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ITEM: |
PUBLIC
HEARING |
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13. |
CONSIDER ADOPTION OF
MID-YEAR FISCAL YEAR 2017-2018 BUDGET ADJUSTMENT |
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Meeting
Date: |
February 22, 2018 |
Budgeted: |
N/A |
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From: |
David J.
Stoldt, |
Program/ |
N/A |
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General
Manager |
Line Item No.: |
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Prepared
By: |
Suresh
Prasad |
Cost Estimate: |
N/A |
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General Counsel Review: N/A |
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Committee Recommendation: N/A |
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CEQA Compliance: This action does not constitute a project
as defined by the California Environmental quality Act Guidelines section
15378. |
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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 from July 1, 2017 through the end of December 31, 2017 and determined that adjustments to the FY 2017-2018 Budget is required. The FY 2017-2018 Budget was adopted on June 19, 2017. 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 table below summarizes the proposed changes to the budget:
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Monterey Peninsula Water Management District |
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2017-2018 |
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Mid-Year Budget Adjustment-Summary |
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Revenue |
Adopted |
Change |
Amended |
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Property Tax |
$1,750,000 |
$0 |
$1,750,000 |
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Permit Fees - WDD |
175,000 |
0 |
175,000 |
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Permit Fees - PED |
56,000 |
0 |
56,000 |
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Capacity Fee |
250,000 |
50,000 |
300,000 |
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User Fees |
3,425,000 |
670,000 |
4,095,000 |
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Water Supply Charge |
3,400,000 |
0 |
3,400,000 |
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Recording Fees |
9,600 |
20,000 |
29,600 |
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Interest |
20,000 |
10,000 |
30,000 |
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Other |
20,000 |
0 |
20,000 |
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Subtotal District Revenues |
9,105,600 |
750,000 |
9,855,600 |
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Reimbursements - CAW |
1,691,400 |
(55,500) |
1,635,900 |
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Reimbursements - PWM Project |
0 |
4,112,500 |
4,112,500 |
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Reimbursements - Watermaster |
74,600 |
0 |
74,600 |
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Reimbursements - Reclamation |
20,000 |
0 |
20,000 |
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Reimbursements - Other |
29,300 |
0 |
29,300 |
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Reimbursements - Legal Fees |
16,000 |
0 |
16,000 |
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Grants |
1,250,000 |
(800,000) |
450,000 |
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Subtotal Reimbursements |
$3,081,300 |
$3,257,000 |
$6,338,300 |
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Carry Forward From Prior
Year |
853,900 |
0 |
853,900 |
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Total Revenues |
$13,040,800 |
$4,007,000 |
$17,047,800 |
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Expenditures |
Adopted |
Change |
Amended |
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Personnel |
$3,593,600 |
$6,000 |
$3,599,600 |
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Supplies & Services |
1,364,100 |
(39,500) |
1,324,600 |
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Project Expenditures |
6,420,100 |
(722,500) |
5,697,600 |
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Fixed Assets |
893,500 |
0 |
893,500 |
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Election Expense |
0 |
7,000 |
7,000 |
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General Fund Balance |
276,500 |
4,756,000 |
5,032,500 |
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Capital Equip. Reserve |
188,000 |
0 |
188,000 |
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Debt Service |
230,000 |
0 |
230,000 |
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Contingency |
75,000 |
0 |
75,000 |
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Total |
$13,040,800 |
$4,007,000 |
$17,047,800 |
As the table above indicates, revenues increased by $4,007,000. The reason for a significant increase in
revenues was due to reimbursement of $4.2 million from Monterey One Water for
the Pure Water Monterey Project. This
was money spent in previous fiscal years now getting reimbursed through the
State Revolving Fund loan. Detailed
information regarding all other proposed changes, as well as their effect on 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 2017-2018.
BACKGROUND: The Board of Directors adopted the original FY 2017-2018 budget on June 19, 2017. The paragraphs below summarize the original budget, proposed mid-year adjustments to the budget and projected reserves accounts.
Revenues
The 2017-2018 adopted budget anticipated revenue sources in the amount of $13,040,800. It was projected that these revenues would be the same amount as budgeted expenditures resulting in a balanced budget. As of December 31, 2017, actual revenue collections totaled $5,876,721 or about 45% of the budgeted amount. Revenues for the first half of each FY year are low because one half 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 13-A and discussed below:
- Increase of $750,000 in District fees was increased mostly due to receipts from User Fee which is expected to be higher than anticipated in the original budget.
- Project Reimbursements was increased by $3,257,000 due to reimbursements in the amount of $4,112,500 received from Monterey One Water for the Pure Water Monterey project. Also, a reduction of $800,000 for the grant funded projects as the work has been deferred to next fiscal year.
The cumulative effect of these revenue adjustments is an increase of $4,007,000 million in projected revenues for FY 2017-2018.
Expenditures
The original budget envisioned expenditures of $13,040,800 in the fiscal year ending June 30, 2018. As of December 31, 2017, actual expenditures totaled $3,748,114, or approximately 29% 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 personnel services portion of the budget increased by $6,000 as shown on Exhibit 13-B.
- The supplies and services portion of the budget decreased by $39,500 as shown on Exhibit 13-C. The most significant decrease was done to the public outreach line item to remove funds not needed for additional work as anticipated in the original budget.
- As presented on Exhibit 13-D, project expenditures decreased by a net amount of $722,500. Some of the larger adjustments are as follows:
- Increase of $150,000 for ASR project to complete the expansion related work.
- Reduction of $785,000 for Sleepy Hollow Intake project as most of the costs has been deferred to next fiscal year. This project is funded by State grant.
- Reduction of $50,000 for fish passage work as some of the costs has been deferred to next fiscal year.
- Reduction of $150,000 for San Carlos restoration project as most of the costs has been deferred to next fiscal year.
The cumulative effect of the
adjustments to the expenditure side of the budget is a net decrease of
$756,000. Additional $4,756,000 is set aside for General Reserve Fund balance.
The total change is $4,007,000 in projected expenditures for FY 2017-2018.
Reserves
The District’s reserve balance is projected to be as follows:
The above adjustments will result in an estimated reserve balance of 8,564,107 at June 30, 2018 as shown on Exhibit 13-E. This amount meets the minimum 5% of the operating budget established by the Board during the 2005-06 budget process. The projected ending reserve balance is an increase of $4,366,600. The original adopted budget had a projected reserve balance of $2,847,256.
EXHIBITS
13-A Revenues
13-B Personnel Costs
13-C Supplies & Services Costs
13-D Project Expenditures
13-E Reserves Analysis
U:\staff\Boardpacket\2018\20180222\PublicHrngs\13\Item-13.docx