HomeMy WebLinkAbout12 End-of-Year and Cycle Budget Reviewenda Item #
ACTION
To: Board of Directors
From: Regina Wise
Date: March 07, 2018
Subject: End -of -Cycle and End -of -Year Budget Review
a) FY17 End -of -Year Financial Results
b) Consideration to establish a Deferred Liabilities Reserve
c) Consideration of End -of -Year Transfers
1. WHY THIS MATTER IS BEFORE THE BOARD
District Code requires multiple budget reviews as part of the budget cycle.
2. HISTORY
12
The FY16 and FY17 Budget was adopted November 18, 2015. Year-end financial
results for FY16 have been subsequently reviewed and fund transfers approved, by
the Board, on March 1, 2017. The Electric Utility's recognized no significant fund
carry forwards for FY16. The Water Utility in FY16 had slightly negative margins that
were offset by funds from the operating reserve for system improvements (per Board
approval on November 2, 2016). This in turn resulted in a planned reduction in
capital spending in FY17 for the Water Utility,
3. NEW INFORMATION
Preliminary FY17 year-end results are possitive and indicate that both the Electric
and Water Utilities both had positive net operating inflows. The Electric Utility had
net operating inflow of $4.4M. The Water Utility had net operating inflow of $124K.
The number of Electric and Water customers and employees for the years ended
December 31, 2017 and December 31, 2016 are as follows:
Utility
FY17
FY16
Electric
13,768
13,679
Water
12,972
12,892
FTE's
71
70
Electric Utility
Attachment 1 is the preliminary Budget vs. Actual Revenue &Expenditures report for
the Electric Utility for FY17_ Revenues exceeded hudaet expectations in FY17 due to
the implementation of a 29/o rate increase and increased residential and commercial
consumption driven by colder temperatures. Revenues also include the Federal
Emergency Management Agency (FEMA) and California Office of Emergency
Services (CalOES) reimbursements, which were not part of the adopted budget. The
reimbursements were provided for the reparation of plant damages sustained in
January and February from extreme winter storms. Finally, the District's participation
in the joint pole program exceeded expectations in FY17 due to increased pole
replacements. Expenses for the Electric Utility met budget expectations; cost of
power was down $1.1 M though operating expenditures were up $1.2M Mostly due to
storm related expenses. Capital expenditures for the Electric Utility were under
budget $1.4M in FY17.
Water Utility
Attachment 2 is the preliminary Budget vs. Actual Revenue &Expenditure report for
the Water Utility for FY17. Net operating income is $430K under budget. Revenues
in FY17 were 2% under budget primarily attributed to a continued decline in
residential consumption. Operating expenses were 2% over budget in FY17. The
District received $65K in reimbursement from FEMA and CalOES for expenses from
the extreme winter storms, however many of the operating expenditures were
associated with snow removal and were ineligible for reimbursement.
Total capital expenditures came in under budget by $366K for FY17 as planned. The
reduction in capital spending was deliberately planned for FY17 to recoup some of
the funds used in FY16 from the operating reserve for aggressive capital
improvement projects.
Deferred Liabilities Reserve
Staff is recommending the Board consider establishing a Deferred Liabilities Reserve
for the Electric and Water Utilities respectfully. In reviewing the year end results the
Electric Utility is in a cash position to be able to fund a deferred liabilities reserve. The
purpose of this reserve is to protect the District from spikes in pension, other post
employment benefits, and worker's compensation premiums. This would ensure a
robust ten year financial master plan expectation. Currently staff is recommending a
$2,000,000 goal level for this reserve over the next 5 years with the primary focus
being on managing the annual required contribution changes for the unfunded
liability. Over the next five years with the current projections from CalPERS the
District's required contributions on an annual basis will increase approximately 85%
or $1 M. Staff did include these projections in the FY18-FY19 Budget and ten year
financial master plan, however has additional concern that more changes will be
likely of which this reserve will be a resource for the District in this volatile time.
Transfers
In reviewing the preliminary FY17 year-end results staff recommends the following
transfers for FY17:
Electric Utility allocations from the Electric General Fund:
• Allocate $1,000,000 of FY17 margins to the Rate Reserve;
• Allocate $1,000,000 of FY17 margins to the Capital Replacement Reserve;
• Allocate $500,000 of FY17 margins to the Vehicle Reserve; and
• Allocate $1,000,000 to a Deferred Liabilities Reserve.
Water Utility
• Reimburse the General Fund from Facilities Fees Fund $150,158 for the
Bridget Street Tank Loan (MSG 1551) final debt payment.
• Reimburse the General Fund from the Glenshire Loan Fund $1,473 for
administrative expenses.
Facilities
The District establishes and collects facilities fees on new developments for electric
and water system improvements attributable to new developments in accordance
with the Electric and Water Master Plans. Attachment 3 reports the status of the
restricted Facilities Fees Fund for each Utility respectfully as of the end of FY17. The
Electric Utility did not have any budgeted expenditures for facilities fees for FY17.
The water facility fee collection remained strong with receipts of $416K in FY17 due
to continued development and new construction within the District. The District has
been able to utilize facilities fees for qualifying debt service for the Water Utility on an
annual basis, in FY16 and recommended for FY17 facilities fees were utilized for the
Pipeline COP debt payment, and the Bridge Street Tank 6160 Loan. The District is
obligated to utilize facilities fees collected within a 5 year period, furthermore, meeting
this requirement.
4. FISCAL IMPACT
Attachment 4 shows the beginning balances of the various reserve funds and the
ending balances after the proposed transfers. Fiscal impact is in alignment with the
Board approved FY16 & FY17 budget and ten-year financial master plan.
5. RECOMMENDATION
1.) Accept this report.
2.) Authorize staff to establish a Deferred Liabilities Reserve for the Electric and
Water Utilities.
3.) Authorize the following Transfers:
a.) Transfer $1,000,000 from the Electric General Fund to the Electric Capital
Replacement Reserve.
b.) Transfer $1,000,000 from the Electric General Fund to the Electric Rate
Reserve.
c.� i ransrer Z�5uu,uvu rrom ine tiectnc enerai runs to the ciectnc venicie
Reserve.
d.) Transfer $1,000,000 from the Electric General Fund to the Electric Deferred
Liabilities Reserve.
e.) Transfer $150,158 from Water Facilities Fees to the Water General Fund.
f.) Transfer $1,473 from the Water Glenshire Loan Fund to the Water General
Fund.
Lisa Hall
Director of Administrative Services
Michael D. Holley
General Manager
Truckee Donner Public Utility District
Budget vs. Actual Revenue & Expenditures
Fiscal Year Ending December 31, 2017
ELECTRIC DEPARTMENT
FY17
ATTACHMENTI
PRELIMINARY
Variance
FY17 Favorable
Type Budget Actual (Unfavorable)
OPERATING REVENUE
Residential
Commercial
Interdept. Sales & Rent
Standby
Joint Pole
FEMA Payout
Other
Total Operating Revenue
OPERATING EXPENSE
Board of Directors
General Management
Administrative Svcs.
Public Info. & Consrv.
Operations
IT/GIS
Building Maintenance
Purchase Power
GASB 68 Sidefund Principle
Total Operating Expense
NET OPERATING INCOME
OTHER INCOME (EXPENDITURE)
Investment Income (Loss)
Transfer from Capital Reserve
Transfers to Vehicle Reserve
Transfers to CA Solar Initiative
Transfers from Cap & Trade AB32 Reserve
Total Other Income (Expenditure)
CAPITAL EXPENDITURES FUNDED BY OPERATIONS
NET OPERATIONS FUNDED CASH INFLOW (OUTFLOW)
CAPITAL EXPENDITURES FUNDED BY RESERVES
Capital Replacement (AMI)
Vehicle Reserve
$ 11,704,400 $ 13,285,579 $ 1,581,180 14%
%0719155 993749678 303,524 3%
19773,479 197105324 (633155) -4%
23,171 219530 (15641) -7%
1603000 62%976 46%976 294%
1,126, 901 13126,901 100%
1663315 248,574 823259 49%
2238983519 2693979562 3,4993043 15%
127,900 102,159 25,741 20%
4983510 4883848 91662 2%
19426,771 193009318 1263453 9%
193003947 1,277,060 235887 2%
413589927 5,606,761 (192479833) =29%
6319492 630,778 714 0%
4959753 4543363 419390 8%
1294255649 11,317,199 191085451 9%
4089800 4089800 - 0%
2196749750 21,586,286 8%464 0%
1,223,769 4,811,276 3,587,507
60, 600 163, 323 102,723 170%
123,199
(1909630) (1905630) - 0%
177,400 1699186 (85214) -5%
1y290,000 1,172,306 (1179694) -9%
11460y569 193149185 (1469384) -10%
25684,338 197449383 9399955
0 453815078 453815078
1,112,820 436,270 676,550
338,432 513,128 (174,696)
1,451,252 949,398 501,854
ATTACHMENT2
PRELIMINARY
Truckee Donner Public Utility District
Budget vs. Actual Revenue & Expenditures
Fiscal Year Ending December 31, 2017
WATER DEPARTMENT
FY77
Type Budget
Residential
Commercial
Standby & Fire Protection
Other
Total Operating Revenue
OPERATING EXPENSE
Board of Directors
General Management
Administrative Svcs.
Public Info. & Consrv.
Operations
IT/GIS
Interdepartmental Rent
GASB 68 Sidefund Principal
Total Operating Expense
NET OPERATING INCOME
OTHER INCOME (EXPENDITURE)
Investment Income (Loss)
Transfers to Vehicle Reserve
Transfer in from Operating Reserve
Facility Fund Reimbursement for Facility Fee Debt
Debt Service
Total Other Income (Expenditure)
CAPITAL EXPENDITURES FUNDED BY OPERATIONS
NET OPERATIONS FUNDED CASH INFLOW (OUTFLOW)
Variance
FY17 Favorable
Actual (Unfavorabl
$ 10,727,529 $ 10,345,599 $ (381,930)
1,356,673 13459,162 1029489 8%
145,840 133,440 (129400) -9%
274,014 338,714 649700 24%
12,5041056 125276,915 (2279141) -2%
127,900 101,643 26,257 21%
486,659 454,580 32,079 7%
193003598 11178,290 122,308 9%
290,129 264,911 25,218 9%
45665,701 41965,573 (29%872) -6%
5675904 6759706 (107,802) =19%
5619479 5619479 1 0%
3129353 312,353 0 0%
833122724 835149536 (2018812) -2%
4,191,332 3,762,380 (428,952)
57,541 85,366 27,825 48%
(159,884) (159,884) 0 0%
224,356 0 (2243356) 100%
3563070 5063228 150,158 42%
(251293013) (231293013) 0 0%
(156503930) (136973303) (46,373)
158413022 139413535 (100,513) -5%
699,380 1233542 (575,838)
2017 Capital Budget Cuts to Reimburse 2016 Budget Overage (6993380)
0
CAPITAL EXPENDITURES FUNDED BY RESERVES
Operating Reserve
Vehicle Reserve
Meter Reserve
Total
224,356 - 224,356
91,398 101,643 (10,245)
2859933 33,400 252,533
601,687 135,043 4663644
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