EXHIBIT 5-B
MPWMD Fiscal Condition September
29, 2004
The purpose of this item is to provide an update on the fiscal condition of the District and obtain Board feedback on planning for the 2005-2006 budgeting process. Attached for your information are the revenue and expenditure summary pages from the 2004-2005 budget (Exhibit 5-B.1 and Exhibit 5-B.2), an Analysis of Reserves (Exhibit 5-B.3) and a Proposed Timeline for User Fee Increase (Exhibit 5-B.4) that was previously presented during the 2004-2005 budget process.
The 2004-2005 budget, totaling $4,726,300, was balanced by using $1,027,300 from general reserves. It is important to note that the budget includes no funding for work related to a new water supply project. As indicated on the Analysis of Reserves worksheet, it is projected that there will be a general reserve balance of $1,113,173 at the end of fiscal year 2004-2005 which is still approximately 25% of the total budget. If we assume a status quo, or the use of an additional $1,027,300 of general reserves in fiscal year 2005-2006, the general reserve balance at the end of that fiscal year would be $85,873. The Capital Projects Fund and the Conservation Fund would each have to borrow money from the Mitigation Fund in order to avoid a deficit position.
In addition to the general reserve, the Analysis of Reserves worksheet also lists the designated reserves at July 1, 2004 totaling $979,527. The Board of Directors previously set these designated reserves aside for specific purposes, however, the Board could use the funds for other purposes if it desired to do so.
The Proposed Timeline for User Fee Increase is a document that was presented during the 2004-2005 budget process. It is included with this item as a reminder that from the time the Board authorizes staff to begin the process of increasing the user fee to the time the first revenue is actually received is approximately nine months.
General Manager Dave Berger and the Division Managers have discussed the District’s financial position and the fact that our reserves are adequate to cover the District’s deficit into next fiscal year. Thus, they believe the 2004-2005 mid-year budget adjustment need include only typical mid-year adjustments; and that a balanced budget be prepared for fiscal year 2005-2006 using a combination of revenue and expenditure adjustments.
In addition to balancing the budget in fiscal year 2005-2006, staff proposes to restructure the budget to a program and performance-based budget, as opposed to the current line item type of budget. Each Division would identify major service programs and both labor related costs and other expenditures would be accumulated in one place so that the Board and staff would be able to see what each program actually costs. The level of service to be provided by each program would also be indicated.
An example of this budgeting concept is fish rescue and rearing. In the current budget the expenditures for the program are in the Projects Expense section of the budget, while salaries and other personnel related costs are in the Personnel section of the budget where the amount applicable to fish rescue and rearing cannot easily be identified. Under the new budgeting concept, the total costs of this program could easily be identified because they would appear in one place. The level of service to be provided by the program would also be identified, i.e., the number of fish to be rescued, etc.
While this revision to the budget format could be accomplished in conjunction with the 2004-2005 mid-year budget adjustment, it would place a considerable burden on staff due to the short timeframe and have very significant impacts on other projects currently underway. Therefore, it is recommended that the effort be undertaken during preparation of the 2005-2006 budget.
U:\staff\word\boardpacket\2004\2004boardpacket\20040929\05\item5_exh5b.doc