Budget Information
Fiscal Year 2015-2016 & 2016-2017 Newly Adopted Budget
I am pleased to present to the Board the Ojai Valley Sanitary District’s Final Budget for Fiscal Years 2015-2016 and 2016-17.
Prior to preparation of this Two-Year Budget, Staff completed an in depth review of all the reserve funds, the Customer Service Database, completed a fee and financial plan analysis, reviewed Operations and Maintenance budgets and the Capital Improvement Program. In addition, the following Major Drivers were also considered:
- Algae TMDL Program Implementation
- Inflow and Infiltration (I&I) Control
- Laterals, Roots, Rags and Protrusions
- Constituents of Emerging Concerns (CEC’s)
- Collection System Rehabilitation
- Treatment Plant Optimization
- Spill Prevention
- Staffing
The comprehensive review results show that each of the following areas play an important role in meeting the environmental discharge restrictions, maintaining a fiscally conservative business approach, maintaining a high quality and safe collection and treatment system and looking to the future. This effort looks at planning for the next 10-20 years:
- Collection System Rehabilitation and I&I Control
- Lateral Program
- Enhanced Root, Rag and Grease maintenance
- I&I reduction for groundwater protection and nutrient reduction
- Aging system rehabilitation, reconstruction and lining
- Treatment Plant Optimization
- Algae TMDL Compliance
- Enhanced Constituent testing and Control
- Nutrient and Constituent removals
- Implement Solar Improvements for Energy production and shade in critical areas to lessen maintenance related to algae growth
- Study the effects of reduced flow due to drought issues and related increasing strength of flow
- Capital Improvement Program Implementation
- Staffing Increase By 2 Positions
- Reserve Fund Enhancement and Fiscal Management
This two-year budget has been prepared to begin to focus and address the Major Drivers listed above.
This Preliminary Budget has been prepared with the following information:
- 0% increase in wages matching the CPI increase
- No increase in employee benefits
- 2% increase in rates
- Restructure of Reserve Funds
- Enhanced Collection System Investment
- Funding for Algae TMDL/Nutrient studies and projects
Income
Sewer service charges comprise the vast majority of the District’s income; however, interest, fees and property tax also make up the income stream. The proposed budget includes a couple of changes to the total income.
First, Staff has slightly increased the projected/anticipated interest rate the District will re-ceive on our investments due to the investment performance over the past 2-year cycle.
Second, during our 3-year Commercial Account review and in conjunction with our Custom-er Service Database and County Tax roll review, we have reduced the number of Capacity Units that will be billed.
O&M
The proposed O&M budget has been increased slightly from FY 2014-15 based on actual operational needs.
Reserves
A couple of proposed changes are included in this two-year budget. The elimination of two reserve funds; it has been determined that the balance in the Treatment Plant Upgrade Re-serve and the Future Purchases Reserve can be better utilized in other funds. The balance in the Treatment Plant Upgrade Reserve will be transferred into the Treatment Plant Re-placement Reserve and the balance in the Future Purchases Reserve will be transferred into the Collection System Replacement Reserve. In addition, Staff is focusing on building the Contingency &Stabilization Reserve where possible and feasible. This “Rainy Day” fund is typically used for rate stabilization and unfunded emergencies. A reserve balance equiva-lent to 50 percent of the O&M budget would be an appropriate amount. It will take several years and prudent budgeting to meet this goal; however, small focused steps will help achieve some enhanced savings.
Staff has also reviewed the 2003 and 2007 bond fund reserves. A re-allocation of these re-serves to continue to meet bond payment requirements, while reducing the customer charg-es, is possible and included in this budget.
CIP
The first 5 years of the CIP represent the highest priority and most immediate project needs. The aging collection system, dating back to the 1920’s is showing signs of age, settlement, corrosion and decay. Staff will continue to watch the most concerning areas, however, a steady and improved re-investment is necessary. The Treatment Plant, built in 1997 is in very good shape, however improvements to the instrumentation and treatment system is required to meet the Algae TMDL nutrient goals.
Operating Budget
The operating budget is the routine operation and maintenance of District facilities and ser-vices at their existing service level and does not directly include funds for upgrades, in-creased capacity, or betterments. The operating budget is broken down in several different ways in the following material.
Expenses By Activity
Historically the District has used its funds for four major activities: Treatment Plant, Collection System, District Management and transfers to specific reserves. A transfer is not really an activity, but rather the source of funding for special projects. Transfers will be explored in more depth below. The budget is broken down into these four activities as shown in the following charts.
The following table compares the FYs 2013-14 & 2014-15 budgets to the current year budget
| Expense Summary By Activity | FY 14-15 | FY 15-16 | FY 16-17 |
|---|---|---|---|
| Treatment Plant | $1,836,957 | $1,944,105 | $1,953,358 |
| Collection System | $1,157,379 | $1,280,856 | $1,257,440 |
| District Management | $2,266,976 | $2,488,589 | $2,309,446 |
| Transfers | $3,545,641 | $3,566,504 | $3,803,601 |
| ---------- | ---------- | ----- | |
| Totals | $8,806,953 | $9,280,054 | $9,323,845 |
O&M Expenses By Type
Treatment plant, Collection System and District Management budgets are a reflection of the on-going activities of the District. It is interesting to note how the same expense type varies from one activity to another. For example, routine professional services are higher in District management because of the high cost of lawyers, auditors, etc. than it is in field operations for engineers to support day-to-day operations. The following chart shows how the budget is allocated to different expense types.
The following table details the breakdown of these expenses to each activity.
| O&M Expense Type | T/P | C/S | D/M | Total | Pct |
|---|---|---|---|---|---|
| Salaries & Benefits | 903,355 | 822,838 | 1,146,928 | $2,873,121 | 50% |
| Maintenance | 816,560 | 383,225 | 167,039 | $1,366,824 | 24% |
| Equipment & Supplies | 121,740 | 23,168 | 443,483 | $588,391 | 10% |
| General | 590 | 750 | 211,418 | $212,758 | 4% |
| Professional Services | 57,300 | 23,480 | 348,063 | $428,843 | 8% |
| Miscellaneous | 44,560 | 27,395 | 171,658 | $243,613 | 4% |
| ---------- | --------- | --------- | --------- | ||
| Totals | $1,944,105 | $1,280,856 | $2,488,589 | $5,713,550 | 100% |
The following table details the breakdown of these expenses to each activity.
| O&M Expense Type | T/P | C/S | D/M | Total | Pct |
|---|---|---|---|---|---|
| Salaries & Benefits | 913,922 | 842,067 | 1,149,340 | $2,905,329 | 52.6% |
| Maintenance | 820,860 | 342,580 | 174,655 | $1,338,095 | 24.2% |
| Equipment & Supplies | 119,740 | 23,168 | 292,297 | $435,205 | 7.9% |
| General | 590 | 750 | 207,158 | $208,498 | 3.8% |
| Professional Services | 55,626 | 21,480 | 311,338 | $388,444 | 7% |
| Miscellaneous | 42,620 | 27,395 | 174,658 | $244,673 | 4.4% |
| ------------- | ------------ | ------------- | ------------- | ||
| Totals | $1,953,358 | $1,257,440 | $2,309,446 | $5,520,244 | 100% |
The Salaries & Benefits category for both fiscal years appears to be maintaining a proportional consistency with prior years and appears appropriate for the size of the District.
Transfers By Destination
Transfer from the General Fund to reserves is the primary mechanism used to fund capital projects and the various special reserves.
For fiscal year 2015-16’s budget the following chart shows the destination or intended use of the transfers.
The following table shows the transfers for 2015-2016 in tabular form.
| Transfer Destination | Transfer Amt. for 2015-16 |
|---|---|
| Treatment Plant Replacement | $630,000 |
| Collection System Replacement | $1,037,046 |
| Equipment Replacement | $562,554 |
| Vehicle Replacement | $75,458 |
| Building Reserve | $20,874 |
| 2003 Revenue Bond Debt Service | $350,000 |
| 2007 Debt Issue | $390,572 |
| SRF Debt Service (Internal Loan) | $500,000 |
| ------------- | |
| $3,566,504 |
*Red hIghlighted reserve funds are restrrcted; see Reserve narratIve for details.
The uses of the various reserve funds are presented in greater detail in Sections 2 and 3 of the budget.
For fiscal year 2016-17’s budget the following chart shows the destination or intended use of the transfers.
The following table shows the transfers in tabular form.
| Transfer Destination | Transfer Amt. for 2016-17 |
|---|---|
| Treatment Plant Replacement | $630,000 |
| Collection System Replacement | $1,270,526 |
| Equipment Replacement | $562,554 |
| Vehicle Replacement | $75,458 |
| Building Reserve | $20,874 |
| 2003 Revenue Bond Debt Service | $350,000 |
| 2007 Debt Issue | $394,189 |
| SRF Debt Service (Internal Loan) | $500,000 |
| ------------- | |
| $3,803,601 |
The uses of the various reserve funds are presented in greater detail in Sections 2 and 3 of the budget.
Personnel
The District work force consists of 21 full-time positions
Funding
As can be seen in the charts below, the majority of funding for the budget is from the sewer service charge.
The following table shows the funding in tabular form.
| Description | Amount | Pct |
|---|---|---|
| Service Charges - All Sources | $8,156,666 | 88% |
| General Fund Interest | $40,500 | 0% |
| Transfer from Reserves | $427,288 | 5% |
| Property Tax (Prop 13 - 1%) | $620,000 | 7% |
| Miscellaneous | $35,600 | 1% |
| ------------- | ||
| Total | $9,280,054 | 100% |
The following table shows the funding in tabular form.
| Description | Amount | Pct |
|---|---|---|
| Service Charges - All Sources | $8,329,271 | 89% |
| General Fund Interest | $42,872 | 0% |
| Transfer from Reserves | $276,102 | 3% |
| Property Tax (Prop 13 - 1%) | $640,000 | 7% |
| Miscellaneous | $35,600 | 1% |
| ------------- | ||
| Total | $9,323,845 | 100% |
Service Charge Rates
Fiscal Year 2015-2016
The sewer service charge rate is set at $53.47 effective July 1, 2015.
| Service Area |
Basic Service |
2003
Debt Issue |
Total Rate |
|---|---|---|---|
| Oak View | 53.47 |
1.89 | 55.36 |
| Ojai | 53.47 | 3.37 | 56.84 |
| Meiners Oaks | 53.47 | 1.89 | 55.36 |
| Ventura Avenue | 53.47 | 1.89 | 55.36 |
The add on increments to pay for 2003 Debt Issue costs which are not part of the basic service are shown above and described in greater detail in Section 3 -- Debt Service.
| Service Area |
FY14-15 Rate |
FY15-16 Rate |
Rate Change |
% Chg |
|---|---|---|---|---|
| Oak View | 52.42 | 53.47 | 1.05 | 2% |
| Ojai | 52.42 | 53.47 | 1.05 | 2% |
| Meiners Oaks | 52.42 |
53.47 | 1.05 | 2% |
| Ventura Avenue | 52.42 | 53.47 | 1.05 | 2% |
Fiscal Year 2016-17
The sewer service charge rate is set at $54.54 effective July 1, 2016.
| Service Area |
Basic Service |
Special Debt |
Total Rate |
|---|---|---|---|
| Oak View | 54.54 | 1.89 | 56.43 |
| Ojai | 54.54 | 3.37 | 57.91 |
| Meiners Oaks | 54.54 | 1.89 | 56.43 |
| Ventura Avenue | 54.54 | 1.89 | 56.43 |
The add on increments to pay for 2003 Debt Issue costs which are not part of the basic service are shown above and described in greater detail in Section 3 -- Debt Service.
| Service Area |
FY13-14 Rate |
FY14-15 Rate |
Rate Change |
% Chg |
|---|---|---|---|---|
| Oak View | 53.47 | 54.54 | 1.07 | 2% |
| Ojai | 53.47 | 54.54 | 1.07 | 2% |
| Meiners Oaks | 53.47 | 54.54 | 1.07 | 2% |
| Ventura Avenue | 53.47 | 54.54 | 1.07 | 2% |
2015-2016 DEBT SERVICE & RESERVES
Reserves
The transfers into the reserves (other than Debt Service) total $2,825,932 plus interest of $194,700 will total $3,020,632.
Debt Service
The transfers into the debt service accounts total $740,572 plus interest of $20,500 will total $761,072. After expenses to pay principal, interest and trustee charges on the various debts, the outstanding debt owed will be reduced by $460,000.
2016-2017 DEBT SERVICE & RESERVES
Reserves
The transfers into the reserves (other than Debt Service) total $3,059,412 plus interest of $199,928 will total $3,259,340.
Debt Service
The transfers into the debt service accounts total $744,189 plus interest of $25,200 will total $769,389. After expenses to pay principal, interest and trustee charges on the various debts, the outstanding debt owed will be reduced by $490,000.
Summary
The Fiscal Years 2015-16 & 2016-17 Preliminary Budget continues the District’s history of responsible fiscal management. Available resources are focused on maintaining services and programs essential to District facilities and improving the quality of service to the customers of the District with minimal rate increases.
Jeff Palmer
General Manager