HomeMy WebLinkAbout17.a. Committee Minutes-Finance 05-14-2024Item 17.a.
J une 6, 2024
T O: HO NO R A B L E B O A R D O F D I R E C TO R S
F RO M :K AT I E YO UNG, S E C R E TA RY O F T HE D I S T R I C T
S UB J E C T: MAY 14, 2024 - F I NA NC E C O MMI T T E E - P R E S I D E NT L A UR I T Z E N A ND
ME MB E R P I L E C K I
Attached are minutes of the above C ommittee meeting.
AT TAC HM E NT S :
D escription
1. F I NA NC E Committee minutes 05-14-24
June 6, 2024 Regular Board Meeting Agenda Packet - Page 207 of 231
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REGULAR MEETING OF THE
CENTRAL CONTRA COSTA
SANITARY DISTRICT
FINANCE COMMITTEE
M I N U T E S
Tuesday, May 14, 2024
2:30 p.m.
Committee:
Chair Mariah Lauritzen
Member Tad Pilecki
Staff:
Roger S. Bailey, General Manager
Katie Young, Secretary of the District
Greg Norby, Deputy General Manager – Operations
Philip Leiber, Deputy General Manager – Administration
Danea Gemmell, Planning and Development Services Division Manager
Edgar Lopez, Capital Projects Division Manager
Kevin Mizuno, Finance Manager
Christopher Thomas, Accounting Supervisor
Diana Diaz, Accounting Supervisor
Amal Lyon, Management Analyst
Shari Deutsch, Risk Management Administrator
Laci Kolc, Risk Management Specialist
Karen DeLong, Administrative Services Assistant
Stacey Durocher, Administrative Services Assistant
1. Call Meeting to Order
Chair Lauritzen called the meeting to order at 2:30 p.m.
2. Public Comments
None.
BOARD OF DIRECTORS:
MARIAH N. LAURITZEN
President
MICHAEL R. MCGILL
President Pro Tem
BARBARA D. HOCKETT
TAD J. PILECKI
FLORENCE T. WEDINGTON
PHONE: (925) 228-9500
FAX: (925) 372-0192
www.centralsan.org
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3. Items for Committee Recommendation to the Board
a. Review proposed Fiscal Year (FY) 2024-25 Central San Operations and
Maintenance, Self-Insurance, and Debt Service budgets.
Mr. Leiber and Mr. Mizuno provided an in-depth review of the presentation
included in the agenda materials. Mr. Leiber highlighted an additional slide
pertaining to potential budgetary impacts regarding newly developing
Nutrient regulations and removal requirements.
In response to a question posed by Chair Lauritzen regarding budget
impacts from Nutrients, Mr. Leiber stated that budgetary impacts are likely
within the next 10 years, but the timing and extent of those impacts remains
to be seen depending on whether the tentative order is adopted in its current
form, and whether it is contested. Mr. Norby also stated that the developing
view is that the activities pertaining to the Nutrient issue over the next one to
two years will likely not have an impact on rates. Ms. Gemmell stated that
staff will be conducting workshops to strategize on the impact of Nutrients
starting in July 2024.
A discussion ensued regarding the increased cost of the soil remediation
work from what was originally captured in the Capital Improvement Budget
(CIB). Ms. Gemmell stated that Geosyntec Consultants provided estimates
related to different timing scenarios and staff will be meeting to discuss this
work since it is a prerequisite to the Nutrient work.
Chair Lauritzen complimented staff on how easy the strategic priorities were
to read and understand. Member Pilecki requested that per- and
polyfluoroalkyl substances (PFAS) be added to the strategic priorities.
In response to a question posed by Chair Lauritzen regarding self-insurance,
Mr. Leiber stated that the cost of the self-insurance program is included in
FY 2024-25 Budget and covers expenditures such as insurance costs, legal
expenses, and claims.
Use of Funds:
A new category called Contribution to Reserves was added to Slide 17
showing how much funding is needed in reserves for the O&M, Sewer
Construction, Debt Service and Self-Insurance funds. It was noted that the
amount shown in the Contribution to Reserves does not directly align with
Table 14 in the Budget due to the carryforward of $49 million from prior FY’s.
Sources of Funds:
All revenue source funds are increasing. Member Pilecki asked why there
was only 2.8 percent revenue when the rates are increasing by four percent.
Ms. Gemmell explained that assumptions are made when rates are
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increased for non-residential customers, and sometimes they do not come in
as projected.
Chair Lauritzen asked staff to add a footnote to the table on Slide 19, Sewer
Service Charge Rates and Revenues explaining why the revenue and rate
increase percentages do not match.
Mr. Mizuno provided a detailed overview of the fund-level budgetary
highlights for the Operations and Maintenace (O&M), Sewer Construction,
Debt Service, and Self-and Insurance funds.
Operations & Maintenance (O&M) Fund:
The proposed appropriations for the next Fiscal Year 24-25 (FY) are
approximately five percent higher at $96 million. It was emphasized that
labor-related expenditures in the O&M fund comprise approximately two-
thirds of the O&M budget, attributable to the workforce dedicated to providing
wastewater collection and treatment services to the District’s customers. It
was also noted that this number has decreased from 73 percent from prior
FY’s due to the Unfunded Actuarial Accrued Liability (UAAL) payoff in June
2021.
In response to a question posed by Mr. Bailey regarding what the additional
UAAL was for, Mr. Mizuno stated that this amount pertains to any
contributions to either the section 115 pension or OPEB trust above and
beyond the minimum contribution amounts specified in actuarial reports,
which is shown separately for transparency.
There was a conversation in response to a question posed by Member
Pilecki regarding the salaries and wages shown in the O&M fund. It was
noted that the salaries and wages in this section pertain only to O&M. Mr.
Leiber stated that salaries and wages for the entire District are shown in the
supplementary financial information section of the budget book. Mr. Bailey
emphasized that before any new full-time employees (FTE’s) are proposed
to be added, that the executive and management teams assess whether the
District’s current FTE headcount has been properly allocated and aligned
with the priorities of the District.
Salaries and Wages:
There was an overall increase of $2.3 million or 5.2 percent which includes
the 3.75 percent cost of living adjustment (COLA), the three percent vacancy
rate and an increase in FTE’s and limited duration employees (LDE’s)
bringing the total FTE headcount to 302.
Benefits (Current Employee Costs):
Benefits incurred an overall increase of $1.3 million or 9.3 percent and
includes a modest increase in pension contributions to Contra Costa County
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Employees’ Retirement Association (CCCERA), increases in medical
premiums of 6.25 percent and the administrative overhead increase by $0.6
million to $6.3 million or 10.8 percent. Member Pilecki recommended this
slide be updated to include merit increases prior to delivery to the Board.
UAAL:
There is no budgeted supplemental contribution to the pension or OPEB
trust for FY 2024-25, while there is a slight increase in the pension UAAL.
Member Pilecki recommended correcting the wording to reflect that the
UAAL administrative fee is not increasing from 0.15 percent to 1.06 percent.
A discussion ensued regarding Slide 30, Concord Reimbursement Revenue
Analysis and it was recommended to remove this slide for further review.
Capital Improvement Program:
The infrastructure investment into the CIP over the past 10 years was $519.1
million. As projected in the financial plan, as well as rate increases, the
adopted Budget and actual expenditures have increased in the past three
years. The gap between the adopted Budget and the actual amount spent
was due to the carryforward. Chair Lauritzen requested that staff label the
carryforward for transparency.
Sewer Construction Fund:
The total projected for FY 2024-25 expenditures is approximately $80.7
million including $5 million in contingency with an overall increase in Capital
spending from the FY 2023-24 Budget of $9.5 million. The Committee
requested minor corrections on Slide 32, Sewer Construction Fund
Expenditures.
The total FY 2024-25 funding sources for the CIB are approximately $121.8
million. The total sources overall have increased by $28.7 million from the
prior FY due to higher debt proceeds that are expected. The net contribution
to reserves in the amount of $41.1 million will be needed for future capital
program spending increases and rate smoothing.
Mr. Bailey requested that staff add a reference to the Joint Powers Authority
(JPA) agreement with Sacramento Regional County Sanitation District to
page 331 in the Budget.
Benchmarking:
Mr. Leiber discussed the benchmarking data in more detail. He stated this
information provides a point of reference on how Central San measures up
with other public agencies. Mr. Bailey advised the Committee Members that
this data was for their information and to provide a high-level view of whether
the District is balanced with the resources it currently has, however does not
show the full picture. In response to Chair Lauritzen’s question about why FY
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2020-21 and 2021-22 were included in this data, Mr. Leiber stated it shows a
trend or comparison over the years.
In conclusion, The FY 2024-25 Budget is balanced and consistent with
reserve policies, and the financial health of Central San remains strong.
The Committee had no further questions.
COMMITTEE ACTION: Reviewed and provided input to staff.
4. Announcements
None.
5. Suggestions for Future Agenda Items
a. Receive list of upcoming agenda items and provide suggestions for any
other future agenda items
COMMITTEE ACTION: Received the list and provided input to staff.
6. Future Scheduled Meetings
Tuesday, May 21, 2024 at 2:30 p.m.
Tuesday, June 25, 2024 at 2:30 p.m.
Tuesday, July 23, 2024 at 2:30 p.m.
7. Adjournment – at 4:42 p.m.
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