HomeMy WebLinkAbout8 Budget Objectives and GoalsBUDGET
To: Board of Directors
From: Regina Wise
Date: September 06, 2017
Subject: Discussion of FY18 & FY19 Budget: Objectives, Goals,
Assumptions, Labor, and Debt
1. WHY THIS MATTER IS BEFORE THE BOARD
This item begins the formal process for preparation of the FYI & FY19 budget.
2. HISTORY
In 2008, the Board implemented two year budget cycles. As we move forward we will
be compiling the FY18 and FY19 budgets utilizing the FY16 and FY17 approved
budget and actuals for the budget foundation and to report comparisons.
3. NEW INFORMATION
SCHEDULE
The schedule for the budget process is as follows:
September 6 (Tonight) -
Discuss the objectives, goals, assumptions, labor and debt.
October 4 -
Discuss the Purchased Power Plan; and
Discuss the operating and capital budget for the Electric and Water Utilities,
October 18 -
Discuss the operating and capital budgets for supporting services;
Discuss revenue, rates, fees, and charges;
Discuss reserve funds; and
Present the Financial Master Plan,
November 1 -
Review the final Purchase Power Plan; and
Present a draft of the FY18 & FY19 Budget.
ovember 15-
Consider adoption of the FY18 & FYI Budget,
OBJECTIVES AND GOALS
The District's Mission is "to provide reliable, high quality water and electrical power
services while meeting customer demand, and to manage District resources in a safe,
open, responsible, environmentally sound manner at the lowest practical cost." This
budget process is essential in planning operational and capital expenses that are in
line with the District's mission statement, goals, and objectives. Key focus areas of
the FY18 and FYI Budget include the following:
Electric Division -Maintain focus on repair and maintenance of District facilities, and
equipment;
• Implement the meter replacement program;
• Expand tree trimiming; and
• Continue pole replacements, and distribution replacement and improvement
projects.
Water Division -Maintain focus on repair and maintenance of District facilities and
equipment;
• Continue the SCADA replacement project;
• Continue pump station and well maintenance and repair projects;
• Pipeline replacements; and
• Continue the meter replacement and repair of water meters across the District.
The FY18 & FY19 budget will be similar to the FY16 & FY17 budget. Key
assumptions and proposed changes are:
• Customer electric rates are projected to increase 3% in FY18 and FYI 95
• Customer water rates are projected to increase to the maximum rate increase
of 3% in FY18 and FY19; and
• Inflation will increase cost of supplies, materials, and services by 3% in FY18
and in FYI 9.
Staffing is proposed to be similar to FY17 with the following changes:
• Labor cost increase of 3% budgeted for FY18 and FY19 for represented
employees per existing contract negotiations,
• Labor cost increase of 4.5% budgeted for FY18 for unrepresented employees,
and 3% for FYI 9. FY18 is budgeted slightly higher as a placeholder due to the
compensation study currently being conducted in FY17;
• Total budgeted headcount in FY18 and FY19 is 70 employees in FY18 and 69
employees in FY19 compared to the 72 employees budgeted in FY17. The
reduction is due to attrition within the Water Department. The Water
Department is anticipating contracting out meter replacements in order to
compensate for the reduced headcount in the FY18 and FY19 Budget;
• The Customer Services and Conservation integration is now complete, and the
Public Information Officer was moved from the Conservation Department to the
General Manager Department as Public Information Officer and Strategic
Affairs Manager. In this capacity, the Public Information Officer will continue to
add depth to the District's needs in maintaining public information, and ensuring
compliance with legislation and regulatory affairs; and
• The Contract Administrator for the District is also being moved from the Electric
Department to Administrative Services to leverage a wider resource base
creating more efficiencies for both utilities.
DEBT
No new debt is expected to be incurred in this budget cycle. Attachment 1 includes
the following detail for debt projections. Current year end FY17 debt projection is:
Electric Utility $4.3M, Water Utility $22.7M. FY18 debt is projected as follows: Electric
Utility $3.5M, Water Utility $20.6M. FY19 debt is projected as follows: Electric Utility
$2.6M, Water Utility $18AM. These changes represent reduced debt by regular debt
service. District staff is not anticipating any significant debt restructuring or refinancing
in the FY18 FY19 Budget Cycle due to agressive refinancings completed in the prior
budget cycle.
4. FISCAL IMPACT
There is no fiscal impact on this board item at this time. This budget workshop is part
of the overall budget process that will affect the District's spending for the next two
fiscal years.
5. RECOMMENDATION
Receive this report and provide comments to staff.
1,
Jeremy Popov
Administrative Services Manager
Michael D. Holley
General Manager
Attachment 1
Truckee Donner Public Utility District
Projected Debt Balances
For the years ending December 31, 2017, 2018, and 2019
Electric Utilitv
Pension Obligation Bond
Total Electric Utility Debt
Water Utilitv
2006 COP -Pipeline Replacement
State Revolving Fund - Donner Lake
Dept of Water Resources - 1996
MSG 1552 - Glenshire Water System
MSG 1551 - Bridge Street Tank
Total Water Utility Debt
FY17 FY18 FY19
$ 4.3 $ 3.5 $ 2.6
6.1 5.5 4.8
1.0 0.7 0.4
$22.7 $20.6 $18.4