Fiscal Year 2022-2023 Final Budget
I am pleased to present to the Board the Ojai Valley Sanitary District’s Final Budget for Fiscal Year 2022-2023.
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
- Changes to Legislation that may affect District Income
- Staffing and Succession Planning
- High Rate of Inflation and Supply/Demand Issues
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
- Energy Efficiency with use of Tesla Battery
- 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:
- 3.5% increase in wages projecting the CPI increase
- No increase in employee benefits
- No service charge rate increase
- 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, staff has slightly decreased the projected/anticipated interest rate the District will receive on our investments over the next year based on changes in the investment market over the last 12 months.
The proposed O&M budget has been increased slightly from FY 2021-2022 based on actual operational needs and consideration of inflation increasing the overall cost of goods and services.
A couple of changes are included in this one-year budget. The balance of the Vehicle and Building Reserve has slowly risen over the past few years; consequently, a contribution to these Reserves are not included in one year budget, as no immediate projects are planned to utilize these funds.
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 reallocated 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 Ojai Valley Sanitary District (OVSD) formed in May 1985 through the consolidation of the Ventura Avenue, Oak View, and Meiners Oaks Sanitary Districts, and the Sanitation Department of the City of Ojai. The predecessor Districts were established in the early 1960s in conjunction with construction of the Oak View Treatment Plant which served them as well as the City of Ojai. Ojai's oldest sections were originally served by sewers and a treatment plant built in the 1920s. The wastewater treatment plant (WWTP) site was originally the Oak View Sanitary District site. The Oak View WWTP was constructed in 1962 and expanded in 1964, 1976, and 1982. Following the merger, the Ojai Valley Sanitary District WWTP was constructed in 1997. The OVSD WWTP utilizes some facilities from each phase of the Oak View WWTP.
The major process equipment for the WWTP was installed during the 1997 upgrade. Staff uti-lizes a maintenance tracking system developed in Mobile MMS to track and schedule maintenance “work orders.” The typical design life for major equipment is 20 to 25 years, and through Staffs proactive maintenance, most of the major equipment at the WWTP is still in service. However, Staff recently tried to have a Filter Influent Pump rebuilt and found that the pump line has been discontinued and parts are no longer available. Staff anticipates that this will be a continuing issue, so the CIP plan will phase replacement of major equipment in the coming years. 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 fol-lowing charts.
The following table compares the FYs 2021-22 budget to the current year budget
|Expense Summary By Activity||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 2022/23||T/P||C/S||D/M||Total||Pct|
|Salaries & Benefits||1,310,206||1,106,394||1,461,232||$3,877,832||52%|
|Equipment & Supplies||290,621||36,025||351,081||$677,727||9%|
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 2022-2023’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 2022/23|
|Treatment Plant Replacement||$1,270,526|
|Collection System Replacement||$630,000|
|2003 Revenue Bond Debt Service||$325,000|
|2016 Refunding Bond||$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||$9,151,251||86%|
|General Fund Interest||$53,712||1%|
|Transfer from Reserves||$451,336||4%|
|Property Tax (Prop 13 – 1%)||$900,000||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.
An Increase In basic sewer rate is not being proposed in the 2022/23 FY budget
DEBT SERVICE & RESERVES
The transfers into the reserves (other than Debt Service) total $2,400,526 plus interest of $237,035 will total $2,637,561.
The transfers into the debt service accounts total $750,000 plus interest of $16,828 will total $766,828. After expenses to pay principal, interest and trustee charges on the various debts, the outstanding debt owed will be reduced by $575,000.
The Fiscal Year 2022-23 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.