Fiscal Year 2021-2022 Final Budget
I am pleased to present to the Board the Ojai Valley Sanitary District’s Final Budget for Fiscal Year 2021-2022.
During preparation of this Budget, Staff utilized our Maintenance database, Customer Service Database, reviewed the asset management plan, reviewed Operations and Maintenance budgets and our Pretreatment and Private Sewer Lateral program. In addition, the following Major Drivers were also considered:
- Pay as you go
- Continue to address Nutrient reduction at the Plant
- 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 approach shows 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 budget has been prepared to focus and address the Major Drivers listed above.
This Final Budget has been prepared with the following information:
- 2.5% increase in wages matching the CPI increase
- No increase in employee benefits
- 2.5% Increase in service charge rates
- Continued Enhanced Collection System Investment
- Funding for Algae TMDL/Nutrient studies and projects
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, is an increase in the monthly service charge, by 2.5 percent. Second, staff has slightly increased the projected/anticipated interest rate the District will receive on our investments over the next year based on more positive results in the last 12 months and the District’s change in investment managers.
The proposed O&M budget has been increased slightly from FY 2021-2022 based on actual operational needs.
A couple of changes are included in this one-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 one 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 have 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.
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 overall is in very good shape. However, it is 20 years old and there are components, motors and controls that are reaching their expected age. In some cases, the original components are still installed but are not supported by manufacturers and spare parts or repairs are difficult to complete. Improvements to the instrumentation and treatment system is required to meet the Algae TMDL nutrient goals.
Staff utilizes a component tracking spreadsheet to document, plan, review, and program specific projects based on priority and criticality. There are currently nearly $50 million dollars of projects that are being tracked, in a one year, 5 year, and 20-year planning effort. All of these projects are then programmed using pay-as-you-go methods to complete the projects when funds are available, avoiding long term bond and interest costs.
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, increased 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 2020-21 budget to the current year budget.
|FY 20-21||FY 21-22|
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 2021/22||T/P||C/S||D/M||Total||Pct|
|Salaries & Benefits||1,227,113||1,034,662||1,395,983||$3,657,758||52%|
|Equipment & Supplies||242,973||33,685||219,353||$496,011||7%|
The Salaries & Benefits category for this fiscal year 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 2021-2022’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 Amount for 2021-22|
|Treatment Plant Replacement||$630,000|
|Collection System Replacement||$1,270,526|
|2003 Revenue Bond Debt Service||$225,000|
|2016 Debt Issue||$425,000|
|SRF Internal Loan Service||$500,000|
|Contingency & Rate Stabilization||$0|
*Red highlighted reserve funds are restricted; 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.
The District work force consists of 21 full-time positions.
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.
|Service Charges – All Sources||$8,994,694||89%|
|General Fund Interest||$53,712||1%|
|Transfer from Reserves||$199,508||2%|
|Property Tax (Prop 13 – 1%)||$825,000||8%|
Service Charge Rates – Fiscal Year 2021-2022
The sewer service charge rate is set at $58.73 effective July 1, 2021.
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||FY21-22 Rate||Rate Change||% Chg|
DEBT SERVICE & RESERVES
The transfers into the reserves (other than Debt Service) total $2,496,858 plus interest of $299,407 will total $2,796,265.
The transfers into the debt service accounts total $650,000 plus interest of $32,421 will total $682,421. After expenses to pay principal, interest and trustee charges on the various debts, the outstanding debt owed will be reduced by $555,000.
The Fiscal Year 2021-22 Final 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.