DUBLIN SAN RAMON SERVICES DISTRICT. Operating Budget

Transcription

1 DUBLIN SAN RAMON SERVICES DISTRICT Operating Fiscal Years and

2 ADOPTED OPERATING BUDGET FISCAL YEARS and Table of Contents INTRODUCTION General Manager s Transmittal Letter and Overview... i-1 Map of District Service Area... i-5 District Organization Chart... i-6 Resolution Adopting... i-7 SECTION 1- EXECUTIVE SUMMARY Board of Directors and Senior Management Team Introduction and Process Strategic Plan Highlights of Accomplishments History, Economic Conditions and Challenges Recent Rate Changes SECTION 2 - FINANCIAL OVERVIEW Description of Funds Estimated Change in Net Assets Financial Policies Revenues Expenses Personnel Capital Improvement Program SECTION 3 - DEPARTMENT OVERVIEW Executive Department Organizational Services Department Financial Services Department Engineering Services Department Operations Department Non-Departmental APPENDIX Auditor Selection and Services Policy... A-1 Accountability Policy... A-2 Investment Policy... A-4 Investment Policy Glossary... A-10 Capital Financing and Debt Management Policy... A-15 Financial Reserves Policy... A-17 Position Details... A-19 Capital Outlay... A-24 Glossary of Terms... A-25

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4 Introduction General Manager s Transmittal Letter Subject: Fiscal Years Ending and To the Board of Directors, I am pleased to present the approved budget for the Dublin San Ramon Services District for fiscal years ending (FYE) and. For the last two years, the District prepared one-year budgets due to turbulent economic events affecting the District at that time. This year, the District once again returns to adopting a two-year operating budget. One of the primary advantages of a two-year budget is the necessity of taking a long-term look at District finances, which leads to better decision-making. In addition, there is a real savings enjoyed by the District via workload reduction compared to the preparation of annual budgets. The two-year budget process has once again been a success and will be continued going forward. Bert Michalczyk Overview The District s operating budget is $49.1 million for FYE and $50.5 million for FYE. Projections used in this budget are the result of several levels of review by management, staff, and the Board of Directors (Board). Cost increases have been limited as much as possible to essential projects or services. This budget continues the District s tradition of meeting all regulatory requirements in planning, designing, building, operating, and maintaining facilities. We also continue a tradition of fiscal responsibility, recognizing that the cost of District services impacts the community, balanced with the need to maintain prudent reserves to sustain our physical assets. With the resources provided in this budget, the District can continue to focus on customers, work in an environmentally friendly manner, establish and maintain partnerships with other organizations, and foster a positive environment for employees. Operating for Fiscal Years - i-1

5 Introduction Challenges The District faces many of the same budgetary challenges as other businesses and municipalities. In additional to normal cost increases, some additional challenges impacting this budget cycle are listed below. Slowdown in growth. In 2009, DSRSD experienced a significant slowdown in new development. Capacity Reserve Fees collected that year were approximately $2 million, compared to over $10 million the year before. This drastic decrease impacts the budget in different ways. Fewer fee sales reduces funds available for the various expansion funds that pay for the Capital Improvement Program (CIP). CIP spending, which is outlined in detail in the Two Year CIP, is limited to projects essential for safety and reliability. The Water Expansion and Regional Expansion funds also are responsible for debt payments related to prior expansion programs. Reduced capacity reserve fee revenue required the District to adopt a new Temporary Infrastructure Charge (TIC). The charge is paid by Water Enterprise customers and will be repaid by the Water Expansion fund once capacity reserve fee revenue returns to a sufficient level. Decreased fee sales also slow the growth in service revenue generated by new accounts in the Enterprise funds. In prior years this growth has helped offset cost increases in the fund. For this budget cycle, the District projects a modest growth in new development. New sewer capacity sales, excluding Pleasanton, are estimated at 550 Dwelling Unit Equivalents (DUEs) and 725 DUEs for FYE and, respectively. Water is estimated at 560 DUEs in and 738 in. Water shortage. California water agencies are dealing with current water shortages and planning for long term drought conditions. The Governor has mandated that all water agencies reduce consumption 20% by the year In addition, the State Water Project (SWP) has reduced allotments to its contractors (which include the District s wholesale supplier) due to pumping limitations in the Sacramento-San Joaquin Delta. Imposed by federal courts to protect endangered species of fish, the pumping limitations are expected to remain in place long term. The District has responded by developing a water conservation program and updating its policy for managing water supplies during shortages. Additionally, the District developed water shortage rates that can be implemented when any type of water shortage is declared, emergency or long term. These rates will enable the District to recover its costs in spite of lower water consumption by District customers. A Stage 1 water shortage was adopted effective July 1, 2009, and continues to be in effect for the current budget cycle. Cost increases. Besides the unusual events noted above, the District must plan for normal cost increases for fuel, chemicals, power, scheduled salary increases, higher costs for employee benefits, rising premiums for property and liability insurance, greater debt expenses, and general inflationary pressures. Zone 7 Water Agency, the District s wholesale water supplier, anticipates an estimated increase in the cost of water of roughly 22.5% in the years i-2 Operating for Fiscal Years-

6 Introduction Partnership obligations. The District has a long term contract with East Bay Municipal Utility (EBMUD) to operate DERWA (Dublin San Ramon Services District-EBMUD Recycled Water Authority) facilities to serve areas that extend beyond its service area boundaries. The costs of operating the DERWA facilities are borne by the DERWA joint powers authority (JPA) and billed to the District in accordance with a cost sharing agreement. The DERWA budget has been approved by its Board, and the District s share of costs are included in the DSRSD budget as operating costs. The District is also a member of the Livermore-Amador Valley Wastewater Management Authority (LAVWMA). This JPA is responsible for the disposal of wastewater from DSRSD and the City of Livermore. LAVWMA develops a budget that is approved by its board of directors. Costs relative to DSRSD (Dublin, South San Ramon, and Pleasanton) are included in the District s budget. Implications on Rates The rates we charge our customers are driven by expenses, revenues, and reserve balances in three fund families: Local Sewer, Regional Sewer, and Water. The Local Sewer Operations fund remains in extremely good shape with working capital in excess of the target level set by the Board. Working capital is projected to nominally increase in the budget year (as it has for the past several years) and into the foreseeable future. It is anticipated that any excess funds from the enterprise would be used to increase funding to the Replacement and Improvement fund to provide for future replacement and improvement projects in the collection system. The Regional Sewer Fund experienced a net loss in FYE. In that year, DSRSD conducted a Regional rate study and the full increase is scheduled to be in effect starting July With this full increase, working capital for the Regional fund is also projected to be above target. As part of a strategic initiative to improve long term forecasting and planning, the District adopted a rate stabilization policy and established related funds during the last budget cycle. The policy enables the District to temper the impact of rate increases and provides greater financial stability to the District s operating funds. The Regional Sewer Operations fund is projected to be able to increase the reserves in its rate stabilization fund in this budget cycle. The Stage 1 Water shortage rates will continue to remain in effect for budgets and. The Water Operating fund is projected to remain stable for the next two fiscal years, with working capital above the Board established target level. DSRSD plans to conduct a new water rate study to evaluate the conditions of water shortage rates and to implement the necessary long term rates to ensure the financial health of this fund. The budget is reasonable and continues to provide for a safe and reliable system while tempering the need to increase customer rates. The District has demonstrated its commitment to control costs, monitor efficiency, and maintain competitive rates in the Livermore-Amador Valley. Operating for Fiscal Years - i-3

7 Introduction We also continue to provide excellent customer service. The District conducts an ongoing survey of customers that have requested service calls. In fiscal year, 73% of these customers gave the District a Very Satisfied rating, 21% were Satisfied, and only 1% were Not Satisfied. With a solid Strategic Plan to guide us, energetic and skilled employees, the financial resources made available through this budget, and the continued support of the Board of Directors, the District is well prepared to meet the challenges of the next year and beyond. i-4 Operating for Fiscal Years-

8 Introduction DISTRICT SERVICE AREA Operating for Fiscal Years - i-5

9 Introduction DISTRICT ORGANIZATION CHART Customers of the District Legal Counsel Legislative (5) President & Board of Directors Executive Department (5) General Manager Organizational Services (10) Financial Services (19) Engineering (21) Operations (54) Organizational Services Mgr. Financial Services Mgr. District Engineer/ Assistant GM Operations Manager Org. Serv. Admin. (1.5) Financial Services Admin. (1) General Engineering (2) Operations Administration (5) Human Resources/ Safety (5) Accounting (5) CIP and Environ. Compliance (8) Field Operations (11) Public Information (3.5) Customer Service (8) Planning and Permitting (8) Plant Operations (12) Information Technology (5) Asset Management (3) Mechanical Maintenance (13) Electrical Maintenance (8) Lab Services (5) i-6 Operating for Fiscal Years-

10 Introduction RESOLUTION NO j RESOLUTION OF THE BOARD OF DIRECTORS OF DUBLIN SAN RAMON SERVICES DISTRICT ADOPTING THE ANNUAL OPERATING BUDGETS FOR FISCAL YEARS ENDING AND WHEREAS, the District is required to adopt an operating budget by June 30; and WHEREAS, the budgets as presented provide a financial plan that supports the Board s policy objectives for the next two fiscal years; and WHEREAS, said budgets incorporate expenditures for operating the District to provide value to the community by delivering high quality wastewater and water services at a competitive price and in an environmentally responsible manner; and WHEREAS, the Finance Committee, which has responsibility for budget oversight to ensure the organization s financial health, has examined the proposed budgets for Fiscal Years Ending and ; and WHEREAS, on May 24, 2011 the Board of Directors of Dublin San Ramon Services District examined the proposed budgets for Fiscal Years Ending and and provided final guidance in the adoption thereof. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF DUBLIN SAN RAMON SERVICES DISTRICT, a public agency located in the Counties of Alameda and Contra Costa, California, that: 1. The Expense s for Fiscal Years Ending and are hereby adopted with operating expenses exclusive of Administrative Cost Allocations as shown in the following table: FYE FYE Fund Name Expense Expense Local Sewer Enterprise $1,283,561 $1,322,113 Local Sewer Replacement 9,450 48,450 Local Sewer Expansion 196, ,765 Regional Sewer Enterprise 12,688,262 12,790,444 Regional Sewer Replacement 297, ,100 Regional Sewer Expansion 7,911,905 7,912,893 Water Enterprise 15,680,781 16,174,653 Water RSF 50,000 50,000 Water Replacement 195, ,978 Water Expansion (in total) 3,434,100 3,445,498 Administrative Cost Center 5,559,721 5,814,709 OPEB 694, ,808 Dougherty Valley Standby District 1,109,000 1,159,200 Total Operating Expenses $49,110,701 $50,513,611 Operating for Fiscal Years - i-7

11 Introduction 2. Revenue estimates are approved as follows: FYE FYE Fund Name Revenue Estimates Revenue Estimates Local Sewer Enterprise $1,946,533 $2,026,408 Local Sewer Rate Stabilization 5,580 5,630 Local Sewer Replacement 558, ,688 Local Sewer Expansion 731, ,667 Regional Sewer Enterprise 18,005,948 18,545,711 Regional Sewer Rate Stabilization 55,380 61,320 Regional Sewer Replacement 1,427,570 1,905,652 Regional Sewer Expansion 9,160,070 12,066,909 Water Enterprise 18,901,785 19,684,392 Water Rate Stabilization 500, ,632 Water Replacement 1,775,580 2,378,118 Water Expansion (total) 5,837,114 10,653,274 Administrative Cost Center 1,421,751 1,422,060 OPEB 718, ,098 Dougherty Valley Standby District 1,114,750 1,165,010 Total Revenue Estimates $62,160,538 $72,871, Replacement transfers shall be made in order to achieve reserve targets calculated in accordance with the District s adopted Financial Reserves Policy (Resolution No ) and are hereby approved as follows: FYE FYE Fund From To From To Local Sewer Enterprise $280,000 $287,000 Local Sewer Replacement 280, ,000 Regional Sewer Enterprise 2,400,000 2,460,000 Regional Sewer Replacement 2,400,000 2,460,000 Water Enterprise 1,651,000 1,692,000 Water Replacement 1,651,000 1,692,000 Total $4,331,000 $4,331,000 $4,439,000 $4,439, In accordance with Resolution No , each year, one half of property taxes that are received in the prior year are transferred from the Water Rate Stabilization fund to the OPEB fund to relieve the water operations fund s portion of past service liability and are hereby estimated and approved as follows: FYE and Fund Purpose From To Water Rate Stabilization Water s Prior OPEB Costs $200,000 OPEB Water s Prior OPEB Costs $200,000 i-8 Operating for Fiscal Years-

12 Introduction 5. Allocation of the Administrative Cost Center s net costs shall be as follows: FYE Fund Name and Local Sewer Enterprise 9.27% Local Sewer Expansion 1.74% Regional Sewer Enterprise 50.49% Regional Sewer Expansion 0.30% Water Enterprise 35.30% Water Expansion 2.90% Total % 6. The threshold to capitalize assets purchased or constructed is established at $10,000 or greater. 7. The maximum number of full time equivalent (FTE) positions as shown in the following table are hereby approved. At no time shall the number of regular and limited term FTE positions exceed that shown below without prior Board approval. Furthermore, the total of the salaries for regular positions as shown in the budget shall not be increased through conversion of limited term positions to permanent positions without prior Board approval. Position Type FYE FYE Regular FTE Limited Term FTE Total FTE Positions The Board authorizes and directs the General Manager, in conformance with the District Code, Board Policy, Memoranda of Understanding and District Rules and Procedures, to take prudent and appropriate steps to control personnel costs as needed to achieve the adopted expense budgets for Fiscal Years Ending and. 9. The Board authorizes and directs the General Manager to monitor the balance in the Regional Expansion fund on a regular basis and in June of and, transfer amounts from the Regional Replacement fund to the Regional Expansion fund sufficient to maintain a working capital balance in the Regional Expansion fund equal to two times the maximum annual debt service (as defined in the Sewer Service Contract with the Livermore- Amador Valley Water Management Agency dated March 1, 2001) within the following parameters: The transfer shall not draw the Regional Replacement fund below 90% of its target level ($6,954,636) without Board approval; and The transfer, if any, shall be reported to the full Board in July of each year. Any such transfer will be considered a zero interest interfund loan to be repaid as soon as it is reasonably prudent to do so. Operating for Fiscal Years - i-9

13 Introduction ADOPTED by the Board of Directors of Dublin San Ramon Services District, a public agency in the State of California, Counties of Alameda and Contra Costa, at its regular meeting held on the 7th day of June 2011, and passed by the following vote: i-10 Operating for Fiscal Years-

14 Executive Summary

15 Executive Summary It is our mission to provide value to our community by delivering high quality wastewater and water services at a competitive price and in an environmentally responsible manner. BOARD OF DIRECTORS, 2011 Dwight L. Howard, President Richard M. Halket, Vice President Daniel J. Scannell, Director Georgean Vonheeder-Leopold, Director Dawn Benson, Director SENIOR MANAGEMENT TEAM Bert Michalczyk P.E., General Manager David A. Requa P.E., District Engineer / Assistant General Manager Lori Rose, CPA, Financial Services Manager Dan Gallagher, Operations Manager Mary H. Gordon, Organizational Services Manager Operating for Fiscal Years and Section 1-1

16 Executive Summary Introduction The Dublin San Ramon Services District (DSRSD) Operating for Fiscal Years ending and includes a brief explanation of the District s budget process, a detailed look at how the accomplishments of the past two years are tied to the District s Strategic Plan, and a discussion of how local, state, and national events may impact this budget. Fiscal Year DSRSD operates on a fiscal year which runs July 1 through June 30. In the document, if a year is used, it means the end of the fiscal year, so for example, is the fiscal year ending June 30,. FYE for fiscal year ending is also used. Process The normal budget process begins at the Division level. Supervisors prepare their budgets and submit them to Department Managers for review and approval. Managers then meet with the General Manager, who determines the impact of the proposed budget on each of the District s funds. The budget is presented to the Finance Committee, and then to the full Board of Directors at a budget workshop where the General Manager and Department Managers discuss financial, capital, and staffing requests. Questions that arise during the workshops are referred to the appropriate Board Committee for further discussion and evaluation. The final proposed budget is submitted to the full Board of Directors for review and adoption prior to June 30. This year the budget was adopted on June 7, Section 1-2 Operating for Fiscal Years and

17 Executive Summary Strategic Plan A strategic plan is a top level planning document for an organization. The DSRSD Strategic Plan FY sets a clear direction for all operational aspects of its mission and provides a framework for decision making over a five year period. The District s Strategic Plan was updated this year and funding for the objectives to be met the next two years were included in the budget. Updating the plan on an annual or bi-annual basis allows staff and the Board to recognize plan accomplishments and to set new goals for the upcoming years. At its highest level, the Strategic Plan seeks to strengthen and build upon opportunities while addressing areas of concern. It also identifies actions, activities, and planning efforts that are underway and which are needed for continued success in operations and management of the District; and provides for periodic reviews and updates. Due to budgetary restraints some initiatives and activities will be deferred. A copy of the District s strategic plan can be found at The DSRSD Strategic Plan seeks to: Ensure the District s long term financial health and stability; Install, maintain, and operate the infrastructure needed to fulfill the District s mission; Provide stewardship of the environment water, wastewater, and recycled water resources with which the District is entrusted; Sustain a high performing, motivated, and adaptable workforce; Sustain sound management practices and good governance; Foster partnerships when needed to better achieve our mission; and Assure clear, concise, and consistent communications with the communities the District serves. Operating for Fiscal Years and Section 1-3

18 Executive Summary Fiscal Years and 2011 Highlights of Accomplishments During the past two years, the District made progress on a number of strategic initiatives and continued to excel in regulatory compliance. Implemented Low-Income Assistance Program for Water Customers In the last fiscal year, DSRSD implemented a low-income assistance program to help qualifying customers with their water bill. US Census data indicates roughly 3% of Dublin s population lives below national poverty levels ($14,000 for a family of two). With the increase in unemployment rates and due to the economic recession, there is a growing need for programs to help the low-income sector of the community to maintain basic living standards. The District funds this program with revenue from cell tower leases. Harvested Biosolids with In-house Personnel For the first time, rather than hiring an outside contractor, District staff completed the annual harvesting of biosolids, only outsourcing the dredging. Biosolids are the stable organic compounds left at the end of the wastewater treatment process. After spending four to five years decomposing in sludge lagoons, biosolids are dredged, pumped a short distance to the District s dedicated land disposal site, and injected inches into the soil. Land application is an economical and environmentally friendly way to dispose of biosolids. This work was done without hiring any additional staff. Launched Asset Management Program The District made progress in creating a modern asset management program that will systematically assess the condition of major assets and prioritize repair and replacement based on risks and consequences of failure. The District hired an experienced consultant that assessed needs and recommended a course of action, formed an Asset Management Division to coordinate the program, and selected the wastewater collection system as the initial asset group to be studied. Staff evaluated and recorded condition data, adopted a rating system based on consistent standards, and began testing the risk-based rating system to prioritize repairs and capital replacement in a small area of the collection system. Eliminated Interest-Rate Risk In the last two fiscal years, the District has completed two separate debt restructurings. In September 2009, DSRSD refinanced a variable rate wastewater-system debt issuance into a fixed-rate bank loan. In January 2011, the District also restructured the WateReuse debt, along with approximately $25 million of the District s share of DERWA commercial paper, into a fixed debt (both related to water system facilities). By restructuring these variable-rate obligations into fixed-rate, the District has eliminated the risk from fluctuations in interest rates. Because debt is such a large component of District s expenses, a fixed payment schedule will allow the District to have more accurate cash flow projections for the longterm and will also stabilize rates for District customers. Section 1-4 Operating for Fiscal Years and

19 Executive Summary Ensured Safe Water Quality As in the past years, the District met or exceeded all regulatory requirements governing the safety of potable and recycled water it delivers to customers, as well as the treated wastewater it discharges to San Francisco Bay. The District s laboratory is certified to perform 70 water quality tests. Results are reported as required to regional, state, and federal agencies. Implemented Controls for Mercury Pollution from Dental Amalgam The District implemented a source control program to remove up to 95% of dental amalgam, a leading source of mercury pollution, from the District s wastewater. In October 2009, the District adopted an ordinance that requires 70 local dental offices to install amalgam separators by April 1,. Permitting and inspections to ensure compliance began this year in The program aligns with American Dental Association best practices and meets requirements of the San Francisco Regional Water Quality Control Board. Completed SCADA Master Plan The District adopted a master plan for its supervisory control and data acquisition (SCADA) systems, electronic systems that monitor and control water, wastewater, and recycled water systems. The plan assesses existing systems with respect to architecture, communications, programmable controllers, facilities, data management, reports, and maintenance and support practices. It also recommends and outlines an implementation strategy that will be considered in the development of two-year and 10-year capital improvement plans. Cleaned Digesters to Restore Wastewater Treatment Capacity Removing thousands of pounds of struvite scale restored the District s three anaerobic digesters to full performance. Struvite is a rock-hard substance formed from ammonium, magnesium, and phosphate when these naturally occurring constituents are present in the right mix of high concentrations. Like plaque in human arteries, struvite blocks critical pipes and valves, reducing efficiency and eventually leading to system failure. To decrease struvite formation, the District has altered its treatment process to reduce the phosphate content in sludge. Added Programs to Detect Identity Theft and Fraud The District implemented an identity theft detection program that complies with the Federal Trade Commission s Red Flag Rules. Stopping identity theft at utilities can reduce identity theft elsewhere because fraudulent proof of a utility account can be used to obtain government and financial services. Based on the recommendations of its auditor, the District also adopted a formal policy on detecting internal fraud. It defines how employees or contractors can report and investigate fraud and establishes disciplinary actions if fraud is discovered. Operating for Fiscal Years and Section 1-5

20 Executive Summary History and Services Above: Image of Dublin Boulevard in 1953, prior to the District s formation. The District was formed in 1953 as the Parks Community Service District. In the early 1960 s the name changed to Valley Community Services District (VCSD). VCSD became the vehicle for delivering local government services including water and wastewater, recreation and parks, garbage collection, and fire protection. The name of the District changed again in 1977 to Dublin San Ramon Services District (DSRSD) to reflect its service areas. In 1988, the cities of Dublin and San Ramon assumed many of the government services provided by the District. This allowed DSRSD to shift from being a multi-faceted, community service district to a special district focused on potable water and wastewater services. In 1999, the District began providing a third service to its customers, recycled water. DSRSD currently serves approximately 143,000 residents in Dublin, southern San Ramon, Dougherty Valley, and Pleasanton. Economic Conditions DSRSD s service area lies within the Tri Valley, located in the East Bay region of the San Francisco Bay Area. The largest part of the District s service area covers the City of Dublin, which is located approximately 35 miles east of San Francisco and 35 miles north of San Jose. Its service area also includes a portion of the City of San Ramon, which is located to the north of Dublin. By contract, the District provides wastewater treatment for the City of Pleasanton, which is located south of Dublin. At the end of 2007, the United States headed into recession and in the months that followed a number of problems surfaced in the housing, financial, and credit markets. These events have had a profound impact on the local economy in the Bay Area. Local development slowed drastically, and capacity reserve fees collected for new development dropped significantly from $32 million in 2006 to $2 million in Although the National Bureau of Economic Research (NBER) declared that the recession officially ended in June , the impacts linger on a local and national level. The unemployment rate, a lagging indicator, has hovered around 11 percent in for the Bay Area, compared to just four percent in However, the District s service area has a diversified industrial base, and thus offers a much greater stability than many other parts of the Bay Area that may depend on more specialized economies such as San Jose (technology) or San Francisco (tourism). For the same period, the City of Dublin had an average unemployment rate of 6.9%, and 4.7% in the City of San Ramon 3. The housing market tells a similar story. While the 1-year comparison of April 2011 median home price (another lagging indicator) is down by 5.5% in Dublin and 4.8% in San Ramon, the number of home sales (a leading indicator) is up by 6.6% in Dublin and 2.5% in San Ramon 4. These statistics are consistent with the opinion that the national recession has bottomed, and our economy is in a state of recovery. Section 1-6 Operating for Fiscal Years and

21 Executive Summary With a steady recovery, Capacity Reserve Fees increased to $10 million, compared to $2 million a year ago. Similarly, plan review fees (these are fees collected for the review of development plans) for the Water Expansion Fund increased from roughly $153,000 in 2009 to over $376,000 in. So far in 2011, this number has grown to about $600,000, which suggests significant recovery in the coming years. However, the District recognizes that the fast-paced growth in the years prior to the recession may never return. Therefore, the District has reevaluated its core business needs and objectives to adapt to these new normal economic conditions. For the long term, all signs suggest that new development in the DSRSD service area will continue at a steady pace East Bay EDA Indicators, 3 Employment Development Department, Monthly Labor Force Data for Cities and Census Designated Places, Challenges The economic downturn in housing, credit, and financial markets since early 2008 created a number of new challenges for DSRSD. As previously discussed in the Economic Conditions section, capacity reserve fees collected by the District have dropped significantly as a direct result of the shift in the economy. In 2009, the District took drastic steps, cutting personnel and other expenses. In addition, the District implemented a Temporary Infrastructure Charge (TIC), which is a fixed charge based upon a customer s meter size, to ensure its ability to make bond payments. That same year, the District experienced extreme instability in variable interest rates and in response the District restructured its debt. Since 2009, DSRSD has continued to deal with instability in the bond market. In early 2011, the District refinanced its variable rate WateReuse bonds along with a $25 Million commercial paper obligation for the DERWA JPA into a fixed rate, 30-year debt. DSRSD took many steps in to improve its credit rating in order to receive favorable terms for its restructured debt. Reductions in spending, preservation of capital reserves and enhancing revenue streams (TIC) were all implemented in response to market conditions. These steps proved to be extremely valuable and the District was able to improve its water debt crediting rating from a preliminary S&P rating of BBB in early to an A and AA rating by S&P and Fitch respectively. The past few years have been rather turbulent; this has forced DSRSD to reevaluate its processes and adapt to being even more efficient and resourceful than before. The District continues to evolve with changing conditions and is well equipped to face future challenges. Operating for Fiscal Years and Section 1-7

22 Executive Summary Recent Rate and Fee Changes Sewer Rates In, DSRSD completed a Wastewater Treatment Rate Study and the Board adopted the recommended rates in July. The rates were adjusted in two steps, with a roughly 12% increase effective January 1, 2011, followed by a 4% increase (plus CPI of 1.7%) effective July 1, Local Wastewater Collection rates increased July 1, 2011 by CPI of 1.7%. Water Rates On July 1, 2009, DSRSD implemented a new rate structure for its water customers. Under the new rate structure, residential customers pay on a three-tier pricing structure: a first tier price for 0-20 hundred cubic feet (ccf), a second tier price for ccf, and a third tier price for more than 34 ccf. Commercial rates vary by season with a lower rate during the winter months (November through April), and a higher rate during summer months (May through October). Irrigation rates are uniform throughout the year. The new rate structure is designed to encourage greater water conservation. DSRSD also implemented water shortage rates and declared a Stage One Water Shortage effective July 1, 2009, due to State-mandated reduction in water delivered to Zone 7 (the District s wholesale water provider). The District continues to remain in Stage One as it seeks to replenish the groundwater basin and monitor further Delta water restrictions. January 1, 2011, DSRSD adjusted its water rates for a 1.13% CPI increase. Zone 7 also increased the District s cost of water by roughly 2.5%. Zone 7 anticipates that they will increase their costs by another 22.5% by Further information and customer examples can be found on the District s website at Capacity Reserve Fees (formerly known as Connection Fees) DSRSD conducted Capacity Reserve Fee studies for the Local Wastewater Collection (Local) and Regional Wastewater Treatment systems (Regional), and both of these fees were increased on July 1,. As a result of the study, Local fees were increased by about 4%, while Regional fees increased 3%. Water capacity reserve fees were reduced due to an ENR decrease of 0.26%. The District recently completed a Water Capacity Reserve Fee study and will be phasing in the needed increases on July 1, 2011 and January 1,. Cost of Service DSRSD compares its combined rates with others in the Valley when making rate decisions. There is an interactive map on the District s web site where the DSRSD single family residential combined water and wastewater rates are compared with neighboring communities. This map is accessible at Section 1-8 Operating for Fiscal Years and

23 Financial Overview

24 Financial Overview Description of Funds Enterprise (Operations) Funds The District is in the business of providing potable and recycled water services and wastewater collection and treatment. The District accounts for t h e s e b u s i n e s s activities in Enterprise funds. R e v e n u e s a r e generated for these busi ne s s ac ti vi ties t h r o u g h s e r v i c e charges to customers. Expenses are charged to the appropriate fund to ensure that rates are established to recover those costs. Local Sewer Collection: Operations relating to wastewater collection. The service area consists of South San Ramon and Dublin. Regional Sewer Treatment: Operations relating to wastewater treatment and disposal. The service area consists of South San Ramon, Dublin and Pleasanton. Water: Operations relating to delivering potable and recycled water. The service area consists of Dublin and the Dougherty Valley (in San Ramon and unincorporated Contra Costa County). Working Capital in Enterprise Funds The District uses working capital, defined as current assets minus current liabilities, to monitor its finances. Working capital is a measure of available resources that the District has to spend. The Board of Directors establishes working capital targets to define the amount of operating reserves they want to have available in each fund to cover ongoing costs. These targets are defined in terms of months of working capital, or the amount of cash needed to cover expenses for a set period. For all three enterprise funds, the target is four months of working capital (or four months of that year s budgeted operating expenses). The working capital target is one of several measures the Board uses to determine when rate adjustments are needed. Replacement and Improvement Funds Each enterprise fund makes a transfer each year to its related replacement and improvement fund for the purchase or construction of new and replacement capital assets. These transfers are based upon funding requirements identified in the District s Replacement Planning Model. This long term planning model ensures that sufficient funds will be available when capital assets need refurbishment or replacement. The District has a Financial Reserves Policy (Appendix C) that establishes guidelines for these funds and defines appropriate amounts of reserves. A capital asset is defined as any individual asset costing $10,000 or more with a useful life of more than two years. Operating for Fiscal Years and Section 2-1

25 Financial Overview Expansion Funds Expansion funds receive revenue from capacity reserve fees paid by developers. These fees are designed to cover the cost of building expanded facilities for new development (including debt service payments on facilities that were financed). Capacity reserve fees are considered non-operating revenue, which is recognized upon receipt but may not be used for many years until the need arises. Costs for growth-related capital projects, including direct staff time and overhead, are charged to the expansion funds. DSRSD conducts capacity fee studies to ensure that all new development pays for their proportional share of facilities built to serve growth. Debt Funds Water debt and related revenues and expenses are presented separately for budgeting purposes; for accounting purposes these costs are a component of the Water Expansion fund. Administrative Cost Center The District uses this fund to capture administrative costs that are not specifically identifiable to any one of its operational activities. All administrative divisions costs are included in this fund. The District provides services to two joint powers authorities: DERWA and LAVWMA. DSRSD bills these agencies each month for services provided and records the portion of the billing related to general administrative costs in this fund. Net fund costs are allocated based upon how employee costs are budgeted across the other funds. Rate Stabilization Fund (RSF) DSRSD has a rate stabilization fund for each enterprise to support the District s strategic goal of managing public funds to assure financial stability, including stability of revenues and the rates and charges related to each enterprise. In some years, there may be a surplus above the working capital target in one or more of the District s enterprise funds; in other years, unexpected events may cause a fund balance to fall below the target. Rate stabilization funds allow the District to properly manage these different circumstances to achieve the desired stability. The reflects the estimated transfer of funds between the enterprise and stabilization funds in accordance with the established policy. Cell tower lease revenues and property taxes are recorded in the water rate stabilization fund. Section 2-2 Operating for Fiscal Years and

26 Financial Overview Other Post Employment Benefits (OPEB) Fund In August 2004, GASB issued Statement No. 45, Accounting and Financial Reporting by Employers for Post- Employment Benefits Other Than Pensions. Under the GASB 45 standard, the cost of retiree health care and other non-pension benefits for retirees must be recorded as the benefit is earned. The District contracts with an actuary every two years to provide information on the Other Post-Retirement Employee Benefits (OPEB). In 2007, a new fund was established to set aside monies for post retirement insurance costs. The District transferred funds in 2007 from the other funds into the OPEB Fund. All funds were able to pay their entire cost of the prior benefits earned by current and retired employees except for the water fund. The water fund s obligation is being amortized over 20 years and paid from revenues received from property taxes, so as not to negatively impact current rates. In 2008, the District selected California Employers Retiree Benefit Trust (CERBT) as trustee for the prefunding of health care coverage for retirees. The budget includes the cost of funding current employees future benefits. Dougherty Valley Standby Assessment District (DVSAD) Fund The DVSAD was established to collect assessments and pay ongoing costs associated with the State Water Project specifically tied to the Dougherty Valley. An assessment is levied each year after the budget is finalized. All assessments received for the DVSAD, as well as related expenses, are accounted for in this fund. This fund is separate from all other District activities, and excess funds can only be used to reduce amounts assessed in future years. Estimated Change in Net Assets The fund schedule on the following four pages summarizes the District s overall financial picture by individual fund. It includes revenue and expenses, as well as cash activity that is not accounted for as a revenue or expense. The fund schedules are grouped by enterprise (Local Sewer, Regional Sewer, and Water), followed by the Administrative Cost Center, the Other Post Employment Benefits fund, and the Dougherty Valley Assessment District fund. The working capital and replacement targets mentioned previously are noted at the bottom of the schedules. Overall, the District is above its working capital targets. The FYE budget includes the full impact of the regional rate increase, as well as rate adjustments for the Consumer Price Index (CPI) adjustments for all enterprise funds. For FYE, an estimated CPI of 1.7% is used. Operating for Fiscal Years and Section 2-3

27 Financial Overview FYE APPROVED BUDGET Section 2-4 Operating for Fiscal Years and

28 Financial Overview Operating for Fiscal Years and Section 2-5

29 Financial Overview FYE APPROVED BUDGET Section 2-6 Operating for Fiscal Years and

30 Financial Overview Operating for Fiscal Years and Section 2-7

31 Financial Overview Financial Policies The District has a number of financial policies, which are summarized below. Audit (Appendix A) The District s financial report is audited annually by an independent professional accounting firm. The District s Auditor Selection and Services Policy states that the auditor may not perform other consulting services for the District. It also requires a full-scale competitive bidding process to be conducted at least every five years. ing Accountability (Appendix B) The General Manager is accountable to the Board of Directors for meeting the budgetary objectives set by the Board. The Board approves the Operating at the total fund level, ensuring that it maintains overall control of rates and fees. In addition, the Board approves the maximum number of full time equivalent staff positions (FTE). The General Manager may make no-net-change budget adjustments within a fund. These adjustments are reported to the Finance Committee. The District prepares formal monthly financial reports that are provided to the Board and senior staff. Additional monthly reporting is provided to the management team showing expenses by division and account. DSRSD also prepares and submits a Comprehensive Annual Financial Report (CAFR) to the Governmental Finance Officers Association for inclusion in its awards program. The District has received the association s certificate for excellence in financial reporting each time it has submitted a report. The CAFR and are available online at in the Publications section. Investments (Appendix C) The District s Investment Policy provides guidance in how District funds can be invested. Allowable investments, as defined in state law, are included in the policy as well as any limitations on the amounts that may be invested. In general, investments are held until maturity. Staff invests available cash under the guidance of the Financial Services Manager and the Finance Committee. The District s objectives for investing are safety, liquidity, and yield, in that order. District cash and investments are pooled, with each fund receiving its proportionate share of interest based upon its monthly cash balances. The exception is interest earned on restricted investments, which is retained by the fund holding those investments. Section 2-8 Operating for Fiscal Years and

32 Financial Overview Capital Financing and Debt Management (Appendix D) The District has established guidelines for the appropriate use of debt because it is a significant component of financing for capital projects. The Capital Financing and Debt Management Policy documents the criteria that favors pay-as-you-go versus pay-as-you-use financing methods, and defines the District s policy in the issuance and management of debt. Financial Reserves (Appendix E) The Financial Reserves Policy was adopted in April 2011 and replaces two separate reserve policies as well as adding criteria for reserves in the District's Expansion funds. This policy covers reserves for: Operating Reserves, Rate Stabilization Fund Reserves, Capital Asset Replacement & Improvement Reserves, and Capital Expansion Reserves For each of these areas, a purpose, use of funds, reporting and targets are defined. Basis of Accounting The District uses enterprise funds to account for its activities. An enterprise fund is used to account for governmental activities that are similar to activities performed by commercial enterprises. However, the purpose of a governmental enterprise fund is not to maximize return (as in the private sector), but to provide a product or service to the public at a reasonable cost. The District uses the full accrual method for financial reporting. However, the budget shows items as expenses that normally would be recorded directly to the balance sheet. This is done to provide budgetary control throughout the year. Examples are: Principal payments of debt, which reduce the amount of debt owed on the balance sheet; Purchases of capital outlay items (fixed assets), which are capitalized on the balance sheet. In addition, non-cash items such as depreciation and contributions of property are not budgeted. Article XIIIB Appropriations Limit The Community Services District law provides that any district that has previously transferred services and all of the property tax revenue allocation associated with those services to another agency does not need to establish an appropriations limit. The District transferred its property tax allocations to the Cities of San Ramon and Dublin in 1988, so no appropriation limit is required. Operating for Fiscal Years and Section 2-9

33 Financial Overview Revenues Service charges are the District s main source of revenue. The District conducts periodic rate studies to determine if rates are covering the cost of service. The current budget reflects adopted rates and fees, as well as anticipated annual Consumer Price Index increases. The following charts and graphs summarize District revenues. Analyses of individual enterprise funds follow. 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000, Estimated Service Charges Infrastructure Charges Capacity Reserve Fees Other Interest Comparison of Total Revenues by Type Category 2011 Est. % Chg. % Chg. Service Charges $33,704,492 $35,393,475 $38,038, % $39,423, % Infrastructure Charge 2,316,068 2,635,432 2,649, % 2,649, % Capacity Reserve Fees 10,373,084 5,108,910 15,207, % 24,031, % Other 6,678,113 8,130,489 5,542, % 5,916, % Interest 408, , , % 850, % Total Revenues $53,480,128 $51,492,565 $62,160, % $72,871, % Section 2-10 Operating for Fiscal Years and

34 Revenue Comparisons by Fund Sewer Funds Financial Overview Category 2011 Est. % Chg. % Chg. Service Charges $1,805,934 $1,914,820 $1,936, $2,015, Other 15,001 16,755 3, , Interest 5,960 2,088 7, , Local Collection Operations 1,826,895 1,933,663 1,946, ,026, Interest 3,901 1,247 5, , Local Collection RSF 3,901 1,247 5, , Capacity Reserve Fees (Buy-in) 317,464 87, , , Other NA 0 NA Interest 42,202 24,649 79, , Local Collection Replacement 359, , , , Capacity Reserve Fees 289,541 85, , , Other 445, , , , Interest 12,060 7,549 20, , Local Collection Expansion 747, , , , Service Charges 14,602,797 15,743,249 17,606, ,141, Other 379,120 1,000, , , Interest 28,792 13,901 74, , Regional Treatment Operations 15,010,709 16,757,282 18,005, ,545, Interest 30,389 15,176 55, , Regional Treatment RSF 30,389 15,176 55, , Capacity Reserve Fees (Buy-in) 977, ,373 1,330, ,793, Other NA 0 NA Interest 61,938 33,532 97, , Regional Treatment Repl. 1,039, ,905 1,427, ,905, Capacity Reserve Fees 5,717,414 3,003,785 8,956, ,836, Other 788,223 2,142,486 43, , Interest 103,217 55, , , Regional Treatment Expansion 6,608,854 5,201,807 9,160, ,066, Sewer Subtotal $25,627,393 $24,859,906 $31,891, $36,280, Operating for Fiscal Years and Section 2-11

35 Financial Overview Revenue Comparisons by Fund Water and Other Funds Category 2011 Est. % Chg. % Chg. Service Charge $17,295,761 $17,735,406 18,495, ,266, Other 384, , , , Interest 37,495 19,196 68, , Water Operations 17,718,214 18,097,602 18,901, ,682, Property Taxes 464, , , , Interest 7,969 5,127 17, , Water RSF 472, , , , Capacity Reserve Fees (Buy-in) 717, ,009 1,722, ,309, Other 0 5, NA Interest 19,798 17,003 53, , Water Replacement 737, ,527 1,775, ,378, Capacity Reserve Fees 2,353,660 1,179,187 2,257, ,828, Infrastructure Charge 2,316,068 2,635,432 2,649, ,649, Other 1,038, , , ,080, Interest 36,984 18,739 53, , Water Expansion 5,745,634 4,619,825 5,837, ,653, Water Subtotal 24,673,710 23,488,081 27,014, ,218, Other 903,299 1,096,818 1,109, ,159, Interest 3,196 3,455 5, , DV Standby Assessment 906,495 1,100,273 1,114, ,165, Other 2,258,060 1,422,387 1,421, ,422, Administrative Overhead 2,258,060 1,422,387 1,421, ,422, Other 0 614, , , Interest 14,470 7,061 24, , OPEB 14, , , , Other Funds Subtotal 3,179,025 3,144,577 3,254, ,372, Grand Total $53,480,128 $51,492,564 $62,160, $72,871, Section 2-12 Operating for Fiscal Years and

36 Financial Overview Growth in Total Service Charge Revenues Total service charge revenue is anticipated to have a modest growth of 5.9% in fiscal year and 5.2% in. In, the largest component of total service charges comes from growth in the Regional Sewer Enterprise, which has an increase of 11.8% due to a planned rate increase and CPI adjustment beginning July Water Enterprise has a steady increase of roughly 4% a year due to a combination of rising costs of Zone 7 water and growth in new customers. 40,000,000 39,000,000 38,000,000 37,000,000 36,000,000 35,000,000 34,000,000 33,000,000 32,000,000 31,000,000 30,000, Estimated Category 2011 Est. % Chg. % Chg. Total Service Charge $33,704,492 $35,393,475 $37,474, % $39,423, % Pages of this section include details for each operating fund. Operating for Fiscal Years and Section 2-13

37 Financial Overview Regional Sewer Operations Regional service charges (for wastewater treatment and disposal) are billed via property tax rolls for south San Ramon and Dublin residential customers. Commercial customers receive a bi-monthly bill that is calculated based on actual water consumption. The City of Pleasanton bills its customers directly and then remits payment to DSRSD on a monthly basis. Service charges are the primary revenue source in the Regional Sewer Operations fund. The number of new accounts for Dublin and San Ramon is estimated to increase approximately 3% in and 4% in The pie chart shows the anticipated service charge revenue by customer location for FYE. Regional Sewer Service Charge Revenues 20,000,000 15,000,000 10,000,000 5,000, Estimated 2011 Est. % Chg. % Chg. Regional Service Charges $14,602,797 $15,743,249 $17,606, % $18,141, % FYE ed Service Charges Dublin 46% Dublin $6,885,688 San Ramon $1,667,007 Pleasanton $6,556,855 Pleasanton 43% San Ramon 11% Section 2-14 Operating for Fiscal Years and

38 Financial Overview Regional Sewer Rates In FYE 2011, the District adopted a two-step rate increase of regional rates, based on a new cost-based study conducted for the treatment system. Roughly two thirds of the increase was implemented on January 1, 2011, and the remaining one third, plus a CPI adjustment, will go into effect at the beginning of fiscal year. All residential customers in Dublin and south San Ramon are billed via the property tax rolls. Nonresidential customers in Dublin are billed directly by the District; in south San Ramon, East Bay Municipal Utilities District (EBMUD) bills commercial customers and then remits payment to DSRSD on a monthly basis. History of Regional Sewer Residential Rates Date Single Family Rate % Change Jul 2011 $ % Jan 2011 $ % Jul $ % Jul 2009 $ % Jul 2008 $ % Jul 2001 $ % May 2000 $ % May 1999 $ Operating for Fiscal Years and Section 2-15

39 Financial Overview Local Sewer Operations Local sewer service charges (for wastewater collection) are billed to Dublin and south San Ramon customers. Residential customers are billed directly on their property tax rolls. Non-residential customers in Dublin are billed directly by the District; in south San Ramon, East Bay Municipal Utilities District (EBMUD) bills commercial customers, and then remits payment to DSRSD on a monthly basis. Because south San Ramon is almost built out, growth projections for that area are quite low. However, growth continues in eastern Dublin, so growth projections remain higher for the Dublin service area. Local sewer service charge revenues are projected to have a modest growth over the next two years due to CPI increases and new customers. Revenues by year are shown in the following graph. Local Sewer Service Charge Revenues $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000, Estimated 2011 Est. % Chg. % Chg. Local Service Charge $1,805,934 $1,914,820 $1,936, % $2,015, % Section 2-16 Operating for Fiscal Years and

40 Financial Overview Local Sewer Rates Historical Rates for Local Sewer are summarized in the table below. In 2007, rates were adjusted as a result of the completion of a rate study. Since then, an annual CPI adjustment has been implemented each year to reflect the inflationary impact on the District s operating costs. A new cost-based study will be completed during this budget cycle. As shown below, the current rate is just slightly higher than it was over ten years ago. History of Local Sewer Residential Rates Date Single Family Rate % Change Jul 2011 $ % Jul $ % Jul 2009 $ % Jul 2008 $ % Jul 2007 $ % Oct 2006 $ % Jul 2001 $ % May 2000 $ % May 1999 $ Operating for Fiscal Years and Section 2-17

41 Financial Overview Water Operations Water service is provided to Dublin and Dougherty Valley (San Ramon and unincorporated Contra Costa County) customers. The District delivers water that is purchased through the Tri Valley s wholesaler, Zone 7 Water Agency (Zone 7). The water purchase is the largest cost in the water enterprise. On December 3, 2002, the District adopted a revised rate schedule that established a Zone 7 Component. This rate is designed to increase or decrease based upon the rate established by Zone 7, generally effective on January 1 each year. This rate is designed to separate the cost of purchasing water from the cost of delivering water to DSRSD customers. Staff of the four retailers (DSRSD, Cities of Pleasanton and Livermore, and California Water Service Company - Livermore District) meet regularly to discuss ways of working proactively with Zone 7 to improve the quality of the water and keep rate increases to a minimum. The District continues to focus on identifying water that is used but not billed for, with a goal of minimizing unbilled water. There are many reasons for unbilled water, including amounts used to flush fire hydrants and test new water lines, as well as inaccurate data (under-reading) from water meters. The District currently has a 4.6% rate of unbilled water, compared to the industry standard of roughly 6%. While sewer revenues are largely predictable, water revenues are influenced by consumption, which is impacted by many variables including seasonal weather variations, water conservation measures (landscaping with drought tolerant plants, low flow showerheads, high efficiency toilets, etc.), new housing (typically with smaller yards, less leaks, and more efficient fixtures), and a number of other factors. For example, when the District s service area receives a lot of rain, outdoor irrigation decreases significantly. Since rainfall is not predictable, the District uses recent consumption data to estimate revenues for each budget cycled. For the next two years, the District expects to continue in Stage 1 of water conservation. The estimated number of new potable accounts is roughly 3% in fiscal year and 4% in. Section 2-18 Operating for Fiscal Years and

42 Financial Overview Potable Water Service Charge Revenues $19,500,000 $19,000,000 $18,500,000 $18,000,000 $17,500,000 $17,000,000 $16,500,000 $16,000, Estimated 2011 Est. % Chg. % Chg. Potable Water Service Charges $17,295,761 $17,735,406 $18,495, % $19,266, % Operating for Fiscal Years and Section 2-19

43 Financial Overview Potable Water Rates The Zone 7 component, charged on all potable water used, automatically increases when Zone 7 raises the cost of wholesale water. Although DSRSD staff works to influence Zone 7 to keep their rate as low as possible, the District does not control this cost. Zone 7 pricing reflects an average annual increase of 7% per year between 2002 and DSRSD conducted a water rate study in 2009 and revised its rate structure July Residential customers pay according to a three-tier pricing structure: a first tier price for 0-20 ccf (hundred cubic feet) used in a bimonthly billing cycle, a second tier price for ccf, and a third tier price for more than 34 ccf. Commercial rates vary by season: a lower rate during winter months (November through April) and a higher rate during summer months (May through October). Irrigation rates are uniform throughout the year. The new rate structure is designed to promote water conservation. In addition, the District defined water shortage stages and set rates for each stage that are designed to generate sufficient revenues to cover costs even when sales decline. A power charge applies to service locations in Pressure Zones 2-4 (where water must be pumped above 389 feet in elevation); this charge increases each year to cover higher electricity costs. DSRSD rates increases since July 2009 are due to annual inflationary adjustments. Date Zone 7 Tier One 1 Tier Two 2 Tier Three 3 Power Charge January 2011 $2.16 $0.78 $0.95 $1.08 $0.25 January $2.11 $0.77 $0.94 $1.07 $0.24 July 2009 $ 1.94 $ 0.77 $ 0.94 $ 1.07 $ 0.23 January 2009 $ 1.85 $ 0.60 $ 0.75 N/A $ 0.19 January 2008 $ 1.58 $ 0.55 $ 0.70 N/A $ 0.19 January 2007 $ 1.46 $ 0.50 $ 0.65 N/A $ 0.19 January 2006 $ 1.36 $ 0.48 $ 0.63 N/A N/A January 2003 $ 1.29 $ 0.48 $ 0.63 N/A N/A January 2002 $ 1.26 $ 0.48 $ 0.63 N/A N/A December 1999 N/A $ 1.58 $ 1.73 N/A N/A 1 Prior to July 1, 2009, Tier 1 is any consumption between 0-30 ccf on a bi-monthly basis. After July 1, 2009, Tier 1 is consumption between 0-20 ccf on a bi-monthly basis. 2 Prior to July 1, 2009, Tier 2 is any consumption over 30 ccf on a bi-monthly basis. After July 1, 2009, Tier 2 is consumption between ccf on a bi-monthly basis. 3 Tier 3 is consumption over 34 ccf on a bi-monthly basis. Section 2-20 Operating for Fiscal Years and

44 Financial Overview Infrastructure Charge Starting in FYE, DSRSD added a Temporary Infrastructure Charge (TIC) for water customers. This new charge will help the District repay outstanding debt in the Water Expansion fund. The TIC is structured to provide flexibility to and to allow the Board of Directors to periodically review and adjust this charge, including the possibility that this charge may be suspended and later re-instated, within the maximum amount as established. Size of Meter (inches) Infrastructure Charge 5/8 $ /4 $ $ /2 $ $ $ $ $ 1, $ 3, $ 5, Water Shortage Rates The Board may implement water shortage stages when additional conservation is necessary to ensure the reliability of the water supply. Due to state-mandated reduction in water delivered to Zone 7, DSRSD declared a Stage 1 water shortage effective July 1, Bimonthly residential rates for each stage currently are noted in the table below (January 1, 2011-December 31, 2011). Water shortage rates are designed to provide revenue sufficiency during the declaration of conservation, meaning that essentially the same amount of revenue is generated with a slight increase for anticipated outreach costs. Stage 1 (per ccf) Stage 2 (per ccf) Stage 3 (per ccf) Stage 4 (per ccf) Tier 1 (0-20 ccf) $ 0.84 $ 1.09 $ 1.56 $ 2.18 Tier 2 (21-34 ccf) $ 1.19 $ 1.67 $ 2.14 $ 3.13 Tier 3 (over 34 ccf) $ 1.41 $ 2.33 $ 3.52 $ 4.87 Operating for Fiscal Years and Section 2-21

45 Financial Overview Recycled Water Service Charges Water recycling continues to be a prime focus for the District. With California s water supply situation worsening, recycled water is becoming increasingly critical to water resource conservation. DSRSD has worked many years in partnership with East Bay Municipal Utilities District (EBMUD) to develop a comprehensive recycled water program for Dublin and San Ramon Valley customers. This effort is represented by the DSRSD-EBMUD Recycled Water Authority (DERWA). DERWA completed its facilities additions and improvements and is currently delivering recycled water to irrigation customers in both Dublin and San Ramon. $2,400,000 $2,300,000 $2,200,000 $2,100,000 $2,000,000 $1,900,000 $1,800, Estimated 2011 Est. % Chg. % Chg. Recycled Water Service Charges $2,318,982 $2,233,627 $2,303, % $2,395, % Date Recycled Water per ccf Jan 2011 $2.96 Jan $2.91 Jul 2009 $ 2.75 Jan 2009 $ 2.34 Jan 2008 $ 2.05 Jan 2007 $ 1.90 Jan 2006 $ 1.77 Jan 2003 $ 1.69 Dec 1999 $ 1.47 Section 2-22 Operating for Fiscal Years and

46 Financial Overview Capacity Reserve Fees are cyclical and are tied to building trends. Areas in the eastern portion of the City of Dublin and the Dougherty Valley in San Ramon and unincorporated Contra Costa County have capacity to grow. Capacity Reserve Fees Capacity Reserve Fees are collected to finance the cost of building expanded District facilities to support new customers. These fees consist of the following components: Expansion Funding for future facilities that will be needed to support planned development. Buy-in Buy-in to existing facilities (net of the principal on any related debt) that are available to serve development. Debt Funding for the principal and interest cost associated with the expansion portion of facilities built to support growth (projects are allocated between current and future customers when they are built; only the future portion of those facilities that have been funded by debt are included). The following chart shows total capacity reserve fee revenues by fund. In the past few years, growth has slowed dramatically in the District s service area. However, DSRSD is projecting a steady recovery and this is reflected in the growth in total capacity reserve fees the District expects to receive over the next two years. 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, Estimated Local Regional Water Capacity Fees 2011 Est. % Chg. % Chg. Local Sewer $607,005 $172,556 $940, % $1,264,545 34% Regional Sewer $6,695,099 $3,414,158 $10,287, % $13,629,148 32% Water $3,070,980 $1,522,196 $3,980, % $9,137, % Total $10,373,084 $5,108,910 $15,207, % $24,031,167 60% Operating for Fiscal Years and Section 2-23

47 Financial Overview Interest The District uses a pooled interest allocation method for all funds, which means that any unrestricted interest that is earned is allocated each month based upon the cash balances in each fund. For the next two fiscal years, a 1% interest rate is assumed. This reflects the current low interest rate environment. Available cash balances have also decreased over the last two years due to use of reserves for debt payments. 900, , , , , , , , , Estimated 2011 Est. % Chg. % Chg. Interest $408,371 $224,259 $722, % $850,570 18% Section 2-24 Operating for Fiscal Years and

48 Financial Overview Other Revenues Other Revenues include administrative fees charged by the District, Dougherty Valley Standby Assessment, overtime inspections, backflow prevention, rental of office space, and other miscellaneous items. The following tables show the changes in this revenue from FYE -. 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Estimated 2011 Est. Local Operations $15,001 $16,755 $3,000 $3,000 Local Replacement Local Expansion 445, , , ,000 Regional Operations 1 375,120 1,000, , ,683 Regional Replacement Regional Expansion 1 788,223 2,142,486 43,063 43,063 Water Operations 384, , , ,000 Water RSF 464, , , ,212 Water Replacement 0 5, Water Expansion 1,038, , ,794 1,080,667 Administrative Cost Center 2,258,060 1,422,387 1,421,751 1,422,060 OPEB 0 614, , ,808 DV Standby District 903,299 1,096,818 1,109,000 1,159,200 Total $6,678,113 $8,130,489 $5,542,758 $5,916,693 % Change 21.7% -31.8% 6.7% 1 Regional Operations and Regional Expansion Funds include a LAVWMA debt credit in FYE 2011, which accounts for the large increases in Operating for Fiscal Years and Section 2-25

49 Financial Overview Transfers Transfers are internal transactions that are used to move money from one fund to another for specified purposes. Transfers are included in both the revenue and expense sections of the District budget. Each Operations fund contributes money to its Replacement fund for the future repair and replacement of its facilities and infrastructure. Amounts are determined each budget cycle based on the fund balance and future projected expenditures. Other transfers are used for a variety of reasons. One example is the transfer for a lease of facilities that were built using Regional funds but are currently being used for water recycling. Another example is the transfer to move 1/2 of property taxes received into the OPEB fund to pay for the Water fund s liability for prior benefits earned (current benefits being earned for the future are funded each year through rates). Section 2-26 Operating for Fiscal Years and

50 Financial Overview Expenses The Board approves the Operating s at the fund level, providing resources for the General Manager to run the District while ensuring that it maintains overall control of rates and fees. The General Manager is authorized to make no net change budget adjustments within a fund. As shown below, the major cost categories at the District are for personnel, debt service, JPA, and the purchase of water from Zone 7. Debt Service 25% Capital Outlay 1% Personnel 34% JPA 8% Other 1% Contracts 7% Water Purchase 17% Materials 7% Major Expenditures Water Purchase All of the District s potable water is purchased from Zone 7 Water Agency. In the Water Operations budget, the water purchase represents 48% of the total costs in that fund. The Zone 7 rate component (discussed in the preceding revenue section) is designed to cover the full cost of water and to increase or decrease based upon the rate established by Zone 7, generally effective January 1st of each year. Operating for Fiscal Years and Section 2-27

51 Financial Overview Personnel As in most service businesses, personnel costs are the District s largest expense. The personnel section describes the District s staffing, employee groups, and benefits. While scheduled salary increases represent a portion of the increase in personnel, benefit costs have had a big impact on the budget in prior years and they will continue to do so into the future. See further discussion and analysis in the Personnel section on page 35 of this section. The District charges staff time directly to capital improvement projects and its two joint powers authorities (for work performed for those agencies); each division budgets a salary and benefit credit to cover the estimated time spent on those efforts. This has the effect of lowering operating costs in years that have many capital projects. Many operational division budgets that show a small or negative increase in personnel costs have substantial staff time allocated to JPAs and capital projects. The administrative budgets personnel costs reflect the true impacts of rising salaries and benefit costs, as administrative personnel do not normally charge time to capital projects or JPAs. The District made a change in its accounting practice and no longer charges staff time to the Replacement funds except via a capital improvement project. This change is reflected in the and budgets. Fund 2011 Est. % Chg. % Chg. Local Sewer Operations 651,082 1,035,309 1,156,541 12% 1,193,777 3% Local Sewer Replacement 122,046 22, % 0 0% Local Sewer Expansion 190, , ,477-19% 198,126 3% Regional Sewer Operations 5,453,032 6,157,150 6,046,069-2% 6,220,138 3% Regional Sewer Replacement 114,847 15, % 0 0% Regional Sewer Expansion 54,871 57,154 31,728-44% 32,487 2% Water Operations 3,393,484 3,651,920 4,178,209 14% 4,272,621 2% Water Replacement 247,094 55, % 0 0% Water Expansion 281, , ,715-9% 327,818 3% OPEB 177, , ,255 13% 758,808 9% Administrative 4,767,842 3,987,586 4,339,933 9% 4,528,588 4% Total 15,453,740 16,188,280 16,957,927 5% 17,532,363 3% Section 2-28 Operating for Fiscal Years and

52 Financial Overview Debt Service The District currently has two outstanding debt issuances, as outlined below: 2009 Refunding Revenue Bonds: In 2009, the District issued $ million in privately placement debt to restructure two outstanding bonds in the Regional Sewer Treatment fund (1997 Indenture and the 2000 Variable Rate Debt) into a 10-year fixed rate debt. Current principal is $16.18 million, and the final payment is on September 1, Water Revenue Refunding Bonds: In 2011, the District issued $36.62 million in bonds in order to refinance roughly $24 million of DERWA Commercial Paper (representing the District s share of this debt) and $12.4 million in WateReuse debt. Principal payments will begin in fiscal year 2014, and the last payment is in In addition to the to the debts noted above, the District is obligated to pay debt service issued through its Joint Power Authorities (JPAs). Currently, the District is responsible for $74.9 million of LAVWMA s $124.7 million in outstanding debt principal, as well as $10.2 million in state loans received by DERWA. The annual debt service for these two debts are shown in the JPA section on the next page. The District adopted the Capital Financing and Debt Management policy (Appendix E) in In general, the District may only use debt financing to purchase or build capital assets that cannot be acquired from either current revenues or replacement reserves and to fund capital improvements and additions. Debt is not used for operating and maintenance costs. Operating for Fiscal Years and Section 2-29

53 Financial Overview Joint Powers Authorities The District participates in two joint powers authorities: the Livermore Amador Valley Waste Management Authority (LAVWMA) and the DSRSD-EBMUD Recycled Water Authority (DERWA). LAVWMA Participants in LAVWMA include the District and the Cities of Livermore and Pleasanton. The authority manages a pipeline that transports treated wastewater to San Lorenzo, where it is discharged into San Francisco Bay. Contributions to LAVWMA from the Regional Operations fund are used for LAVWMA operations and maintenance (O&M), repair and replacement of LAVWMA facilities, and to pay DSRSD s portion of the LAVWMA debt that was used to repair and improve the existing facilities and pipeline. LAVWMA has its own operating and capital budgets and issues its own debt. LAVWMA JPA 2011 Est. % Chg. % Chg. Regional Operations - O&M 1,778,471 1,762,029 1,945, % 1,945, % Regional Operations - Debt 1,688,704 1,688,985 1,688, % 1,688, % Regional Expansion - Debt 5,256,592 7,557,754 7,557, % 7,557, % Total 8,723,767 11,008,768 11,191, % 11,191, % DERWA DSRSD and East Bay Municipal Utility District (EBMUD) participate in DERWA to provide recycled water service. The recycled water treatment plant began operations in The District contributes to DERWA from the Water funds. DERWA JPA 2011 Est. % Chg. % Chg. Water Operations 1,391,301 1,336,670 1,651, % 1,651, % Water Replacement ,000 NA 157, % Water Expansion Debt 849, , , % 852, % Total 2,241,176 2,189,211 2,661, % 2,661, % Section 2-30 Operating for Fiscal Years and

54 Comparative Expense s Category and Department Financial Overview The charts below provide additional comparative details about the District s budget by category and department. Category 2011 Est. % Chg. % Chg. Personnel 15,453,740 16,188,291 16,957, % 17,532, % Materials 10,551,278 11,360,606 11,541, % 12,084, % Contracts 4,120,128 3,537,701 3,738, % 3,699, % Other (excludes Depreciation) 17,402,404 14,856,429 16,872, % 17,196, % Total 47,527,550 45,943,027 49,110, % 50,513, % For Department variance analysis, please see the Department Overview section of this document. Department 2011 Est. % Chg. % Chg. Executive Group 1,030,096 1,214,894 1,264, % 1,347, % Organizational Services 2,077,712 1,789,758 1,929, % 2,001, % Financial Services 2,953,365 3,029,854 3,363, % 3,373, % Engineering Services 2,679,737 3,091,773 3,218, % 3,280, % Operations 10,703,298 11,318,577 11,913, % 12,086, % Non-Departmental (exc. Depr.) 28,083,342 25,498,170 27,420, % 28,424, % Total 47,527,550 45,943,027 49,110, % 50,513, % Operating for Fiscal Years and Section 2-31

55 Financial Overview Comparative Expense s Operations Funds Local Sewer Operations Local Sewer Operations (Local) captures the costs related to the local sewer collection system that serves Dublin and south San Ramon. The budget for this fund reflects a budgetary decrease of 1.2% from the estimated actual. There are two major cost components of this fund, personnel costs (35.6%) and other costs (36.4%) primarily allocated administrative costs. 2,500,000 2,000,000 1,500,000 1,000, , Est Est. Personnel Materials Contracts Other Replacement Transfer 2011 Est. % Chg. % Chg. Personnel 651,082 1,034,026 1,156, % 1,193, % Materials 45,693 47,927 53, % 54, % Contracts 72,865 53,099 59, % 59, % Other (excluding Depreciation) 148, , , % 409, % Replacement Transfer 450, , , % 287, % Total 1,368,147 1,911,791 1,935, % 2,004, % How Are Local Sewer Service Charges Spent? Section 2-32 Operating for Fiscal Years and

56 Financial Overview Regional Sewer Operations Regional Sewer Operations captures the costs related to the operation of the regional wastewater treatment facility, which serves District customers in Dublin and southern San Ramon as well as the City of Pleasanton ( by contract) Est Est. % Chg. % Chg. Personnel 5,453,032 6,154,853 6,046, % 6,220, % Materials 1,774,588 1,773,060 2,018, % 1,992, % Contracts 588, , , % 815, % Other (excludes Depreciation)* 3,512,734 5,512,743 5,785, % 5,915, % Replacement Transfer 1,900,000 1,948,000 2,400, % 2,460, % Total 13,228,509 15,951,586 17,112, % 17,403, % *Other includes contributions to LAVWMA O&M costs. How Are Regional Sewer Service Charges Spent? Repl. Transfer 14% Personnel 35% Other 34% Materials 12% Contracts 5% Operating for Fiscal Years and Section 2-33

57 Financial Overview Water Operations Water Operations captures costs related to the purchase and delivery of water to customers in Dublin and Dougherty Valley. 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - FYE FYE 2011 Est. Est. FYE FYE Personnel Materials Contracts Other Replacement Transfer 2011 Est. % Chg. % Chg. Personnel 3,393,484 3,651,381 4,178, % 4,272, % Materials 8,400,127 9,059,563 9,068, % 9,572, % Contracts 3, , , % 557, % Other (excluding Depreciation) 2,438,339 2,567,115 3,187, % 3,277, % Replacement Transfer 1,921,667 2,306,000 1,651, % 1,692, % Total 16,157,586 18,047,740 18,747, % 19,372, % How are Water Service Charges Spent? Section 2-34 Operating for Fiscal Years and

58 Financial Overview Administrative Cost Center This fund captures the District s administrative costs, which are costs not directly attributable to any particular fund. While most of the divisions outside of the operations department use this fund to record their costs, any costs that can be specifically linked to a specific fund are budgeted and charged accordingly. For example, training an employee about backflow requirements (the device that prevents water from flowing backwards from a residence or irrigation system into the District s potable water system) would be charged to the Water Operations fund. The Administrative Cost Center is allocated each month to the other funds based on total proportional staffing costs. 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Est. Personnel Materials Contracts Other 2011 Est. % Chg. % Chg. Personnel 4,767,842 3,988,077 4,339, % 4,528, % Materials 133, , , % 160, % Contracts 1,038, ,648 1,017, % 1,079, % Other 66,668 44,029 43, % 45, % Total 6,005,793 5,136,223 5,559, % 5,814, % Operating for Fiscal Years and Section 2-35

59 Financial Overview District Wide Expense History The chart below shows the District s operating expense history for the past ten completed fiscal years. 10-YEAR EXPENSE HISTORY Personnel Materials Contract Services Other (Millions) Section 2-36 Operating for Fiscal Years and

60 Financial Overview Personnel TOTAL FTE POSITIONS SUMMARY BY DEPARTMENT Department 2011 Change Executive Group Organizational Services Financial Services Engineering Services Operations Total The Board reviews all n e w p o s i t i o n r e - quests, authorizes t o t a l f u l l t i m e equivalent (FTE) positions and approves salary ranges for positions after negotiation with the relevant bargaining units. Employee Bargaining Units The District has five employee bargaining units. Below is a listing of each unit with highlights from their contracts: Senior Managers Annual contract by Board resolution Annual CPI adjustment (San Francisco Bay Area index) in odd numbered years Salary survey in even numbered years (salary set at median of survey group) Pay for Performance Plan Mid-Management/Confidential Employees Contract date December 31, 2007 December 26,2011 Annual CPI adjustment (San Francisco Bay Area index) Pay for Performance Plan Professional Employees Contract date December 31, 2007 December 26, 2011 Annual CPI adjustment (San Francisco Bay Area index) 50% match of Deferred Compensation contribution Pay for Performance Plan Stationary Engineers Local 39 Contract date April 10, December 26, 2011 Annual CPI adjustment (San Francisco Bay Area index) with a 2% floor and a 6% ceiling 25% match of Deferred Compensation contribution Confidential Employees Contract date September 24, December 23, Annual CPI adjustment (San Francisco Bay Area index) with a 2% floor and a 6% ceiling 25% match of Deferred Compensation contribution. Pay for Performance Plan The General Manager is an at-will contract employee. Operating for Fiscal Years and Section 2-37

61 Financial Overview Benefits All regular and limited term employees who work more than 1,000 hours per fiscal year are enrolled in the CalPERS (California Public Employees Retirement System) age 55 retirement program. Employees contribute 10% of salary toward their retirement (8% is the employee s portion and 2% is paid by the employees on behalf of the employer as negotiated in exchange for the current retirement plan). The District contribution varies from year-to-year. For FYE 2011, the District s contribution is % of salary. In FYE the contribution will be % and is projected to be % in FYE. The increase in costs is mainly attributed to the loss in investment value due to the market crash. All Board members and full-time employees are eligible to receive medical, dental and vision benefits. Part-time employees receive prorated benefits. The Board annually reviews and sets the maximum premium that will be paid by the District (according to a cost-sharing agreement in each of the contracts). Currently, the maximum monthly District contribution for medical is set at $1, for Local 39 employees and $1,380 for other employees, including the Board of Directors. This employer contribution is effective for calendar year The District provides retiree medical and dental. The amount paid is the same as that paid for current employees. Funding of these benefits is from the OPEB fund (see pages 2-3 for more details). The District budgets each year s expense for future post-employment benefits as a percentage of wages. For FYE and, the District ed 7.7% of salaries for future post-employment benefits. Contributions are based upon an actuarial study that is completed every two years. Section 2-38 Operating for Fiscal Years and

62 Financial Overview Capital Improvement Program Introduction Dublin San Ramon Services District ( District or DSRSD ) provides potable water, wastewater and recycled water services for portions of the Livermore- Amador Valley and San Ramon Valley in the Counties of Alameda and Contra Costa. Specifically, the District provides: Potable water distribution; wastewater collection, treatment and disposal; and recycled water treatment and distribution within the City of Dublin; Wastewater collection, treatment and disposal within the southern portion of the City of San Ramon in the I-680 corridor; Potable water distribution and recycled water treatment and distribution to the Dougherty Valley portion of the City of San Ramon; Wastewater treatment and disposal, through contract, to the City of Pleasanton; Wholesale recycled water treatment for Dublin San Ramon Services District- East Bay Municipal Utility District Recycled Water Authority (DERWA); and Contract operation of Livermore Amador Valley Water Management Authority (LAVWMA). The Capital Improvement Program ( CIP ) was established to plan for the improvement and construction of fixed assets to meet these service responsibilities. The CIP supports the District s Mission to provide value to our community by delivering high quality wastewater and water services at a competitive price and in an environmentally responsible manner. The complete Capital Impro vement Program (CIP) budget for FYE and is contained in a separate document that includes detailed project information. This section contains an overview of that document and summary schedules. The complete 2-year CIP budget and the 10-year CIP plan are available online at The CIP is a key document to implement DSRSD Strategic Element 2.0 Infrastructure.to plan, build, operate and maintain safe, secure and high quality utility infrastructure for current and future customers..by making knowledge-based decisions, using quality materials, employing progressive methods, completing work on time, meeting budget expectations, and employing modern asset management techniques. The CIP is a budgeting and planning tool that documents the facility planning, improvement and construction of the infrastructure to serve our customers. Key Success Measurements for the CIP are: Conformance with statutes and regulations; Adequate facilities to provide existing customers with safe, reliable, environmentally conscious, cost effective and efficient service during normal and emergency conditions; and Available adequate excess capacity to accommodate planned and approved growth of the community the District serves. Operating for Fiscal Years and Section 2-39

63 Financial Overview The CIP consists of two separate documents the CIP 10-Year Plan ( CIP Plan ) and the CIP 2-Year ( CIP ) with the Board of Directors taking separate actions on each. The Board of Directors ( Board ) accepts the CIP Plan biennially, prior to adopting the CIP, to establish a capital project plan and to provide a basis for capital financial planning. Acceptance of the CIP Plan does not authorize any expenditure. The Board adopts the CIP in June of the biennial year coinciding with the biennial approval of the Operating. The Board adoption authorizes the work and budget of individual projects and programs, and establishes the maximum expenditure from each fund for each fiscal year. * The current CIP Plan FYE was accepted by the Board of Directors on March 15, The focus for this budget cycle is to select CIP projects justified by one or more of the following criteria: Mission Critical for a specific reason such as reliability, capacity or cost management, the projects are critical to maintaining the mission of the District even in these difficult financial times. Regulatory for compliance with regulations or laws. Important projects in this category, while not critical, are important to the mission of the District such a replacing a disintegrating sewer or leaking water main and is included if the project can be accomplished with existing District staff with only minimal use of outside consultants. Commitment projects that are important, not critical, because the District has made a commitment such as the treatment plant odor control program. However, the scope of the projects has been or can be kept to minimum. Purpose of the CIP The CIP is a comprehensive document that authorizes funding to begin work on capital projects and/or programs during fiscal years ending (FYE) and. A project is defined as being a significant or unique item of work that is associated with a particular facility and has a known scope of work. A program provides funding for several similar items of work on various facilities, some of which are not yet defined. When a specific scope of work is defined, a project is then created within the program budget to accomplish the work. CIP Authorization By adopting the CIP, the Board: Authorizes work to proceed on individual capital projects/programs; Authorizes total budgets for individual capital projects/programs; Establishes the maximum expenditures from each fund for each fiscal year; Authorizes the initiation of project expenditures in either year of the CIP ; and Makes the appropriate Environmental findings for some projects. Section 2-40 Operating for Fiscal Years and

64 Financial Overview In each project/program description header, the status of each is noted as Continuing, Initiate, New or Closing. Upon adoption of the CIP, the Board of Directors takes the following actions regarding the status of each project/program: Continuing: Confirms that the project/program remains authorized; and Adopts any increase or decrease in total project/program budget. Initiate: Authorizes work to begin on projects/programs previously listed under the CIP Plan; Authorizes work to begin on the project in either year of the CIP ; and Adopts any increase or decrease in total project/program budget from the CIP Plan. New: Closing: Confirms the need for the new project/program; Authorizes work to begin on the project in either year of the CIP ; and Adopts a total project/program budget. Confirms that the project/program remains authorized for warranty phase; That the physical work is substantially complete and can be capitalized; Remains authorized for outstanding liabilities; and Additional funding commitments are not authorized. CIP Format The CIP consists of a project description sheet for each capital project and program for which the Board is authorizing work to proceed during FYE and. Each description sheet is divided into five areas of information: Header with general information Project purpose and description Impact Analysis Financial Overview Fund Split Basis Footer section with Project Manager and Project Sponsor names, and any additional Notes Project/program sheets are grouped in the CIP by the source of funds being used to complete the project/program. Some projects/programs are funded by more than one fund. Those are listed under the fund making the largest contribution to the project. Projects that are administrative in nature are funded 45% by the Regional Sewer Replacement (Fund 310), 42% by the Water Replacement (Fund 610) and 13% by the Local Sewer Replacement (Fund 210). These projects are listed with the Fund 310 Section as that fund has the largest percentage. Identifying the source of funding allows for financial analysis of the CIP by fund to ensure adequate resources are available to complete the necessary projects. Operating for Fiscal Years and Section 2-41

65 Financial Overview The CIP includes projects and programs that are capitalized in the District s accounting system. A project that is capitalized is a project of nonrecurring nature with a cost of $15,000 or more and an estimated service life of three (3) years or more. Engineering studies to determine capital projects required to be constructed are also capitalized. Examples of capitalized projects are: New, expanded, renovated or modified facilities Repair or replacement of facilities Relocation of facilities Repaving facility access roads Installation of a new roof Repainting of reservoirs and major equipment Major water meter replacement project Rehabilitation or replacement of existing facilities, which is not routine maintenance Engineering studies and services that lead to, or are directly related to, capitalized facilities such as master plans and the CIP Non-capitalized projects include recurring, normal and routine maintenance projects, examples of which include, but are not limited to: Repair of potholes Fixing fencing Spot patching of roof Touch-up painting Annual equipment maintenance Annual water meter replacement Engineering services and studies that do not lead to, or are not directly related to, capitalized facilities Ongoing Financial, Engineering Design and Geographic Information Systems (GIS) computer hardware and software upgrades not related to the CIP The normal and routine maintenance of existing facilities noted above will be included in the biennial Operating of each appropriate department and division. CIP Controls When the Board adopts the CIP, each proposed project/program and corresponding budget is authorized and may be fully expended with the following conditions. Fund Expenditure Limits - Upon adoption of the CIP, the Board establishes a limit on the expenditure from each fund for each fiscal year. The limit for each fund is less than the sum of all projects/programs approved within the fund. The pace of a capital project is affected by many factors, frequently unidentified at the time of budgeting. The fund limit is a fiscal control point that is established based upon considerations of the complexities associated with specific project schedules and expenditure experience from previous years. The Board must approve any increase in a fund expenditure limit after review by the appropriate technical committee and/or the Finance Committee. The fund limit is included in the Operating as the Capital Projects line item. Section 2-42 Operating for Fiscal Years and

66 Financial Overview The following table outlines the recommended fund expenditure limits for FYE and FYE. Fund Name Fund Expenditure Limits for Fiscal Years Ending and Fund No. FYE FYE 2-Year Total Local Sewer Replacement 210 $550,000 $325,000 $875,000 Local Sewer Expansion 220 $0 $0 $0 Regional Sewer Replacement 310 $2,368,000 $1,896,000 $4,264,000 Regional Sewer Expansion 320 $55,000 $55,000 $110,000 Water Replacement 610 $2,223,000 $1,553,000 $3,776,000 Water Expansion 620 $410,000 $33,500 $443,500 TOTAL $5,606,000 $3,862,500 $9,468,500 The following pie chart illustrates the relative percentages that each of the fund expenditure limits represent of the total over the two-year period. Operating for Fiscal Years and Section 2-43

67 Financial Overview Total Project The total expenditures for each individual project shall not exceed the project total. However, expenditures may be initiated in either fiscal year even if one year shows no budget. Per Accountability Policy (P ) (Appendix B), the General Manager is authorized to approve cumulative increases to a project budget up to a maximum of $100,000. In excess of the General Manager s signing authority, the appropriate technical committee and the Board must approve increases to the total project budget. Project Approval Under A Program There exists some facility improvements that are categorized as programs. Each program will eventually have one or more projects authorized under it as a specific scope of work is identified. For example, the Wastewater Collection System Replacement (Rehabilitation) Program (CIP ) has annual funds to support repair or replacement of leaking sewer pipelines and manholes as each project is identified. However, the specific pipelines or manholes that need to be repaired or replaced cannot be identified at this time; therefore, the replacement monies are listed as a program. The District Engineer assigns specific projects with project numbers as the projects are identified. Approval authority depends upon availability of budget and the cost of the project created. General Manager may approve a project of $100,000 or less. The General Manager may approve an increase in the budget of a project created from a program provided adequate budget is available and the total budget will not exceed $100,000. A project created from a program in excess of $100,000 or a budget increase that will result in a project budget in excess of $100,000 requires Board approval. Upon completion of a project created from a program, any unused funds are returned to the program provided it is in the same fiscal year. Total Program The monies for the specific project under a program will come from the program funds. Program funds are not cumulative from year to year. Program funds that do not fund specific projects by the end of the fiscal period do not carry forward. Thus, the total expenditures for each program shall not exceed the total program budget for each fiscal year. The appropriate technical committee and the Board must approve increases in a program budget. CIP Implementation After the Board adopts the CIP, the General Manager may proceed with implementation. The General Manager may authorize staff to complete the implementation process or use consultant contracts in standard District form, task orders and purchase orders for services, equipment, materials and supplies up to the CIP limits, provided that the aggregate amount of approved expenditures does not exceed $100,000. The General Manager may approve professional and construction contracts in standard District form, as previously approved by the Board, up to $100,000. All work authorized by the General Manager or submitted to the Board for authorization shall be procured and managed in accordance with District purchasing procedures. Section 2-44 Operating for Fiscal Years and

68 Department Overview

69 Department Overview Executive Department Organization Chart Board of Directors Office of the General Manager General Manager Management Services Executive Services Supervisor Administrative Assistant I/II (2) Admin.Tech Confidential (1) Operating for Fiscal Years and Section 3-1

70 Department Overview Executive Department by Category 2011 Estimated Personnel 875, ,646 1,011,908 1,051,519 Materials 8,823 7,137 6,603 7,000 Contracts 56, , , ,728 Other 89, , , ,145 Total 1,030,096 1,214,894 1,264,953 1,347,392 % Change 17.9% 4.1% 6.5% Executive Department by Fund 2011 Estimated Local Sewer Operations 10,248 10,794 9,400 9,500 Regional Sewer Operations 34,168 39,837 41,525 42,625 Water Operations 69,758 60,377 82,250 82,250 Water Expansion 2, Administrative Overhead 913,710 1,102,925 1,131,778 1,213,017 Total 1,030,096 1,214,894 1,264,953 1,347,392 % Change 17.9% 4.1% 6.5% Section 3-2 Operating for Fiscal Years-

71 Department Overview MISSION STATEMENT Set policy and provide resources to enable the District to meet its mission of providing value to our community by delivering high quality water and wastewater services at a competitive price and in an environmentally responsible manner. Legislative Division The Legislative Division (five Directors of the Board, elected at large by voters of the District in Dublin and those parts of San Ramon and Dougherty Valley within the District s boundaries) provides legislative, policy, and political direction and guidance for the District by developing and adopting long-term planning documents including: the biennial Operating and Capital Improvement Program budgets; the ten-year Capital Improvement Plan; the Urban Water Management Plan; the Water System Master Plan; the Collection System Master Plan; the Wastewater Treatment Master Plan; and specialty plans for biosolids, disposal, and security. The Board of Directors also adopts and oversees the District s Strategic Plan using goals established by the five committees of the Board, the General Manager, and the Senior Managers. The Board appoints, evaluates, and determines compensation for the General Manager, General Counsel, Treasurer and District Secretary; and protects the interests of the District s customers by monitoring proposed regulations and legislation affecting the District. Board members stipends and benefits are reflected in the Personnel category. Legislative Division Summary 2011 Estimated Personnel 112,373 99, , ,252 Materials 3,117 3,800 3,800 3,800 Contracts 1 42, ,000 51, ,456 Other Total 158, , , ,208 % Change 35.7% -21.9% 38.7% 1 Increases in FYE 2011 and due to bi-annual cost of Board Member election process. Operating for Fiscal Years and Section 3-3

72 Department Overview Office of the General Manager MISSION STATEMENT Provide value to our community by delivering high quality water and wastewater services at a competitive price and in an environmentally responsible manner. The Office of the General Manager provides executive leadership and management for the District, ensuring that the policies, directives, and Strategic Plan of the Board of Directors are appropriately carried out. The Office of the General Manager represents the Board s policies and direction with employees, customers, community organizations, and the general public; coordinates District-wide legal issues, provides day-today guidance to District General Counsel interpreting Board direction, and coordinates all relations between the District and other governmental entities, including cities, counties, and other special districts. Top Accomplishments in FYE & 2011 Accomplished an update to the District s five-year strategic plan to guide operations from FYE Successfully accomplished a long term restructure of the District s water debt by selling $35.6 million in bonds to the investment community thereby stabilizing future water rates for customers. On target to exceed the governor s request for a 20% reduction in per capita water use by Benefited from district participation as a member of the Solano Community College Water/Wastewater (W/WW) program successfully hiring program graduates to fill operator positions at the wastewater treatment plant due to ongoing retirements. Top Goals for FYE & Attain fair and equitable labor agreements Participate in the Tri-Valley Coordination / Integration effort Renew relationships with local cities by holding liaison meetings Support efforts to seek sustainable biosolids management solutions by continuing to participate in the Regional Biosolids to Energy project consortium. Seek renewal and obtain a LAVWMA wet weather NPDES permit for discharge to Alameda Creek Section 3-4 Operating for Fiscal Years-

73 Department Overview Staffing Summary 2011 Estimated General Manager Total Summary 2011 Estimated Personnel 339, , , ,820 Materials Contracts 4,578 6,500 32,300 8,500 Other 88, , , ,275 Total $ 433,015 $500,553 $548,158 $536,795 % Change 15.6% 9.5% -2.1% Operating for Fiscal Years and Section 3-5

74 Department Overview MISSION STATEMENT Provide efficient and c o n s c i e n t i o u s customer service and support to the Board of Directors, senior m a n a g e r s, l o c a l agencies, and the p u b l i c t h r o u g h facilitating Board a n d C o m m i t t e e meetings, overseeing and implementing governmental rules a n d r e g u l a t i o n s (Political Reform Act a n d B r o w n A c t ), coordinating contract a d m i n i s t r a t i o n, conducting elections, m a n a g i n g t h e District s records program (vital and permanent records), performing general a d m i n i s t r a t i v e duties, ensuring staff compliance with the AB1234 ethics laws, coordinating travel and training for the Board of Directors, p l a n n i n g a n n u a l District events, and m a n a g i n g t h e District s reception a n d m a i l r o o m services. Management Services Division The Management Services Division provides management, administrative, and customer support to the Board of Directors, the District, DERWA, and LAVWMA. This Division supports Board functions, develops and implements the Strategic Plan, provides records management services, and represents the District on specific issues. Top Accomplishments in FYE & 2011 Finished re-codifying District Code and published on the District s website. Reviewed, updated, and submitted a biennial review of the District s Conflict of Interest Code to the Fair Political Practices Commission. Designed and implemented annual District Agreement review process. Partnered successfully with the ITS group to launch and implement the automated District telephone system. Partnered successfully with ITS to initiate District-wide electronic records management effort with formulation of management pilot program. Provided staff support and resources for successfully filling the vacancy on the Board of Directors. Successfully conducted the District Board elections. All duties pertaining to the Board support function were satisfactorily met even with significant staffing losses and instituted furloughs. Top Goals for FYE & Actively manage the backlog of records scheduled for destruction in the District s Records Center per the adopted Records Retention Policy. Continue the systematic review of District Agreements in preparation for a computerized contract software Examine feasibility of posting Board and Committee agenda packets into the District s internet website. Reduce significant backlog of vital District records imaging resulting from staff reductions due to the District s financial crisis. Partner with ITS to launch management pilot program and implement program as first step towards District-wide electronic records management. Section 3-6 Operating for Fiscal Years-

75 Department Overview Staffing Summary 2011 Estimated Executive Services Supervisor Administrative Assistant I/II Admin. Technician Confidential Total Summary 2011 Estimated Personnel 423, , , ,447 Materials 5,082 3,098 2,603 3,000 Contracts 8,753 16,465 16,990 16,772 Other 815 1,278 1,170 1,170 Total 438, , , ,389 % Change 13.8% 10.0% 5.2% Operating for Fiscal Years and Section 3-7

76 Department Overview Organizational Services Organization Chart Organizational Services Manager (1) Human Resources and Safety Human Resources Supervisor (1) Public Information Community Affairs Supervisor (1) Administrative Assistant (0.5) HR Analyst (1) Community Affairs Specialist (1) HR Technician (2) Graphic Designer (1) Safety Technician (1) Administrative Assistant (0.5) Section 3-8 Operating for Fiscal Years-

77 Department Overview Organizational Services by Category 2011 Estimated Personnel 1,708,103 1,480,946 1,583,501 1,642,736 Materials 24,275 26,301 30,075 31,229 Contracts 339, , , ,314 Other 6,021 25,027 12,290 12,290 Total 2,077,934 1,789,758 1,929,655 2,001,569 % Change -13.9% 7.8% 3.7% Organizational Services by Fund 2011 Estimated Local Sewer Operations 2,957 4,800 8,710 8,710 Regional Sewer Operations 115, , , ,215 Water Operations 244, , , ,218 Administrative Overhead 1,714,181 1,359,285 1,511,432 1,572,426 Total 2,077,934 1,789,758 1,929,655 2,001,569 % Change -13.9% 7.8% 3.7% Operating for Fiscal Years and Section 3-9

78 Department Overview MISSION STATEMENT Provide resources to assist the District and the Organizational Services Department in achieving their goals effectively and efficiently. Organizational Services Administration Division The Organizational Services Administration Division provides oversight of and direction to the Organizational Services Department. In addition, the Division oversees and administers Risk Management, Labor Relations, and Legislative Affairs. Top Accomplishments in FYE & 2011 Consolidated Human Resources and Safety under one supervisor. Completed programmatic review of insurance requirements for standard District agreements and construction contracts. Contributed to the District s meeting the State s water conservation target years ahead of schedule by developing and implementing a timely and innovative water conservation outreach campaign. Implemented a multi-pronged community outreach effort in the Fall of to educate ratepayers on the need for restructuring of the water debt. Development of structured labor relations plan ensuring employee labor contracts are consistent, equitable and reflect the long-term strategic initiatives of the Board. Secured one year contract extension with District s largest employee represented group in exchange for waiver of costly classification/ compensation study and waiver of 2% cost of living adjustment. Completed programmatic review of District outreach activities. Top Goals for FYE & Provide necessary resources to Organizational Services Department and District staff. Negotiate successful contracts with all four bargaining units. Enhance organizational bench strength by supporting succession planning initiatives. Ensure water conservation policies are communicated within the community and result in reduced water use. Update the Emergency Response Plan. Conduct programmatic assessment of District Safety Program Section 3-10 Operating for Fiscal Years-

79 Department Overview Staffing Summary 2011 Estimated Organizational Services Manager Administrative Assistant I/II Total Summary 2011 Estimated Personnel 234, , , ,049 Materials Contracts 2 206,879 23,900 38,350 38,950 Other Total 441, , , ,449 % Change -37.7% 25.5% 2.3% 1 Full-time position previously budgeted in Public Information; the position now provides support equally to both divisions 2 FYE includes liability insurance, which is later budgeted in the non-departmental account. Operating for Fiscal Years and Section 3-11

80 Department Overview MISSION STATEMENT Serve the organization by assisting employees and the community in a manner that enriches relationships with the District and protects business resources, as w e l l a s e n s u r e healthy, safe, and s e c u r e a c t i v i t i e s throughout the District. Human Resources and Safety Division The Human Resources/Safety Division includes both Human Resources and Safety and Risk Management functions. The Human Resources Unit recruits and hires, performs classification and compensation studies, and coordinates employee benefits, workers compensation, employee relations, organizational personnel planning, and policy development. The Unit also supports labor relations and administers the employee training and development program. The Safety and Risk Management Unit manages and advises the District of its responsibilities regarding health, safety, and security (HS&S). This Unit monitors compliance with HS&S programs (occupational safety and health, industrial hygiene, laboratory safety, hazardous materials, information technology, ergonomics, security, and emergency management) to minimize or prevent occupational injuries and illnesses in the workplace and to protect the quality of the surrounding environment. It also recommends appropriate corrective actions; helps implement new health, safety, and security programs; and serves as liaison between the District and various external agencies and regulatory bodies. Top Accomplishments in FYE & 2011 HR Successful renewal of benefit contracts for life and disability plans, dental plan, and vision plan with only minimal increases. Completed the update of records management for personnel filing system to align with regulatory retention standards. Completed three (3) external recruitments and four (4) internal recruitments within established timelines. Successful implementation of Local 39 MOU extension. Improved efficiency and work-flow in the employee performance evaluation process by evaluating results from prior year and making system changes as necessary. Top Goals for FYE & HR Expand the employee development and training program to achieve strategic plan initiatives related to succession planning and providing a flexible and skilled workforce. Review and update personnel rules to ensure that procedures and management practices result in fair and equitable application for all employees. Complete implementation of fraud reporting hotline and online reporting system. Complete timely implementation of three bargaining unit MOU contracts. Section 3-12 Operating for Fiscal Years-

81 Department Overview Staffing Summary 2011 Estimated Human Resources Supervisor HR Analyst HR Technician Administrative Assistant I/II Human Resources Total Summary 2011 Estimated Personnel 667, , , ,290 Materials 1, ,500 2,500 Contracts 76, , , ,400 Other 636 1,141 2,000 2,000 Human Resources Total 746, , , ,190 % Change -18.6% 13.5% 4.0% 1 The Administrative Assistant was promoted into a Technician position during FYE 2011 Operating for Fiscal Years and Section 3-13

82 Department Overview Human Resources and Safety Division continued Top Accomplishments in FYE & 2011 Safety Developed safety procedures and trained staff for induced hazardous energy control procedures (HECPs). Completed update of the District s Emergency Response Plan and conducted Disaster exercise with key staff. Successful update of District s Illness and Injury Prevention Program and other safety programs. Completed all District site inspections and made safety and security updates to facilities. Top Goals for FYE & Safety Continue developing close working relationships with nearby districts and government bodies in an effort to share costs while enhancing benefits to all concerned. Continue expanding the District security system to include remote facilities. Update existing safety programs on a regular schedule to reflect changes to regulations and changes within the District. Update the Emergency Response Plan to ensure compliance with State and Federal requirements and maintain accurate information and organization for disaster response. Update Business Continuity Plan to ensure the District is ready to respond to events that would severely impact staffing and services. Section 3-14 Operating for Fiscal Years-

83 Department Overview Staffing Summary 2011 Estimated Safety Officer Safety Technician Safety Unit Total Summary 2011 Estimated Personnel 276, , , ,620 Materials 18,144 18,778 19,825 20,979 Contracts 16,576 23,327 49,810 49,810 Other 3,368 4,896 4,200 4,200 Safety Unit Total 314, , , ,609 % Change -26.9% 3.0% 3.3% Operating for Fiscal Years and Section 3-15

84 Department Overview MISSION STATEMENT Educate, inform, and influence significant audiences through District messages that are clear, concise, and consistent. Public Information Division The Public Information Division develops and implements District programs in community outreach, public education, employee communication, and legislative relations. Top Accomplishments in FYE & 2011 The outreach campaign contributed to the District surpassing the Governor s goal of 20% potable water reduction in July, ten years early. PI implemented a comprehensive water conservation campaign that included drought tolerant gardening workshop, static cling bathroom mirror signs and restaurant table tent signs encouraging wise water use, Spring issues of Newsline devoted to water conservation, and magnetic signs, with water conservation messages, mounted on 15 District vehicles. Kept customers informed and the District actions and activities transparent by managing a dynamic web site populated with accurate, timely information 24/7. During the first half of PI updated 108 pages and created 112 new pages for the web, including information about compensation at the District, the low income assistance program, and fact sheets regarding proposed rate changes. Improved public perception and understanding of the District s need to restructure and refinance its debt by hosting an open house, issuing news releases at crucial steps in the process, and producing a Newsline dedicated to District finances. Top Goals for FYE & Promote sustainable behavior regarding efficient water use so customers maintain the 20% reduction in water use. Public outreach activities will include tips and tactics on the web and a speakers bureau, among other things. Manage a dynamic web site as a vital tool for customers and employees and a source of accurate, timely information 24/7, contributing to the District s transparency. Increase trust, support, and investment in the District such that customers associate DSRSD with managing finances soundly, providing sustainable and reliable water, serving efficiently and effectively 24/7, and protecting public health, the environment, and critical resources. Provide public information and support regarding the treatment and disposal of biosolids, regionally. Section 3-16 Operating for Fiscal Years-

85 Department Overview Staffing Summary 2011 Estimated Community Affairs Supervisor Community Affairs Specialist I/II Graphic Designer Administrative Assistant I/II Total Summary 2011 Estimated Personnel 529, , , ,777 Materials 4,317 6,000 7,000 7,000 Contracts 39,207 94,600 89,379 90,154 Other 1,789 18,990 5,390 5,390 Total 574, , , ,321 % Change 17.8% -2.8% 2.8% 1 Full-time position that now provides support to both Public Information and Organization Services Admin. Operating for Fiscal Years and Section 3-17

86 Department Overview Financial Services Organization Chart Financial Services Manager (1) Accounting Financial Services Supervisor (1) Customer Service Customer Services Supervisor (1) Information Services Information Services Supervisor (1) Accountant I/II (1) Customer Service Rep III (1) IT Analyst I/II (2) Financial Analyst (1) Customer Service Rep I/II (2) IT Analyst/ Web Programmer (1) Senior Accounting Technician (1) Customer Field Rep I/II (3) IT Technician I/II (1) Accounting Technician (1) Admin. Assistant I/II (1) Section 3-18 Operating for Fiscal Years-

87 Department Overview Financial Services by Category 2011 Estimated Personnel 2,433,498 2,580,147 2,740,723 2,857,933 Materials 18,565 24,860 99, ,859 Contracts 486, , , ,169 Other 1,676 3,304 4,225 4,225 Total 2,950,538 3,029,854 3,363,516 3,373,186 % Change 2.7% 11.0% 0.29% Financial Services by Fund 2011 Estimated Local Sewer Operations 117, , , ,623 Local Expansion Regional Sewer Operations 187, , , ,769 Regional Expansion 14, Water Operations 704, , , ,825 Water Expansion 24,137 18, Administrative Overhead 1,901,970 1,993,261 2,102,510 2,181,966 Total 2,950,538 3,029,854 3,363,516 3,373,186 % Change 2.7% 11.0% 0.29% Operating for Fiscal Years and Section 3-19

88 Department Overview MISSION STATEMENT Provide resources and support to the Financial Services Department team so they can work tog e t h e r a n d w i t h other departments to achieve the District s goals and objectives. Financial Services Administration Division The Financial Services Administration Division is in charge of overseeing the Financial Services Department, which includes Accounting, Customer Service and Information Technology. Top Accomplishments in FYE & 2011 Refinanced two variable rate water system obligations into a 30-year fixed-rate bond to stabilize payments and reduce administration. Refinanced sewer system obligations into a 10-year fixed rate loan. Implemented revised water rate structure to prepare for water shortages and encourage water conservation. Amended the Financing Administration Agreement with the City of Pleasanton. Top Goals for FYE & to support the District s mission. Work with all District divisions to coordinate and prepare the two-year operating budget. Evaluate and implement revenue structures to support rate stability while achieving debt service coverage requirements. Enhance long-term financial planning. Develop a modern asset management system in coordination with Engineering and Operations Section 3-20 Operating for Fiscal Years-

89 Department Overview Staffing Summary 2011 Estimated Financial Services Manager Administrative Assistant Total Summary 2011 Estimated Personnel 304, , , ,423 Materials Contracts 7,523 8,950 8,920 8,920 Other Total 311, , , ,018 % Change 8.0% -21.0% 1.9% 1 Transferred to the Customer Service Group in 2011 Operating for Fiscal Years and Section 3-21

90 Department Overview MISSION STATEMENT Provide timely, accurate, and responsive financial data and services to our internal and external customers. Accounting Division The Accounting Division accurately maintains the District s financial records, pays vendors, issues invoices, processes payroll, invests District funds, and prepares reports, financial statements, and statutory filings. This Division establishes internal controls to ensure District assets are protected and accounting transactions are recorded accurately and in accordance with generally accepted accounting principles. This Division coordinates the District s annual audit, produces the Comprehensive Annual Financial Report (CAFR) and the biennial budget, and prepares long term financial projections. Top Accomplishments in FYE & 2011 Successfully refinanced $35.6 M in water system debt, increasing the stability for water system over the next thirty years. Updated Connection Fee Studies for Local and Regional funds, ensuring the equitability of capacity fees paid by developers. Awarded Certificate of Achievement for Excellence in Financial Reporting on the District s CAFR (Comprehensive Annual Financial Report). Successfully collected residential sewer rates via property tax rolls. This process was conducted completely in-house, which further reduces the District s expenses. Completed one year budgets in FYE and 2011 with support of the Board of Directors due to recent economic uncertainty. Established initial phase of asset management system for long-term asset planning. Assisted Engineering in designing and implementing an Asset Management Program for the sewer collection system (ongoing). Top Goals for FYE & to support the District s mission. Work with all District divisions to coordinate and consolidate the biennial budget process and annual mid term updates. Control costs. Continue to develop monthly, quarterly, and annual reports. Interact with the other divisions regarding long term financial planning to ensure that management has appropriate tools for making decisions that support the District s mission and goals. Actively manage debt. Ensure that all payments and reporting requirement are filed in a timely manner. Stay abreast of current developments in the debt market, review long term plans for potential debt requirements, and analyze restructuring options as they become available. Continue with asset management program. Through active involvement with the Engineering Department, develop an outline and implementation plan. Gather historical asset data and assist with all evaluations through financial analysis and staff experience. Assist with refinancing of the LAVWMA debt. Conduct new rate studies for Regional Sewer and Water Operations. Section 3-22 Operating for Fiscal Years-

91 Department Overview Staffing Summary 2011 Estimated Financial Services Supervisor Accountant II Financial Analyst Sr. Accounting Technician Accounting Technician Account Clerk II Total Summary 2011 Estimated Personnel 679, , , ,671 Materials Contracts 1 163,441 69, ,286 49,075 Other Total 842, , , ,971 % Change -7.5% 17.1% -9.7% 1 Increases in FYE and due to rate and fee studies. Operating for Fiscal Years and Section 3-23

92 Department Overview MISSION STATEMENT Provi de su perior service to District customers using a First Contact Resolut i o n a p p r o a c h to problem solving and, as a collaborative team, develop the most efficient and expedient processes to support that service level. Customer Services Division The Customer Services Division is the primary point of contact for District customers, handling all incoming customer calls for service, managing the billing, remittance, and collections programs and maintaining that portion of the District infrastructure related to those processes. Top Accomplishments in FYE & 2011 Successfully migrated to a new payment program that improved service by allowing customers to easily pay their bills, by credit card or electronic check, by phone or web, at a reduced rate, provides staff with real-time transaction information, and allows total flexibility to manage individual account records. In partnership with IT designed and implemented a new on-line account access program improving the mechanics and the presentation of data to customers resulting in a more user friendly application. Developed a successful program to market AutoPay to customers. The program has been successful in that currently 52% of customers pay by electronic media versus by paper check. Successfully met metric objectives for entire period. Fully implemented a program to comply with the FTC s initiative to stop identity theft. Developed and implemented new processes, communication materials, and outreach, to support the Districts new Low Income Assistance program. Trained staff and launched the program ahead of schedule. Negotiated with the AMR system vendor to provide the District with all of the hardware and software needed to convert to the upgraded system at no cost to the District allowing us to begin the migration to a fully automated downloadable meter reading system. Top Goals for FYE & Complete the migration from single frequency AMR transmitter system to multi frequency system allowing future, low cost, migration to a total fixed based, fully automated AMR network. Continue to develop and implement programs that encourage customers to receive and pay bills electronically. Continue to work on enhancing the Customer Service pages on the internet. Continue to provide superior service and to take on new responsibilities when needed with existing resources. Section 3-24 Operating for Fiscal Years-

93 Department Overview Staffing Summary 2011 Estimated Customer Service Supervisor Customer Service Rep II Customer Service Rep III Administrative Assistant Customer Field Rep I/II Total Summary 2011 Estimated Personnel 776, , , ,375 Materials 10,927 10,028 82,149 89,709 Contracts 143, , , ,499 Other Total 931, ,046 1,181,407 1,217,183 % Change 4.8% 21.0% 3.0% 1 Position was transferred from the Administration division in 2011 Operating for Fiscal Years and Section 3-25

94 Department Overview MISSION STATEMENT The Information System's mission is to assist the District's Divisions to achieve DSRSD's strategic plan, goals, and objectives by adding value to key business processes through partnering in the application of information technology solutions and by del i vering the best quality products, services, and data in a timely, reliable, and cost-effective manner. Information System's vision is to be a partner in providing quality and reliable products, services, and data to add value to the efforts of management and staff. Information Technology Services Division The Information Technology Services Division maintains and supports the District s computer and telephone systems in ways that minimize downtime and maximize user efficiency. This Division evaluates and recommends new applications that support the business needs of the District, provides technical assistance to staff, maintains the intranet, and manages technical projects. Top Accomplishments in FYE & 2011 Installation, configuration and deployment of the Storage Area Network and the virtualization of the back office and servers without disruption to District activities. Coded and deployed OCA (online customer access) to replace Eden Citizen Services module. Network extension projects including the new Maintenance Building, the modernization of the SCADA network and security upgrades to VPN and defense-in-depth appliances. Doubled the speed of District website navigation. Top Goals for FYE & Upgrade District technology platforms including desktop virtualization with Windows 7 and Office Achieve enhanced integration of technology in the Operations department including providing access to staff that are outside of office environments Achieve unified communications with integrated voic , , SMS, and call control with a consistent user interface Update the District s web platform and functionality Section 3-26 Operating for Fiscal Years-

95 Department Overview Staffing Summary 2011 Estimated Information Services Supervisor IT Analyst I/II IT Analyst (Web Programmer) IS Technician I/II Total Summary 2011 Estimated Personnel 683, , , ,464 Materials 7,294 13,800 16,250 16,250 Contracts 172, , , ,675 Other 1,548 1,804 2,625 2,625 Total 864, ,131 1,002,723 1,060,014 % Change 8.4% 7.0% 5.7% 1 Position provides.50 FTE functional support to the Public Information Division Operating for Fiscal Years and Section 3-27

96 Department Overview Engineering Services Organization Chart District Engineer / Assistant General Manager (1) Eng. Svs. & Environ. Compliance Plan/Permitting and Clean Water Asset Management Administrative Analyst I/II (1) Sr. Civil Engineer Supervisor (1) Principal Engineer Supervisor (1) Principal Engineer Supervisor (1) Senior Civil Engineer SME (1) Associate Civil Engineer SME (1) Engineering Tech GIS Spec. (1) Assistant Engineer (1) Clean Water Specialist (1) Administrative Tech. (1) Sr. Engineering Tech GIS Spec. (1) Environmental Comp. Insp. (1) Sr. Environmental Comp. Insp.(1) Engineering Tech GIS Spec. (1) Environmental Comp. Insp. (2) Construction Inspector (2) Administrative Tech (1) Admin. Assistant I/II (1) Section 3-28 Operating for Fiscal Years-

97 Department Overview Engineering Services by Category 2011 Estimated Personnel 2,572,590 3,020,105 3,121,170 3,177,372 Materials 31,289 9,668 29,027 46,800 Contracts 68,052 59,018 63,064 50,645 Other 7,806 2,982 5,521 5,583 Total 2,679,737 3,091,773 3,218,782 3,280,400 % Change 15.4% 4.1% 1.9% Engineering Services by Fund 2011 Estimated Local Sewer Operations 54, , , ,381 Local Sewer Replacement 128,223 27, Local Sewer Expansion 198, , , ,764 Regional Sewer Operations 756,081 1,383,919 1,300,409 1,321,383 Regional Sewer Replacement 52,129 13, Regional Sewer Expansion 62,260 56,744 31,728 32,487 Water Operations 385, , , ,427 Water Replacement 162,036 61, Water Expansion 281, , , ,162 Administrative Overhead 600,428 19,936 61,266 62,796 Total 2,679,737 3,091,773 3,218,782 3,280,400 % Change 15.4% 4.1% 1.9% Operating for Fiscal Years and Section 3-29

98 Department Overview MISSION STATEMENT Manage a diverse team that builds and maintains a water and wastewater inf r a s t r u c t u r e t h a t meets the needs of our current and future customers. General Engineering Administration Division The General Engineering Administration Division provides oversight of and direction to the Engineering Department and assists the Engineering Services and Environmental Compliance Division, the Planning/Permitting and Clean Water Division, and the Asset Management Division as needed to resolve issues. This Division approves and implements Engineering Department standards and procedures and maintains standard contract forms. Within the District, the Division assists management of labor relations, leads water shortage contingency planning, and provides technical support to the Finance and Operations Department. The Division also interfaces with other Tri-Valley agencies regarding utility issues. Top Accomplishments in FYE & 2011 Initiated a modern Asset Management Program for the District s wastewater collection system. Integrated the Environmental Compliance and Clean Water Divisions into the Engineering Department. Completed Clean Water Revival Project audit. Completed acquisition of Camp Parks water storage and well sites. Top Goals for FYE & Expand the Asset Management Program to the wastewater treatment plant. Develop a plan to meet District long term water supply needs and accomplish water conservation requirements. Assist in developing new Memorandums of Understanding with Local 39 Employees, Professional Employees, and Mid-Management Employees bargaining groups. Section 3-30 Operating for Fiscal Years-

99 Department Overview Staffing Summary 2011 Estimated District Engineer/ Asst. GM Administrative Analyst I/II Total Summary 2011 Estimated Personnel 1 462, , , ,212 Materials Contracts 7,260 13,488 14,858 14,275 Other 1,724 1,976 2,545 2,607 Total 471, , , ,294 % Change -17.9% 7.8% 3.4% 1 Two employees were transferred to other divisions during FYE Operating for Fiscal Years and Section 3-31

100 Department Overview MISSION STATEMENT Plan, design, and manage construction of the District s capit a l i m p r o ve m e n t projects in manner t h a t co n si s te n tl y balances cost, operational efficiency, sustainability and community objectives. Support District operations with up-tod a t e w a t e r a n d wastewater system mapping and analyses using the best available technology. Protect the wastewater treatment plant processes and the e n v i r o n m e n t through the District s Pretreatment Program. Engineering Services and Environmental Compliance The Engineering Services and Environmental Compliance Division prepares and administers two elements of the Capital Improvement Program (CIP): (1) the CIP Ten Year Plan, a biennial planning document that records the intended uses of connection fees and replacement and rehabilitation funds; and, (2) the CIP Two Year, a biennial document that provides staff the authority to proceed with budgeted CIP projects. The Division plans, designs and manages the construction of all of the District s CIP projects. The Division also maintains the District s water, recycled water, and wastewater collection system mapping and hydraulic models. In addition, the Environmental Compliance section implements the District s Pretreatment Program, a requirement of the Wastewater Treatment Plant (WWTP) NPDES permit. Top Accomplishments in FYE & 2011 Completed FYE CIP Ten Year Plan and the FYE - CIP Two Year. Integrated Environmental Compliance staff into the Division. Completed a SCADA Master Plan outlining improvements to the water and wastewater SCADA systems. Completed design of Digester No. 4 for the WWTP. Completed design for the Dissolved Air Flotation Thickener Rehabilitation for the WWTP. Completed the construction of a new meter for the Facultative Sludge Lagoons at the WWTP. Completed the application for renewal of the WWTP NPDES Permit. Top Goals for FYE & Construct the Dissolved Air Flotation Thickener Rehabilitation at the WWTP. Complete modifications to the Emergency Power Systems at the WWTP. Implement SCADA Master Plan Improvements. Rehabilitate pipelines in the Donahue/Vomac Sanitary sewer basin to reduce infiltration and inflow. Update the water system hydraulic model. Renew WWTP NPDES permit. Section 3-32 Operating for Fiscal Years-

101 Department Overview Staffing Summary 2011 Estimated Senior Civil Engineer Supervisor Senior Civil Engineer SME Assistant Engineer Sr. Engineer Tech./GIS Specialist Sr. Env. Compliance Insp Environmental Comp. Insp. I/II Administrative Tech Total Summary 2011 Estimated Personnel 1,100,867 1,116,729 1,091,910 1,118,203 Materials 12,835 1,606 10,300 19,700 Contracts 40,854 28,770 16,920 16,920 Other 3, Total 1,158,339 1,147,337 1,119,980 1,155,673 % Change -0.9% -2.4% 3.2% Operating for Fiscal Years and Section 3-33

102 Department Overview MISSION STATEMENT Review development plans and determine fees in a timely and accurate manner, maintain accurate a n d a c c e s s i b l e facilities records and projections of future service needs, and e n s u r e t h a t n e w projects comply with r e g u l a t o r y a n d e n v i r o n m e n t a l requirements. Planning / Permitting and Clean Water Division The Planning / Permitting and Clean Water Division manages the District s long-term utility planning activities, oversees the expansion of the District s water and sewer systems by development projects, and monitors water and wastewater users in accordance with Best Management Practices (BMPs) water conservation in accordance with the Memorandum of Understanding (MOU) with the California Urban Water Conservation Council (CUWCC), BMPs for pollution prevention, and Department of Public Health regulatory requirements for backflow prevention. This Division updates master plans for potable water, recycled water, and wastewater, maintains records of water and wastewater use and projections, coordinates annexation of properties into the District service area, oversees environmental compliance of all District-constructed facilities, reviews all environmental documents for projects being constructed by other entities, reviews designs and issues construction permits for connections to District facilities and developer-dedicated facilities, and maintains capacity allocation records. Top Accomplishments in FYE & 2011 Completed the Urban Water Management Plan and submitted the Plan to the Department of Water Resources in a timely manner. Successfully merged the Clean Water Section and Program with the Planning and Permitting Division. Accepted approximately 25 miles of potable water pipelines, 3 miles of recycled water pipelines, and 3.5 miles of sanitary sewer pipelines. Tested the impact of smart irrigation controllers on residential water use through a pilot giveaway program and found 9% in water use savings for participants. Developed and implemented a source control program for dental mercury; and issued discharge permits to 70 dental facilities. Top Goals for FYE & Assist department manager in developing and implementing an efficient and effective department cross functional management strategies and team to achieve and sustain the long term water conservation goal of 25% at 2020 and represent the District in the water conservation community. Represent DSRSD in the water/wastewater industry to advocate the District s interests in obtaining State and Federal funding. Maintain a high level of service to developers to allow community approved development to proceed in a timely manner. Maintain effective monitoring of water and wastewater customers to ensure conformance to regulatory requirements. Ensure that CIP projects conform to regulatory and environmental requirements. Revise District Recycled Water Use Guidelines so that it is an effective guide to both recycled water customers and District staff. Section 3-34 Operating for Fiscal Years-

103 Department Overview Staffing Summary 2011 Estimated Principal Engineer Supervisor Clean Water Program Specialist Environmental Comp. Insp Associate Civil Engineer SME Engineering Tech/GIS Spec. I/II Construction Inspector I/II Administrative Assistant I/II Total Summary 2011 Estimated Personnel 925,944 1,091,013 1,140,956 1,173,265 Materials 18,338 7,315 17,827 26,400 Contracts 19,938 16,760 28,950 16,450 Other 2, ,400 1,400 Total 966,519 1,115,862 1,189,133 1,217,515 % Change 15.5% 6.6% 2.4% Operating for Fiscal Years and Section 3-35

104 Department Overview MISSION STATEMENT L e a d t h e development of the Asset Management Program (AMP) and the cultural change necessary to fully i n t e g r a t e t h e Program into the District s activities. Asset Management Division The Asset Management Division was established in March with the goal to implement a modern asset management program consistent with the District s Strategic Plan. The objective is to develop a program that makes fuller use of data and analytical tools rather than institutional knowledge to facilitate smarter decisions on what, when and how facilities should be operated, maintained, rehabilitated and ultimately replaced. The program will include knowing what assets we have (inventory); where they are located; what condition they are in (condition assessments); which are critical (highest risk if there is a failure); prioritizing work based on risk and probability of failure; how can we best operate, maintain, repair and replace them to minimize overall risk and costs, while providing the service our customers expect. Top Accomplishments in FYE & 2011 Establishment of an Asset Management Steering Committee to provide overall program guidance. Prioritization of FYE 2011 hydro-cleaning and CCTV inspections to include areas where: 1) no inspection data currently available and; 2) areas that have high numbers of defects in the pipes. Revised condition assessment standards that will provide consistency from future CCTV inspections. Pilot testing an area planned for a CIP project (Donohue basin) that provided more information for preliminary and final design. Developed probability of failure and consequence of failure criteria and prepared first generation risk analysis for all of the nearly 5,000 pipe segments in the collection system. Developed replacement funding estimates that are based on the condition of the pipes rather than solely based on age. Top Goals for FYE & Expand Collection system data analysis and accessibility to more staff Develop more analytical tools to allow data to be filtered and evaluated Begin development of an AMP for DERWA Begin development of an AMP for the WWTP. Update the Emergency Response Plan to ensure compliance with State and Federal requirements, maintain accurate information, and organization for disaster response. Section 3-36 Operating for Fiscal Years-

105 Department Overview Staffing Summary 2011 Estimated Principal Engineer Supervisor Engineering Tech/ GIS Spec I/II Administrative Tech Total Summary 2011 Estimated Personnel 1 83, , , ,692 Materials Contracts 0 0 2,336 3,000 Other Total 83, , , ,918 % Change 430.4% 11.5% -3.4% 1 Group was established late in FYE. Increase in FYE due to addition of intern. Operating for Fiscal Years and Section 3-37

106 Department Overview Operations Department Organization Chart Operations Manager (1) Field Operations Plant Operations Mechanical Maintenance Electrical Maintenance Lab Services Field Operations Supervisor (1) WTP Operations Supervisor (1) Mechanical Supervisor (1) Electrical & Inst. Supervisor (1) Lab Supervisor (1) Water/Wastewater Sys Operator (9) Senior WTP Operator III (6) Senior Mechanic Crane Certified (1) Operations Control Specialist (2) Environmental Chemist II (2) Maintenance Worker (1) WTP Operator II (4) Senior Mechanic (1) Senior Electrician (1) Laboratory Technician (2) Operator in Training (1) Mechanic II Crane Certified (2) Electrician (2) Associate Civil Engineer SME (1) Mechanic II (1) Instrument Technician (2) Administrative Analyst I/II (1) Mechanic I (2) Administrative Assistant I/II (1) Fleet Mechanic (2) Administrative Technician (1) Co Gen Specialist (1) Maintenance Worker I/II (2) Section 3-38 Operating for Fiscal Years-

107 Department Overview Operations Department by Category 2011 Estimated Personnel 7,302,446 7,521,065 7,767,591 8,015,095 Materials 2,448,932 2,779,873 2,871,273 2,832,579 Contracts 853, ,515 1,137,642 1,101,698 Other 97,097 99, , ,535 Total 10,702,399 11,318,577 11,913,729 12,086,907 % Change 5.8% 5.3% 1.5% Operations Department by Fund 2011 Estimated Local Sewer Operations 569, , , ,752 Local Sewer Replacement Local Sewer Expansion 2,309 8, Regional Sewer Operations 6,557,341 6,839,390 7,308,695 7,444,254 Regional Sewer Replacement 158, , Regional Sewer Expansion Water Operations 3,013,256 3,271,300 3,587,704 3,593,169 Water Replacement 83, , Water Expansion 31,659 10,144 21,581 22,341 Administrative Overhead 285, , , ,863 Total 10,702,399 11,318,577 11,913,729 12,086,907 % Change 5.8% 5.3% 1.5% Operating for Fiscal Years and Section 3-39