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Home My WebLink About9 Capital and Operating Budgetsenda Item # BUDGET To: Board of Directors From: Regina Wise Date: October 21, 2015 Subject: FY16 and FY17 Operating/Capital Budget Presentations: a) Board of Directors and General Management b) Administrative Services c) Public Information & Conservation d) IT/GIS e) District Budget Overview 1. WHY THIS MATTER IS BEFORE THE BOARD This item continues the preparation process of the FY16 and FY17 Budget. 2. HISTORY District Code requires the District to prepare a two-year budget. BUDGET PROCESS SCHEDULE September 2 • Discuss the objectives, goals, assumptions, labor and debt September 16 • Discuss the Purchased Power Plan October 7 • Discuss the operating and capital budget for the Electric and Water Utilities October 21 (Tonight) • Discuss the operating and capital budgets for supporting services • Reserve funds • Revenue, rates, fees and charges • Present the Financial Master Plan NnvPmhar 4 • Review final Purchase Power Plan • Present a draft of the FY16 & FY17 Budget • Ten -Year Financial Master Plan Projection • Hold a public hearing regarding the budget November 18 • Adopt the FY16 & FY17 Budget 0 Page 1 of 6 BUDGET ASSUMPTIONS At the September 2, 2015 Board Meeting, staff presented the following budget assumptions: • 3% inflation for FY17 • No new debt • No planned electric rate increase in FY16 & FY17 • Water rate increase of 6% in FY16 • Maximum water rate increase of 5% in FY17 • Contract negotiations set union labor increases at 5% for FY16 and 3% for FY17 • An electrician is expected to be added in FY16 • An engineer is expected to be added in FY17 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 financial goals in the long-term. Attachment 1 shows the summary draft FY16 and FY17 budgets for the Electric and Water Utilities. With the exception of inflationary increases and previously established assumptions, the proposed FY16 and FY17 budgets are similar to the approved FY15 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 Board of Directors and General Management, Administrative Services, Conservation, and IT, comparing the proposed budget to the FYI budget: Board of Directors/General Management • $15,000 additional election expense is included in FY16 only. • $15,000 additional training expense is also included in FY16 only. • No new capital expenditures. Board of Directors and General Mgmt Budgets %Variance (in thousands) FY16 vs. FY17 vs. I FYI FY16 FY17 FY15 FY16 Board of Directors Operating Exp I $ 254 $ 264 $ 256 4% -3% General Management Operating Exp li $ 928 $ 993 . $ 1,024 7% 3% Total Department Expenses $ 1,182 $ 1,257 $ 1,280 6% 2% Administrative Services • FY16 and FY17 budget includes increased labor expense for added Finance and Accounting Manager position. • $5,400 decrease in provision for bad debts . • No new capital expenditures. Page 2 of 6 Administrative Services Budgets % Variance (in thousands) FY16 vs. FY17 vs. FYI FY16 FY17 FYI FY16 Administrative Services Operating Exp $ 2,550 $ 2,770 $ 2,866 9% 3% Public Information and Conservation • $150,000 decrease in public benefit programs and information is attributed to cost shifting between operations and capital projects. • $137,000 increase in capital expenditures for FY16 includes district building warehouse lighting and additional PEV (plug-in electric vehicle) charging stations. • $88,000 increase in capital expenditures for FY17 is additional planned expansion of the PEV charging stations. Public Information and Conservation (in thousands) FYI Budgets FY16 FY17 %Variance FY16 vs. FY17 vs. FYI FY16 Public Benefit Programs and Information Operating Expenses $ $ 1,575 163 $ $ 1,395 183 $ $ 1,434 188 -11% 12% -9% 3% 3% 3% Total Department Expenses $ 1,738 $ 1,578 $ 1,622 Capital Expenditures 10 147 88 1370% -1 % -67% -1 % Total Department Exp $ 1,748 $ 1,725 $ 1,710 Information and Technology (IT) • No significant changes in operational expenses, 4% decrease is attributed to cost shifting between operations and capital projects. • Primary focus for capital expenditures for FY16 and for FY17 include network infrastructure improvement, SCADA reliability, and water SCADA replacement. • The 72% increase in FY15 to FY16 is due to timing of capital projects in prior budget cycle, FY14 was heavily front loaded with expected capital spending in that budget cycle. IT (in thousands) FYI Budgets FY16 FY17 % Variance FY16 vs. FY17 vs. FYI FY16 Operating Expenses $ 1,227 $ 1,184 $ 1,230 4% 72% 28% 4% -5% -1% Capital Expenditures 890 1,534 1,459 Total Department Exp $ 2,117 $ 2,718 $ 21689 Page 3 of 6 The FY16 and FY17 summary Budgets for the Electric and Water Utilities (Attachment 1) represent balanced budgets without imposing an electric rate increase in this budget cycle and utilizing the recommended water rate increase of 6% in FY16 and a maximum rate increase of 5% for FY17. 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 4, 2015. 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. _� r 1; �-- 7f W Z;:; � � -1 Regina Wise Accounting and Finance Manager Michael D. Holley General Manager Page 4 of 6 ELECTRIC UTILITY DRAFT SUMMARY BUDGETS (in thousands) Electric Revenues and Transfers Sales Revenues Interest Income & Transfers Total Revenues and Transfers Expenses Board of Directors & General Management General Management Administrative Services Conservation Electric Operations Information and Technology Purchased Power Building Maintenance Total Operating Expenses Debt Service Transfers Net Available for Capital Scheduled Capital Attachment 1- Electric FY15 FY16 FY17 FY16 vs. FYlS FY17 vs. FY16 23,546 22,671 22,899 4% 1% 2,015 3,840 3,725 91% -3% $ 25,561 $ 26,511 $ 26,962 -4% 2% 127 132 128 4% -3% 466 503 519 8% 3% 1,365 1,457 1,507 7% 3% 1,406 1,286 1,321 -9% 3% 4,011 4,222 4,539 5% 7% 613 622 647 1% 4% 12,415 11,945 12,426 -4% 4% 505 508 508 1% 0% $ 20,908 $ 20,674 $ 21,595 -1% -4% 895 927 961 4% 4% 906 506 191 -56% -38% $ 2,851 $ 4,553 $ 4,216 60% -7% $ 2,851 $ 4,553 $ 4,216 60% -7% Total - - - Page 5 of 6 WATER UTILITY DRAFT SUMMARY BUDGETS (in thousands) Water Revenues and Transfers Sales Revenues Misc Operating Revenue Interest Income & Transfers Total Revenues and Transfers Expenses Attachment 1 - Water FY15 FY16 FY17 FY16 vs. FY15 FY17 vs. FY16 10,739 11,410 12,084 6% 6% 421 414 420 -2% 1% 2,818 2,429 2,081 -14% -14% $ 13,978 $ 14,253 $ 14,585 2% 2% Board of Directors 127 132 128 4% -3% General Management 462 490 505 6% 3% Administrative Services 1,184 1,313 1,359 11% 3% Conservation 332 292 300 -12% 3% Water Operations 4,741 4,633 4,836 -2% 4% Information and Technology 613 562 583 -8% 4% Interdepartmental Rent 389 554 561 42% 1% Total Operating Expenses $ 7,849 $ 7,975 $ 8,272 2% 4% Debt Service 3,325 3,193 3,195 -4% 0% Transfers 151 155 160 3% 3% Net Available for Capital $ 2,653 $ 2,930 $ 2,958 10% 1% Scheduled Capital $ 2,653 $ 2,930 $ 2,958 10% 1% Water Operations IT Total Capital $ 2,653 $ 2,930 $ 2,958 Total - - - Page 6 of 6