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Home My WebLink About12 2009 Overall budget Agenda Item # 12 WORKSHOP To: Board of Directors From: Bob Mescher Date: October 01, 2008 Subject: 2009 Proposed Budget: Overall Budget Summary and Rate Projections 1. WHY THIS MATTER IS BEFORE THE BOARD This item continues the process for preparation of the 2009 budget. 2. HISTORY Changes affecting the FY 08 budget: • The electric rates were increased 7% and water rates were increased 3% for FY 2008 • Direct labor increased based upon the approved union contract • The solar initiative SB-1 began in 2008 • Public benefit programs were substantially increased • Funding to the reserve accounts was increased The assumptions and proposed changes in the FY 2009 budget were: • Direct Labor Costs o Overtime decreased 5% from the 2008 Budget o Bargaining unit employees increased by 4% per contract o Rates of pay for non-union employees increased 5% • Staffing level changes included one additional full-time position, and a reduction of one part-time position and one full-time position, all in the Electric Department • Electric rates increased 3% based on ordinance 2007-03 • Water rates remain unchanged • Most other expenses remained the same or decreased, except for new programs such as additional conservation and public benefit programs • The General Services Department was eliminated; associated costs and budget were allocated to other departments; the 2008 budget has been normalized so it can be easily compared to the 2009 budget. • A vehicle replacement reserve fund has been added • The water meter surcharge has not yet been included 3. NEW INFORMATION The following is based on estimated amounts in the draft 2009 budget (which may still be modified slightly) as they compare to the original 2008 budget: 2009 electric department revenue is projected to increase 3.3%, primarily due to the already approved 3% rate increase. Water department revenue is also projected to increase by 3.5%, primarily due to a 1% growth and 2.5% of underestimated revenue in the 2008 budget. The water rates are proposed not to increase in 2009 except for a water meter surcharge that has not yet been included in this budget. The amount collected for water meters would be transferred to reserves. (A separate workshop has been scheduled to further discuss this topic.) 2009 electric and water department operating expenses are proposed to increase 2.8% and 3.5% respectively. No rate increases beyond the already approved electric 3% increase is required. No new debt is proposed for 2009. It is estimated that the District will conclude 2008 financially neutral for both the electric and water departments, instead of the budgeted $563,000 deficit for the electric department. Therefore, it will not be necessary for the electric department to have an offsetting surplus in 2009. See the attached exhibits for more information. 4. FISCAL IMPACT Staff is proposing a balanced budget for 2009. Total revenue and transfers from other existing funds will equal total expenses and transfers to reserves. 5. RECOMMENDATION Receive this report and provide comments to staff. Mary Chapman Mi a D. Holley Administrative Services Manager General Manager Truckee Donner Public Utility District Comparison of 2009 Budget Draft and 2008 Budget As of September 26,2008 2009 Budget-DRAFT 2008 Budget* $Variance %Variance Electric Water Total District Electric Water Total District Electric Water Total District Electric Water Total Operating Revenue 23,770,000 9,950,000 33,720,000 23,016,753 9,616,806 32,633,559 753,247 333,194 1,086,441 3.3% 3.5% 3.3% Operating Expenses Board 85,000 80,000 165,000 85,836 82,836 168,672 (836) (2,836) (3,672) -1.0% -3.4% -2.2°0 415,590 359,806 775,396 59,410 40,194 99,604 14.3% 11.2% 12.8% General Management 475,000 400,000 875,000 Administration 1,680,000 1,170,000 2,850,000 1,655,373 1,077,117 2,732,490 24,627 92,883 117,510 1.5% 8.6% 4.3% Conservation 1,350,000 170,000 1,520,000 1,211,708 77,817 1,289,525 138,292 92,183 230,475 11.4% 118.5% 17.9% 1,350,000 - 2,990,000 2,855,542 - 2,855,542 134,458 - 134,458 4.7% 0.0% 4.7% Electric Utility - _ - 3,590 0.0% 0.0% 0.0% Purchased Power 11,110,000 11,110,000 11,106,410 11,106,410 3,590 Water Utility 370,000 4,760,000 5,130,000 238,501 4,781,336 5,019,837 131,499 (21,336) 110,163 55.1% -0.4% 2.2% GIS 540,000 240,000 780,000 532,311 209,547 741,858 7,689 30,453 38,142 1.4% 14.5% 5.1 Total Operating Expenses 18,600,000 6,820,000 25,420,000 18,101,271 6,588,459 24,689,730 498,729 231,541 730,270 2.8% 3.5% 3.0% ,000 4,915,482 3,028,347 7,943,829 254,518 101,653 356,171 5.2% 3.4% 4.5% Net Operating Income 5,170,000 3,130,000 8,300 F 535,950 7,150 675 (74,725) (35,950) (110,675) -2.1% -1.0% -1.5% Less Debt Service 3,540,000 3,500,000 7,040,000 3,614,725 3, Net Income 1,630,000 (370,000) 1,260,000 1,300,757 (507,603) 793,154 329,243 137,603 466,846 25.3% -27.1% 58.9% Plus Transfers from Other Fund! 2,570,000 10,300,000 12,870,000 4,433,220 8,455,759 12,888,979 (1,863 220) 1,844,241 (18,979) -42.0% 21.8% -0.1% Available Balance 4,200,000 9,930,000 14,130,000 5,733,977 7,948,156 13,682,133 (1,533,977) 1,981,844 447,867 -26.8% 24.9% 3.3% Capital Projects 3,610,000 9,010,000 12,620,000 5,557,544 7,248,835 12,806,379 (1,947,544) 1,761,165 (186,379) -35.0% 24.3% -1.5% Transfers to Reserves 590,000 920,000 1,510,000 739,520 699,321 1,438,841 (149,520) 220,679 71,159 -20.2% 31.6% 4.9% Surplus(Deficit) - - - (563,087) (563,087) 563,087 563,087 -100.0% 0.0% -100.0% The 2008 Budget for the General Services Department has been allocated to other departments. i Truckee Donner Public Utility District 2009 Draft Budget- List of Major Capital Improvement Projects As of September 26, 2008 Electric Rates Tahoe Donner Substation Rebuild $ 610,000 Line & Extension Upgrades 160,000 Reclosures and Controls 70,000 Office Equipment and Computers 100,000 GIS Computer Hardware & Software 50,000 Miscellaneous GIS Projects 50,000 Other Miscellaneous 190,000 Total Rate Funded Projects $1,230,000 Contributions Development Agreements $ 960,000 Other Customer Contribution Projects 520,000 Total Contribution Funded Projects $1,480,000 Facilities Fees Donner Lake Circuit No. 3 $ 770,000 Tahoe Donner 3 130,000 Total Contribution Funded Projects $ 900,000 Total Electric Projects $3,610,000 Water Rates Northside Well $ 170,000 Large Commercial Meters 100,000 Total Rate Funded Projects $ 270,000 Contributions Development Agreements $ 260,000 Total Contribution Funded Projects $ 260,000 Facilities Fees Martis Well $1,300,000 Test Wells 500,000 SCADA 400,000 Fiberboard Well 320,000 Stockholm Pump Station 240,000 Emergency Power Pump Station 120,000 Total Contribution Funded Projects $2,880,000 District Pipeline Replacement Funded by 2006 COP $3,300,000 Water Meter Replacement Funded by Reserves and Surcharge $2,300,000 Total Water Projects $9,010,000 Truckee Donner Public Utility District Designated Fund Activity, Balances and Goals 2008 Budget and 2009 Draft Budget As of September 26, 2008 i o- 2007 2008 2008 2009 2009 Activity End of Year End of Year Description Balance Projection Projection Budget Projection Goal Variance Land Sales Fund $4,115,057 $ 60,000 $ 4,175,057 $ - $ 4,175,057 $ - $ 4,175,057 Electric Rate Reserve 1,148,106 410,000 1,558,106 426,000 1,984,106 3,000,000 (1,015,894) Reserve for Future Meters 1,263,263 (266,000) 997,263 (997,263) - - - Water Capital Replacement Fund 294,508 185,000 479,508 194,000 673,508 4,000,000 (3,326,492) Electric Capital Replacement Fund - - - - - 1,000,000 (1,000,000) Vehicle Replacement Fund - - - 295,000 295,000 295,000 - Storm Damage Fund 359,553 - 359,553 - 359,553 - 359,553 350481 Debt Service Coverage 252,481 515,000 767,481 583,000 1,350,481 - 1,205, Building Fund 238,095 (33,000) 205,095 - 205,095 - 205,0099 5 Internal Loan* (1,534,369) 144,000 (1,390,369) (1,150,000) (2,540,369) - (2,540,369) Other 2841495 - 284,495 - 284,495 - 284,495 Total Designated Funds $6,421,189 $ 1,015,000 $ 7,436,189 $ (649,263) $ 617869926 $8,2959000 $(1,508,074) *The internal loan is projected to increase due to the $1,294,000 unreserved portion of the meter implementation project, less a planned reimbursement of$144,000 from the general fund.