HomeMy WebLinkAbout14 Two Year budget cycle Agenda Item # 14
TRUCKEE ..
Public Utility District
WORKSHOP
To: Board of Directors
From: Bob Mescher
Date: May 20, 2009
Subject: Discussion of the Transition to a Two-Year Budget Cycle
1. WHY THIS MATTER IS BEFORE THE BOARD
The purpose of this workshop is to discuss the process surrounding the transition to
the two-year District budget.
2. HISTORY
Prior to the FY10-11 budget, budgets were prepared annually.
A biannual budget, as compared to an annual budget, reduces overall Board and staff
time, promotes long-term cost planning, and facilitates rate stabilization.
Considering these benefits, the Board approved a revision to Title 3 of the District
code to require the General Manager to submit to the Board of Directors a two-year
budget draft and to review the budget performance semiannually.
3. NEW INFORMATION
The new biannual budget process is similar to the previous annual budget process
with the exception that it plans for an additional year. The first year will be developed
using a zero based method, i.e. expenses will be budgeted individually, rather than
increased from the prior year's budget. Then, using the first year as a basis, the
second year will be projected by applying reasonable multipliers to the first year to
estimate changes in operating, maintenance, and capital project costs. Additionally,
staff will separately account for major cost influences in the second year, such as
planned changes in head count, purchased power prices, capital projects, etc.
Later this summer, a workshop item will be brought to the Board presenting a
schedule of the FY10-11 budget process. Generally, the workshop schedule will be
similar to last year:
• September
o Mission, goals, and objectives
o Assumptions
o Staffing and labor costs
o Existing debt
o Purchased power
• October
o Revenue projections
o Reserve funding
o Individual departmental operating budgets and capital projects
o New debt
• November
o Public hearing
o Board adoption
The actual financial performance will be compared to the adopted budget
semiannually, after the close of June and December of each year:
• June 2010 mid-year review
• December 2010 mid-cycle review
• June 2011 mid-year review
• December 2011 end-of-cycle review
Significant variances will be identified and explained. If necessary, revisions to the
budget may be requested if unanticipated needs occur after the adoption of the
budget.
4. FISCAL IMPACT
There is no direct fiscal impact associated with this workshop.
5. RECOMMENDATION
Receive this report and provide comments to staff.
14,A- Aes,� /e�02 /*'. �.
Mary Chapman 61 Michael D. Holley
Administrative Services Manager General Manager