Budget Update. Fiscal Year Orange County Sanitation District

Transcription

1 Fiscal Year Budget Update Orange County Sanitation District We protect public health and the environment by providing effectivee wastewater collection, treatment, and recycling.

2 Orange County Sanitation District, California Budget Update Fiscal Year Mission Statement We protect public health and the environment by providing effective wastewater collection, treatment, and recycling.

3 The Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to the Orange County Sanitation District, California, for its biennial budget for the fiscal year beginning July 1, In order to receive this award, a government unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communication device. III

4 Table of Contents OCSD Service Area... i Board of Directors... ii Board Committees... iii Orange County Sanitation District Organization Chart... iv Administrative Officials... v Message from the General Manager... vi Finance Summary... 1 Financial Overview & Budgetary Issues... 2 Where the Money Comes From... 6 Revenues by Category... 6 Where the Money Goes... 8 Expenses by Category... 8 Strategic Planning Capital Improvement Program Overview Debt Financing Program Operating Expenses Departments Summary Office of the General Manager Administrative Services Technical Services Engineering Operations and Maintenance Appendix Cash Flow Projection... A-2 Capital Improvement Program Summary... A-4 Project Summary... A-5 Capital Improvement Expenditure Graphs... A-6 Summary of Capital Requirements... A-7 New Project Descriptions... A-13 Capital Equipment Budget Summary... A-18 Capital Equipment Budget Detail... A-20 Listing of Proposed Purchases Over $100, A-21 Self-Funded Insurance Plans... A-22 Historical Staffing Summary... A-23 Historical Staffing Detail... A-24 Appropriations Limit... A-32 Miscellaneous Statistics... A-33 Wastewater Treatment Process

5 OCSD Service Area i

6 OCSD Board of Directors Agency/City Active Director Anaheim... Harry Sidhu Brea... Roy Moore Buena Park... Patsy Marshall Cypress... Phil Luebben Fountain Valley... Larry Crandall Vice Chairman Fullerton... Sharon Quirk Garden Grove... Bill Dalton Huntington Beach... Keith Bohr Irvine... Christina Shea La Habra... Tom Beamish La Palma... Mark Waldman Los Alamitos... Troy Edgar Newport Beach... Don Webb Orange... Jon Dumitru Placentia... Constance Underhill Santa Ana... Sal Tinajero Seal Beach... Charles Antos Stanton... David Shawver Tustin... Doug Davert Chairman Villa Park... Brad Reese Yorba Linda... John Anderson Sanitary/Water Districts Costa Mesa Sanitary District... James M. Ferryman Midway City Sanitary District... Joy L. Neugebauer Irvine Ranch Water District... John Withers County Areas Member of the Board of Supervisors... Chris Norby ii

7 OCSD Board Committees Steering Committee Doug Davert, Board Chair Larry Crandall, Board Vice Chair Bill Dalton, Operations Committee Chair Mark Waldman, Administration Committee Chair Phil Luebben James M. Ferryman David Shawver Administration Committee Mark Waldman, Chair Phil Luebben, Vice Chair John Anderson Keith Bohr Jon Dumitru James M. Ferryman Chris Norby Brad Reese Christina Shea Sal Tinajero John Withers Doug Davert, Board Chair Larry Crandall, Board Vice Chair Operations Committee Bill Dalton, Chair David Shawver, Vice Chair Charles Antos Tom Beamish Troy Edgar Patsy Marshall Roy Moore Joy L. Neugebauer Sharon Quirk Harry Sidhu Constance Underhill Don Webb Doug Davert, Board Chair Larry Crandall, Board Vice Chair GWR System Joint Cooperative Steering Committee James M. Ferryman Larry Crandall Mark Waldman Don Webb (Alternate 1) Patsy Marshall (Alternate 2) Phil Luebben (Alternate 3) iii

8 Organization Chart Board of Directors General Management Administration General Manager General Counsel Office General Management Administration Assistant General Manager Administration (includes Government Affairs) Board Services Public Information Office Safety and Health Administrative Services Administrative Services Financial Management Contracts, Purchasing & Materials Management Human Resources Information Technology Technical Services Technical Services Administration & Research Environmental Compliance & Regulatory Affairs Environmental Laboratory & Ocean Monitoring Source Control Engineering Engineering Administration Planning Project Management Office Engineering & Construction Facilities Engineering Project Management Operations & Maintenance Operations & Maintenance Administration Collection Facilities Operations & Maintenance Facilities Maintenance & Fleet Services Process Engineering & Odor Control Process Engineering & Odor Control Plant No. 1 Operations Plant No. 2 Operations Mechanical & Reliability Maintenance Instrumentation & Electrical Maintenance iv

9 Administrative Officials Management Team General Manager... James D. Ruth Assistant General Manager... Robert P. Ghirelli General Counsel...Brad Hogin Director of Finance and Administrative Services... Lorenzo Tyner Director of Technical Services... Edward M. Torres Director of Engineering... James D. Herberg Director of Operations & Maintenance... Nicholas J. Arhontes v

10 Message from the General Manager June 3, 2009 Honorable Chair and Board of Directors: I am pleased to submit this update to the Orange County Sanitation District (OCSD) approved operating budget and capital improvement program. This document provides a framework for District activities during the second year of the adopted two-year budget for Fiscal Years and and serves as a source of information for the District s Board of Directors, and our employees and ratepayers. In November 2008, the District Board approved an updated Five-Year Strategic Plan that presented the District s Mission and Vision statements, Levels of Service, and Business Plan. The Strategic Plan serves as the underlying basis for the development of this budget update and supports our mission to protect public health and the environment by providing effective wastewater collection, treatment, and recycling. It also set forth the groundwork for establishing a stable five-year revenue base, a prudent step required to support our more than two billion dollar capital improvement program. In addition to providing resources to support the processing of nearly 230 million gallons of wastewater each day from 2.5 million residents and businesses, the Strategic Plan focused on four distinct program areas: Biosolids The District produces approximately 650 tons of digested and dewatered biosolids per day. By 2020, the District s biosolids production is projected to increase by 30 percent, to 310,000 tons annually. We have viable long-term strategies in place for 2/3 of our biosolids production and we will continue to pursue beneficial reuses for the remaining 1/3 of our biosolids production. Cost-effective land application reuse options will continue in Kern County and Arizona as long as possible while pursuing a biosolids-to-energy alternative. Air Quality The District expects amendments to existing regulations requiring significant reductions in common pollutants. As a result, OCSD will apply feasible and cost-effective controls to reduce the air toxic emissions below health risk notification levels to the surrounding community and OCSD employees. Odor Control This budget includes resources that will allow us to invest more than $100 million to establish an odor-based standard on total odor. These resources will provide for the design and construction of new processes and structures at our wastewater treatment plants to significantly reduce odor impacts on our neighbors. Groundwater Replenishment (GWR) System Although now completed, the District will maintain its partnership with the Orange County Water District in the initial phase of the GWR System. The GWR System captures secondary treated effluent and purifies it to a level that surpasses bottled water quality. It has the capacity to reclaim nearly 70 million gallons of water daily. While the costs are about the same as importing water from Northern California, we are able to cut the energy necessary to do so in half while reducing our reliance on external water sources. This budget update also addresses rising treatment and chemical costs, aging infrastructure and increased regulatory requirements. As a result, the operating budget is increased by 5.9 percent above what was approved last year as the second year of the adopted two-year budget. However, despite these increases, OCSD provides wastewater treatment, sewer and facilities maintenance, ocean monitoring and many other services with residential user fees averaging less than $19 per month, one of the lowest rates in the state. As a result of operational efficiencies, we are able to provide increasing activities with only a one percent increase in authorized staffing, contributing to the goal of maintaining our low user rates. vi

11 Budget Update This budget strongly supports the primary mission of the District, touching on all key areas: Strategic Planning OCSD has developed a new Five-Year Strategic Plan that sets the direction of the agency and serves a basis for many budget allocations. Staff will review and update this plan, annually bringing it to the Board for approval. Capital Improvement Program (CIP) All consent decree activities will remain on or ahead of schedule. A new management review program will be fully implemented to reduce the magnitude of change orders as a percentage of total program costs. There are currently 93 projects being managed for a total fiscal year cash flow budget of $259 million. Levels of Service We will continue to increase the quality of effluent discharged into the ocean or provided for water reclamation in a cost effective manner. Process Reviews To ensure our major programs are managed as efficiently as possible, we will engage independent experts to review our existing and future projects and services. In previous years, auditors reporting directly to the Board have reviewed the contract administration of our large construction projects and various financial processes. Financial Positioning This budget reflects our commitment to fiscal responsibility as indicated by our recent upgrade to an AAA bond rating from Standard and Poors while maintaining Aa ratings from the other two rating agencies. Employee Emphasis We continue to invest in our employees focusing on succession planning, leadership training, and the implementation of a new performance appraisal system. Legislative Platform Our legislative activities have supported the Santa Ana River Interceptor (SARI) Line relocation, Homeland Security requirements, and Design- Build initiatives. Information Technology We have completed our new Information Technology Strategic Plan that includes a comprehensive review of the District s technology needs. This budget update supports that assessment as means of increasing our overall efficiency. Interagency Agreements We are reviewing all of our agreements with other agencies to ensure alignment with our strategic goals. I believe that this budget update fully supports the goals included in the District s Strategic Plan and positions us well to address the challenges ahead. I look forward to another dynamic and productive year of leading the organization. James D. Ruth General Manager vii

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13 Budget Update Finance Summary 1

14 Financial Summary Overview & Budgetary Issues Budget Overview The District s proposed operating and capital improvement budget totals $495.1 million, or 5.9 percent above what was approved last year as the second year of the adopted two-year budget. The increase in the budget is primarily attributable to the deferral of certain construction projects from as the District continues to move towards meeting full secondary treatment standards by December 31, 2012 and incurs costs related to the New Secondary Treatment System at Plant No. 1 and the Trickling Filters at Plant No. 2. The budget continues to reflect the agency s ongoing efforts to streamline operations. However, operating costs will increase as a result of the expansion of the Capital Improvement Program, the rising cost of chemicals used for odor and corrosion control, and higher salary and benefit costs due to a reduced vacancy factor based on trend information. The District s Capital Improvement Program (CIP) budget for Fiscal Year is $259.1 million. This CIP budget finances collection system, joint works treatment and disposal system improvement projects. This increase is attributable to the timing of construction cash outlays as we meet our infrastructure needs. Financing The District uses long-term borrowing (Certificates of Participation [COP]) for capital improvements that cannot be financed from current revenue. Before any new debt is issued, the impact of debt service payments on total annual fixed costs is analyzed. Debt financing of $410 million is forecasted over the next four years to assist in the funding of the $2.0 billion in capital improvements required over the next ten years. New money debt was issued in the amount of $200 million in and it is anticipated that $70 million in COPs will be issued in Staffing Reflecting the organization s commitment to providing service at the lowest costs, the budget includes a minimal one percent increase in staffing for to an authorized staffing level of 648 full-time equivalent position. Added staff for is mostly allocated to Operations and Maintenance with an addition of one full-time equivalent position in Safety and Health and one in Contracts, Purchasing, & Materials Management. This staffing level continues to reflect a significant reduction from the Fiscal Year approved staffing level of 678 positions. Personnel costs will increase due to increased staff, bargaining agreements, and health insurance and retirement costs, but the District will continue to effectively manage these expenses with less than 19 percent of the District s budget allocated to employee costs. Level of Treatment The agency s two treatment plants, located in Fountain Valley and Huntington Beach, process about 230 million gallons of wastewater each day generated by approximately 2.5 million people in central and northwest Orange County. The proposed budget to operate, maintain and manage our sewage collection, treatment and disposal system in is $159.1 million. Increases are primarily a result of salary and benefits and chemical costs. The cost per million gallons of wastewater treated, (an industry-wide performance measurement), is expected to increase in Fiscal Year to $1,763, a $25, or 1.4 percent increase over the previous projection of $1,738. To eliminate most bacteria from being released from the ocean outfall, in Fiscal Year the District began using chlorine bleach to disinfect the effluent and then applying sodium bisulfite to remove remaining chlorine prior to releasing the treated wastewater to the ocean. To protect the animal life living in the ocean, the District continues to take great measures to limit the chlorine residual to essentially non-detectable levels. This mode of disinfection is anticipated to continue for the short-term while the District studies, designs and constructs permanent facilities, and considers alternate disinfection technologies. Beginning in Fiscal Year , the addition of disinfection treatment required an annual outlay for additional chemicals in the District s operating budget. The cost for disinfection is projected to be approximately $7.5 million annually in

15 Budget Update Capital Improvement Program (CIP) The total CIP cash flow outlay for Fiscal Year is being proposed at $259.1 million, up $30.2 million from the previously approved budget due mostly to deferral of CIP projects from into Over the next 10 years, the District s Capital Improvement Program will: Rehabilitate the existing headworks, primary treatment, secondary treatment, outfall pumping, and solids handling facilities at both treatment plants. Replace and rehabilitate nine of the District s outlying pumping stations, and rehabilitate and upgrade 29 trunk sewer improvement projects. Optimize the production of power and biosolids at each of the treatment plants. Reclaim 70 million gallons of the District s effluent per day, or nearly one-third of the total daily flow (Groundwater Replenishment System). Achieve secondary treatment standards by December Five Projects Drive the CIP Over the next 12 months, secondary upgrade projects required to achieve secondary treatment standards will drive the CIP. The New Plant No. 1 Secondary Treatment System and the Trickling Filters at Plant No. 2 are expected to require $65.7 million and $63.9 million, respectively. One of the larger Collection System related projects in the proposed budget is the $26.0 million Bitter Point Force Main Rehabilitation with proposed cash outflows of $8.0 million. Two other projects will also have a sizeable impact on the CIP over the next year. The Headworks Improvements at Plant No. 2 and Central Generation Automation projects are expected to require $10.9 million and $10.3 million, respectively. Together, these five projects represent 61 percent of the total Fiscal Year proposed CIP cash flow budget of $259.1 million. Groundwater Replenishment (GWR) System The OCSD Strategic Plan includes water reclamation. With the Orange County Water District (OCWD), we began operating the Groundwater Replenishment (GWR) System, the nation s largest water reclamation project, in November Phase I of the GWR System can reclaim 70 million gallons of water a day, delaying the need to build a second outfall which could cost more than $200 million. OCSD and OCWD have agreed to match the funding for this project which will be completed in Fiscal Year Staff recommends $537,000 should be budgeted in Fiscal Year for project completion. OCSD has received approximately $44 million in Federal and State grants to offset part of the District s total costs. Moving Towards Secondary Treatment In July 2002, the Board of Directors approved a change from the existing level of treatment, a blend of 50 percent advanced primary and 50 percent secondary treated wastewater, to secondary treatment standards. The reasoning behind the decision to move to secondary standards included (1) the possibility (no matter how remote) that bacteria from the ocean outfall may at times reach the shoreline, (2) upgraded treatment will aid additional water reclamation with the Orange County Water District, (3) and the public s clearly stated preference for upgrading wastewater treatment at this time. The CIP includes three projects totaling $627 million to upgrade the District s treatment plants to meet secondary treatment standards. Construction of the facilities to meet secondary treatment standards is currently on track to be completed by December 31, Sewer Service Fee Increases The proposed single family residential rate, the underlying basis for all sewer rates, is $221. This proposed rate by the District is still well below the State s annual average sewer rate of $406, according to a 2008 survey of 726 agencies in California. 3

16 Financial Summary Overview & Budgetary Issues Operating Budget Increase The operations budget for the collection, treatment, and disposal of wastewater is proposed at $159.1 million, a $2.9 million, or 1.9 percent increase above the previously approved budget. Although individual expenses will increase or decrease slightly, the overall increase to the operating budget is primarily attributable to five specific areas: Personnel Costs $2.5M Although staffing is being proposed at 648 full time equivalents, as previously approved for , costs will increase $2.5 million. This increase is partially due to the reduction in the budgetary vacancy factor from 5 percent to 3 percent based on recent changes in trend information. Another significant increase in personnel cost is the $600,000, or 3.9 percent increase in retirement premiums. This increase is reflective of revised actuarial assumptions, low interest earnings in prior years, as well as the enhanced retirement benefit program effective July 1, The retirement cost category has also increased due to inclusion of $846,000 for net pension and other post employment benefit costs in accordance with requirements set by the Governmental Accounting Standards Board. Operating Materials & Supplies $2.0M As the requirement for better quality effluent increases, so does the need for chemicals (primarily bleach) to treat the region s wastewater. Operating materials and supplies are proposed to increase primarily due to combined increases in chemical coagulants, odor control, and disinfection. Contractual Services ($400,000) The major component of this category is biosolids removal and transportation costs. These costs continue to rise however, cost increases in this area were less than previously anticipated. Utilities ($400,000) There are reductions identified in natural gas utilization because Central Generation Operations has been successful in reducing natural gas usage and changes in the rules provided by the Air Quality Management District have allowed more flexibility. Self-Insurance Requirements $700,000 Recent and anticipated increases in the cost of workers compensation benefits and claims are the cause of the increase in this budget category. In order to maintain an adequate reserve balance, a temporary transfer of $500,000 will be made from the General Liability and Property program reserve to the Workers Compensation program reserve in Operating Expenses $149M FY Approved +5% $156M FY Approved +2% $159M FY Proposed Revision Total operating and maintenance expenses will increase $10 million from FY

17 Budget Update 5

18 Financial Summary Where the Money Comes From Where the Money Comes From Fees & Charges $240.2M 24.7% Beginning Reserves $551.7M 56.7% Debt Proceeds $70.0M 7.2% Property Taxes $65.2M 6.7% Other $30.0M 3.1% Interest $15.2M 1.6% Revenues by Category (in millions) Category Approved Approved Proposed Revisions Beginning Reserves $512.3 $467.2 $551.7 Service Fees Permit User Fees Capital Facilities Capacity Charges Property Taxes Intradistrict Transfers 4.0 (2.1) 0.0 Interest Other Revenue Debt Proceeds Total Revenue $1,068.2 $951.1 $

19 Financial Summary Revenues by Category Revenues by Category The District has a variety of revenue sources available for operating and capital expenses. The major revenue sources are as follows: Beginning Balances Service Fees Industrial Waste Permit User Fees Connection Fees Property Taxes Interest Earnings Other Miscellaneous Revenue Debt Proceeds Beginning Reserves $552M As a result of its Reserve and Investment Policies, the District will begin the year with a balance carried forward from the previous year. General Service Fees $220M User fees are ongoing fees for service paid by customers connected to the sewer system. A property owner, or user, does not pay user fees until connected to the sewer system and receiving services. Once connected, a user is responsible for his share of the system s costs, both fixed and variable, in proportion to his demand on the system. These fees are for both Single Family Residences (SFR) and Multiple Family Residences (MFR). The proposed single family residential rate, the underlying basis for all sewer rates, is $221. This proposed rate by the District is still well below the State s annual average sewer rate of $406, according to a 2008 survey of 726 agencies in California. Permit User Fees $9M Large industrial and commercial properties that discharge high volumes or high strength wastewater are required to obtain a discharge permit and pay extra fees. These fees are for the owner s share of the system s costs, both fixed and variable, in proportion to the demand placed on the system. Capital Facilities Capacity Charges (CFCC) $11M CFCC is a one-time, non-discriminatory charge imposed at the time a building or structure is newly connected to the District s system, or an existing structure is expanded. This charge pays for District facilities in existence at the time the charge is imposed, or to pay for the construction of new facilities in the future that are of benefit to the property being charged. These fees are being reduced from the original FY budget of $23 million to $11 million due to the current recession and decline in residential and commercial development. Property Taxes $65M The County is permitted by State law (Proposition 13) to levy taxes at 1 percent of full market value (at time of purchase) and can increase the assed value no more than 2 percent per year. The District receives a share of the basic levy proportionate to what was received in the 1976 to 1978 period less $3.5 million, the amount that represents the State s permanent annual diversion from special districts to school districts that began in The District s share of this revenue is dedicated for the payment of debt service. Interest Earnings $15M Interest earnings are generated from the investment of accumulated reserves consisting of a cash flow/contingency, a capital improvement, a renewal/ replacement, and a self-insurance reserve. Other Revenue $30M Other revenue includes $12.8 million from the Irvine Ranch Water District (IRWD) for capital and equity charges. Debt Proceeds $70M Certificates of Participation (COPs) are the District s primary mechanism for financing capital projects. COPs are repayment obligations based on a lease or installment sale agreement. In , the District is scheduled to issue $70 million of new money COPs to assist with the financing of the $259 million in capital outlays scheduled for this fiscal year. 7

20 Financial Summary Where the Money Goes Where the Money Goes CIP $259.0M 26.6% Ending Reserves $477.2M 49.1% Operating $159.1M 16.4% Debt $77.0M 7.9% Intradistrict $0.0M 0.0% Expenses by Category (in millions) Category Approved Approved Proposed Revisions Capital Improvement Program $373.7 $228.9 $259.0 Debt Service Operating Expenses Intradistrict Transfers 4.0 (2.1) 0.0 Subtotal $601.0 $467.3 $495.1 Ending Reserves Total Expenses $1,068.2 $951.1 $

21 Financial Summary Expenses by Category Expenses by Category The District budgets its funds in five distinct areas: Capital Improvement Program (CIP) In order to provide the appropriate level of service to the District s rate payers, large capital improvements are required. The CIP provides for the management and implementation of these improvements. Debt Service This is the cost of issuing debt. Long-term debt financing allows the District to complete large multiyear capital projects by providing funds not always immediately available. Operating Expenses The proposed budget allocates resources to operate, maintain and manage our sewage collection, treatment and disposal system and for any associated administrative or technical requirements. New secondary treatment system facilities in construction at Plant No. 1. Intradistrict Transfers Expenditures related to other affiliated agencies. Reserves The District budgets for reserves for various potential needs including cash flow, operating contingencies, capital improvement, and replacement and catastrophic loss. The reserve levels are governed by District policy. 9

22 Strategic Planning Introduction Driven by the mission, vision and core values of the Strategic Plan, OCSD continues aggressive efforts to meet the sanitation, health, and safety needs of the more than 2.5 million people we serve while protecting the environment where we live. Mission Statement The Mission Statement is the basic foundation that defines why we exist. We protect public health and the environment by providing effective wastewater collection, treatment, and recycling. Vision Statement Our Vision Statement supports the Mission Statement by expressing a broad philosophy of what the Orange County Sanitation District strives to achieve now and in the future in the delivery of services to our customers, vendors, other agencies, the general public, and each other. Making decisions in an open and honest way to produce optimum financial, environmental and societal results. Cooperating with other stakeholders to protect the ocean and regional water resources for the people we serve. Beneficially recycling wastewater, biosolids and other resources using safe and effective processes and systems. Developing the best possible workforce by providing employees with opportunities to advance their careers through enhanced growth, responsibility, and professional development. Core Values Our Core Values support the Mission and Vision Statements by expressing the values, beliefs, and philosophy that guides our daily actions. They help form the framework of our organization and reinforce our professional work ethic. Honesty, Trust and Respect We aspire to the highest degree of integrity, honesty, trust, and respect in our interaction with each other, our suppliers, our customers, and our community. Teamwork and Problem Solving We strive to reach OCSD goals through cooperative efforts and collaboration with each other and our constituencies. We work to solve problems in a creative, cost-effective and safe manner, and we acknowledge team and individual efforts. Leadership and Commitment We lead by example, acknowledging the value of our resources and using them wisely and safely to achieve our objectives and goals. We are committed to act in the best interest of our employees, our organization, and our community. Learning/Teaching Talents, Skills and Abilities We continuously develop ourselves, enhancing our talents, skills, and abilities, knowing that only through personal growth and development will we continue to progress as an agency and as individuals. Recognition/Rewards We seek to recognize, acknowledge and reward contributions to OCSD by our many talented employees. Operating Philosophy The Orange County Sanitation District is a public agency that is successful by working as a team and by leveraging our efforts with other public agencies. We think like a business and act in the public interest, all the while emphasizing the ABC s of our operating philosophy: Accountability We maintain accountability for our commitments and for our behavior. We use measurable short-term and long-term goals. We use methods that regularly check our collective and individual progress in achieving our commitments. We measure and expect honest, respectful, open and constructive behavior in ourselves and from the people with whom we work. Balance We achieve balance in what we do. Work matches our capacity to perform it. We look for economies of operation without sacrificing quality or causing unreasonable risk. We consistently perform our core work and meet our basic wastewater management responsibilities while being willing to take on new initiatives that improve environmental quality or service in the community we serve. Communication We promote timely and accurate communication with the many different people who make up our community of interest. Staff and management communicate freely, openly and honestly to solve problems and to achieve constructive change. 10

23 Budget Update We provide our Board of Directors with accurate and timely information about matters that impact their policy making and affect the wider interests of Orange County. We provide opportunities for the public, the media and our staff to become informed about our activities and to provide input during our deliberations. Risk Register During annual strategic level risk assessment and mitigation workshops, the Executive Management Team identifies weaknesses and threats and assesses strategic and organization-wide risks facing the District. The team also identifies mitigation measures that the District currently has in place, proposes additional mitigation measures that the District considers appropriate; and develops an action plan of responsibilities and timeframes for follow-up. The information generated from these workshops are compiled and documented within the District s Risk Register. Several Strategic Plan long and short-term goals reflect mitigation measures. Several of the risks involve preparedness for uncontrollable events, such as terrorist attacks and natural disasters. Several are concerned with finance, and many are compliance-related. OCSD Long-Term Planning Long-Term Strategic Goals should be acceptable, flexible, measurable, motivating, suitable, understandable, and achievable. The Long-Term Goals are the results the District seeks to achieve over a specified period, usually three to five years. The Risk Register contains several longterm concerns requiring short and long-term strategic planning. Several goals were completed in the last year: Phase I of the Management System for Environmental Compliance Stage I of Engine Emission Compliance Development of a Statewide Emissions Inventory Protocol Enterprise Information Technology Strategic Plan Feasibility of Deep-Well Injection of Biosolids Evaluation of Processing Biosolids at the Terminal Island Demonstration Well In-County Compost Take-Back Program Plan Strategy Succession Management Plan. Other interrelated, long-term goals will remain as the District continues to construct the facilities required to reach full secondary treatment. As secondary treatment facilities are completed, more biosolids will be produced. Currently, the land reuse options are scarce and other new technologies that the District is planning will become the more available, more expensive, biosolids management options. The biosolids long-term goal will continue until a viable, cost-efficient, and effective method of reuse is available. 11

24 Strategic Planning Long-Term Goals Goals SARI Line Relocation Contaminants of Potential Concern (CPC) Biosolids Management Engine Emission Compliance Review Interagency Agreements Odor Control FY Progress Work in conjunction with the County of Orange and the Federal Government to relocate the Santa Ana River Interceptor Line by March Issued draft report on findings and recommendations completed on 12/31/2008. Report based on two phases (third phase representative sample was not collected by lab fourth phase makeup from lab is pending). Developing initial source control strategy based on 18 CPCs in 8 sectors per RWQCB Order No. R Amending Order No. R , R Article 15, Staff Report, Summary of Public Hearing, et al., CCR Title 22 Section (a)(2)(a) Fate of CPCs. Monitor both opposition to land application in Kern County and Arizona, and availability of sustainable cost-effective alternatives and provide management and Board with recommendation on whether to pursue proposal for selecting a technology to manage the remaining one-third of our biosolids capacity. This is an ongoing process that will continue to be a challenge as more land becomes unavailable for reuse options. The recently completed 5-year research strategic plan identified several projects targeted at reducing the quantity of biosolids produced. A project charter to initiate research on one promising technology is being developed. Although the study to evaluate alternatives for complying with lower emission limits in the South Coast Air Quality Management s Rule has been completed, the demonstration testing will not begin until Compliance modifications to the engines cannot begin until a decision is made on the success or failure of the demonstration testing. OCSD and Santa Ana Watershed Project Authority (SAWPA) staff continue to meet to discuss issues related to SARI line flows, rates, and long-term planning. OCSD and Irvine Ranch Water District (IRWD) staff are close to final agreement on issues related to sewer charges, reserves, cash balances, biosolids costs, and odor control costs. Staff will develop and present to the board of directors an MOU to document the agreement reached on the issues. Minimizing odor complaints is a priority. Chemical addition in the collection system has increased. Plant odors will be contained within the treatment plant boundaries by completing Odor Control Projects at Plant 1 and Plant 2 by Projects P1-113 (Trickling Filters at Plant 1) and P2-102 (Solids Storage at Plant 2) have been designated to satisfy odor control compliance in these areas. These projects are scheduled to start design in July

25 Budget Update Strategic Initiatives Short-Term Goals During Fiscal Year , there were several Short-Term Goals that supported the Long-Term Strategic Goals of the District. The updates and the completed portions of Long-Term Goals are included in the following table. Status Complete Complete Complete Complete Complete Complete Ongoing Ongoing Ongoing Complete Short-Term Goals Management System for Environmental Compliance Implement a management control system for environmental compliance information that incorporates a dashboard-style report. Climate Change/Greenhouse Gases Complete development of statewide emission inventory protocol for publicly-owned treatment works and submit mandatory emission inventory to the California Air Resources Board for FY Engine Emission Compliance Complete study to evaluate alternatives for complying with lower emission limits in the South Coast Air Quality Management s Rule Initiate planning and design of demonstration testing of the most promising technology(s) identified in the study. Complete Facilities Master Plan Update - Complete a comprehensive update of the Facilities Master Plan and obtain Board approval. Sustainable Biosolids Program Evaluate option of processing some of biosolids at the City of Los Angeles Terminal Island demonstration well; Evaluate the feasibility of deep injection/methane recovery including commissioning a study of the geological formations below Plants 1 and 2, and availability and acceptability of any existing wells; Complete new in-county Compost Take-Back Program Plan strategy. Succession Plan - Implement the succession management plan including management training and the creation of a Leadership Academy. Manage and Optimize a Sustainable Biosolids Program Monitor both opposition to land application in Kern County and Arizona, and availability of sustainable cost-effective alternatives and provide management and Board with recommendation on whether to pursue proposal for selecting a technology to manage the remaining one-third of our biosolids capacity. Plan and Maintain a Sustainable Capital Improvement Program The team continued work on the original plan. Tasks complete include: issue a call for new projects and prepare materials for Manager and EMT review and prioritization of new requests; work on validating all CIP project budgets and scopes of work with updated estimated cost at completion for the entire program; and complete ASCE Peer Review of our CIP management program and present findings to the Board of Directors. Local Sewer Services - Tasks complete include: establish New Local Sewer Service Fee (7-1-08); obtain OCSD Board approval of sewer transfer agreement with CMSD ( ). Meetings in progress with Orange and Newport Beach for local sewer transfers in the future. Discussions with El Modena and Santa Ana will begin later in the year. Continue to seek an asset transfer to other agencies. Also transfer other local assets back to cities that are not serving a true regional purpose. Enterprise Information Technology Strategic Plan Develop and publish a three year Information Technology Strategic Plan based on the master OCSD strategic plan. 13

26 Strategic Planning Levels of Service The Levels of Service included in the following tables support the strategic vision, mission, ethics, goals, and initiatives of the District and include key performance indicators of the Operational targets. Level of Services Target Accomplishments for FY and Accomplishments for FY Environmental Stewardship: OCSD will protect public health and the environment. FY Target FY Results Provide capacity to collect and treat dry weather urban runoff 4 mgd 1.4 mgd Maximum off-site odor impact (in D/T*) Reclamation Plant No. 1 Treatment Plant No. 2 Air emissions health risk to community, cancer risk per 1 million Employees 42 D/T 48 D/T <10 42 D/T 48 D/T <10 Permit compliance (air, land, and water) 100% 99% OCSD will be a good neighbor. FY Target FY Results Odor complaint response Treatment Plants within1 hour Collection System within 1 working day Odor complaints: Reclamation Plant No. 1 Treatment Plant No. 2 Collection System 100% 100% % 100% Restore collection service to customer within 8 hours 100% 100% Respond to collection system spills within 1 hour 100% 100% 14

27 Budget Update Business Principle: OCSD will exercise sound financial management. FY Target FY Results COP service Principal and Interest < O&M expenses <O&M expenses Annual user fees Annual increase in collection, treatment, and disposal costs per million gallons Annual reserve level over adopted reserve policy level Sufficient to cover all O&M requirements Sufficient to cover all O&M requirements <10% 9.8% >0% 28% OCSD will be responsive to our customers. FY Target FY Results Respond to public complaints or inquires regarding construction projects within 1 working day New connection permits processed within one working day >90% >90% >90% >90% 15

28 Strategic Planning Wastewater Management: OCSD will provide a safe reliable effluent for recycling. FY Target FY Results Concentration of emerging chemical constituents of concern in Plant No. 1 secondary effluent: Thirty-day geometric mean of total coliform bacteria in effluent after initial dilution: Industrial compliance with permits to discharge into OCSD sewers Meet secondary treatment standards NDMA = < 150 ppt 1,4 Dioxane = < 2ppb NDMA = 66.4 ppt 1,4 Dioxane =1.7 ppb <1,000 mpn 291 mpn >90% permit compliance BOD 100 mg/l TSS 55 mg/l 100% permit compliance BOD 45 mg/l TSS 30 mg/l OCSD will manage flows reliably. FY Target FY Results Frequency of use of emergency one-mile (78-inch diameter) outfall: 0 per year during dry, less than once per 3 years in peak wet weather 0 Sanitary sewer spills per 100 miles: < 2.1 < 2.1 Contain sanitary sewer spills within 5 hours. 100% 100% OCSD effluent will be recycled. FY Target FY Results Provide up to 104 mgd specification effluent to the Groundwater Replenishment System: OCSD will implement a sustainable biosolids management program. 9. National Biosolids Partnership Certification for Biosolids Environmental Management System. Percent of biosolids recycled 104 mgd FY Target Maintain NDB Certification >95% recycled <5% to landfill 63 mgd (without additional flow to be provided by lift station) FY Results Maintained 100% recycled 0% to landfill Workplace Environment: OCSD will take care of our people. FY Target FY Results Training hours per employee 45 per year 43 Employee injury incident rate 5.2 Industry Average 4.5 Mandatory OSHA training requirements 100% 58 Hours worked since last Lost Work Day 1,000,000 19,000 Lost Work Day Rate

29 Capital Improvement Program Overview CIP Budget Request Summary This is an update to the Fiscal Year two-year budget. In preparation for the update, the District s Board of Directors reviewed the proposed changes to the CIP to gain an understanding of the impact from the CIP to the current rate structure program. The CIP includes three projects totaling $627 million to upgrade the District s treatment plants to meet secondary treatment standards. Implementation of secondary treatment standards is scheduled to be completed by December 31, In conjunction with preparation for the budget, the District staff conducted strategic planning workshops with the Board of Directors to layout a capital program to deliver the levels of service desired by the Board of Directors. These levels of service and resulting capital projects are included in the District s Five-year Strategic Plan. This includes approximately $50 million of new CIP over the next 10 years. This budget update also includes the identification of 21 new future rehabilitation and replacement projects. These future projects are based on the District s condition assessment program. These future CIP needs increase the amount of the CIP by $118 million. However, these projects will be funded from the future rehabilitation, renewal, and replacement line item in OCSD existing budget and will not impact OCSD user rates. In addition, District staff has reviewed each ongoing CIP project to ensure that the scope of the project is appropriate, and that the cost estimates are accurate. The validated CIP includes 94 large capital projects and 29 special projects with a 15-year expenditure of $1.326 billion. This total represents a $158 million decrease from the CIP estimate. The proposed CIP budget is organized by treatment and collection system processes and areas. The funds requested for the current cash flow budget total $259.1 million, a decrease of 31 percent from last year s cash flow request of $373.7 million. The current year cash flow is part of an overall total cost of $2.520 billion for active projects. Following is a chart for the Proposed CIP Cash Flows and the total Project Costs for all proposed projects, by project phase, in millions: Total Project Current Status Cash Flow Costs Future $0.0 $324.8 Planning Design Construction ,664.8 Capital Equipment Total $259.1 $2,520.5 There are currently 31 projects in the Planning Phase with proposed capital outlay spending in Two of the larger cash flow projects in the Planning Phase are the Title 24 Access Compliance Improvements at Plant No. 1 and the Plant Water System Rehabilitation at Plant No. 2 with current year projected expenditures of $0.56 million and $0.35 million, respectively. A total of $134.1 million in capital outlay, currently listed within the Planning Phase, is being projected for future budgets based on the capital improvement needs that are identified through the 2002 Interim Strategic Plan Update and the CIP Validation Study. There are currently 18 projects in the Design Phase with proposed capital outlay spending in Two of the larger projects in the Design Phase are the Sludge Thickening Dewatering and Odor Control at Plant 1 Project and the Solids Thickening and Processing Upgrades Project with projected current year expenditures of $4.69 million and $3.89 million, respectively. There are currently 44 projects in the Construction Phase with proposed capital outlay spending in The two most significant projects in the construction phase are the New Secondary Treatment System at Plant No. 1 and the Trickling Filters at Plant No. 2 with projected current year expenditures of $65.69 million and $63.93 million, respectively. Standard contingency factors have been applied to improve budgeting. The rates of 20, 20, and 10 percent have been applied respectively to the estimates made during the project development, design, and construction project phases. This reflects standard practice for estimating construction project costs. Following within the appendix are descriptions and justifications for the capital improvement projects which are new in this Fiscal Year budget update. They give the reader a brief overview of each project, the budget for the total project, and any potential changes in the operational budget resulting from the implementation of the project. 17

30 CIP Overview Each project in the CIP went through an extensive validation and prioritization process. Projects have been prioritized based on risk exposure if the project was deferred. Projects that would present a higher risk if they were delayed are given a higher priority. The CIP budget process is continually improved and further refined as the District improves the CIP project management controls systems. The Project Management Controls System staff work with the project managers and management throughout the year to manage the scope, schedule, budget, risk and other key project indicators for each project. The information is collected monthly and compiled in the OCSD Project Control System website. This information is then readily available during the budgeting process to minimize the time and effort needed to prepare and update the CIP portion of the overall budget. Construction of new facilities at Treatment Plant No. 2 in Huntington Beach. 18

31 Debt Financing Program Debt Financing Due to the magnitude of identified future annual capital expenditures, it is necessary that the District utilize debt financing to meet its total obligations. Debt financing allows the District to meet projected construction schedules while achieving the lowest possible user fees, as well as, long-term stability in future sewer service fee rates. Certificate of Participation (COP) The primary debt mechanism used is Certificate of Participation (COP). COPs are repayment obligations based on a lease or installment sale agreement. The COP structure was selected over other structures because COPs are not viewed as debt by the State of California, as the purchaser does not actually receive a bond, but rather a share in an installment sale arrangement where the District serves as the purchaser. COPs can be issued with fixed or variable interest rates. Fixed-rate debt can be either traditional or synthetic in form: Fixed-Rate Debt traditionally has a final maturity between 20 and 30 years from the date of issuance. Generally, principal is amortized annually. Principal maturing in early years typically has a lower interest rate ( coupon ) than later maturities. This structure typically produces a level debt service. Synthetic Fixed-Rate Debt: long-term, variablerate debt can be issued and then the interest component can be swapped to a fixed rate. This form of fixed-rate debt achieves a balance between short and long-term interest costs and is frequently a less expensive form of debt. In some markets, this form of fixed-rate debt is less expensive to issue than the more traditional form of fixed-rate debt described above. Variable-rate debt can also be traditional or synthetic: The maximum level of variable rate obligations incurred by any District should not exceed the level of invested reserves available to that District. The District currently has outstanding synthetic fixed-rate and fixed-rate COPs of $1,045.7 million and variable-rate COPs of $195.8 million, for a ratio of 84:16. The District Maintains Its AA Rating The District s bond rating is AAA from Standard & Poors and AA from Fitch Ratings. A AAA Rating is the highest for a government agency. In order to maintain this rating, the District adheres to its 2001 Debt Policy and coverage ratios requirements. This Board-adopted policy serves as the agency s guide in the management of existing debt and in the issuance of future debt. Debt Ratios The District does have contractual covenants within the existing COP agreements which require minimum coverage ratios of The minimum coverage ratio is the ratio of net annual revenues available for debt service requirements to total annual debt service requirements for all senior lien COP debt. The coverage ratio for senior lien COP debt is being proposed at 2.39 for Fiscal Year Debt Financings In Fiscal Year , new COP debt issuances of $70 million are being proposed. These debt issuances will help fund proposed CIP budgeted cash outlays of $259.1 million in this fiscal year. Variable-Rate Debt traditionally has either a long or short nominal maturity, but the interest rate resets periodically. Typically, the intervals for interest rate resets are daily, weekly or monthly, but any period is possible. Synthetic Variable-Rate Debt as described above for fixed-rate debt, variable-rate debt can be created from a fixed-rate issue by means of a floating-rate swap. 19

32 Operating Expenses Summary of Operating & Maintenance Expenses Category Approved Approved Proposed Revisions Salaries and Benefits $83.8 $90.0 $92.5 Operating Materials & Supplies Contractual Expenses Repairs and Maintenance Utilities Professional Services Other Materials, Supplies, Services Capital Grants to Member Agencies Self-Insurance Requirements Training and Meetings Research and Monitoring Administrative Expenses Printing and Publications Cost Allocation (20.5) (21.5) (21.8) Total Operating Expenses $148.7 $156.2 $ Salaries, Wages & Benefits $92.5M Salaries & Wages This category includes salaries for 648 full time equivalent (FTE) staff positions as well as Directors pay. The vacancy factor applied for the budget update has been reduced from 5 percent to 3 percent based on trend information. Provision has been made in these salary projections in order to comply with the terms of the most recently adopted MOUs. Retirement The District's employees are members of the Orange County Employees' Retirement System (OCERS). Preliminary information from OCERS indicates that an increase in rates is expected. The employer s required contribution rate has been increased from percent to percent. In addition, the District will pay 3.5 percent on behalf of each employee. Group Insurance Includes the District s share (approximately $12,600 per employee) of employee medical plan benefits for the indemnity plan, prepaid HMO plans, the dental insurance plan, and the life and disability insurance premiums. The proposed budget includes a 10 percent increase for the medical plans. Operating Materials & Supplies $25.7M Disinfection Chemicals The largest cost related to disinfection is for chemicals, specifically bleach. Sodium Hypochlorite (Bleach) Over 95 percent of the bleach is used for effluent disinfection. The remaining bleach usage is for odor control, disinfection of plant water, and the control of filamentous organisms in activated sludge in the secondary treatment process. It is anticipated that the District will use 11.4 million gallons of bleach in However, due to revised estimates on unit cost increases, the proposed budget for bleach has been increased from $6.9 million to $7.2 million. Chemical Coagulants Cationic polymer is added to the influent wastewater along with ferric chloride via the physical/chemical treatment systems at both plants to improve solids removal efficiencies in the

33 Budget Update primary clarifier basins. It is also added to digested sludge prior to dewatering to cause the sludge to coagulate to improve the sludge and water separation process. The usage costs for this group of chemicals is expected to increase more than previously estimated as overall chemical coagulants are being proposed at $500,000 more than previously approved for Odor Control Chemicals The District uses hydrogen peroxide and sodium hydroxide (caustic soda) as the primary odor control chemicals within the treatment plants; magnesium hydroxide, ferrous chloride, calcium nitrate and caustic soda are the primary odor and corrosion control chemicals used within the collection system. An increase of $1.1 million is being proposed from the previously approved $7.2 million budget for odor control chemicals due to recent increases in unit costs. Contractual Services $28.5M The major component of this category is biosolids removal and transport costs. Contracts have been executed with firms for agricultural reuse of residual solids. Since the closure of the Coyote Canyon Landfill in 1990, no replacement site for sludge disposal has yet been approved within Orange County. Additionally, biosolids production increased at Plant No. 1 and Plant No. 2 when secondary facility rehabilitation projects were completed and secondary flow increased. Plant No. 1 biosolids production will increase further when the Steve Anderson Lift Station (SALS) begins operation diverting more flow to Plant No. 1. Total estimated biosolids production for Fiscal Year is 294,000 wet tons. The proposed budget reflects a decrease of $1.2 million, however, because rate increases were less than expected. This category also includes appropriations for grounds keeping services, janitorial services, security services, toxic removal services, outside laboratory services, trash pickup, plant site sweeping, temporary help to level out periodic increases in staff workload, a maintenance contract for the Plant 2 oxygen generation plant, digester cleaning and disposal services, line cleaning and closed-circuit television (CCTV) services. Repairs and Maintenance $10.2M This item, which is for parts and services for repair of plant and collection facilities and annual service contracts, reflects an authorization to allow for routine equipment maintenance and is expected to increase by $100,000. Two large repairs include: the overhaul of three belt filter presses budgeted at $300,000; and the rehabilitation of three digesters to maximize treatment plant capacity budgeted at $150,000. Utilities $9.8M The overall cost for utilities is a significant component of the operating budget. The overall cost for utilities is anticipated to decrease by $400,000 compared with the previously approved budget. Natural Gas Natural gas is purchased to supplement the digester gas that is used to run the central generation facilities. The budget shows a decrease of $1 million reflecting lower levels of natural gas needed because central generation operations has been sucessful in reducing natural gas usage and changes in the rules provided by the SCAQMD have allowed more flexibility. Electricity Electricity is the largest utility cost incurred by the District and is used to run the plant processes. The budget reflects an increase of $600,000 due to a projected 6 percent increase in Edison energy rates, an increase in process demand for secondary treatment, and a decrease in electrical power production at the District s central generation facilities to reduce emissions. Nearly all the power required to operate Plant No. 2 is generated by the District s Central Power Generation Facilities. 21

34 Operating Expenses Professional Services $2.6M Professional Services includes General Counsel, special labor counsel, legislative advocacy, audit and miscellaneous accounting services, engineering, and other technical consulting services. Other Material, Supplies, Services $2.7M This category of costs includes the in-lieu insurance premium used to maintain the level of accumulated reserves for the property and general liability selfinsurance programs. This in-lieu cost for is proposed at $1.1 million. Expenses not chargeable to other categories, such as freight and miscellaneous items, and annual regulatory fees assessed by the SCAQMD, are recorded with this category. Grants to Member Cities $1.7M The payments to agencies in connection with the Cooperative Projects Grant Program were reduced from $2.5 million in Fiscal Year to $0.3 million in , and then back up to $1.7 million in The Cooperative Projects Grant Program co-funds projects sponsored by a member agency to eliminate or reduce inflow and/or infiltration of storm water and groundwater from local wastewater collection lines and to repair or replace poor performing, aging local wastewater collection system infrastructure. The grant allowance is in accordance with program contracts currently in place as this program has now reached its cap of $7.5 million. This program will be discontinued after the fiscal year. Insurance $2.8M The District s outside excess general liability insurance coverage is $30 million with a selfinsurance retention of $500,000. The District s property insurance coverage of $1 billion for perils of fire and $300 million for perils of flood is subject to a self-insurance retention of 5 percent per unit of insurance up to $25,000 for fire and $100,000 for flood. The District is totally self-insured for earthquake. An appropriation of $1.1 million for in lieu premium contribution charged to operations is recommended for the Property and General Liability Program. This will serve to maintain the reserves balance. Training and Meetings $1.4M Expanding activities of regulatory agencies have required increased Board member and staff travel in recent years. Given current economic constraints, employee travel is now subject to increased scrutiny. All meeting request budgets have been reviewed for necessity, duplication, and redundancy and have been limited to a responsible level. An amount equal to approximately 2 percent of the Regular Salaries budget is allocated to Training. Training activities are coordinated though the Human Resources Division of the Administrative Services Department. Also this category includes ongoing technical training and materials for staff; expansion of our supervisory training program to provide supervisors with training to more effectively manage their Divisional groups; required training for computerized plant monitoring and control systems, Laboratory Information Management System (LIMS), Computerized Maintenance Management System (CMMS), Financial Information System (FIS), and other high tech equipment, processes and systems; and training to allow for an adaptive and flexible work force. The General Manager and the Board have continued to place a heightened emphasis on safety, technical, and management training. 22

35 Budget Update Research and Monitoring $1.2M Overall, this category of costs is expected to decrease slightly over the next fiscal year. Research and monitoring expenditures consists of contract services to carry out the extensive ocean monitoring program required by the EPA under provisions of the District s ocean discharge permit (NPDES) permit; air quality monitoring costs; the District s contribution to the Southern California Coastal Water Research Project (SCCWRP) being conducted under a joint power agreement with other Southern California municipal dischargers; and also provide for increased operational and ocean research and evaluation to develop optimum operating parameters in treatment plants. Administrative Expenses $1.2M These accounts include supplies, postage, technical journals and publications, forms, small office equipment, and small computer items that cost less than $5,000 per item and exclude items that are capitalized. Printing and Publication $0.6M The budget provides for in-house and outside reproduction costs and reflects an expanded management information system and administrative requirements as well as a continuing demand by the public and regulatory agencies for information. The continuing effort of the Public Information Office to improve public education programs about the District s activities is also reflected in the budget for this line item. This group of accounts also includes costs for photo processing, advertisements, and notices. Cost Allocation ($21.8M) This represents direct labor and benefit charge outs and materials, supplies and services cost allocation to the capital project where the related work was performed. The Nerissa is OCSD s custom designed and built ocean monitoring and research vessel. It holds and operates specialized ocean sampling equipment that enables OCSD to conduct core and regional monitoring and special studies along the coastline. 23

36 Departments Summary Department Administration Units Expenses by Department (in millions) Budget Originally Proposed Percent Change Updated Proposed Percent Change Office of the General Manager $6.6 $ % $6.5 (5.8%) Administrative Services % % Operating Units Sub-Total $24.4 $ % $26.5 (1.1%) Technical Services % % Engineering % 3.8 (13.6%) Operations & Maintenance % % Sub-Total $122.3 $ % $ % Total $146.7 $ % $ % Less: Operating Revenue (7.8) (8.1) 3.8% (8.1) 0.0% Grand Total $138.9 $ % $ % Department Administration Units Staffing by Department (FTEs) Budget Originally Proposed Percent Change Updated Proposed Percent Change Office of the General Manager % (5.9%) Administrative Services % (2.7%) Operating Units Sub-Total % (3.4%) Technical Services % (0.5%) Engineering % (0.9%) Operations & Maintenance % % Sub-Total % % Total FTEs % % 24

37 Budget Update. Administration Units Office of the General Manager Budget $6.5M Staffing 28 FTEs The Office of the General Manager provides general oversight of all District operations and incorporates functions in the areas of Safety and Health, Public Information Office, Government Affairs, and Board Services. This office reports directly to the Board of Directors. The budget reflects the transfer of 2.75 FTEs to Administrative Services and the addition of one Safety & Health Specialist. Administrative Services Budget $20.0M Staffing FTEs The Administrative Services Department maintains financial oversight and administration of all District funds and accounts and is responsible for contract administration and procurement, oversees all human resources management activities including employee development, and employee and labor relations, and oversees all District computer, networking and customer support issues. The budget reflects a net reduction of 2.75 FTEs due to the removal of the seven-fte placeholder for new positions previously budgeted here combined with the transfer of 3.25 FTEs from other departments and the addition of one Storekeeper. Operating Units Technical Services Budget $19.8M Staffing FTEs The Technical Services Department oversees environmental issues, regulatory compliance and research at the District and is responsible for the environmental laboratory, ocean monitoring and source control. The budget reflects a transfer of 0.5 FTE to Administrative Services. Engineering Budget $3.8M Staffing FTEs The Engineering Department is responsible for the planning, design and construction of the District s capital improvement program and District annexations, easements and connection permitting. The budget reflects the continuing use of Integrated Program Management Consultants (IPMC) to supplement District resources in managing the CIP and the transfer of 1.0 FTE to Operations and Maintenance. Operations and Maintenance Budget $106.0M Staffing FTEs The Operations and Maintenance Department is responsible for the operation of the District s two wastewater treatment plants and for reliable collection and transportation of wastewater, asset management and efficient, safe operation and maintenance of the system in the 471 square mile area. The budget reflects the transfer of 1.0 FTE from Engineering and the addition of five new positions: one Plant Operator, one Reliability Technician, one Electrical Technician I, one Mechanic, and one Lead Mechanic. * FTE = Full-Time Equivalent Position 25

38 Office of the General Manager General Counsel Office Board of Directors General Manager General Management Administration Administrative Services Technical Services Engineering Operations & Maintenance General Management Administration Assistant General Manager Administration (includes Government Affairs) Board Services Public Information Office Safety and Health Service Description The mission of the Office of the General Manager is to work with the Board to establish standards, policies and procedures, and the overall goals and Strategic Plan of the District. The Office of the General Manager reports the District s progress in meeting the established goals to support the District s mission, and provides general oversight of the District s operations. The office reports directly to the Board of Directors. In addition to the line departments, this department oversees District-wide functions in the areas of: Safety and Health, Public Information, Government Affairs, and Board Services. Safety and Health provides expertise, support and guidance to protect employees, the public, the environment, and assets through development and implementation of comprehensive and cost effective safety, health and security systems, policies and procedures. Public Information Office provides services and implements programs to meet the communications needs of both internal and external audiences for the District. The division plans and implements media relations, website content, community relations, construction outreach, community education and outreach, employee newsletter, intranet development, corporate identity program, collateral material and graphics development, presentation development, and crisis communications. The public information office also includes the front lobby receptionist and handles meeting planning, audio visual setup and conference room booking. 26 Operating Expense Originally Updated Category Actual Budget Proposed Proposed Personnel $ 3,244,438 $ 4,009,080 $ 4,293,260 $ 4,108,850 Chemicals & Other Supplies 537, , , ,620 Professional / Contractual Services 1,088,531 1,050,100 1,031, ,600 Research & Monitoring Repairs & Maintenance 4,687 3,580 3,600 3,500 Utilities 104, , , ,000 Other 53, , , ,970 Cost Allocation (323,801) (143,500) (145,200) (147,940) Total $ 4,709,563 $ 6,609,700 $ 6,894,560 $ 6,490,600

39 Office of the General Manager Budget Update Service Description (continued) Government Affairs manages the intergovernmental relations for the District, including legislative analysis and tracking, building coalitions around key issues, and providing timely information to the Board of Directors. The Government Affairs Office also manages state and federal legislative advocates; follows political matters at the regional, state and federal levels; and acts as a liaison to various associations, government agencies, and others. Finally, the office coordinates efforts seeking grants and federal appropriations. Board Services includes the Clerk of the Board Office, and supports the Board of Directors by acting as filing officer for Statement of Economic Interests, receiving and processing summons and complaints filed against the District; and, preservation and protection of the District s records for public, private, and governmental use. Budget Overview The budget for the General Manager s Office reflects a cost reduction of $0.4 million. This decrease is due to a net reduction of 1.75 full-time equivalent positions as well as significant decreases in departmental expenses for Contractual and Professional Services. Position changes involve the transfer of 2.75 full-time equivalent positions to Administrative Services and the addition of one Safety and Health Specialist. Performance Objectives / Measures Authorized FTE Positions Managers 4.00 Supervisors / Professionals Administrative / Clerical 4.00 Interns 0.00 Other 4.00 Total Staffing Trends Staffing Trends Maintain the collection, treatment and disposal cost per million gallons at or below $1, per million gallons by end of Fiscal Year Maintain District staffing at or below FTEs by the end of Fiscal Year Maintain 100 percent compliance with terms and conditions of our permits and local, State and Federal regulations. Deliver 80+ percent of each fiscal year s CIP budget principles. Provide public outreach for OCSD s capital improvement projects. Maintain a safe and healthy work environment and implement security measures to comply with Homeland Security requirements. Establish key legislative priorities and keep the Board and senior management apprised of matters in Sacramento and Washington, D.C. Provide accurate and timely board/committee agenda packages to the Board of Directors. Support the Board of Directors information needs via enhanced Directors webpage. Update performance dashboard quarterly. Present for Board approval proposed updated District agreements with SAWPA and IRWD. Assure full participation of all Managers and Supervisors in the Leadership Academy. Through the Board s leadership, a Five-Year Strategic Plan was updated in November

40 Administrative Services Department General Counsel Office Board of Directors General Manager Office of the General Manager Administrative Services Technical Services Engineering Operations & Maintenance Administrative Services Financial Management Contracts, Purchasing & Materials Management Human Resources Information Technology Service Description The Administrative Services Department oversees all of the District s finance, contracts/ purchasing, human resources, and information technology activities, including both day-today operations and strategic planning. The department serves as a liaison with Executive Management, the Board of Directors, and other departments of the District. The department includes four divisions: Financial Management; Contracts, Purchasing, & Materials Management; Human Resources; and Information Technology. Financial Management oversees and administers all District funds and accounts. Programs include treasury management and debt financing, accounts receivable and payable, user fees, payroll, accounting for fixed assets, coordinating the capital and operating budget process, and risk management. Contracts, Purchasing, & Materials Management is responsible for contract administration and procurement for all District departments. Additionally, this division manages the District's warehouses, receiving and maintaining inventory, and distributing supplies, materials, and equipment. Human Resources manages employee development and training, compensation and classification, employee benefits, and employee and labor relation activities. Information Technology is responsible for customer support related information technology assets and services, networking and infrastructure, telecommunications operation and maintenance and network and programming, and database systems development. 28 Operating Expense Originally Updated Category Actual Budget Proposed Proposed Personnel $ 17,724,698 $ 12,922,700 $ 14,731,500 $ 15,338,790 Chemicals & Other Supplies 1,918,641 2,127,280 2,113,340 1,993,350 Professional / Contractual Services 1,241,842 1,394,870 1,427,170 1,356,820 Research & Monitoring Repairs & Maintenance 1,028,843 1,271,900 1,341,950 1,191,650 Utilities 228, , , ,000 Other 2,083, ,900 1,161,950 1,026,500 Cost Allocation (1,594,826) (1,146,390) (1,155,390) (1,166,180) Total $ 22,630,276 $ 17,812,260 $ 19,870,520 $ 20,006,930

41 Administrative Services Department Budget Update Budget Overview For Fiscal Year , the originally proposed budget showed the planned District-wide increase of seven full-time equivalent positions along with the related salary and benefits costs within the Human Resources Division of this department. Now that the specific positions to be added have been determined, the positions and associated costs are reflected in the departments to which new positions have been allocated. The budget for the Administrative Services Department reflects the elimination of the seven position placeholder, the transfer of 3.25 full-time equivalent positions from the General Manager s Office and Technical Services, and the addition of one Storekeeper. Despite the decrease in staff levels, personnel costs are increased due to the addition of net pension and other post-employment benefits costs in accordance with requirements of the Governmental Accounting Standards Board. This increase is largely offset by reductions in almost all other spending categories resulting in an overall departmental budget increase of $0.1 million. Performance Objectives / Measures Process all approved sewer service fee refund requests will be processed within 45 days, 90 percent of the time. All treasury investments will be in compliance with the State Government Code 100 percent of the time. Authorized FTE Positions Managers 9.00 Supervisors / Professionals Administrative / Clerical Technical 2.00 Interns 1.00 Total Staffing Trends Staffing Trends Sustain succession management and Leadership Academy programs through June Continue the cycle count program and maintain a minimum 97 percent accuracy rate. Ensure bid requests are accurate and comprehensive so that resulting bids are responsive. Coordinate and uphold solicitation schedules in support of planned projects and emergency procurements. Implement various components of the Information Technology Strategic Plan (ITSP). Maintain 99 percent network uptime. Implement Enterprise Content Management (ECM) System. OCSD has started a major upgrade to its voice and data telecommunication systems. 29

42 Technical Services Department General Counsel Office Board of Directors General Manager General Management Administration Administrative Services Technical Services Engineering Operations & Maintenance Technical Services Administration & Research Environmental Compliance & Regulatory Affairs Environmental Laboratory & Ocean Monitoring Source Control Service Description The Technical Services Department provides District leadership on environmental, regulatory compliance and research related matters, and support services to other departments, and consists of four divisions: Technical Services Administration and Research provides oversight to the operating divisions within the department and manages the District s research activities. Environmental Compliance and Regulatory Affairs oversees both environmental compliance and regulatory advocacy for air, land, and water issues at the federal, state and local levels. ECRA is also responsible for obtaining environmental permits from EPA, RWQCB and the SCAQMD and for the offsite management of biosolids. Environmental Laboratory and Ocean Monitoring provides laboratory services supporting operational compliance, and environmental monitoring activities and is responsible for the District s ocean monitoring program. Source Control is responsible for administering and enforcing the District s wastewater discharge ordinance and federal pretreatment regulations to control industrial discharges into the sewer system. The division manages the District s urban runoff diversion program, FOG (fats, oils and greases) program, and nonindustrial source control program to control pollutants of concern for the Groundwater Replenishment System. 30 Operating Expense Originally Updated Category Actual Budget Proposed Proposed Personnel $ 13,607,220 $ 14,335,800 $ 15,174,000 $ 15,559,600 Chemicals & Other Supplies 871,622 1,111,300 1,123,940 1,002,190 Professional / Contractual Services 557,173 1,162, , ,400 Research & Monitoring 1,030,873 1,426,410 1,409,860 1,178,460 Repairs & Maintenance 277, , , ,540 Utilities 310, , , ,000 Other 279, , , ,600 Cost Allocation 526,897 8,280 5,580 3,320 Total $ 17,461,919 $ 19,252,940 $ 19,703,380 $ 19,817,110

43 Technical Services Department Budget Update Budget Overview For Fiscal Year , the significant changes to Technical Services Department s budget are associated with transfer of the hazardous waste management program including contract services for treatment and disposal of the waste materials from the Safety Division to Technical Services Department. Other significant changes include increased fees associated with inventorying of greenhouse gases and environmental permits, and reduced costs associated with professional services for air quality auditing and monitoring activities, development of environmental reports, advocacy efforts in Kern County due to us discontinuing land application of biosolids in Kern County, discontinuing biosolids related research with the Association of Compost Producers and the Water Environment Research Foundation and further streamlining of our Ocean Monitoring Program resulting in a reduction in contract services. Performance Objectives / Measures Achieve 90+ percent of strategic goals and objectives: Implement management control system for the scope of environmental requirements Determine the environmental footprint for both treatment plants. Monitor both opposition to land application in Kern County and Arizona, and the availability of sustainable cost-effective alternatives in order to provide management and the Board with a recommendation on whether to pursue proposal for selecting a technology to manage the remaining one-third of our biosolids capacity. Complete three phase testing and analysis of compounds of emerging concern (CEC), prepare report on findings and recommendations, develop initial source control strategy if there are CECs identified that require control. Ensure Technical Services Department s expenditures are managed within 90 to 100 percent of the proposed budget. Meet 100 percent of regulatory deadlines for required compliance reports and permit applications. Support GWR System routine monitoring requirements as defined by project goals. Collect and test all sediment and water quality ocean samples according to schedule. File the annual Ocean Monitoring Report with regulators by March 1, Meet Environmental Laboratory s test/fte standards within 10 percent of Fiscal Year Meet benchmark standard within 10 percent variance. Meet turn-around time standard within 10 percent variance. Meet Environmental Laboratory compliance test standards 95 percent correct on first and 100 percent on second attempt. Conduct monitoring of industrial facilities within 95 percent of the benchmark. Conduct 100 percent enforcement action and follow-up monitoring within 30 days of each non-compliance event. Authorized FTE Positions Managers 4.00 Supervisors / Professionals Administrative / Clerical Technical Interns 1.50 Total Staffing Trends Enhanced Source Control Program will provide educational outreach on emerging compounds of concern. 31

44 Engineering Department General Counsel Office Board of Directors General Manager Office of the General Manager Administrative Services Technical Services Engineering Operations & Maintenance Engineering Administration Planning Project Management Office Engineering & Construction Facilities Engineering Project Management Service Description The Engineering Department is responsible for the planning, design and construction of the District s capital improvement program and District annexations, easements and connection permitting. The Engineering Department is comprised of five divisions: Engineering Administration provides management to all Engineering Divisions. Planning provides engineering data management, Capital Improvements Program (CIP) master planning, water resources management, and California Environmental Quality Act review. In addition, this division manages new annexations, connection permitting, easements, and agency agreements. Project Management Office This division is responsible for the delivery of large capital projects from the preliminary design stage through the closeout of construction. Engineering and Construction provides multi-disciplinary engineering, administrative and inspection services for large CIP projects. This division also provides professional engineering support to the Operations and Maintenance Department. Facilities Engineering is responsible for delivery of smaller fast-track design and construction projects to upgrade or repair our existing facilities, including preparation of in-house project designs. 32 Operating Expense Originally Updated Category Actual Budget Proposed Proposed Personnel $ 13,710,055 $ 15,864,300 $ 16,834,900 $ 16,977,940 Chemicals & Other Supplies 237, , , ,540 Professional / Contractual Services 51, , , ,200 Research & Monitoring Repairs & Maintenance 22,108 4,100 4,160 0 Utilities 15,748 17,000 17,340 0 Other 1,785, ,270 2,077,000 1,668,000 Cost Allocation (13,004,600) (14,731,350) (15,552,950) (15,596,850) Total $ 2,817,612 $ 2,302,250 $ 4,120,550 $ 3,769,830

45 Engineering Department Budget Update Budget Overview In Fiscal Year , the Engineering Department formed a new division, Facilities Engineering, which increased the overall staffing level. In the Fiscal Year budget, six O&M employees were budgeted to move to Engineering while two full-time equivalent positions were cut from the Department. For Fiscal Year the department will show a net decrease of one full-time equivalent position. The cost allocation total represents direct labor and benefit charge outs and materials, supplies and services cost allocation to those capital projects where the related work was performed. Since the work of the Engineering Department is largely concerned with capital projects most of the costs for this department are allocated to the Capital Improvement Program. Performance Objectives / Measures Expend minimum 90 percent of project annual Capital Improvement Program cash flows for Fiscal Year Ensure that reporting division s expenditures are managed to less than 100 percent of proposed budgets. Ensure that reporting divisions achieve 90 percent of individual performance objectives. Staffing Trends Staffing Trends Authorized FTE Positions Managers 5.00 Supervisors / Professionals Administrative / Clerical Interns 0.50 Operations & Maintenance 0.00 Total CIP Expenditures Support $14M 5% Additional Capacity $31M 12% Replacement/ Rehabilitation $82M 32% Improved Treatment $132M 51% In , the Engineering Department will be responsible for $259 million in capital expenditures. 33

46 Operations and Maintenance Department General Counsel Office Board of Directors General Manager General Management Administration Administrative Services Technical Services Engineering Operations & Maintenance Operations & Maintenance Administration Collection Facilities Operations & Maintenance Facilities Maintenance & Fleet Services Process Engineering Plant No. 1 Operations Plant No. 2 Operations Mechanical & Reliability Maintenance Instrumentation & Electrical Maintenance Service Description The Operations and Maintenance Department is responsible for collecting, conveying and treating wastewater, reusing or disposing of the treated wastewater and all residuals, and providing care to all facilities. The O&M Department consists of eight divisions: Operations and Maintenance Administration provides leadership, strategic direction, and oversight to all Operations and Maintenance divisions. Collection Facilities Operations and Maintenance operates, maintains and manages regional gravity and pumping facilities that transport wastewater to the two regional plants for treatment and reclamation. The division hosts regional collaboration and networks with the member cities and agencies on collection facilities management issues. Facilities Services manages the non-process infrastructure systems of the two 100-acre treatment facilities, and also maintains fleet equipment, the motor pool, managing the Computerized Maintenance Management System and helping to initiate, coordinate and manage various supply and contracted services for all O&M divisions. Process Engineering provides engineering and technical support to all staff relating to air, water and solids issues in the collection and treatment facilities. 34 Operating Expense Originally Updated Category Actual Budget Proposed Proposed Personnel $ 35,256,355 $ 36,712,200 $ 38,974,500 $ 40,545,040 Chemicals & Other Supplies 16,418,093 21,609,000 22,938,020 24,921,730 Professional / Contractual Services 18,068,259 28,099,800 28,197,300 27,660,280 Research & Monitoring Repairs & Maintenance 10,301,483 9,749,610 8,432,070 8,713,650 Utilities 7,461,353 8,931,370 9,402,920 8,947,100 Other 477, , , ,100 Cost Allocation (3,233,719) (4,490,450) (4,682,750) (4,915,450) Total $ 84,749,217 $ 100,794,030 $ 103,449,020 $ 106,032,450

47 Operations & Maintenance Department Budget Update Service Description (continued) Plant 1 and Plant 2 Operations are responsible for the daily management of the wastewater treatment processes and biosolids loading activities to ensure compliance with all regulatory permits, management of odor reduction operations, support of the CIP, and coordination of construction work. This includes supply of spec water to OCWD s GWR System and processing of its waste streams. Mechanical and Reliability Maintenance is responsible for maintaining and repairing all mechanical equipment in the treatment plants, rebuild, welding and fabricating services, equipment reliability program, hosting the asset management program, and leading the Asset Management Steering Committee. Instrumentation and Electrical Maintenance is responsible for maintaining all instrumentation, process integration and controls, electrical, HVAC equipment and systems in the treatment plants, pump stations, support and office buildings; providing reliable power by operating the two generating facilities and back-up generator power sources, and repairing all systems. Budget Overview The Fiscal Year budget for the Department reflects a cost increase of $2.6 million. Significant factors affecting this change include: Authorized FTE Positions Manager 7.00 Supervisors / Professionals Administrative / Clerical 6.75 Interns 0.50 Operations & Maintenance Total Staffing Trends Fiscal Year budget is linked to meeting all regulatory, Consent Decree, and Level of Service needs for the facilities and systems managed by the O&M staff. They include providing treated water to OCWD for GWR System needs, continued ramp-up to full secondary treatment by December 31, 2012, and minimizing offsite odor impacts from Plants No. 1 and 2 in conformance with new Dilution to Threshold (D/T) criteria. No budget is provided to meet the state s mandated greenhouse gas reduction program as specific criteria are unknown. Staffing increases are needed for proper care and management of the expanding facilities. A staffing plan developed in Fiscal Year will be updated in the winter of 2009 to guide future increases needed to help close staffing gaps. We will continue to utilize outsourced services and managed overtime to minimize the needs for increased FTEs. Costs of numerous chemicals needed for the collections, treatment, and outfall disinfection processes are expected to continue to increase based on market trends indexed to fuel and energy. This also affects our transported biosolids as produced tonnage increases with increasing levels of secondary treatment. Cost increases in electricity from the regional utility for the collection system pump stations and treatment plants are expected. Natural gas usage for the central generation facilities has decreased due to agreements reached with the SCAQMD allowing increased use of digester gas, our renewable fuel source. Electrical loads at both plants will continue to rise as the facilities expand. Chemical costs continue to rise as OCSD meets the challenges of treatment, disinfection, and odor control. 35

48 Operations and Maintenance Department (continued) Materials and services for repairs and maintenance agency-wide will trend upwards to cover facilities growth, planned maintenance, as well as increased maintenance needs in our older facilities where systems are at or beyond their life cycle. No contingencies are included for major emergency repairs or unbudgeted expenses. Performance Objectives / Measures Achieve 100 percent compliance with water, solids, air, and energy permits. Achieve a compliance level of 80 percent to 100 percent of the Levels of Service (LOS) targets consistent with resource availability. Manage O&M expenditures to within 96 to 100 percent of approved budget. In December 2009, complete the update to the staffing plan to guide recruitment and staff development needs as the facilities and their complexity continue to grow. 36

49 Appendix A - 1

50 Cash Flow Projection Orange County Sanitation District Consolidated Cash Flow Projections Preliminary Preliminary Preliminary Preliminary Preliminary Preliminary Description Revenues: General User Fees 210,540, ,603, ,799, ,848, ,083, ,731,000 Permitted User Fees 9,170,000 10,124,000 11,078,000 12,198,000 13,052,000 13,966,000 Property Taxes (Flat in short term) 65,210,000 65,210,000 65,210,000 65,210,000 68,471,000 71,895,000 New COP Issues 70,000, ,000,000 60,000, ,000, Interest Revenues (3-4%) 15,205,000 15,628,000 17,641,000 20,192,000 22,221,000 21,818,000 Capital Facilities Capacity Charges 10,566,000 11,128,000 11,719,000 12,342,000 12,998,000 13,689,000 Other Revenues 39,921,220 41,524,765 37,077,935 45,136,073 61,893,980 44,306,824 Revenues 420,612, ,217, ,524, ,926, ,718, ,405,824 Requirements: Oper & Mtce Exp (7.0% yr) 156,116, ,680, ,866, ,062, ,434, ,760,000 Capital Improvement Program 259,068, ,420, ,877, ,170,000 94,235,000 84,205,000 Repl, Rehab & Refurb - 1,000,000 3,000,000 70,596,000 63,612,000 83,895,000 COP Service (5.0%, 30 yrs) 77,076,280 92,312,590 97,601, ,216, ,518, ,345,420 Other Requirements 2,824,200 2,824,200 2,824,200 2,824,200 2,824,200 2,824,200 Requirements 495,085, ,236, ,168, ,868, ,623, ,029,620 Revenues-Requirements (74,473,180) 22,980,975 25,356,145 46,057,503 (9,904,340) (10,623,796) Accumulated Funds: Beginning of Year 551,660, ,187, ,168, ,524, ,582, ,677,853 End of Year 477,187, ,168, ,524, ,582, ,677, ,054,057 Consolidated Reserve Policy 475,522, ,942, ,815, ,005, ,925, ,981,720 Over (Under) Reserve Policy 1,664,980 5,225,955 10,709,320 19,577,073 19,752,433 5,072,337 Sewer Service User Fees: Avg SFR Annual User Fee $ $ $ $ $ $ Percentage Change 9.95% 10.41% 9.43% 10.11% 7.00% 7.00% Equivalent Dwelling Units 922, , , , , ,187 SFR Connection Fee $4,980 $5,229 $5,490 $5,765 $6,053 $6,356 Outstanding COPs $1,291,903,000 $1,372,237,000 $1,399,952,000 $1,535,289,000 $1,482,551,000 $1,441,449,000 Reserve Policy 50% Next Year Operating 78,058,000 83,340,000 89,433,000 96,531, ,217, ,380,000 10% Next Year Operating 15,612,000 16,668,000 17,887,000 19,306,000 20,443,000 21,676, % Next Year AUG COP Svc. 92,312,590 97,601, ,216, ,518, ,345, ,285,720 50% average CIP bal to ,043,000 85,676,000 86,702,000 81,367,000 81,716,000 81,327,000 Short term CIP, GWRS % Outstanding COPs 129,190, ,224, ,995, ,529, ,255, ,145,000 $57mm INPUT 57,000,000 57,000,000 57,000,000 57,000,000 57,000,000 57,000,000 Repl & 2%/yr 56,307,000 57,433,000 58,582,000 59,754,000 60,949,000 62,168,000 Total 515,522, ,942, ,815, ,005, ,925, ,981,720 COP Ratios Sr Lien Coverge, Min A 2

51 Budget Update Orange County Sanitation District Consolidated Cash Flow Projections Preliminary Preliminary Preliminary Preliminary 10 Year Description Total Revenues: General User Fees 345,958, ,878, ,967, ,391,000 $ 3,119,798,600 Permitted User Fees 14,944,000 15,990,000 16,949,000 17,868, ,339,000 Property Taxes (5% yr) 75,490,000 79,265,000 83,228,000 87,389, ,578,000 New COP Issues ,000,000 Interest Revenues (4%) 21,629,000 21,900,000 21,989,000 21,728, ,951,000 Capital Facilities Capacity Charges 14,416,000 15,183,000 15,989,000 15,461, ,491,000 Other Revenues 45,993,400 59,035,883 52,255,841 53,457, ,603,494 Revenues 518,430, ,251, ,378, ,294,573 5,205,761,094 Requirements: Oper & Mtce Exp (7.0% yr) 231,520, ,442, ,974, ,266,000 2,148,120,920 Capital Improvement Program 70,454,000 65,559,000 79,047,000 56,034,000 1,247,069,000 Repl, Rehab & Refurb 101,382, ,770, ,214, ,433, ,902,000 COP Service (5.0%, 30 yrs) 111,285, ,771, ,675, ,684,514 1,058,488,164 Other Requirements 2,824,200 2,824,200 2,824,200 2,824,200 28,242,000 Requirements 517,465, ,367, ,734, ,241,714 5,205,822,084 Revenues-Requirements 964,480 12,884,703 (8,356,339) (4,947,141) (60,990) Accumulated Funds: Beginning of Year 551,054, ,018, ,903, ,546, ,660,750 End of Year 552,018, ,903, ,546, ,599, ,599,760 Consolidated Reserve Policy 555,371, ,090, ,733, ,816,514 $ 552,733,514 Over (Under) Reserve Policy (3,353,443) 9,812,660 3,813,387 7,783,246 Sewer Service User Fees: Avg SFR Annual User Fee $ $ $ $ Percentage Change 7.00% 7.00% 6.00% 5.00% Equivalent Dwelling Units 938, , , ,472 SFR Connection Fee $6,674 $7,007 $7,358 $7,726 Outstanding COPs $1,398,678,000 $1,349,512,000 $1,302,415,000 $1,253,223,000 Reserve Policy 50% Next Year Operating 115,760, ,221, ,987, ,133,000 10% Next Year Operating 23,152,000 24,844,000 26,597,000 28,627, % Next Year AUG COP Svc. 115,771, ,675, ,684, ,684,514 verage CIP bal to ,409,000 77,720,000 68,250,000 50,758,000 Short term CIP, GWRS % Outstanding COPs 139,868, ,951, ,242, ,322,000 $57mm INPUT 57,000,000 57,000,000 57,000,000 57,000,000 Repl & 2%/yr 63,411,000 64,679,000 65,973,000 67,292,000 Total 595,371, ,090, ,733, ,816,514 COP Ratios Sr Lien Coverge, Min A - 3

52 Budget Update Original FY Budget 228,906,000 % Change Projects Completed or Canceled (4,764,000) (2.08%) New Projects 1,130, % Additions to Existing Projects 90,687, % Deductions from Existing Projects (57,220,000) (25.00%) Changes to Capital Equipment 329, % Revised FY Budget 259,068, % Original Total Budget 2,484,247,000 % Change Projects Completed or Canceled (120,539,000) (4.85%) New Projects 13,802, % Additions to Existing Projects 168,023, % Deductions from Existing Projects (24,966,000) (1.00%) Changes to Capital Equipment % Revised Total Budget 2,520,567, % A - 4

53 Capital Improvement Project Summary Project Summary FY Replacement/ Improved Additional Total Item Rehabilitation Treatment Capacity Support Budget Collections Facilities 35,938, ,300 3,897,600 5,626,300 45,578,000 Headworks 10,829,000 2,737,000 1,122,000-14,688,000 Primary Treatment 7,310, , ,460,000 Secondary Treatment 765, ,161,870 21,898, ,826,000 Solids Handling & Digestion 13,333,750 7,200,350 3,045,900-23,580,000 Ocean Outfall Systems 951, ,000 Utility Systems 4,602,250 10,515, , ,000 15,889,000 Odor Control Related Projects 184, , ,000 Plant Automation & Computerization 1,555, ,000 1,159,000 2,883,000 Process Related Special Projects - 30,000-2,911,000 2,941,000 Miscellaneous & Support Projects 5,996,000 1,002,500-2,578,500 9,577,000 Water Management Projects - 537, ,000 Strategic & Master Planning 38, ,500 38,500 38, ,000 Research & Development 250, , , ,000 1,233,000 Equipment 405, , , ,750 1,623,000 Total 82,160, ,280,720 31,102,880 13,524, ,068,000 A 5

54 Budget Update $45,578,000 Collections Facilities 17.6% $7,460,000 Primary Treatment $378, % Strategic & Master Planning 0.1% $14,688,000 Headworks 5.7% $1,623,000 Equipment 0.6% $23,580,000 Solids Handling & Digestion 9.1% $924,000 Odor Control Projects 0.4% $1,233,000 Research & Development 0.5% $2,883,000 Plant Automation & Computerization 1.1% $537,000 Water Management Projects 0.2% $9,577,000 Miscellaneous & Support Projects 3.7% $951,000 Ocean Outfall Systems 0.4% $15,889,000 Utility Systems 6.1% $2,941,000 Process Related Projects 1.1% $130,826,000 Secondary Treatment 50.5% Total FY Capital Improvement Expenditure by Process - $259,068,000 $132,280,720 Improved Treatment 51.1% $31,102,880 Additional Capacity 12.0% $13,524,050 Support 5.2% $82,160,350 Replacement / Rehabilitation 31.7% Total FY Capital Improvement Expenditure by Type - $259,068,000 A - 6

55 Summary of Capital Requirements Summary of Capital Requirements Collection System Improvement Projects Original Revised Original Revised Total Total Project Project Project Cashflow Cashflow Item Number Budget Budget Budget Budget Number Collections Raitt and Bristol Street Sewer Extension ,748,000 4,450, ,000 1 Santa Ana Trunk Sewer Rehab ,129,000 21,156,000 1,056, ,000 2 Carbon Cnyn Sewer and Pump Stn. Abandonment ,952,000 9,603,000 4,518,000 70,000 3 Santa Ana River Interceptor Realignment and Prot ,382,000 10,828, , ,000 4 Santa Ana River Interceptor 2006 Protection Repair ,000 Complete Santa Ana River Interceptor Protection Repair , ,000 5 Taft Branch Improvements ,121,000 1,132,000 6 Euclid Relief Improvements - Reach "A" ,050,000 1,069,000 Canceled Newhope-Placentia & Cypress Trunk Replacements ,623,000 2,392,000 1,016,000 1,268,000 7 Rehabilitate District Siphons By Adding Air Jumper ,556,000 8,004, ,000 38,000 8 Fullerton-Brea Interceptor Sewer Relief , ,000 9 Newhope-Placentia Trunk Replacement ,230, Rehabilitation of the Westside Pump Station ,646,000 10,509,000 2,789,000 4,600, Westside Relief Interceptor/ Los Alamitos MH Rehab ,038,000 13,177, Rehabilitation of Magnolia Trunk Sewer ,769,000 27,886,000 6,216,000 5,358, Miller-Holder Trunk Sewer Relief ,169,000 13,253, Beach Trunk/Knott Interceptor Sewer Relief ,605,000 26,987, Miller-Holder and Knott Trunks Odor Control Project ,795, Balboa Trunk Sewer Rehabilitation ,514,000 8,514, , , Replacement of the Bitter Point Pump Station ,547,000 31,904,000 13,100,000 5,961, Replacement of the Rocky Point Pump Station ,952,000 30,952,000 18,024, , Bitter Point Force Main Rehabilitation ,947,000 26,007,000 8,025, Newport Force Main Condition Assessment ,112,000 7,024,000 12, , Bayside Drive Improvement ,750,000 3,750,000 2,328,000 2,077, Dover Drive Trunk Sewer Relief ,351,000 6,787,000 1,575,000 1,030, Sewer Access Improv. Big Canyon Nature Park Area , , , , District 6 Trunk Sewer Relief ,050,000 2,201, Fairview Road Trunk Sewer Relief ,029,000 Canceled Southwest Costa Mesa Trunk ,600,000 12,711, Gisler-Redhill System Improvements, Reach B ,437,000 9,170,000 7,100, , Rehabilitation of College Ave. Pump Station ,969,000 10,892, ,000 2,036, Browning Subtrunk Sewer Relief ,920,000 4,510, County Island Annexation and CEQA Documentation , ,000 63, Von Karman Trunk Sewer Relief , , Continued A 7

56 Budget Update Summary of Capital Requirements Collection System Improvement Projects Collections (Continued.) Original Revised Original Revised Total Total Project Project Project Cashflow Cashflow Item Number Budget Budget Budget Budget Number Edinger/Bolsa Chica Trunk Improvements ,411,000 4,473, Coast Trunk Sewer Rehabilitation ,830,000 8,941, ,000 2,900, Wintersburg Channel Siphon Protection Project ,000 75, North County Collections Yard ,773,000 12,270, ,000 4,636, Manhole Rehabilitation and Assessment Program ,540, ,000 Canceled Facilities Engineering Projects - Collections FE-Collect 7,920,000 8,520,000 1,232, , Replacement of the Ellis Ave. Pump Stn I-10 77,257,000 78,923,000 2,728, , Bushard Trunk Sewer Rehabilitation I ,757,000 68,075, , Los Alamitos Blvd. Sewers Condition Assessment SP , , , Total Collections Projects 519,424, ,145,000 67,494,000 45,578,000 A - 8

57 Summary of Capital Requirements Summary of Capital Requirements Treatment System Improvement Projects Headworks Original Revised Original Revised Total Total Project Project Project Cashflow Cashflow Item Number Budget Budget Budget Budget Number Headworks Rehab. and Expansion at Plant No. 1 P ,202,000 21,033, Headworks Rehabilitation/Refurbishment P ,024,000 8,944,000 6,292,000 3,740, Headworks Improvements at Plant No. 2 P ,498, ,497,000 13,200,000 10,948, Headworks Total 285,724, ,474,000 19,492,000 14,688,000 Primary Treatment Primary Clarifiers 6-31 Evaluation and Optimization Study P , , Primary Effluent Pipeline Joint Repairs P ,590, Primary Treatment Rehab/Refurb P ,230,000 38,923,000 5,685,000 7,310, Primary Effluent Pump Stations Reliability Study SP ,000 Complete Primary Treatment Total 37,330,000 42,663,000 5,685,000 7,460,000 Secondary Treatment New Secondary Treatment System at Plant No. 1 P ,863, ,300,000 21,474,000 65,686, Activated Sludge Plant No.1 Upgrades P ,226, Activated Sludge Plant Rehabilitation P ,133,000 46,761, , Rehabilitation of Activated Sludge Plant at Plant 2 P ,401,000 Complete Trickling Filters at Plant No. 2 P ,192, ,238,000 56,872,000 63,930, Oxygen Plant Rehabilitation at Plant No. 2 SP-129 2,500,000 2,500,000 1,973, , Oxygen Plant Rehabilitation SP ,000 Complete Secondary Treatment Total 552,239, ,025,000 80,319, ,826,000 Solids Handling & Digestion Sludge Digester Rehabilitation at Plant 1 P ,397,000 60,397,000 8,668,000 9,781, Sludge Dewatering and Odor control at Plant 1 P ,547, ,549,000 2,077,000 4,686, Truck Wash and Dewatering Beds at Plant No. 1 P ,146,000 2,927,000 22, Digester Ferric Chloride System Rehabilitation P ,627, , Solids Thickening and Processing Upgrades P ,020,000 74,145,000 1,983,000 3,883, Plant No. 2 Primary Sludge Feed System Project P ,766,000 27,082,000 3,798,000 4,825, Digester Rehabilitation at Plant No. 2 P ,398,000 36,398, Sludge Dewatering and Odor Control at Plant 2 P ,696,000 57,852, , , Replacement of Drying Beds and Truck Wash at Plant P2-97 4,443,000 4,443, Solids Handling & Digestion Total 398,413, ,420,000 16,782,000 23,580,000 A 9

58 Budget Update Summary of Capital Requirements Treatment System Improvement Projects Original Revised Original Revised Total Total Project Project Project Cashflow Cashflow Item Number Budget Budget Budget Budget Number Ocean Outfall Systems Final Effluent Sampler and Building Area Upgrades J-110 1,890,000 1,890, , Effluent Pumping Station Annex J-77 60,487,000 Complete Outfall Land Section and OOBS Piping Rehabilitation J-112 7,788, , Outfall Piping Rehabilitation Program Study J ,000 80, Ocean Outfall Booster Station Rehabilitation (Electrical) J ,000, , inch Interplant Effluent Pipeline Rehabilitation J ,893, Ocean Outfall Booster Station Rehabilitation (Mechanical) J-117 4,559, Outfall Beach Box Rehabilitation Evaluation J , , Ocean Outfall Systems Total 62,377,000 83,880, , ,000 Utility Systems Interplant Gas Line Rehabilitation J-106 3,752,000 3,752, , , Cengen Cooling Water System Replacement J-109 9,094,000 9,419, ,000 1,216, Cengen Emissions Control Project J ,000,000 31,003, , Cable Tray Improvements at Plants 1 & 2 J-47 31,744,000 31,744,000 2,000 17, Air Quality Improvements J-79 9,168,000 11,668,000 1,788,000 2,753, Central Generation Automation J ,332,000 20,618,000 9,976,000 10,253, Fire Suppression for Servers and Equip at P1 & P2 J ,000 1,069,000 25, Electrical Power Distribution System Improvements J-98 8,992,000 10,026, , Power Building 3A Backup Power Reliability Project P , ,000 82,000 73, Plant Water System Rehabilitation at Plant No.1 P ,538,000 3,717, , , Plant 1 66kV Substation P ,780,000 15,096, , , Plant Water System Rehabilitation at Plant No.2 P ,108,000 4,108, , , Additional High Pressure Flare P ,500,000 1,500,000 27, Solids Area Cable Tray Improvements at Plant No. 2 P ,156,000 2,959,000 Canceled Fuel Cell Feasibility Study SP , , , Fuel Cell Hydrogen Gas Generation Research SP , , , , Utility Systems Total 146,231, ,822,000 18,229,000 15,889,000 Odor Control Related Projects Rehabilitation of Odor Control Facilities J ,707,000 39,730, , , Trickling Filter Odor Control at Plant No. 1 P ,582,000 5,182, Primary Scrubber Rehabilitation at Plant No.1 P ,200,000 4,730, Solids Storage Building Odor Control Project P ,183,000 10,297, Primary Treatment Odor Control Upgrades P ,460,000 30,919, Odor Control Related Projects Total 86,132,000 90,858, , ,000 A - 10

59 Summary of Capital Requirements Summary of Capital Requirements Treatment System Improvement Projects Process Related Special Projects Original Revised Original Revised Total Total Project Project Project Cashflow Cashflow Item Number Budget Budget Budget Budget Number Plant O&M Manual & SOP Project - Phase I SP-53 3,750, , Corrosion Management SP ,667,000 4,667,000 1,487,000 2,011, Special Projects: Biotrickling Filter (BTF) SP ,027, ,000 30,000 30, Process Related Special Projects Total 5,694,000 9,415,000 1,517,000 2,941,000 Plant Automation & Computerization Power Monitoring and Control Systems J ,899,000 12,013,000 5,084, , Strategic Information Architecture (SIA) SP-03 1,995,000 1,995, , , Internet/Intranet Development SP , ,000 28,000 61, CMMS System Replacement SP-100 3,789,000 3,789, , , PDS2D Software Replacement SP , , Environmental Compliance Awareness Program SP , , ,000 74, Geographic Information System SP-15 4,157,000 4,047, , , Network Equipment Upgrade SP-89 2,806,000 2,846, , , Plant Automation & Computerization Total 25,528,000 25,974,000 6,819,000 2,883,000 Miscellaneous & Support Projects Facilities Engineering Projects - Joint FE-J 22,110,000 23,910,000 1,244, , Facilities Engineering Projects - Plant 1 FE-P1 19,110,000 20,910,000 1,110,000 2,667, Facilities Engineering Projects - Plant 2 FE-P2 19,110,000 20,910, ,000 2,488, Temporary Upgrades To Plant Security Barriers J-108 1,450,000 1,973,000 1,105, , Emergency Operation Center J , Contracts and Purchasing Building Extension J-118 3,589, Laboratory Refurbishment at Plant No. 1 J , , Regional FOG Control Collection at Plant No. 1 P ,150, ,000 Canceled Title 24 Access Compliance Improvements at Plant No. 1 P ,965, , Plant No. 2 Landscaping Project P , , , , Office Space Planning Study SP , , , Integrated Security Access Control System SP , , NPDES Permit Renewal SP , , ,000 50, Software and Computer Equipment Replacement Project SP-135 2,700,000 50, Land Records Information System SP , , Small Cap. Equip. Replacement Project SP-34 10,550,000 10,120,000 1,600,000 1,500, Asset Management Program SP ,100,000 4,800, , , Warehouse Reinvention Project SP , ,000 50,000 50, Plant 2 Maintenance Building Modifications SP ,000 Complete Miscellaneous & Support Projects Total 84,050, ,821,000 7,553,000 9,577,000 A 11

60 Summary of Capital Requirements Treatment System Improvement Projects Budget Update Water Management Projects Original Revised Original Revised Total Total Project Project Project Cashflow Cashflow Item Number Budget Budget Budget Budget Number Groundwater Replenishment System J ,400, ,400, , Water Management Projects Total 248,400, ,400, ,000 Strategic & Master Planning Treatment Plant Strategic Plan Update J-102 4,500,000 4,520, , , Orange County Biosolids Production Siting Study SP , , , , Strategic & Master Planning Total 4,900,000 4,920, , ,000 Research & Development USBR Brine Management Grant Project SP , , ,000 48, Research Strategic Plan SP , ,000 20, Superoxygenation of Primary Influent SP , , ,000 70, Digester Optimization SP ,000 90,000 45, Digester Pilot Plant Safety and Control System Upg SP , ,000 70, Operational Research Projects (annual allocation) SP ,040,000 10,000,000 1,000,000 1,000, Research & Development Total 11,805,000 11,750,000 1,410,000 1,233,000 Total Treatment and Disposal Projects 1,948,823,000 2,008,422, ,118, ,867,000 Capital Equipment Purchases 16,000,000 16,000,000 1,294,000 1,623,000 Total Collection, Treatment and Disposal Projects 2,484,247,000 2,520,567, ,906, ,068,000 A - 12

61 FY Budget Update Project Name & Number Project Category Santa Ana River Interceptor Protection Repairs Collections Facilities Project Budget: $200,000 Description This project provides for emergency repairs for Fiscal Year to the existing Santa Ana River Interceptor (SARI), currently located within the floodplain of the Santa Ana River between Weir Canyon Road and the County Line. This project is intended to conduct emergency repairs to the pipeline and manholes in the event of a failure or if the pipeline becomes exposed due to major storm water releases from Prado Dam. Justification The existing pipeline has been subjected to continued scour of overlying soil and sediments and could be washed away during high storm releases from Prado Dam. If this pipeline reach from Weir Canyon Road to the Orange/San Bernardino County line is not protected while efforts are being made to relocate SARI, then this line could fail during a major flood event causing a wastewater spill of environmentally disastrous proportions. This project will not impact the operational budgets. Project Name & Number Project Category Wintersburg Channel Siphon Protection Project Collections Facilities Project Budget: $75,000 Description This project will provide for project support to protect two existing sewer siphons located under Warner Avenue that conflict with an Orange County Channel Improvement Project. The budget will allow staff to review project design documents and provide inspection services during the County of Orange's protection efforts. Justification This project provides funding to allow staff to ensure that the existing facilities are not damaged during the County of Orange's project to widen the Wintersburg Channel. This project will not impact the operational budgets. A - 13

62 CIP New Project Descriptions Project Name & Number Project Category Primary Clarifiers 6-31 Evaluation and Optimization Study - P1-116 Primary Treatment Project Budget: $150,000 Description This project will evaluate potential options to improve process performance of the Primary Clarifier Basins 6 through 31 at Reclamation Plant No. 1. This will include further developing past process performance testing recommendations and conducting those process performance tests. The results of the tests will be used to develop potential modifications and upgrades to the Primary Clarifiers to increase performance. The costs and benefits associated these improvements will be documented for future considerations in the Capital Improvement Program. Justification O&M Process Engineering staff has been working with Brown & Caldwell to develop tests designed to improve the process performance of the Primary Clarifiers. As part of these tests, the performance of the primary clarifiers will be monitored to document potential improvements in process performance parameters, particularly the primary sludge density and the primary sludge pumping rates. Improvements in the primary clarification process are anticipated to result in both capital and operational savings for the District. Project Name & Number Project Category Digester Ferric Chloride System Rehabilitation - P2-105 Solids Handling & Digestion Project Budget: $2,627,000 Description This project will rehabilitate or replace the deteriorating ferric chloride station and associated pipe lines that serve the digester system at Plant No. 2. This includes relocating potential piping tripping hazards and installing additional protections to contain chemical leaks. The project will also include upgrades to the instrumentation and controls systems that are currently operated manually. Justification The existing facility is approximately 20 years old. The chemicals used are corrosive and equipment is at the end of its useful life. Also, recent optimization efforts of the chemical dosing systems at Plant No. 2 have shown that it is more economical to directly control hydrogen sulfides in the digesters compared to increased dosing of primary influent that carries over into the digesters. This is because the system can optimize the ferric usage based on a continual monitoring of hydrogen sulfides in the digester gas. The construction budget is $1,400,000. The project is not expected to significantly change operational costs. It will allow operational staff to tend to other needs within the treatment plant. A - 14

63 FY Budget Update Project Name & Number Project Category Outfall Piping Rehabilitation Program Study - J-113 Ocean Outfall Systems Project Budget: $370,000 Description The purpose of this project is to plan outfall inspection and rehabilitation work not covered by existing outfall CIP projects. This includes review and evaluation of all previous planning and inspection activities related to Outfall No.'s 1 and 2, as well as the risers on Outfall No. 2. Based on the results of this evaluation, additional field data may be collected as part of the planning process. Justification Outfall No. 1 has been in continual service since it was constructed in Previous limited investigations have shown that the existing outfalls may be experiencing corrosion. In order to ensure that the District has a reliable effluent discharge system, it is important to conduct periodic detailed investigations of these facilities. A critical part of this work is to create a flexible operating scenario for the outfall diversion box. To this end, the planning efforts for the outfall investigations must be coordinated with the study and future outfall design modifications conducted under J-119. Project Name & Number Project Category Ocean Outfall Booster Station Rehabilitation (Electrical) - J-114 Ocean Outfall Systems Project Budget: $10,000,000 Description This project will rehabilitate the deteriorating electrical systems at the Ocean Outfall Booster Station. The Ocean Outfall Booster Station is the primary pumping station for the discharge of treated wastewater to the ocean outfall system. This includes replacement of the variable frequency drives and other major pieces of equipment that are at the end of their useful lives and are becoming obsolete and difficult to service. Justification The existing facility is approximately 20 years old. The O&M Department retained consulting services to perform an extensive evaluation of the existing equipment at the Ocean Outfall Booster Station. The conclusions were that the electrical equipment and systems were at the end of their useful lives. This was evidenced by the records of equipment failures and repairs needed to ensure that the station operates reliably. The report documents that the cost for repairs of the station has increased over time, and at this time, it requires a large rehabilitation project to reduce overall maintenance cost back down to an acceptable level. The construction budget is $5,333,000. The project is expected to maintain maintenance costs at the currently accepted level for the Ocean Outfall Booster Station. A - 15

64 CIP New Project Descriptions Project Name & Number Project Category Outfall Beach Box Rehabilitation Evaluation - J-119 Ocean Outfall Systems Project Budget: $380,000 Description This project consists of a study to examine the current and future purposes of the outfall box located within Huntington Beach State Park and evaluate alternatives for either rehabilitating the box or constructing a new box within the Treatment Plant No. 2 property. Justification The box was originally built in the 1960's to provide the flexibility of diverting flow from the one-mile to the five-mile outfall (or vice versa) in order to facilitate maintenance of the outfalls. However, full flexibility was not constructed at that time (i.e., the connection between the boxes was not made). Because corrosion was observed in the top part of the box during a recent inspection, it is necessary to conduct a more detailed inspection of the inside of the box as well as the outfalls to determine the condition of these facilities. The first step in achieving this goal is to determine the future use of the box and evaluate alternatives that allow the District to maintain the outfalls and box under current permit requirements. The project is expected to maintain operational costs at current levels. Project Name & Number Project Category Title 24 Access Compliance Improvements at Plant No. 1 - P1-115 Miscellaneous & Support Projects Project Budget: $8,965,000 Description The project will provide Title 24 (Americans with Disabilities Act) upgrades and retrofits at the existing office facilities and grounds at Reclamation Plant No. 1. The building and office space modifications include the following buildings: Administration, Human Resources, Laboratory, Shop A, Building 5/6, Auto Shop, Purchasing, Control Center, and supporting office trailers. The grounds modifications include changes to the parking areas, pedestrian corridors between office buildings, and access to the office facilities for outside visitors. If the projects to add offices to the second floor of the Laboratory or the Public Information Office of the Administration Building proceed ahead of this project, the ADA work and associated costs need to be included as part of those projects. The estimated ADA cost for the Laboratory is $600,000. The estimated ADA cost for the Administration Building is $800,000. Justification State and federal law requires that OCSD ensure that these facilities can be accessible to individuals with disabilities. The construction estimate is $6,000,000. This project will not impact the operational budget for OCSD. A - 16

65 FY Budget Update Project Name & Number Project Category Software and Computer Equipment Replacement Project - SP-135 Miscellaneous & Support Projects Project Budget: $2,700,000 Description This project will provide for the replacement of various pieces of computer software and equipment that meet the criteria for capital replacement. The criteria for an equipment replacement to be eligible for capitalization are a value in excess of $5,000 and a useful life of five (5) or more years. Justification These funds are needed to replace obsolete software and computer equipment that is beyond its useful life. They will also be used to replace equipment when parts or services needed for repair can no longer be purchased. The project will not impact operational costs. Project Name & Number Project Category Land Records Information System - SP-136 Miscellaneous & Support Projects Project Budget: $410,000 Description The project is to create a land records database system. The work includes researching, digitizing, populating attributes, and entering data into the District's GIS database for approximately 2,450 easements and other land documents. This work also includes scanning the legal documents and other pertinent land documents into the District's Electronic Data Management System to link the two databases. Justification Over the years, property owners knowingly and unknowingly have encroached upon the District's easements. Property owners have built fences, swimming pools, garages, basketball courts, and golf courses, and have planted trees, and placed other obstacles that have impacted District staff's ability to access sewer manholes. To better address this growing concern and the need to respond quickly to encroachments, the District plans to develop a user-friendly Land Records Information System (LRIS). The System would contain all of the District's legal and land record documents to allow staff to more effectively monitor and maintain the many land assets of OCSD. Funding for this project was transferred from SP-68-2 and SP-15. The project is expected to improve staff efficiency and customer response times but will not change overall operational costs. A - 17

66 FY Budget Update Proposed Equipment Budget Department Trucks & Vehicles Other Mobile Eq Machine Eq & Tools Comm Equipment Public Information Office Information Technology ,000 Environmental Laboratory & Ocean Monitoring Operations & Maintenance Process Engineering Instrumentation & Electrical Maintenance ,000 Collection Facilities Operations & Maintenance ,500 - Facilities Maintenance & Fleet Services 672, , Total Proposed Capital Equipment 672, ,100 14, ,000 A - 18

67 Proposed Equipment Budget Summary Proposed Equipment Budget Department Instr / Test Equipment Safety & Traffic Eq Office Fix & Eq Computer Equipment Proposed Budget Public Information Office ,000-14,000 Information Technology - 20, , ,100 Environmental Laboratory & Ocean Monitoring 99, ,500 Operations & Maintenance Process Engineering 209, ,000 Instrumentation & Electrical Maintenance 61, ,700 Collection Facilities Operations & Maintenance ,500 Facilities Maintenance & Fleet Services ,300 Total Proposed Capital Equipment 370,200 20,000 14, ,100 1,623,100 A - 19

68 FY Budget Update Proposed Equipment Budget Detail Division Equipment Type Proposed Equip. Budget Public Information Office New Reception Station 14, Information Technology Archiving Equipment (rebudget from FY ) 5,000 Storage Equipment (rebudget from FY ) 10,000 SCADA Storage (rebudget from FY ) 30,000 Plotters & Scanners (rebudget from FY ) 35,900 Scanner 11 x 17 (rebudget from FY ) 10,000 Scanner - A -size and B-size Paper 28,700 Agenda Automation Equip. 60,000 Control Center Video Display 11,600 Imaging Equipment 15,000 Video Monitoring/Recording Equip. 25,000 Video Monitoring/Recording Equip. 40,000 Remote Capture Equipment 10,000 Scanner hardware 35,900 Vehicle/License Plate Recognition Equip. 20,000 Total 337, Environmental Laboratory & Ocean Monitoring Samplers (4) 29,500 Autoclave 70,000 Total 99, Operations & Maintenance Process Engineering Handheld VOC Meter 9,000 Electronic Odor Sensing Device (OdoWatch) 200,000 Total 209, Instrumentation & Electrical Maintenance Programmable Logic Controller CPUs and Racks Upgraded 35,000 Infrared Camera System 22,000 Battery Tester/Load Bank 20,300 Oscilliscope 6,100 Portable Generator System (Trailer Mounted) 35,300 Total 118, Collection Facilities Operations & Maintenance Hot/Cold High Pressure Washer; Parts Cleaning Tank & Bead Blaster 8,500 Washer and Dryer for North County Yard 6,000 Total 14, Facilities Maintenance & Fleet Services Generator Truck - Replace V# ,000 Twelve-Passenger Van Pool Van - Replace V# ,800 Twelve-Passenger Van Pool Van - Replace V# 0528 (Rebudget from FY ) 39,800 Light Duty Service Truck - New Lead Mechanic, Div ,300 Sedan for Div ,000 Scissor Lift - Replace E# ,300 Manlift - Replace E# ,800 Pickup Truck - Replace V# ,800 Vactor Jet Rodder - Replace V# ,900 Pickup Truck - Replace V# ,600 Total 830,300 Total Proposed CORF Equipment Budget 1,623,100 A - 20

69 Proposed Equipment Budget Detail Listing of Proposed Purchases Over $100,000 Resolution 07-04, Establishing Policies and Procedures For: The Award of Purchase Orders and Contracts; Public Works Project Contracts; Professional Services Contracts; and Delegation of Authority to Implement Said Policies and Procedure, was adopted by the Board on February 28, Article IV, Section 4.03(B) of the Resolution provides that, Purchases of supplies, materials, equipment or services, including Professional Service Consultants as outlined in each Fiscal Year s annual budget, to include capital equipment, shall be bid and awarded directly by the Contracts/Purchasing Manager. The annual authorization amount for a multi-year contract is determined in the year the contract is bid/let. Therefore, the contract authorization amount indicated herein is valid only when the contract is bid/let in FY Following are services or supply items identified in the budget process with a cost greater than $100,000. Staff requests the Board approve the purchase of these items and those listed in the Proposed Equipment Budget Detail listing without further Board action in accordance with the referenced policy. Contract Change Order Description of Services or Supplies Division Authorization Contingency (1) Chemical Contracts Anionic polymers for solids removal 830/840 $ 347,800 0% (2) Cationic polymers for solids removal 830/840 2,450,000 0% (2) Ferric chloride 830/840 4,796,500 0% (2) 25% Caustic soda for odor control 830/ ,600 0% (2) Hydrogen peroxide for odor and corrosion control 830/840/870 1,746,200 0% (2) Bleach for disinfection and odor control 830/840 7,237,200 0% (2) Sodium bisulfite for dechlorination ,000 0% (2) 50% Caustic soda for odor and corrosion control ,860 0% (2) Magnesium hydroxide for odor and corrosion control 870 2,282,870 0% (2) Ferrous chloride for odor and corrosion control 870 2,177,000 0% (2) Calcium nitrate for odor and corrosion control ,000 0% (2) Other Contracts Security services contract ,000 10% Uniform contract ,000 10% IBM Software Maintenance ,000 10% Microsoft Enterprise License Agreement ,000 10% Oracle Software Maintenance ,000 10% Hazardous waste services ,000 10% Outside Laboratory Services ,600 10% Core OMP benthic infauna taxonomy ,200 10% Thomas Bros. map production (rebudget from FY ) ,000 10% Solids removal 830/840 20,580,000 10% Grit and screenings hauling and disposal 830/ ,900 10% Natural gas 830/840/860 1,042,000 10% Oxygen plant services ,000 10% Digester cleaning and disposal 850 1,575,000 10% Hydraulic pack rehabilitation and service ,000 10% GAP water 860 1,078,900 10% Electric arc flash study ,000 10% Local sewer line cleaning ,700 10% CCTV services for sewers ,000 10% Manhole rehabilitation ,000 10% Easement/right-of-way maintenance ,000 10% Dig alert program contract ,960 10% Pipe rehabilitation ,000 10% Manhole frame & cover replacement services ,350 10% Groundskeeping services contract 870/ ,000 10% Custodial services contract ,000 10% Gasoline and lubricants - cardlock fuel contract ,400 10% Process area preventive maintenance/painting program ,000 10% Compressed natural gas ,000 10% Total Contracts with Board Pre-Approval $ 54,512,040 Note 1: The change order contingency is for the lifetime of the contract and is based on the annual authorized amount in the year the contract is bid/let. [For example, a three-year contract which is authorized for an annual contract amount of $300,000 with a 10% change order contingency must be initially bid/let for less than or equal to $300,000; over the life of the contract, the total change orders may not exceed 10% of $300,000, or $30,000.] Note 2: Once a chemical contract is bid/let, there is no increase in unit cost allowed without Board approval. A - 21

70 FY Budget Update SELF-FUNDED INSURANCE PLANS The General Liability and Property program and the Workers Compensation program provide for the District to be partially self-insured for general liability and workers compensation. The in-lieu premiums charged to the operating divisions are the revenue source for these programs. Expenses primarily consist of settlement claims, legal fees and excess loss insurance premiums. Ending Reserve Balances are projected at $57 million. General Liability and Property The District s current excess general liability insurance coverage is $30 million with a self-insured retention of $500,000. The District s current property insurance coverage is $1 billion for perils of fire and $300 million for perils of flood, subject to a self-insured retention of 5 percent per unit of insurance up to $25,000 for fire and $100,000 for flood. The District is completely self-insured for earthquake. In order to maintain the reserve balance of $55 million for the General Liability and Property program, appropriations for in-lieu premiums charged to operating divisions are recommended at $1,082,000 for FY Workers Compensation The District s current excess workers compensation coverage has statutory limits with a self-insured retention of $500,000 per person per occurrence. In order to maintain the reserve balance of $2 million for the Workers Compensation program, appropriations for in-lieu premiums charged to operating divisions are recommended at $535,000 for FY and a temporary transfer of $500,000 will be made from the General Liability and Property program reserve. FY Self-Insurance Program Budget General Liability Workers' Total & Property Compensation Self-Insurance DESCRIPTION OR ACCOUNT TITLE Program Program Program Beginning Reserves $ 56,000,000 $ 1,683,000 $ 57,683,000 Revenues In-Lieu Premiums 1,082, ,000 1,617,100 Claims Reimbursement from Other Funds Transfer In - 500, ,000 Service Department Allocation 24,100-24,100 Total Revenues 1,106,200 1,035,000 2,141,200 Expenses Benefits/Claims 200, , ,000 Contractual Services 1,200 30,000 31,200 Legal Services 300,000 40, ,000 Professional Services 5,000 10,000 15,000 Transfer Out 500, ,000 Policy Premium Expense 1,100, ,000 1,310,000 Total Expenses 2,106, ,000 2,824,200 Excess Revenue (Expenses) (1,000,000) 317,000 (683,000) Ending Reserves $ 55,000,000 $ 2,000,000 $ 57,000,000 A - 22

71 Historical Staffing Summary Authorized Authorized Authorized Authorized Proposed Department and Division Name FTE FTE FTE FTEs FTEs Office of the General Manager General Management Administration Assistant General Manager Administration Board Services Public Information Office Safety & Health Department Subtotal Administrative Services Department Administrative Services Financial Management Contracts, Purchasing & Materials Management Human Resources Information Technology Department Subtotal Technical Services Department Technical Services Administration Environmental Compliance & Regulatory Affairs Environmental Laboratory & Ocean Monitoring Source Control Environmental Compliance Services Department Subtotal Engineering Department Engineering Administration Planning Project Management Office Engineering & Construction Facilities Engineering Department Subtotal Operations & Maintenance Department Operations & Maintenance Administration Operations & Maintenance Process Engineering Plant No. 1 Operations Plant No. 2 Operations Mechanical and Reliability Maintenance Instrumentation & Electrical Maintenance Regional Assets & Services Collection Facilities Operations & Maintenance Facilities Maintenance & Fleet Services Department Subtotal Grand Total - All Departments A 23

72 FY Budget Update Authorized Authorized Authorized Approved Proposed FTEs FTEs FTEs FTEs FTEs Division & Position Office of the General Manager 110 General Management Administration General Manager Assistant General Manager Management Discretion Secretary to the General Manager Intern Total General Management Administration Assistant General Manager Administration Assistant General Manager Legislative Affairs Liaison Principal Financial Analyst Total Asst. General Management Administration Board Services (formerly division 570) Board Services Supervisor Clerk of the Board Secretary to the Board of Directors Records Management Specialist Associate Clerk of the Board II Assistant Secretary to the Board of Directors Administrative Assistant Program Assistant Office Assistant Total Board Services Public Information Office (formerly division 560) Public Information Manager Public Affairs Supervisor Principal Public Information Specialist Senior Public Information Specialist Public Information Specialist Executive Assistant Administrative Assistant Office Assistant Intern Total Public Information Office Safety & Health (formerly division 530) Safety & Health Manager Safety & Health Supervisor Safety & Health Specialist Security & Emergency Planning Specialist Senior Safety & Health Representative Safety & Health Representative Human Resources Assistant Intern Total Safety & Health Total Office of the General Manager A 24

73 Historical Staffing Detail Authorized Authorized Authorized Proposed Proposed FTEs FTEs FTEs FTEs FTEs Division & Position Administrative Services Department 210 Administrative Services Director of Finance & Administrative Services / Treasurer Principal Financial Analyst Executive Assistant Total Finance Administration Financial Management Controller Accounting Manager Accounting Supervisor Principal Accountant Principal Financial Analyst Senior Accountant Senior Staff Analyst Accountant/Staff Analyst Contracts/Purchasing Assistant Payroll Technician Accounting Assistant II Total Financial Management Contracts, Purchasing & Materials Management Contracts & Purchasing Manager Contracts Supervisor Purchasing Supervisor Principal Contracts Administrator Materials Control Supervisor Senior Contracts Administrator Contracts Administrator Senior Buyer Buyer Administrative Assistant Contracts/Purchasing Assistant Lead Storekeeper Senior Storekeeper Inventory Control Technician Storekeeper Total Contracts, Purchasing & Materials Management Human Resources (formerly division 510,520,540,550) Director of Human Resources Human Resources & Employee Relations Manager Human Resources Manager Human Resources Supervisor Principal Human Resources Analyst New Positions (TBD) Senior Human Resources Analyst Human Resources Analyst Executive Assistant Human Resources Assistant Program Assistant Office Assistant Interns for agency Planned Recruitment Position Pool ($ max) Total Human Resources A 25

74 FY Budget Update Authorized Authorized Authorized Proposed Proposed FTEs FTEs FTEs FTEs FTEs Division & Position Information Technology (formerly divisions 910, 920, 930, and 940) Director of Information Technology Information Technology Systems & Operations Manager Information Technology Manager Information Technology Supervisor Principal Information Technology Analyst Senior Information Technology Analyst Information Technology Analyst III Records Management Specialist Information Technology Analyst II Information Technology Analyst I Staff Analyst Executive Assistant Administrative Assistant Information Technology Technician II Information Technology Technician I Office Assistant Total Administration, Customer & Network Support Information Technology Programming & Database Systems Information Technology Manager Principal Information Technology Analyst Senior Information Technology Analyst Information Technology Analyst III Total Programming & Database Systems Information Technology Process Controls Integration Process Controls Manager Senior Engineer Principal Information Technology Analyst Engineer Senior Information Technology Analyst Information Technology Analyst III Total Process Controls Integration Total Administrative Services Department Technical Services Department 610 Technical Services Administration Director of Technical Services Legislative Affairs Liaison Senior Engineer Associate Engineer III Associate Engineer II Grants Specialist Senior Environmental Specialist Executive Assistant Intern Total Technical Services Administration Environmental Compliance & Regulatory Affairs Environmental Assessment Manager Environmental Supervisor Legal & Regulatory Affairs Liaison Senior Engineer Senior Scientist Engineer Boat Captain Regulatory Specialist Associate Engineer III Principal Environmental Specialist Senior Environmental Specialist Environmental Specialist Administrative Assistant Intern Total Environmental Compliance & Regulatory Affairs A 26

75 Historical Staffing Detail Authorized Authorized Authorized Proposed Proposed FTEs FTEs FTEs FTEs FTEs Division & Position Environmental Laboratory and Ocean Monitoring Laboratory Manager Environmental Supervisor Laboratory Section Supervisor LIMS Administrator Senior Scientist Boat Captain Scientist Principal Environmental Specialist Principal Laboratory Analyst Senior Environmental Specialist Senior Laboratory Analyst Environmental Specialist Laboratory Analyst Administrative Assistant Laboratory Assistant Program Assistant Intern Total Environmental Laboratory and Ocean Monitoring Source Control Source Control Manager Engineering Supervisor Senior Regulatory Specialist Engineer Regulatory Specialist Source Control Supervisor Associate Engineer III Principal Environmental Specialist Senior Environmental Specialist Source Control Inspector II Environmental Specialist Administrative Assistant Environmental Technician Program Assistant Office Assistant Total Source Control Environmental Compliance Services Engineering Manager Engineering Supervisor Legal & Regulatory Affairs Liaison Senior Engineer Senior Scientist Engineer Regulatory Specialist Associate Engineer lll Principal Environmental Specialist Associate Engineer II Senior Environmental Specialist Environmental Specialist Administrative Assistant Environmental Technician Intern Total Environmental Compliance Services Total Technical Services Department Engineering Department 710 Engineering Administration Director of Engineering Senior Engineer Executive Assistant Total Engineering Administration A 27

76 FY Budget Update Authorized Authorized Authorized Proposed Proposed FTEs FTEs FTEs FTEs FTEs Division & Position Planning Engineering Manager Engineering Supervisor Senior Engineer Engineer Principal Engineering Data Management Specialist Principal Staff Analyst Associate Engineer III Engineering Data Management Specialist Senior Engineering Associate Senior Engineering Data Management Specialist Associate Engineer II Engineering Associate Engineering Data Management Technician II Associate Engineer l Engineering Assistant II Administrative Assistant Engineering Assistant I Total Planning Project Management Office Engineering Manager Engineering Supervisor Senior Capital Improvement Program Project Manager Capital Improvement Program Project Manager Senior Engineer Principal Project Controls Analyst Principal Engineering Data Management Specialist Principal Staff Analyst Cost Estimator Planner/Scheduler Engineering Assistant II Administrative Assistant Office Assistant Total Project Management Office Engineering & Construction Engineering Manager Engineering Supervisor Senior Construction Inspection Supervisor Senior Engineer Construction Inspection Supervisor Engineer Principal Staff Analyst Associate Engineer lii Cost Estimator Planner/Scheduler Senior Engineering Associate Senior Construction Inspector Associate Engineer li Engineering Associate Senior Staff Analyst Construction Inspector Associate Engineer l Engineering Assistant II Administrative Assistant Engineering Assistant I Office Assistant Intern Total Engineering & Construction Facilities Engineering Engineering Manager Engineering Supervisor Senior Engineer Engineer Associate Engineer lll Associate Engineer II Engineering Associate Administrative Assistant Total Facilities Engineering Total Engineering Department A 28

77 Historical Staffing Detail Authorized Authorized Authorized Proposed Proposed FTEs FTEs FTEs FTEs FTEs Division & Position Operations & Maintenance Department 810 Operations & Maintenance Administration Director of Operations & Maintenance Principal Financial Analyst Utilities Management Specialist Executive Assistant Total Operations & Maintenance Administration Regional Assets & Services Director of Regional Assets & Services Engineering Supervisor Senior Engineer Engineer Principal Financial Analyst Principal Staff Analyst Senior Engineering Associate Executive Assistant Total Regional Assets & Services Operations & Maintenance Process Engineering Engineering Manager Engineering Supervisor Senior Engineer Senior Scientist Engineer Principal Financial Analyst Regulatory Specialist Scientist Associate Engineer lll Associate Engineer ll Senior Environmental Specialist Administrative Assistant Environmental Technician Intern Total Operations & Maintenance Process Engineering Plant No. 1 Operations Engineering Manager Operations Manager Chief Plant Operator Operations Supervisor Lead Plant Operator Senior Plant Operator Administrative Assistant Plant Operator Control Center Technician Total Plant No. 1 Operations Plant No. 2 Operations Operations Manager Chief Plant Operator Operations Supervisor Lead Plant Operator Senior Plant Operator Administrative Assistant Equipment Operator Plant Operator Control Center Technician Total Plant No. 2 Operations A 29

78 FY Budget Update Authorized Authorized Authorized Proposed Proposed FTEs FTEs FTEs FTEs FTEs Division & Position Mechanical and Reliability Maintenance Maintenance Manager Senior Engineer Senior Maintenance Supervisor Engineer Utilities Management Specialist Maintenance Supervisor Associate Engineer III Maintenance Specialist Reliability Technician CMMS Technician II Lead Electrical Technician Lead Power Plant Operator Electrical Technician II Lead Mechanic Lead Welder/Fabricator Power Plant Operator II Machinist Administrative Assistant Senior Mechanic Welder/Fabricator Engineering Assistant I Senior Maintenance Worker Mechanic Maintenance Worker Office Assistant Total Mechanical and Reliability Maintenance Instrumentation & Electrical Maintenance Maintenance Manager Process Controls Manager Engineering Supervisor Senior Engineer Principal Information Technology Analyst Senior Maintenance Supervisor Engineer Senior Information Technology Analyst Maintenance Supervisor Maintenance Specialist Information Technology Analyst III CMMS Technician II Information Technology Analyst II Lead Electrical Technician Lead Instrumentation Technician Lead Power Plant Operator Electrical Technician II Instrumentation Technician II Power Plant Operator II Administrative Assistant Power Plant Operator I Electrical Technician I Instrumentation Technician I Maintenance Worker Office Assistant Total Instrumentation & Electrical Maintenance A 30

79 Historical Staffing Detail Authorized Authorized Authorized Proposed Proposed FTEs FTEs FTEs FTEs FTEs Division & Position Collection Facilities Operations & Maintenance (formerly division 420) Engineering Manager Senior Maintenance Supervisor Maintenance Supervisor Senior Engineering Associate CMMS Technician II Lead Mechanic Administrative Assistant Senior Mechanic Mechanic Total Collection Facilities Operations & Maintenance Facilities Maintenance & Fleet Services (formerly division 430) Facilities Manager Senior Maintenance Supervisor Maintenance Supervisor Maintenance Specialist CMMS Technician II Lead Mechanic Lead Welder/Fabricator Machinist Automotive/ Heavy Equipment Technician Equipment Operator Senior Mechanic Welder/Fabricator Engineering Assistant I Lead Facilities Worker Facilities Worker/Builder Facilities Worker/Painter Automotive/ Heavy Equipment Assistant Office Assistant Total Facilities Maintenance & Fleet Services Total Operations & Maintenance Department Grand Total, All Departments A 31

80 Appropriations Limit Appropriations Limit Article XIIIB of the California State Constitution, more commonly referred to as the Gann Initiative or Gann Limit, was adopted by California voters in The Gann Limit placed limits on the amount of proceeds of taxes that state and local governmental agencies can receive and appropriate (authorize to spend) each year. The limit is different for each agency and the limit changes each year. The annual limit is based on the amount of tax proceeds that were authorized to be spent in fiscal year in each agency, modified for changes in inflation and population in each subsequent year. Proposition 111 was passed by the State s voters in June This legislation made changes to the manner in which the Appropriations Limit is to be calculated: The annual adjustment factors for inflation and population have been changed. Instead of using the lesser of California per capita income, or U.S. CPI, each agency may choose either the growth in the California per capita income, or the growth in assessed valuation due to new non-residential construction within the district. For population, instead of using only the population growth of an agency, each agency may choose to use the population growth within its county. These are both annual elections. The revised annual adjustment factors will be applied to the limit for most agencies and each year in between in order to calculate the limit. The actual limits for the intervening years, however, are not affected. Expenditures for qualified capital outlay, which are capital assets with a value of more than $100,000 and an expected life of 10 years or more, are excluded from the limit. An agency which exceeds the limit in any one year may choose to not give a tax refund if they fall below the limit in the next fiscal year. They then have two more years to refund any remaining excess or to obtain a successful override vote. In certain situations, proceeds of taxes may be spent on emergencies without having to reduce the limit in future years. Each agency also conducts a review of its Appropriations Limit during its annual financial audit. The law requires a governing body to annually adopt, by resolution, an appropriations limit for the following year, along with a recorded vote regarding which of the annual adjustment factors have been selected. The Orange County Sanitation District s appropriations limit and annual adjustment factors are adopted at the same meeting as the budget. The adjustment factors used for are the weighted average change in city population and the change in state per capita personal income. The following table shows the annual appropriations limit for each of the last two years and the appropriations limit and the appropriations, or proceeds from taxes, for The increase in the limit is based upon population changes ranging from 0.46% to 2.70% for major cities within the District as provided by the State Department of Finance and a per capita personal income change of 0.62% as provided by the State Department of Finance. Annual Appropriation Limits: $75,209, $79,153, $80,476,000 Proceeds of Taxes (Appropriations) $31,781,000 As a result of the July 1998 consolidation of the District, a single limit is presented in contrast to individual limits shown in years prior to Population changes for representative cities have continued to be used in order to ensure consistency and to eliminate significant population growth in parts of the County outside of the District s service area. This method results in a lower limit than using the County-wide change. A - 32

81 General Information FY Budget Update Year of Formation Form of Government... County Sanitation District Authority... Section 4700 et. seq.... California Health & Safety Code Service Area sq. miles Service Population... Approximately 2.5 million Assessed Value... $307.6 billion Miles of Sewers miles On-Plant Pump Station Off-Plant Pump Stations Operating Authority... RWQCB/NPDES Permit No.... CA Statewide WDR Order No Authorized Staff (Full-Time Equivalent) Treatment Information Daily Influent Flow to Total Primary Capacity Comparison (in mgd) Plant 1 Plant 2 Total Influent BOD: Plant No milligrams per liter Plant No milligrams per liter Influent Suspended Solids: Plant No milligrams per liter Plant No milligrams per liter Effluent BOD milligrams per liter Effluent Suspended Solids.. 35 milligrams per liter Biosolids Beneficially Used ,700 wet tons Est. Influent Capacity - Primary Treatment Primary Treatment Capacity (includes standby): Plant No mgd Plant No mgd TOTAL mgd Estimated Average Daily Influent: Plant No mgd Plant No mgd TOTAL mgd Secondary Treatment Capacity: Plant No mgd Plant No mgd TOTAL mgd Legend: mgd million gallons per day kwh kilowatts per hour Estimated Electricity Generated: Plant No ,981,000 kwh Plant No ,262,000 kwh TOTAL... 82,243,000 kwh Financial Information Originally Updated Actual Projected Proposed Proposed Fees and Charges: One-Time 3-Bedroom Residence Connection $4, $4, $4, $4, Average Annual Single-Family Residence Fee $ $ $ $ Local SFR Fee N/A $ $ $ District's Avg. Share of Ad Valorem Property Tax 1.80% 1.80% 1.80% 1.80% Cost to Collect, Treat, & Dispose of 1 Million Gallons $1, $ 1, $ 1, $ 1, Summary of COP Issues: August 2000 Refunding / New Money $ 195,800,000 September 2008B New Money 27,800,000 August 2003 New Money 191,500,000 December 2008C Refunding 176,115,000 May 2007A Refunding 93,465,000 May 2009A New Money 200,000,000 December 2007B New Money 295,185,000 Total Outstanding COP Balance 7/1/09 1,241,530,000 May 2008A Refunding 61,665,000 A - 33

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