FY 2017-18) 28 14 May 18, 2023 Regular Board Meeting Agenda Packet - Page 461 of 480 Page 22 of 30 Sewer Construction Fund Expenditures Total FY 2023-24 expenditures of $71.2 million Reduction in capital spending from prior year budget of $19.8 million Lower capital spending next year will allow for catch-up on unexpected budgetary carryforward Capital spending ramping back up in FY 2024-25, and remaining higher than this for duration of 10-year plan F Sewer Construction Fund Sources Total FY 2023-24 funding sources of $93.1 million, including debt proceeds Decrease in total sources by $35.7 million from the prior year due to lower debt proceeds expected Net contribution to reserves of $21.9 million necessary for future capital program spending increases and rate smoothing 30 Recycled Water General Improvements �$0.8 1% $3.4 5% City of Concord Capital Reimbursement $7.6 8% Capacity Fees Other $4.2 5% $2.6 3% r (Chart in millions) (Chart In millions) May 18, 2023 Regular Board Meeting Agenda Packet - Page 462 of 480 15 Page 23 of 30 Self Insurance Budget Operating Revenues: $2.0 million Investment Income HHW Contribution $316,300 $24,000 I 31 Debt Service Expenditures Total FY 2023-24 expenditures of $9.2 million Incorporates debt service on 2018 Revenue Refunding Bonds and 2021 cops Debt service entirely secured and funded by ad valorem property taxes 32 Operating Expenses: $2.2 million Legal Services, Technical & Other $375,000 Services, $60,000 Expected Losse $175,000 Trustee & Other Costs $6,000 May 18, 2023 Regular Board Meeting Agenda Packet - Page 463 of 480 16 Page 24 of 30 33 Reserve Balance Projections as of June 30, 'i 0'2'3 Reserve Policy Target Projected Balance 10 $37,626,114 $43,235,552 $9,000,000 $89,861,666 $41,300,064 $121,355,886 $9,142,948 $171,798,899 Projected Balance Minus $3,673,950 $78,120,334 $142,948 $81,937,233 Reserve Policy Target Reserves comply with policy specified minimums to ensure adequate resources Impacts allocation of SSC to various sub -funds Affects rate setting, in conjunction with drivers from 10-year financial plan —.99110 34 17 May 18, 2023 Regular Board Meeting Agenda Packet - Page 464 of 480 Page 25 of 30 Reserve Balance Projections as of June 30, 2024 -mm. Beginning Projected Reserve $41,300,064 $121,355,886 $9,142,948 $171,798,899 Increase/(Decrease) ($1,223,728) ($36,148,837) ($142,948) ($37,515,513) Ending Projected Reserve $40,076,336 $85,207,049 $9,000,000 $134,283,386 Reserve Policy Target $40,076,336 $47,791,500 $9,000,000 $96,867,836 Over/(Under) Target $37,415,549 $37,415,549 35 36 m May 18, 2023 Regular Board Meeting Agenda Packet - Page 465 of 480 Page 26 of 30 Public Hearing on June 1, 2023 Staff recommendation for Board to approve and adopt the following budgets: Operations & Maintenance Capital Improvement Self -Insurance Debt Service Coinciding with budget, Board also asked to delegate authority to General Manager to renew insurance 37 Conclusion FY 2023-24 budget is balanced, consistent with reserve policies L J Financial health of Central San remains f�r�• strong Staff will continue to monitor impact of # inflation and financial markets on , budget w "Thank you" to all dedicated staff involved in budget development process, as well as ongoing monitoring during the year 38 19 May 18, 2023 Regular Board Meeting Agenda Packet - Page 466 of 480 Page 27 of 30 39 20 May 18, 2023 Regular Board Meeting Agenda Packet - Page 467 of 480 FY 2023-24 BUDGET REVISION LOG As of May 9, 2023 ITEM 3.a. This log includes substantive edits made to the FY 2023-24 Budget Book distributed to the Board on May 4, 2023 and summarized in the 5/9/23 Finance Committee Presentation. it Section Page # Table/Paragraph Description of Change 1 Financial Summary 47 Table 1b Increase FY 23-24 CIB total spend by $300,000 to $71,202,000 and update total appropriations and budget to budget variances ($ and %) accordingly. 2nd paragraph, 2nd The Sewer Construction fund budget is $-7 � 71.2 million, a decrease of $24-4-19.8 million (221-4-21.7%) 2 Financial Summary 47 bullet from the prior year budget of $91.0 million. Lastly, decrease Contribution to Reserves accordingly by same amount and update variances column. 3 Financial Summary 48 Figure 1 Replace figure 1 with new chart reflecting $300,000 increase to sewer construction sources and decrease to contribution to reserves. Due to increase in treatment plant program spend by $300,000, reduce FY 23-24 CIB contribution to reserve to $21,924,163 and total funding sources to $71,202,000. Update total column to reflect these 4 Financial Summary 51 Table 2a changes, decreasing grand total contribution to reserves to $20,557,487 and total funding sources to $173,468,813. Lastly, update footnote below table to reflect new total contribution to reserves. Updated pie chart to reflect $300,000 increase in sewer construction spend and corresponding decrease in 5 Financial Summary 58 Figure 3 contribution to reserves. The uses of funds (expenditures and contributions to reserves) for FY 2023-24 are shown in Figure 3. Two 6 Financial Summary 58 2nd paragraph expenditure categories, O&M and Sewer Construction, account for 83-4%-83.6% of the total uses. In FY 2023-24, contribution to reserves comprises 39.7% 10.6% of the total use of funds. 7 Financial Summary 73 2nd paragraph Delete second sentence Page 1 of 2 May 18, 2023 Regular Board Meeting Agenda Packet - Page 468 of 480 FY 2023-24 BUDGET REVISION LOG As of May 9, 2023 This log includes substantive edits made to the FY 2023-24 Budget Book distributed to the Board on May 4, 2023 and summarized in the 5/9/23 Finance Committee Presentation. # Section Page # Table/Paragraph Description of Change The $7" $71.2 million capital improvement budget does not include anticipated carryforward from FY 8 Financial Summary 73 3rd paragraph 2022-23, which will be communicated to the Board after the close of the current fiscal year. The FY 2023-24 capital budget, excluding carryforward, is decreasing by $24.t-$19.8 million (22.1°%) (21.7%) from the prior year budget of $91.0 million. 9 Financial Summary 73 4th paragraph Central San is projected to contribute r,�$21.9 million to capital reserves in FY 2023-24 with revenues and debt proceeds exceeding expenditures by that amount. FY 23-24 budgeted treatment plant program expenditures increase by $300,000 to a revised total of $31,300,000 to reflect change done in CIP section of budget after finalization of Financial Summary section. 10 Financial Summary 74 Table 13 Updated $ and %variances for treatment plant program accordingly. Other impacted areas of this table that are updated accordingly include FY 2023-24 CIB spend (increased to $71,202,000), updating total $ and %variances accordingly, reducing Contribution to Reserves to $21,924,163, and increasing Cash Funded expenditures to $57,202,000. 11 Financial Summary 76 2nd bullet The Sewer Construction fund is projected to close FY 2023-24 with a working capital reserve of $95-.5-$85.2 million, exceeding minimum working capital reserves by$3-74 $37.4 million. 12 Financial Summary 78 Table 14 Reduce Sewer Construction Fund reserves as of 6/30/24 by $300,000 and update change year over year $ and % accordingly. Also reduce Amount Over/(Under) Minimum Reserve Target at 6/30/24 by $300,000. Page 2 of 2 May 18, 2023 Regular Board Meeting Agenda Packet - Page 469 of 480 Page 30 of 30 ITEM 3.b. Backup slide (image) from May 9, 2023 Finance Committee Meeting May 18, 2023 Regular Board Meeting Agenda Packet - Page 470 of 480