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Budget Information

Fiscal Year 2017-2018 & 2018-2019 Final Budget

I am pleased to present to the Board the Ojai Valley Sanitary District’s Final Budget for Fis-cal Years 2017-2018 and 2018-2019.

Three themes were used in the preparation of this budget:

  1. Pay as you go
  2. Implement the Nutrient Reduction at the Plant and reduce I&I
  3. Continue to Implement the Private Sewer Lateral Program and Second Unit Program

During preparation of this Two-Year Budget, Staff completed a review of the Customer Service Database, completed an asset management plan, reviewed Operations and Maintenance budgets. In addition, the following Major Drivers were also considered:

  • Algae TMDL Program Implementation
  • Inflow and Infiltration (I&I) Control
  • Laterals, Roots, Rags and Protrusions
  • Collection System Rehabilitation
  • Treatment Plant Optimization
  • Spill Prevention
  • Staffing and Succession Planning

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 Retirements
  • Reserve Fund Enhancement and Fiscal Management

This two-year budget has been prepared to focus and address the Major Drivers listed above.

This Final Budget has been prepared with the following information:

  • 2.7% increase in wages matching the CPI increase
  • No increase in employee benefits
  • No Changes in proposed rates
  • Continued 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 receive on our investments due to the investment performance over the past 2-year cycle.

Second, due to our 3-year Commercial Account review, Unpermitted Connection Program and PSL Program, there has been an increase in the number of Capacity Units billed.

O&M
The proposed O&M budget has been increased slightly from FY 2016-17 based on actual operational needs.

Reserves
A couple of changes are included in this two-year budget. The balance of the Equipment Replacement Reserve has slowly risen over the past few years; consequently, a contribution to this Reserve is not included in this two-year budget.

The 2016 Refunding Bond issue refinanced both the 2003 and 2007 bonds into one issue. However, due to the payment distribution requirements of the 2003 Bond (discussed in detail in Sections 3 & 6) repayment of the balance of this issue is accounted for separately until fiscal year 2022-23 when the original bonds were slated to be satisfied. The reserves for the 2007 bond has been re-allocated to be used for 2016 Refunding Bond issue; the 2003 bond reserve continues to be used to reduce the customer charges related to the payment obligation associated with this issue.

CIP
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 reinvestment 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 services 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 fol-lowing charts.

2017-2018 Expenses by Activity

 

 

 

The following table compares the FYs 2013-14 & 2014-15 budgets to the current year budget

Expense Summary By Activity FY 16-17 FY 17-18 FY 18-19
Treatment Plant $1,953,358 $2,005,769 $2,052,098
Collection System $1,257,440 $1,429,027 $1,384,716
District Management $2,309,446 $2,591,325 $2,448,933
Transfers $3,803,601 $3,421,858 $3,396,858
  ---------- ----------  -----
Totals $9,323,845 $9,447,979 $9,282,605



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 $953,859 $900,651 $1,268,963 $3,123,473 52%
Maintenance $786,140 $440,301 $218,126 $1,444,567 24%
Equipment & Supplies $157,800 $34,775 $303,908 $469,483 8%
General $590 $800 $211,127 $212,517 4%
Professional Services $61,000 $19,500 $375,558 $456,058 8%
Miscellaneous $46,380 $33,000 $213,643 $293,023 4%
  ---------- --------- --------- ---------  
Totals $2,005,769 $1,429,027 $2,591,325 $6,026,121 100%

 

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 987,098 $92,771 $1,312,977 $3,227,846 54.8%
Maintenance 814,520 $385,075 $21,4026 $1,412,621 24%
Equipment & Supplies 149,550 $25,360 $171,517 $346,427 5.9%
General $590 $800 $212,595 $213,985 3.6%
Professional Services 53,500 $16,100 $321,508 $391,108 6.6%
Miscellaneous 46,840 $29,610 $216,310 $292,760 5%
  ------------- ------------ ------------- -------------  
Totals $2,052,098 $1,384,716 $2,448,933 $5,885,747 100%

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 2017-18’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 2018-19
*Treatment Plant Replacement $630,000
Collection System Replacement $1,270,526
Equipment Replacement $0
Vehicle Replacement $75,458
Building Reserve $20,874
2003 Revenue Bond Debt Service $325,000
2016 Debt Issue $600,000
SRF Debt Service (Internal Loan) $500,000
  -------------
  $3,421,858

*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 2018-19’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 2018-19
*Treatment Plant Replacement $630,000
Collection System Replacement $1,270,526
Equipment Replacement $0
Vehicle Replacement $75,458
Building Reserve $20,874
2003 Revenue Bond Debt Service $300,000
2016 Debt Issue $600,000
SRF Debt Service (Internal Loan) $500,000
  -------------
  $3,396,858

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 $8,335,856 88%
General Fund Interest $30,000 0%
Transfer from Reserves $354,123 4%
Property Tax (Prop 13 - 1%) $690,000 7%
Miscellaneous $38,000 1%
  -------------  
Total $9,447,979 100%

 

The following table shows the funding in tabular form.

Description Amount Pct
Service Charges - All Sources $8,327,218 89%
General Fund Interest $30,000 0%
Transfer from Reserves $155,387 3%
Property Tax (Prop 13 - 1%) $725,000 7%
Miscellaneous $45,000 1%
  -------------  
Total $9,282,605 100%



Service Charge Rates

Fiscal Year 2017-2018

The sewer service charge rate is set at $54.54 effective July 1, 2017.

Service
Area
Basic
Service
2003
Debt Issue
Total
Rate
Oak View 54.54 1.74 56.28
Ojai 54.54 3.06 57.6
Meiners Oaks 54.54 1.74 56.28
Ventura Avenue 54.54 1.74 56.28

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
FY16-17
Rate
FY17-18
Rate
Rate
Change
%
Chg
Oak View 54.54 54.54 0 0%
Ojai 54.54 54.54 0 0%
Meiners Oaks 54.54 54.54 0 0%
Ventura Avenue 54.54 54.54 0 0%


Fiscal Year 2018-19

The sewer service charge rate is set at $54.54 effective July 1, 2018.

Service
Area
Basic
Service
2003 Debt Issue Total
Rate
Oak View 54.54 1.6 56.14
Ojai 54.54 2.8 57.34
Meiners Oaks 54.54 1.6 56.14
Ventura Avenue 54.54 1.6 56.14

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
FY17-18
Rate
FY18-19
Rate
Rate
Change
%
Chg
Oak View 54.54 54.54 0 0%
Ojai 54.54 54.54 0 0%
Meiners Oaks 54.54 54.54 0 0%
Ventura Avenue 54.54 54.54 0 0%



2017-2018 DEBT SERVICE & RESERVES

Reserves
The transfers into the reserves (other than Debt Service) total $2,496,858 plus interest of $227,250 will total $2,724,108.

Debt Service
The transfers into the debt service accounts total $925,000 plus interest of $30,000 will total $955,000. After expenses to pay principal, interest and trustee charges on the various debts, the outstanding debt owed will be reduced by $495,000.

 


2018-2019 DEBT SERVICE & RESERVES

Reserves
The transfers into the reserves (other than Debt Service) total $2,496,858 plus interest of $227,750 will total $2,724,608.

Debt Service
The transfers into the debt service accounts total $900,000 plus interest of $30,000 will total $930,000. After expenses to pay principal, interest and trustee charges on the various debts, the outstanding debt owed will be reduced by $500,000.

 


Summary

The Fiscal Years 2017-18 & 2018-19 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