ITEM:

PUBLIC HEARINGS

 

16.

CONSIDER ADOPTION OF MID-YEAR FISCAL YEAR 2008-2009 BUDGET ADJUSTMENT

 

Meeting Date:

February 26, 2009

Budgeted: 

N/A

 

From:

Darby Fuerst,

Program/

N/A

 

General Manager

Line Item No.:

 

Prepared By:

Rick Dickhaut

Cost Estimate:

N/A

 

General Counsel Approval:  N/A

Committee Recommendation:  N/A

CEQA Compliance:  N/A

 

SUMMARY:  Annually, the District considers its financial position after the end of the first half of the fiscal year.  District staff has reviewed income and spending patterns since July 1, 2008 and determined that adjustment of the Fiscal Year 2008-09 budget developed last spring, and adopted June 16, 2008, is required.  Included in the process was a review of staffing levels, supplies, outside services, current work assignments and other factors affecting the budget.  The tables below summarize the proposed budget changes:

           

Revenue

Adopted

Change

Amended

Property Tax

$1,432,000

$0

$1,432,000

Permit Fees

250,000

(50,000)

200,000

Connection Charges

300,000

150,000

450,000

User Fees

3,670,400

0

3,670,400

Recording Fees

12,000

0

12,000

Interest

50,000

0

50,000

Project Reimbursements

1,157,600

(70,000)

1,087,600

Legal Fee Reimbursements

30,000

0

30,000

Other

8,000

0

8,000

       Subtotal

$6,910,000

$30,000

$6,940,000

Line of Credit Proceeds

0

180,500

180,500

Capital Equip. Reserve

98,000

0

98,000

Flood/Drought Reserve

57,000

0

57,000

From Fund Balance

1,209,000

(134,700)

1,074,300

       Total

$8,274,000

$75,800

$8,349,800

 

 

 

 

Expenditures

Adopted

Change

Amended

Personnel

$3,194,300

($161,300)

$3,033,000

Supplies & Services

1,017,300

60,200

$1,077,500

Project Expenditures

3,691,000

169,200

$3,860,200

Capital Assets

236,400

5,700

$242,100

Capital Equipment Reserve

60,000

0

$60,000

Debt Service

0

2,000

$2,000

Contingency

75,000

0

$75,000

       Total

$8,274,000

$75,800

$8,349,800

 

 

 

 

As the table indicates, net revenue increases are $210,500 and net expenditure increases are $75,800, resulting in a reduction in the budgeted use of reserves of $134,700.  Detailed information regarding the proposed changes, as well as their effect on the general operating reserves, is detailed in the background section of this staff note.

 

RECOMMENDATION:  Following a presentation by District staff and a public hearing, staff recommends adoption of the proposed mid-year budget adjustment for Fiscal Year 2008-09.

 

BACKGROUND:  The Board of Directors adopted the original Fiscal Year 2008-09 budget on June 16, 2008.  The paragraphs below summarize the original budget, proposed mid-year adjustments to the budget and projected general operating reserves.

 

Revenues

 

The 2008-09 adopted budget anticipated revenue sources in the amount of $8,274,000, including $98,000 from the Capital Equipment Reserve and $57,000 from the Flood/Drought Reserve.  It was projected that these revenues would be less than budgeted expenditures resulting in the use of $1,209,000 from the General Operating Reserve.  This use of General Operating Reserves was attributable to the decision to pay for expansion of the Aquifer Storage and Recovery (ASR) Project on a pay-as-you-go basis.  As of December 31, 2008, actual revenue collections totaled $2,728,085 or about 33% of the budgeted amount.  Revenues for the first half of each fiscal year are historically low because larger portions of the District’s three major revenue sources, user fees, property taxes and reimbursements, are collected during the second half of each fiscal year.  District staff has analyzed the revenue activity for the first six months of the fiscal year, as well as activities scheduled for the second half of the fiscal year, and recommends various adjustments to the revenue portion of the budget as discussed below:

 

 

User Fees, the District’s largest revenue source, have not been adjusted because they are based on California American Water’s (CAW) billings to customers and the amount of CAW’s rate increase that will be retroactive back to January 1, 2009 is still unknown.  The original budget assumed that CAW would be granted about 50% of its requested rate increase of approximately 80%.

 

The cumulative effect of these revenue adjustments is an increase of $210,500 in projected revenues for Fiscal Year 2008-09.

 

 

 

Expenditures

 

The original budget envisioned expenditures of $8,274,000 in the fiscal year ending June 30, 2009. As of December 31, 2008, actual expenditures totaled $2,670,860, or approximately 32% of the budgeted amount.  This low percentage is not unusual because project expenditures for the first half of each fiscal year are historically low.   District staff has analyzed the expenditure activity for the first six months of the fiscal year, as well as activities scheduled for the second half of the fiscal year, and recommends various adjustments to the expenditure portion of the budget as discussed below:

 

 

 

 

 

 

The cumulative effect of the adjustments to the expenditure side of the budget is a net increase of $75,800 in projected expenditures for Fiscal Year 2008-09.  

 

General Operating Reserves

 

The difference of the adjustments to revenues and expenditures results in a reduction in the use of general operating reserves of $134,700.  After this amount is subtracted from the original budgeted use of $1,209,000, the result is a budgeted net decrease of $1,074,300 in general operating reserves during Fiscal Year 2008-09.  This use of reserves netted with the audited surplus of $121,130 from Fiscal Year 2007-08 changes the estimated general reserve carryover at June 30, 2009 to $528,201 (Exhibit 16-E).  This amount equates to about 6.3% of the new operating budget amount, which is still above the minimum of 5% established by the Board during the 2005-06 budget process.

 

EXHIBITS

16-A    Reimbursements

16-B    Personnel Costs

16-C    Supplies & Services

16-D    Project Expenditures

16-E    Reserves Analysis

 

 

 

 

U:\staff\word\boardpacket\2009\20090226\PubHrgs\16\item16.doc