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Home My WebLink About9-FY14 & FY15 Operating & Capital Budget Presentations1 • TRUC EE D 11 NE Public Utility District BUDGET To: Board of Directors From: Robert Mescher Date: October 16, 2013 Subject: FY14 and FY15 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 FY14 and FY15 Budget. 2. HISTORY District Code requires the District to prepare a two-year budget. BUDGET PROCESS SCHEDULE District Code requires the District to prepare a two-year budget. BUDGET PROCESS SCHEDULE September 4, 2013 • Discussed the budget objectives, goals, assumptions, and debt September 18, 2013 • Presented the Purchased Power Plan • Discussed CEC Changes to the Renewable Portfolio Standard (RPS) • Reviewed the Proposition 218 process for water rates October 2, 2013 • Discuss the Electric and Water Utility operational and capital budgets October 16 (tonight) • Set a public hearing date for the budget • Discuss the supporting services operational and capital budgets • Present a draft summary of FY14 and FY15 Budget • Present a draft 10-year Financial Master Plan • Review revenue requirements • Discuss the projected reserve fund balances November 6, 2013 • Present a water rate study (HDR Engineering, Inc.) • Set a public hearing for water rates • Present the draft FY14 and FY15 Budget and Financial Master Plan • Conduct a public hearing regarding the FY14 and FY15 Budget November 20, 2013 • Consider adopting the FY14 and FY15 Budget with the overhead allocation rates and Purchased Power Plan January 15, 2014 • Hold a public hearing regarding water rates • Consider adopting an ordinance for water rates effective after February 14, 2014 BUDGET ASSUMPTIONS At the September 4, 2013 Board Meeting, staff presented the following budget assumptions: • Annual inflation is expected to be 3% • New development activity will increase • No new debt • No planned electric rate increase in FY14 & FY15 • Estimated water rate annual increase of 3% in FY14 & FY15 • $5 monthly water meter surcharge (7.5%) ends December 31 St • Estimated labor rate increase of 2% in FY14 • Estimated labor rate increase of 3% in FY15 • One IT employee added in FY14 • One Work Order employee restored in FY15 McZIWITAI'1;101NLTi1_110lei L Staff is proposing a budget that balances the revenue and expenses by building or utilizing existing reserves in the short-term, while achieving the District financial goals in the long-term. With the exception of inflationary increases in some categories, the proposed FY14 and FY15 budget is similar to the approved FY13 budget. The budget highlights for Board of Directors/General Management, Administrative Services, Conservation, and IT/GIS, comparing the proposed budget to the FY13 budget: Board of Directors/General Management • $15,000 additional election expense is included in FY15 only • $15,000 increase in miscellaneous expense primarily due to demographic changes of the medical insurance participants • No significant changes in operational expenses • No new capital expenditures Administrative Services • $60,000 decrease in bad debt expenses • $40,000 decrease in meter reading expense • $20,000 decrease in office supplies • $10,000 decrease in miscellaneous expenses • No new capital expenditures Public Information and Conservation • $50,000 decrease in electric conservation programs • $35,000 decrease in water conservation programs • $10,000 capital expense to improve warehouse lighting efficiency IT/GIS • Consolidated all District IT expenses and IT responsibilities into this department • $115,000 increase labor expenses due to an additional employee to support increased reliance on technology • $300,000 increase in capital expenditures to improve reliability and security of the District's SCADA and and communication equipment A summary of the proposed FY14 and FY15 Budget (Attachment 1) illustrates that no electric rate increase is needed and that a minimum of 3% water rate increase is needed in FY14 and again in FY15. This will be discussed in more detail in the Financial Master Plan presentation tonight and in the Board Meeting next month on November 6, 2013. 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. Robert Mescher Administrative Services Manager Michael D. Holley General Manager