HomeMy WebLinkAbout10. Conduct a public hearing to receive public comment and consider adopting the Fiscal Year (FY) 2023-24 Central San Budget for the following funds: Operations and Maintenance, Capital Improvement, Self-Insurance, and Debt Service; andDCENTRALSAN
MEETING DATE: JUNE 1, 2023
BOARD OF DIRECTORS
POSITION PAPER
Page 1 of 9
Item 10.
SUBJECT: CONDUCTA PUBLIC HEARING TO RECEIVE PUBLIC COMMENT ON THE
FISCAL YEAR (FY) 2023-24 CENTRAL SAN BUDGET FOR THE
FOLLOWING FUNDS: OPERATIONS AND MAINTENANCE, CAPITAL
IMPROVEMENT, SELF-INSURANCE, AND DEBT SERVICE. ADJOURN THE
HEARING UNTIL JUNE 21, 2023, AT WHICH DATE THE BUDGET WOULD
BE TAKEN UP FOR ADOPTION, AND AT THAT TIME ALSO FI ND THE
PROPOSED FY2023-24 DISTRICT BUDGET IS EXEMPT FROM THE
CALIFORNIA ENVIRONMENTAL QUALITYACT (CEQA)
SUBMITTED BY: INITIATING DEPARTMENT:
KEVIN MIZUNO, FINANCE MANAGER ADMINISTRATION -FINANCE
REVIEWED BY: EDGAR LOPEZ, PROVISIONAL DIRECTOR OF ENGINEERING AND
TECHNICAL SERVICES
PHILIP LEI BER, DEPUTY GENERAL MANAGER, ADMINISTRATION
Roger S. Bailey
General Manager
ISSUE
Pursuant to Central San's Budget Policy (BP 048), prior to adoption of the budget, a public hearing must
be held to receive public comment for the following funds: Operations and Maintenance (O&M), Capital
Improvement, Self -I nsurance, and Debt Service.
BACKGROUND
Central San's draft FY 2023-24 Budget book (Attachment 1) was distributed to Board Members on May 4,
2023, at a regularly scheduled public meeting. The following is a timeline of meetings where the proposed
FY 2023-24 Budget has been reviewed by the Board and its Committees and made available to the public
for review and feedback:
June 1, 2023 Regular Board Meeting Agenda Packet - Page 74 of 165
Page 2 of 9
May 8 Engineering & Operations Committee review of Capital Improvement
Budget (CI B)
May 9 Finance Committee review of overall Budget with a focus on O&M, Self -
Insurance, and Debt Service
May 18 Presentation of Budget by staff at Board Meeting
June 1 Public Hearing on Budget Adoption
Commencing on page 47 of the FY 2023-24 draft Budget book, the Financial Summary section provides a
comprehensive synopsis of the core elements of Central San's entire budget including analysis of specific funds,
revenues, expenses, and reserves. A presentation providing an overview of the proposed FY 2023-24 budget
was provided to the Board at the May 18, 2023 public meeting. Additionally, a presentation providing an
overview of the FY 2023-24 CIB as well as the long-term (ten-year) Capital Improvement Plan (CIP) was
provided to the Board that same day.
At the May 18, 2023 meeting, the Board was asked to review and provide feedback on the proposed FY
2023-24 Budget following presentations by staff. I ncorporating feedback from Board Members as well as
various District staff, several revisions were made to the draft budget book provided to the Board on May
4, 2023, which are summarized in the attached Change Log (Attachment 2).
California Environmental Quality Act (CEQA)
Staff has evaluated the FY 2023-24 O&M, Sewer Construction, Self -I nsurance, and Debt Service Fund
budgets and concludes the adoption of these budgets are not projects, are ministerial in nature, and are
exempt from CEQA. They are exempt under Central San's CEQA Guidelines Section 15301, since each
funds the ongoing operations of Central San and the Cl B funds the operation, repair, maintenance,
permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities,
mechanical equipment, or topographical features, involving negligible or no expansion of use beyond that
existing at the present time. Approval of the FY 2023-24 Budgets will establish the Board of Directors'
independent finding that these budget documents are exempt from CEQA.
The Board further finds that, although the Cl P Budget will authorize amounts of individual capital
improvement project spending, the adoption of the Budget does not authorize construction of any project
requiring CEQA compliance documentation. Central San either has or will produce appropriate CEQA
compliance documentation prior to undertaking any "project" identified in these documents.
ALTERNATIVES/CONSIDERATIONS
The Board has considered numerous financial planning alternatives and assumptions, most recently at the
January 12, 2023 publicly held financial workshop. This budget reflects the policy direction provided in
areas including the composition and level of the Capital Improvement Budget in the context of the
Comprehensive Wastewater Management Plan (CWMP), responsibly managing unfunded liabilities,
including for four new permanent full-time equivalent (FTE) positions to address new needs, and overall
guidance regarding the need for fiscal discipline and cost control.
FINANCIAL IMPACTS
Adoption of the proposed FY 2023-24 budget will provide Central San the resources necessary to
accomplish Strategic Plan Objectives directed by the Board for that year. The FY 2023-24 budget was
prepared using the sewer service charge revenue assumptions per the proposed two-year rate plan.
Sewer service charge revenues in FY 2023-24 are proportioned as follows: O&M 56.0%; Capital 42.6%;
Self-insurance 1.4%.
June 1, 2023 Regular Board Meeting Agenda Packet - Page 75 of 165
Page 3 of 9
COMMITTEE RECOMMENDATION
The Engineering and Operations Committee reviewed the Capital Improvement budget on May 8,
2023. The Finance Committee received a staff presentation of the FY 2023-24 O&M, Self -Insurance, and
Debt Service fund budgets on May 9, 2023. Both Board Committees provided feedback to staff, which
has been considered in the final version of the budget book recommended for adoption by the Board. A
log of revisions made subsequent to the distribution of the initial draft of the budget book on May 4, 2023,
has been attached hereto (Attachment 2). A revised version of the budget book will be posted to the
Central San website, under "Financial Information".
RECOMMENDED BOARD ACTION
Open a public hearing on the proposed budget and hear any public comment received. Adjourn the matter
until June 21, 2023 at 1:30 p.m. to then take the following actions:
A. Find that the FY 2023-24 District Budget is exempt from CEQA; and
B. Adopt the FY 2023-24 District Budget for the Operations and Maintenance; Capital Improvement; Self -
Insurance; and Debt Service funds, as presented.
Strategic Plan Tie -In
GOAL ONE: Customer and Community
Strategy 1— Deliver high-quality customer service, Strategy 2 - Promote initiatives to advance affordable and equitable
access to services, Strategy 3 - Build neighborhood and industry relations
GOAL TWO: Environmental Stewardship
Strategy 1 - Achieve compliance in all regulations, Strategy 2 - Educate on pollution prevention and environmental
protection, Strategy 3 - Be a partner in regional development of local water supply, Strategy 4 - Identify and advance
sustainability initiatives, including reducing energy usage and emissions
GOAL THREE: Workforce Diversity and Development
Strategy 1 - Recruit from a diverse pool of qualified applicants, Strategy 2 - Engage employees and conduct labor
relations in a transparent, effective and collaborative environment, Strategy 3 - Retain skilled workers by investing in
resources and opportunities for all employees to grow and thrive, Strategy 4 - Foster a culture of diversity, equity, and
inclusion
GOAL FOUR: Governance and Fiscal Responsibility
Strategy 1 - Promote and uphold ethical behavior, openness, and accessibility, Strategy 2 - Encourage and facilitate
public participation, Strategy 3 - Maintain financial stability and sustainability
GOAL FIVE: Safety and Security
Strategy 1 - Reduce and eliminate risks of injury or illness, Strategy 2 - Protect personnel and assets from threats and
emergencies, Strategy 3 - Understand and reduce impacts of cybersecurity attacks
GOAL SIX: Infrastructure Reliability
Strategy 1 - Manage assets optimally, Strategy 2 - Execute long-term capital renewal and replacement program
GOAL SEVEN: Innovation and Agility
Strategy 1 - Leverage data analytics to become a more efficient utility, Strategy 2 - Implement organization -wide
optimization, Strategy 3 - Be adaptable, resilient, and responsive
June 1, 2023 Regular Board Meeting Agenda Packet - Page 76 of 165
Page 4 of 9
ATTACHMENTS:
1. Replacement Sheet- Draft Budget 2023-24
2. Log of Budget Book Changes (FY 23-24)
June 1, 2023 Regular Board Meeting Agenda Packet - Page 77 of 165
Page 5 of 9
Attachment 1
OICENTRAL SAN
Final Draft Central San
FY 2023-24 Budget
See separate Budget Binder distributed May 4, 2023.
The final draft Budget (as of June 1, 2023) is also available on the
District's website as part of the Public Hearing Board agenda item
and in Public Notices section: www.centralsan.ora
Please contact Katie Young, Secretary of the District, with any questions:
Telephone: (925) 229-7303
Email: kyoung@centralsan.org
June 1, 2023 Regular Board Meeting Agenda Packet - Page 78 of 165
Page 6 of 9
Attachment 2
FY 2023-24 Budget Revision Log
As of June 1, 2023
This log includes substantive edits made to the FY 2023-24 Budget Book distributed to the Board on May 4, 2023.
Section
Page #
Table/Paragraph
Description of Change
Introduction
12
2nd paragraph
Updated language regarding sequencing of rate proposal
Introduction
18
3rd paragraph
Changed language regarding population "boomed"
Sewer Service Charge
GM wants discussion or table to also reflect accounts, and discussion of EDUs. Table
Introduction
23
Billings by Type table
also had* that was not footnoted. Added EDUs in anew column to table
Outdated language regarding rate increases was left from the prior budget book for
Introduction
27
3rd paragraph
FY 22-23. This has now been removed.
Introduction
28
1st paragraph
Added sentence indicating diagram reflected typical process. This time, 218 process
took place in May -June
Introduction
28
1st paragraph
Added SSC rate adoption to June row.
Introduction
46
5th paragraph
Corrected 10 year CIP amount to $980.2 rather than $980.
Increase FY 23-24 CIB total spend by $300,000 to $71,202,000 and update total
Financial Summary
47
Table lb
appropriations and budget to budget variances ($ and %) accordingly.
The Sewer Construction fund budget is $70 9 71.2 million, a decrease of $2119.8
Financial Summary
47
2nd paragraph, 2nd bullet
million (24-4-21.7%) from the prior year budget of $91.0 million. Lastly, decrease
Contribution to Reserves accordingly by same amount and update variances column.
Financial Summary
47
3rd paragraph
Added reference to table 8a showing summary of changes to O&M budget
Replace figure 1 with new chart reflecting $300,000 increase to sewer construction
Financial Summary
48
Figure 1
sources and decrease to contribution to reserves.
Financial Summary
49
1st bullet (SSC)
Added "ADUs" in listing or rates in addition to single family and multi -family
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.
Financial Summary
51
Table 2a
Update total column to reflect these 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.
Financial Summary
54
Table 2c
Added footnote to acknowledge potential increase in capacity fees due to RHNA.
Financial Summary
56
1st paragraph and table 3
Add ADU rate to table and acknowledge in text
Updated pie chart to reflect $300,000 increase in sewer construction spend and
Financial Summary
58
Figure 3
corres oncling decrease in contribution to reserves.
The uses of funds (expenditures and contributions to reserves) for FY 2023-24 are
shown in Figure 3. Two expenditure categories, 0&M and Sewer Construction,
Financial Summary
58
2nd paragraph
account for 8x4A 83.6% of the total uses. In FY 2023-24, contribution to reserves
comprises 4872410.6% of the total use of funds.
Financial Summary
61
Figure 5
Change pie chart from 3-dimensional to 2-dimensional formatting.
Financial Summary
66
Table 8a
Added new table (8a) showing summary of changes to O&M budget
Financial Summary
66
Training discussion
Added text describing increase in Admin travel
Financial Summary
71
Staffing Changes
Paragraph 1- Fix the paragraph formatting to match other formatting
added a row for GM Specials headcount for 5 and prior years. Updated Total
Financial Summary
71
Table 11
Temporary Employees headcount.
Staffing Changes, 1st
A sentence added at the end of the paragraph stating "The parameters for these
Financial Summary
71
workers are under discussion with bargaining units and may have durations beyond
paragraph
one year."
Staffing Changes, 2nd
Include new sentences and verbiage clarifying how newly proposed FTE positions
Financial Summary
71
paragraph
add value to Central San's operations.
Under Administration - add a bullet point to reflect the reclassification of "Director of
Financial Summary
72
Staffing Changes
Administration and Finance" to "Deputy General Manager"
Ad missing "as" and describe limited duration workers (The parameters for these
Financial Summary
72
workers are under discussion with bargaining units and may have durations beyond
one ear.
Financial Summary
73
2nd paragraph
Delete second sentence
The $71.2 million capital improvement budget does not include anticipated
carryforward from FY 2022-23, which will be communicated to the Board after the
Financial Summary
73
3rd paragraph
close of the current fiscal year. The FY 2023-24 capital budget, excluding
carryforward, is decreasing by $244-$19.8 million (22.1%) (21.7%) from the prior
year bud et of $91.0 million.
Central San is projected to contribute $244-$21.9 million to capital reserves in FY
Financial Summary
73
4th paragraph
2023-24 with revenues and debt proceeds exceeding expenditures by that amount.
Financial Summary
73
Staffing Changes
Under Operations Department - add a bullet point to reflect the reclassification of
"Director of Operations to "Deputy General Manager of Engineering and Operations"
Financial Summary
73
Table 11
Changed headcount under Temporary -Employee Limited Duration from 5 to 6.
Financial Summary
73
Staff Changes 1st paragraph
Changed 2nd to last sentence from five limited duration to six limited duration
employees
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June 1, 2023 Regular Board Meeting Agenda Packet - Page 79 of 165
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Attachment 2
Section
Page #
Table/Paragraph
Description of Change
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. Updated $ and %variances for treatment
Financial Summary
74
Table 13
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.
Staff Changes - Engineering
Changed Capital Division bullet from three limited duration to four limited duration
Financial Summary
74
& Technical Services bullet
employees. Add One Project Safety Officer limited duration employee
oint
Financial Summary
74
Table 11
Changed temporary headcount and summer students, Interns
Revise sentences 3-5 to state the following:
The project most likely to have significant impacts on future O&M costs is the Solids
Financial Summary
75
1st paragraph
Handling Facilities Improvement Project as that project now contemplates
transitioning. The technology to be utilized in phase// of this project is tentatively
proposed to be fluidized bed incineration, a more modern and efficient approach to
the existing multiple hearth furnaces. The lifecycle cost of the project, including O&M
impacts, is expected to be lower than continuing with the existing technology.
The Sewer Construction fund is projected to close FY 2023-24 with a working capital
Financial Summary
76
2nd bullet
reserve of $9&-.5-$85.2 million, exceeding minimum working capital reserves by
$37.4 million.
Added comment about grant funding, "To the extent that grant funding for capital
projects is received during FY 2023-24, this would result in an increase in the Sewer
Financial Summary
76
2nd bullet
Construction Fund reserve balance, providing the ability to reduce future borrowing
and reduce future rate adjustments. "
Reduce Sewer Construction Fund reserves as of 6/30/24 by $300,000 and update
Financial Summary
78
Table 14
change year over year $ and % accordingly. Also reduce Amount Over/(Under)
Minimum Reserve Target at 6/30/24 b $300,000.
A sentence was added to clarify absence of interest earnings for Rate Stabilization
Table 14 - Reserve
Fund Account stating: "This fund is a book entry to the 0&M and Sewer Construction
Financial Summary
79
Projections
funds. Interest earnings from those funds are not separately assigned to the Rate
Stabilization Account"
Financial Summary
79
Table 14
Added comment about interest earnings on rate stabilization fund.
Financial Summary
83
4th paragraph
Cost of service completion date corrected to 2023.
Financial Summary
84
3rd bullet (Other Revenues)
Added comment about grant funding.
Financial Summary
87
Table 15 -Ten Year Financial
Column added for the Total 10 Years.
Plan Summary
Remove Director of Operations from Central San's Executive Team. Should be two
Operating Departments
89
3rd paragraph
Deputy General Managers and one Director for Engineering and Technical Services.
Change bullet point "Office of the Director of Finance and Administration" to "Office
Operating Departments
90
Divisions Bullet Point
of the Deputy General Manager of Finance and Administration"
Budget Modifications,
One GM special was budgeted accordingly in Operations and four GM specials were
Operating Departments
95
paragraph 1
budgeted in the Office of the General Manager.
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
98
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
104
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
112
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
.Employees
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
119
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
122
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
127
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
131
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Em to ees
Operating Departments
134
3rd paragraph
Updated description of office's responsibilities related to capital project work
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June 1, 2023 Regular Board Meeting Agenda Packet - Page 80 of 165
Page 8 of 9
Attachment 2
Section
Page #
Table/Paragraph
Description of Change
Personnel Requirements
Change "Deputy General Manager (Director of Engineering & Technical Services)" to
Operating Departments
137
table
"Director of Engineering &Technical Services"
Capital
139
Infrastructure Reliability
remove the highlighted yellow from a bullet point to make it not highlighted
Operating Departments
140
FY 2021 Performance
Updated to actual year performance
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
142
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Added limited duration employee for project safety officer and rebalanced
Operating Departments
142
lTemporary Employees
temporary classifications.
Added 1 limited duration employee and rebalanced temporary classifications.
Updated Capital Division headcount from 3 limited duration employees to 4 limited
Operating Departments
Personnel Requirements
duration employees (added Project Safety Officer) and changed Intern headcount
Table Limited Duration
from 4 to 2. Changed Temporary Utility Systems Engineer from 1 to 2. Added 1
142
Employees
Temporary Engineering Assistant.
Updated paragraph to include a limited duration project safety officer (for capital
Operating Departments
143
Budget Modifications
projects)
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
148
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Table shows loss of six staff and explanation accounts for S. The word document
Operating Departments
154
Personnel Requirements
should have reflected five transfers from Planning and Development to Operations
table
Optimizations division
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operating Departments
155
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Change bullet point from "Director of Operations" to "Office of the Deputy General
Operating Departments
157
Divisions Bullet Point
Manager of Engineering and Operations"
Change title from "Director of Operations" to "Office of the Deputy General Manager
Operating Departments
158
Title of Page
of Engineering and Operations"
Change from "Director of Operations" to "Office of the Deputy General Manager of
Operating Departments
158
Overview
Engine rinand Operations'
Personnel Requirements
Change from "Director of Operations" to "Office of the Deputy General Manager of
Operations Department
159
table
Engineering and Operations"
Change from "Director of Operations" to "Office of the Deputy General Manager of
Operations Department
159
Budget Modifications
En inee ing and Operations"
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operations Department
159
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operations Department
169
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operations Department
180
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Personnel Requirements
Changed table name for Personnel Requirements from "Limited Duration Employees"
Operations Department
185
Table Limited Duration
to "Temporary Employees to be consistent with the Financial Summary
Employees
Recycled water financial
Replaced tables with new format providing sub -totals for 0&M versus capital
Operations Department
186
summary tables
expenses and revenues.
Operations Department
186
1st and 2nd paragraphs
Revised two paragraphs following the table, describing new table.
Capital Improvement
196
New bullet
Added potential grant funding to list of revenues
Program
Capital Improvement
Program
198
Priority List
Revised list order to reflect deletion of project 8466
Capital Improvement
Last bullet (Projects
Program
203
Completed)
Added project #8466 to those being closed.
Capital Improvement
Program
204
Table 1
Updated table to reflect project changes.
Capital Improvement
205
1st paragraph
Removed highlight
Program
Capital Improvement
206
Phasing of projects
Added Pleasant Hill Phase 2 to sewer renovation paragraph.
Program
Capital Improvement
207
2nd table on page
Update order of projects to in table to be sequential.
Program
Capital Improvement
Program
207
Budget Modifications Table
Added PH phase 2, names to list, budget clarity
Capital Improvement
Program
214
Table 2
Project changes to Danville and PH2, which impacts overall totals
Capital Improvement
Program
215
Description
Changed replacement to 8,700 and increased budget as awarded
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June 1, 2023 Regular Board Meeting Agenda Packet - Page 81 of 165
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Attachment 2
Section
Page #
Table/Paragraph
Description of Change
Capital Improvement
Program
222
Project page
Deleted DP8466, revised priority
Capital Improvement
Program
246
Sustainability paragraph
Added to paragraph about how all CP evaluates or improves this subject
Capital Improvement
248
Table 3
Corrected RAS budget
Program
Capital Improvement
284
Bullet points
Removed highlight
Program
Capital Improvement
284
Project 8516 Description
Updated equipment list
Program
Capital Improvement
285
Bullet points
Removed highlight
Program
Capital Improvement
285
Project 8517 Description
Updated vehicle list
Program
Capital Improvement
298
Budget modifications table 5
Increase Filter plant 7361 by 1.8 M as approved by board
Program
Capital Improvement
299
Budget modifications table
Increase Filter plant 7361 by 1.8 M as approved by board
Program
Capital Improvement
301
Priority ranking table
Changed Water Exchange priority TBD, as it is being evaluated
Program
Capital Improvement
307
n/a
Added new paragraph for unfunded CIP projects
Program
Capital Improvement
n/a
n/a
Added new "NetZero" project
Program
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June 1, 2023 Regular Board Meeting Agenda Packet - Page 82 of 165