HomeMy WebLinkAbout10 Budget Workshop on Operating and Capitalenda Item #
BUDGET
To: Board of Directors
From: Regina Wise
Date: October 18, 2017
Subject: FY18 and FY19 Operating/Capital Budget Presentations:
a) District Budget Overview
b) Board of Directors and General Management
c) Administrative Services
d) Conservation
e) Information Technology
1. WHY THIS MATTER IS BEFORE THE BOARD
This item continues the preparation process of the FY18 and FY19 Budget.
2. HISTORY
District Code requires the District prepare a two-year budget.
BUDGET PROCESS SCHEDULE
September 6
• Discuss the objectives, goals, assumptions, labor, and debt.
October 4
• Discuss the Purchase Power Plan; and
• Discuss the operating and capital budget for Electric and Water Utilities.
October 18 (Tonight)
• Discuss the operating and capital budgets for supporting services;
• Review reserve funds;
• Review revenue, rates, fees, and charges;
• Present the Financial Master Plan; and
• Schedule the public hearing regarding the budget.
November 1
• Review final Purchase Power Plan;
• Present a draft of the FY18 & FY19 budget; and
• Conduct a public hearing regarding the budget.
10
November 15
• Consider adoption of the FY18 & FY19 budget.
BUDGET ASSUMPTIONS
At the September 6, 2017 Board meeting, staff presented the following budget
assumptions:
• 3% inflation;
• No new debt;
• Budgeted electric revenue includes a 3% scheduled rate increase for FY18 Q.
FY19;
• Budgeted water rate revenue includes the maximum potential rate increases of
3% for FY18 & FY19;
• Labor cost increase of 3% budgeted for FY18 & FY19 for represented
employees per existing MOU; and
• Labor cost increase of 4.5% budgeted for FY18 and 3% for FY19 for
unrepresented employees.
3. NEW INFORMATION
Staff is proposing a balanced budget by balancing the revenue and expenses and
building or utilizing existing reserves in the short-term to achieve the District's financial
goals in the long-term. Attachment 1 shows the summary draft for FY18 and FY19
budget for the Electric and Water Utilities combined. Highlighting the areas we will be
reviewing in this workshop; Board of Directors, General Management, Administrative
Services, Conservation, and Information and Technology. With the exception of
inflationary increases and previously established assumptions, the proposed FY18
and FY19 budget is similar to the approved FY16 and FY17 budget. Costs of
supporting services are shared between the Electric and Water Utilities though we will
look at them in whole for the purpose of this review. Listed below are the budget
highlights for comparison to the budget for FY17:
Board of Directors and General Mana eq ment
• The 17% increase in FY18 expenses compared to FY17 for Board of Directors
is primarily attributed to an increase in budgeted legal expenses in addition to
l6kannual $15K in election expenses;
• The 19% increase in FY18 expense compared to FY17 for General
Management is primarily attributed to moving the Public Information Officer and
Strategic Affairs Manager from conservation to General Management as a final
part of the Conservation and Customer Services integration,
• All general Public Information and Strategic Affairs costs including marketing
and advertising were moved from the prior Public Information and Conservation
budget to the General Management budget; and
• No new capital expenditures are planned for the Board of Directors and
General Management cost centers.
Board of Directors and General Mgmt
Budgets
% Variance
(in thousands)
FY18
FY19
vs.
vs.
FY17
FY18
FY19
FY17
FY18
Board of Directors Operating Exp
$
256
$
300
$ 297
17%
-1 %
General Management Operating Exp
$
11221
$ 11457
$ 11519
19%
4%
Total Expenses
$
15476
$ 11757
$ 1,815
19%
3%
Administrative Services
• The 3% decrease in expenses in FY18 compared to FY17 for Administrative
Servcies is primarily attributed to labor shifting to capital for the meter
installation project for the Electric Utility;
• Administrative Services has maintained very low bad debt, enabling the District
to continue to budget for FY18 and FY19 a bad debt expense of less
than .05%; and
• No new capital expenditures are planned for Administrative Services
however,
Administrative Services
Budgets
%Variance
(in thousands)
FY18
FY19
vs.
vs.
FY17 FY18 FY19
FY17
FY18
Administrative Services Operating Exp
$ 25727 $ 21656 $2,841
-3%
7%
Conservation
• The 289/o decrease in FY18 expenses compared to FY17 for Conservation is a
combination of:
• Decrease in spending on public benefit programs and information as
programs are nearing community saturation;
• The shifting of expenses related to Public Information
and
• Conservation does not have any capital projects planned in the FY18 and FY19
budgeted.
Conservation
Budgets
%Variance
(in thousands)
FY18
FY19
vs.
vs.
FY17
FY18
FY19
FY17
FY18
Public Benefit Programs and Information
$
11319
$
973
$1,019
-26%
5%
Operating Expenses
$
90
$
37
$ 38
-59%
3%
Total Expenses
$
11409
$ 19010
$ 1,057
1 -28%
4%
Information and Technology (IT)
• There are no significant changes in operational expense for IT, the 4% increase
in FY18 compared to FY17 is primarily attributed to budgeted labor increases;
• Primary focus for capital expenditures for FY18 and FY19 include continuing
network infrastructure improvements, SCADA replacement for the Water Utility,
and various IT projects; and
• FY19 budget includes a SCADA reliability project explaining the 36% increase
in capital in FY19, the District has completed 4 of 8 phases through FY17, this
project is aligned with the progress of the SCADA replacement project.
Information and Technology
Budgets
%Variance
(in thousands)
FY18
FY19
vs.
vs.
FY17
FY18
FY19
FY17
FY18
Operating Expenses
$ 11199
$ 11253
$ 1
2330
4%
6%
Capital Expenditures
1 11459
1
7355
21102
-7%
36%
Total Expenses
$ 21658
$ 21608
$ 3,432
-2%
24%
Additional budget drivers will be discussed in more detail in the Financial Master Plan
presentation tonight and in the board meeting next month on November 1, 2017.
4. FISCAL IMPACT
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.
' P� J
Regina Wise
Interim Administrative Services Manager
Michael D.
Holley
General Manager
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