ITEM:		PUBLIC HEARING
15.	CONSIDER ADOPTION OF MID-YEAR FISCAL YEAR 2012-13 BUDGET ADJUSTMENT
Meeting Date:			March 18, 2013	Budgeted:	N/A
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Suresh Prasad	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, 2012 through the end of December 31, 2012 and determined that adjustment to the FY 2012-13 Budget is required. The FY 2012-13 Budget was adopted on June 27, 2012. Included in the budget adjustment process was a review of staffing levels, supplies, outside services, current work assignments and other factors affecting the current budget. The tables below summarize the proposed changes to the budget:

Monterey Peninsula Water Management District
2012-13 Budget
Mid-Year Budget Adjustment-Summary
Revenue	Adopted	Change	Amended
Property Tax	$1,403,000	$0	$1,403,000
Permit Fees - WDD	175,000	0	175,000
Permit Fees - PED	56,000	0	56,000
Connection Charges	175,000	0	175,000
User Fees	100,000	0	100,000
Water Supply Charge	3,700,000	(400,000)	3,300,000
Mitigation Revenue	1,560,000	78,000	1,638,000
Recording Fees	6,000	0	6,000
Interest	5,000	0	5,000
Other	15,000	0	15,000
Subtotal District Revenues	7,195,000	(322,000)	6,873,000
Reimbursements - CAW	5,319,200	(15,000)	5,304,200
Reimbursements - Watermaster	91,000	0	91,000
Reimbursements - Other	63,600	(18,600)	45,000
Reimbursements - Legal Fees	15,000	0	15,000
Grants	1,478,400	(110,000)	1,368,400
Subtotal Reimbursements	$6,967,200	($143,600)	$6,823,600
Fund Balance	0	0	0
Total Revenues	$14,162,200	($465,600)	$13,696,600
Monterey Peninsula Water Management District
2012-13 Budget
Mid-Year Budget Adjustment-Summary
Expenditures	Adopted	Change	Amended
Personnel	$3,303,500	($35,000)	$3,268,500
Supplies & Services	936,000	0	936,000
Project Expenditures	9,631,900	(457,300)	9,174,600
Fixed Assets	70,200	0	70,200
General Operating Reserve	0	26,700	26,700
Debt Service	145,600	0	145,600
Contingency	75,000	0	75,000
Total	$14,162,200	($465,600)	$13,696,600

As the revenue and expenditure tables indicate, net revenue decreases are $465,600 and net expenditure decreases are $492,300 resulting in a surplus of $26,700. The surplus will be transferred the District’s General Operating reserve account. Detailed information regarding the proposed changes, as well as their effect on general operating reserves, is detailed in the background section of this report.

RECOMMENDATION: Following a presentation by District staff and a public hearing, staff recommends adoption of the proposed mid-year budget adjustment for FY 2012-13.

BACKGROUND: The Board of Directors adopted the original FY 2012-13 budget on June 27, 2012. The paragraphs below summarize the original budget, proposed mid-year adjustments to the budget and projected reserves accounts.

Revenues

The 2012-13 adopted budget anticipated revenue sources in the amount of $14,162,200. It was projected that these revenues would be the same amount as budgeted expenditures resulting in a balanced budget. As of December 31, 2012, actual revenue collections totaled $4,593,844 or about 32% of the budgeted amount. Revenues for the first half of each FY year are historically low because most of the District’s three major revenue sources, water supply charge, property taxes and reimbursements, are collected during the second half of each FY. District staff has analyzed the revenue activity for the first six months of the FY, as well as activities scheduled for the second half of the FY, and recommends various adjustments to the revenue portion of the budget as shown in Exhibit 15-A and discussed below:

• Water Supply Charge revenues have been decreased by $400,000 based on actual collections and adjustments made during the first six months.

• Mitigation Revenue has been increased by $78,000 based on ten percent increase for the period January through June as allowed by Public Utilities Commission.

• Project Reimbursements for conservation activities have been decreased by $15,000 due to deferral of project cost. This is reimbursement revenue and is driven by the project expenditures.
• Other Reimbursements were decreased by $18,600 due to several adjustments in the permit processing.

• Grant funds were decreased in the amount of $110,000 due to deferral of the grant project.

The cumulative effect of these revenue adjustments is a reduction of $465,600 in projected revenues for FY 2012-13.

Expenditures

The original budget envisioned expenditures of $14,162,200 in the FY ending June 30, 2013. As of December 31, 2012, actual expenditures totaled $3,212,466, or approximately 23% of the budgeted amount. This low percentage at the mid-way point of the FY is not unusual because project expenditures for the first half of each FY year are historically low. District staff has analyzed the expenditure activity for the first six months of the FY, as well as activities scheduled for the second half of the FY, and recommends various adjustments to the expenditure portion of the budget as discussed below:

• The personnel portion of the budget has been reduced by $35,000 as shown on Exhibit 15-B. This reduction is due to various adjustments based on six months year-to-date expenditures.

• As presented on Exhibit 15-C, project expenditures decreased by a net amount of $457,300. Some of the larger adjustments are as follows:
1. Expenditures for Groundwater Replenishment Project were decreased by $300,000 from $1,036,600 to $736,600 based on refined estimates for the project timeline.
2. Reduction in IRWMP Grant expenditures due to deferral of the project costs to next fiscal year.
3. Increase in public outreach for consultant to replace in-house public outreach employee.

The cumulative effect of the adjustments to the expenditure side of the budget is a net decrease of $492,300 in projected expenditures for FY 2012-13.

General Operating Reserves

The difference of $26,700 in adjustments to revenues and expenditures resulted in the funding of General Operating Reserve as follows:

Description	Original Budget	Adjustment	Amended Budget
General Operating Reserve	0	26,700	26,700

Since the District has been using its reserves to fund its operations during the year, the total reserve fund balance at June 30, 2011 was ($30,769). The above adjustments will result in an estimated reserve carryover of ($4,069) at June 30, 2013 as shown on Exhibit 15-D. This amount is below the minimum of 5% established by the Board during the 2005-06 budget process.

EXHIBITS

15-A Revenues

15-B Personnel Costs

15-C Project Expenditures

15-D Reserves Analysis

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