HomeMy WebLinkAbout8 Finance Master Plan s
Agenda Item #
Workshop
To: Board of Directors
From: Peter Holzmeister
Date: July 28, 2006
Subject: Finance master plan
Why this matter is before the Board: This matter is a discussion of the
District's finance master plan. It is a tool that was developed for use by the
Board in looking at financial issues into the future. The plan has been modified
to improve its operation. We want to reacquaint the Board with the tool.
History: A couple of years ago, we retained the services of MuniFinancial to
prepare a spreadsheet based plan that would permit us to model our finances ten
years into the future based on various assumptions and trends. The model was
to allow us to change assumptions and update trends as we saw fit. It was to
allow us to evaluate the impacts of various scenarios. The plan developed by
MuniFinancial was very close to what we wanted, but it was difficult to use.
Playing scenarios and updating trends were complex to key in. We decided to
modify the spreadsheet to simplify its use.
New information: We have begun to prepare the budget for 2007. We have
also been talking about long term issues that impact our finances. We have
begun to generate cash reserves over a period of years. The debt to pay for the
buyout of the IdaCorp contract will expire in 2012. We need to have an electric
rate reserve to cushion a possible rate increase when we enter into the contract
with UAMPS. Once we have the power supply from UAMPS we will need a risk
mitigation fund to cover expenses associated with purchasing market power
during plant outages. A finance master plan helps us look at the
interrelationships of these issues. It helps us predict cash balances and changes
in rates.
We have revised the original finance master plan and it is ready for review by the
Board. Tricia Phillips, the District's Senior Accountant / Analyst, has been the
leader modifying the spreadsheet model. She has considerable experience in
modeling utilizing spreadsheets. We will demonstrate the workings of the finance
master plan using a PowerPoint presentation during Wednesday's workshop
Recommendation: This is a workshop. No formal action is required.
Truckee Donner PUD
Financial Master Plan
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Financial Master Plan
Purpose :
- To allow the Board and staff to dynamically
model financial results based on a set of
assumptions
— Allows for multi-year planning ( 10 years)
— Allows for many "what ifs"
— Can be updated as new information becomes
known
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Financial Master Plan
• "Variable inputs" include
— Community growth
— Usage changes
— Power cost changes
— Capital expenditures
— Wage & benefit changes
— Annual inflation
— Interest earnings rates
— EDU size & growth
— Misc revenue growth
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Financial Master Plan
• Calculates cash balances in major funds
— General fund
— Facilities fees
— Capital reserve (water)
— Rate reserve (electric)
— Donner Lake Assessment District
— Glenshire Bond payment
— Etc.
• Goal is to make sure that cash balances meet
reserve and/or debt payment needs over the
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Financial Master Plan
• Plan can be used as a guide to make
decisions including whether to increase or
lower rates , postpone capital spending ,
etc .
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