ITEM:

PUBLIC HEARINGS

 

16.

CONSIDER ADOPTION OF MID-YEAR FISCAL YEAR 2009-10 BUDGET ADJUSTMENT

 

Meeting Date:

February 25, 2010

Budgeted:

N/A

 

From:

Darby Fuerst,

Program/

N/A

 

General Manager

Line Item No.:

 

Prepared By:

 

Rick Dickhaut

Cost Estimate:

N/A

General Counsel Review: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 (FY).District staff has reviewed income and spending patterns since July 1, 2009 and determined that adjustment of the FY 2009-10 budget developed last spring, and adopted June 15, 2009, 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:

†††††††††††

†††††††††††

As the table indicates, net revenue increases are $349,000 and net expenditure increases are $345,600 resulting in a reduction in the budgeted use of reserves of $3,400.Detailed information regarding the proposed changes, as well as their effect on 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 FY 2009-10.

 

BACKGROUND:The Board of Directors adopted the original FY 2009-10 budget on June 15, 2009.The paragraphs below summarize the original budget, proposed mid-year adjustments to the budget and projected general operating reserves.

 

Revenues

 

The FY 2009-10 adopted budget anticipated revenue sources in the amount of $7,172,800, including $195,000 of Line of Credit Proceeds and $104,600 from the Capital Equipment Reserve.It was projected that these revenues would be less than budgeted expenditures resulting in the use of $780,800 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, 2010, actual revenue collections totaled $2,726,153 or about 34% of the budgeted amount.Revenues for the first half of each fiscal year are historically low because larger portions of the Districtís 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 shown in Exhibit 16-A and discussed below:

 

 

 

 

 

The cumulative effect of these revenue adjustments is an increase of $349,000 in projected revenues for FY 2009-10.

 

 

 

 

 

Expenditures

 

The original budget envisioned expenditures of $7,953,600 in the fiscal year ending June 30, 2010. As of December 31, 2009, actual expenditures totaled $2,893,193 or approximately 36% of the budgeted amount.This low percentage at the mid-way point of the fiscal year 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 $345,600 in projected expenditures for FY 2009-10.††

 

General Operating Reserves

 

The difference of the adjustments to revenues and expenditures results in a reduction in the use of general operating reserves of $3,400. After this amount is subtracted from the original budgeted use of $780,800, the result is a budgeted net decrease of $777,400 in general operating reserves during FY 2009-10.††† This use of reserves added to the audited deficit of $282,943 from FY 2008-09 changes the estimated general reserve carryover at June 30, 2010 to $544,990 as shown on Exhibit 16-F.This amount equates to about 6.6% 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††† Capital Assets

16-F††† Reserves Analysis

 

 

 

 

 

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