Finance Committee Meeting

Transcription

1 Finance Committee Meeting FY16 Strategic Business and Operating Plan and Preliminary Budget Review April 8, 2015

2 Finance Committee Meeting FY16 Strategic Business Operating Plan and Preliminary Budget Review I. Strategic Business and Operating Plan (SBOP) II. FY16 Preliminary Budget III. Trends FY13-FY16 IV. Preliminary Budget Compared to Rate Commission Report V. Next Steps and Questions 2

3 FY16 Strategic Business and Operating Plan Prepared in accordance with Section of the Charter of the Metropolitan St. Louis Sewer District 3

4 Strategic Business and Operating Plan VISION STATEMENT Quality Service Always MISSION STATEMENT To protect the public s health, safety, and water environment by responsibly providing wastewater and stormwater management. 4

5 Strategic Business and Operating Plan VALUES Integrity Acting ethically at all times, treating everyone with honesty, fairness and respect. Teamwork Working together to accomplish our mission with open communication, trust respect and diversity. Innovation Embracing continuous improvement and new solutions to achieve excellence. Employees Developing successful, responsible and safety conscious employees and acknowledging their contributions. Customers Building strong relationships by keeping our commitments, providing excellent service and being transparent in everything we do. 5

6 Strategic Business and Operating Plan GOALS A. Deliver consistent, high quality customer service; B. Comply with all legal and regulatory requirements and schedules; C. Minimize customer rate increases; and D. Be accountable to the St. Louis community. 6

7 Strategic Business and Operating Plan STRATEGIES 1. Educate and partner with stakeholders to build support; 2. Manage the District s costs and revenues to optimize financial impacts; 3. Integrate and improve the District s business processes; 4. Promote appropriate standards through proactive regulatory and legislative involvement; 5. Address customer and regulatory needs through a comprehensive infrastructure management program; 6. Create a learning and business oriented culture based on competency and accountability. 7

8 FY16 Preliminary Budget 8

9 FY16 Preliminary Balanced Budget FY16 Total Revenue ($$s in millions) Wastewater User Charges $311.1 Stormwater User Charges 1.4 Revenue Bonds Stormwater Taxes 24.3 Investment and Other Income 22.3 Use of Fund Balances 24.8 Total District Revenue $583.9 FY16 Total Expense ($$s in millions) Operating Budget $210.0 CIRP Debt Service 73.5 Total District Expenses $

10 FY16 Preliminary Budget Key Points I. Overall Operating budget increase of 2.9% II. The General Fund budget includes: A. $2.2 million increase for Salaries & FICA (includes 2.4% avg. wage increase.) B. $1.5 million for election expenses. C. $953 thousand in incremental budgets tied to the SBOP, including 10 additional positions. D. Elimination of $3.9 million related to the billing system upgrade project in FY15. E. Reclassification of $3.7 million of insurance expenses out of General Fund to the General Insurance Fund. III. Includes a Total Capital Improvement and Replacement Program (CIRP) budget of $300.4 million. IV. Assumes the issuance of an additional bonds with a par value of $180 million and approximately $20 million in premiums net of costs of issuance. V. The budget was developed to align with the October 2011 Rate Commission Report. 10

11 FY16 Preliminary Budget - Revenue ($$s in millions) Stormwater Taxes $ % Investment and Other Income $ % Use of Fund Balance $ % Total = $583.9 Revenue Bonds $ % SW User Charges $ % WW User Charges $ % WW User Charges SW User Charges Revenue Bonds Taxes Investment and Other Income Use of Fund Balance 11

12 FY16 Budgeted Revenue by Major Category ($$s in millions) FY15 - $555.0 FY16 - $583.9 $400.0 Change $33.3 $350.0 $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 FY15 $279.2 FY16 $312.5 FY15 $166.9 Change $33.1 FY16 $200.0 FY15 $24.0 Change $0.3 FY16 $24.3 FY15 $60.1 Change ($35.3) FY16 $24.8 FY15 $24.8 Change ($2.5) FY16 $22.3 $- 12

13 Schedule of Residential User Rates Wastewater FY15 FY16 % Change Effective Date 7/1/14 7/1/15 Average Monthly Residential Bill (7 Ccf) Stormwater $ $ % Effective Date 8/1/10 8/1/10 Single Family & Commercial per Month $ 0.24 $ 0.24 Multi-Family-Charge per Unit per Month $ 0.18 $

14 FY16 Preliminary Total Budget Expenses ($$s in millions) Total CIRP Budget is $300.4, 51% of total Stormwater CIRP $19.0 3% CIRP $ % Debt Service $ % Operating Budget $ % Total = $583.9 Total Operating Budget is $210.0, 36% of total Operating Budget Stormwater O&M CIRP Stormwater CIRP Debt Service Stormwater O&M $17.1 3% 14

15 FY16 Budgeted Operating Expense by Major Category ($$s in millions) Operating Budget FY15 - $204.0 Operating Budget FY16 - $ % $130.0 $120.0 $110.0 $100.0 $90.0 $80.0 $70.0 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $- FY15 $99.3 Change $4.3 FY16 $103.6 FY15 $18.1 Change ($0.5) FY16 $17.6 Change $0.9 FY15 $16.2 FY16 $17.1 Change $0.1 FY15 $50.4 FY16 $50.5 Change $0.3 FY15 $3.8 FY16 $4.1 Change $0.9 FY15 $16.2 FY16 $

16 FY16 General Fund Budget By Department CHANGE FY15 FY16 $ % Civil Service Commission $ 10,000 $ 10,000 $ - 0.0% Rate Commission 512,200 75,000 (437,200) -85.4% Secretary-Treasurer (includes Board of Trustees) 1,656,522 3,384,171 1,727, % Executive Director 1,285,215 1,360,646 75, % General Counsel 2,558,204 2,579,474 21, % Human Resources 12,850,462 10,067,675 (2,782,787) -21.7% Finance 22,537,450 20,619,396 (1,918,054) -8.5% Information Systems 13,248,538 12,924,533 (324,005) -2.4% Engineering 24,119,366 25,011, , % Operations 104,001, ,673,452 2,671, % Total Departments $ 182,779,663 $ 182,705,566 $ (74,095) 0.0% Incrementals - 952, ,728 Total General Fund Operating Budget $ 182,779,663 $ 183,658,294 $ 878, % Energy Loan Debt Service 35,922 35,931 9 Total General Fund Operating Budget with Energy Loan $ 182,815,585 $ 183,694,225 $ 878, % Non-operating Other (1) 560,000 1,500, ,000 Total $ 183,375,585 $ 185,194,225 $ 1,818, % (1) FY15 - Hyperion Budget System Upgrade; FY16 - Data Center Colocation 16

17 FY16 Incremental Budget Summary Department Purpose FTE Change Budget Executive Director Human Resources Human Resources General Counsel Public outreach and communications Learning Management System Replacement of ProWatch System Professional Legal support 1 $63, , , ,208 Operations City Water consulting 2 197,685 Operations Maintenance Mechanic 1 72,624 Operations Flow monitoring 4 264,793 Operations Maintenance on new Pump Stations 1 75,176 Total General Fund Incremental 10 $952,728 17

18 FY16 District Funded Positions 1,100 1, , FY12 FY13 FY14 FY15 FY16 18

19 FY16 to FY15 Budgeted Debt Service & CIRP ($$s in millions) Debt Service FY16 - $73.5 Debt Service FY15 - $66.7 CIRP $50.0 $45.0 $40.0 $35.0 $30.0 FY16 $30.4 Change $10.1 FY16 $40.6 Change ($3.7) FY15 $44.3 $350.0 $300.0 $250.0 $200.0 FY16 $300.4 Change $16.2 FY15 $284.2 $25.0 $20.0 $15.0 $10.0 $5.0 $- FY15 $20.3 FY16 $2.5 Change 0.4 FY15 $2.1 $150.0 $100.0 $50.0 $- 19

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21 FY 2016 CIRP Program Summary Type of Project Number Budget Wastewater Construction ,395,000 Wastewater Engineering 78 68,951,000 Stormwater Construction 28 5,972,500 Stormwater Engineering 6 1,420,000 New Project Appropriations Subtotal: ,738,000 Continued Wastewater 12 27,562,000 Continued Stormwater 4 588,000 Continued Project Appropriations Subtotal: 16 28,150,000 PROJECT APPROPRIATION TOTALS: ,888,

22 FY 2016 CIRP New Wastewater & Stormwater Projects 3% 97% Stormwater $7.4 M 34 Projects Wastewater $263.3 M 183 Projects Total Budget $270.7 M Total Number of New Projects

23 FY 2016 CIRP New Wastewater Revenue Allocations 6% City 10% City & County 82% County 10 Projects 33 Projects 131 Projects $16.5 M $26.3 M $214.5 M 2% Treatment Plants 9 Projects $6.0 M Total Number of Project Appropriations 183 Total Budget $263.3 M 2 3

24 FY 2016 CIRP Continued Projects Wastewater Coordination with Others 6 Easement Acquisition / Condemnation 6 Projects in Design / Major Scope Changes 0 Stormwater Coordination with Others 0 Easement Acquisition / Condemnation 4 Projects in Design / Major Scope Changes 0 Total:

25 FY 2016 CIRP Contingencies Appropriated in FY 2015 Wastewater Kingston I/I Reduction and Pump Station Elimination 645,000 Stormwater Manchester & Missouri Avenue Phase II Storm Improvements Stormwater Infrastructure Repair/Replacement Watkins Creek OMCI 360, ,000 Total: 1,140,00 2 5

26 FY 2016 CIRP Funding Sources General Fund: 20 Projects $17.7 M 6% 7% OMCI & Special Funds: 58 Projects $20.8 M 87% Sanitary Replacement Fund: 155 Projects $260.4 M Total Number of Project Appropriations 233 Total Budget $298.9 M 2 6

27 FY 2016 CIRP Engineering & Construction - New Engineering 84 Projects $70.4 M Construction 133 Projects $200.3 M 26% 74% Total Number of Project Appropriations 217 Total Budget $270.7 M 2 7

28 FY 2016 CIRP Contingency Projects Type of Project Number Budget Wastewater Construction Stormwater Construction 15 93,675, ,643,000 Phased Funding 3 11,600,000 Project Totals: ,918,

29 2 9

30 FY 2016 CIRP New Allocations Type of Project Number % Budget Asset Management Renewal ,140,000 Cityshed 3 2 4,750,000 CSO ,182,000 SSO ,539,000 Treatment Plant 9 2 6,010,000 Districtwide ,725,000 Stormwater ,392,500 TOTALS: ,738,

31 Asset Management Renewal Projects & Anticipated Results Repair/Replacement Projects- 350 small & immediate need projects (under $25,000) and larger infrastructure repair projects as needed CIPP lining of existing sewers Repair/reconstruct pump stations and forcemains Results: renew 50, ,000 feet of sewer, implement repairs on deteriorating infrastructure, provide for sewer system assessments, and reduce frequency of sewer overflows and building backups. 3 1

32 Sewer Rehabilitation 3 2

33 Cityshed Projects & Anticipated Results Begin design of two cityshed projects, Degiverville and Natural Bridge. Results: Projects will lead to the reduction of building backups and street flooding. 3 3

34 3 4

35 CSO Projects & Anticipated Results Begin construction of the Maline Creek CSO Storage Facility, a 28 foot diameter, 3,000 feet long underground facility with pump station Continue CSO Volume Reduction Green Infrastructure program Continue design of Lower & Middle RDP CSO Controls System Improvements Results: reduce and control combined sewer overflows, reduce system surcharging, and reduce building backups in the combined sewer area. 3 5

36 3 6

37 3 7

38 SSO Projects & Anticipated Results Construct 600,000 to 700,000 feet of CIPP lining of existing sewers Construct 34 private I/I reduction projects Begin construction of Coldwater Wet Weather Storage Tank C Construct 65,000 feet of sanitary sewer, and 35,000 feet of storm sewer to facilitate the removal of private I/I Continue Watershed Design efforts throughout the District Results: remove 11 constructed SSOs, with an additional 5 removals possible after monitoring verification. Reduce building backups & system surcharging. 3 8

39 Public I/I Reduction 3 9

40 Private I/I Reduction 4 0

41 Coldwater Wet Weather Storage Facility Tank C 4 1

42 4 2

43 WWTF Projects & Anticipated Results Miscellaneous treatment facility improvements and repairs at the Coldwater, Lemay, Lower Meramec, and Missouri plants Stress testing at Lemay plant to ensure compliance with Consent Decree goals. Commence comprehensive ammonia and nutrient removal master plan effort Results: Make needed repairs at treatment facilities, and develop master plan for potential future regulatory requirements. 4 3

44 Districtwide Projects & Anticipated Results General Service Agreements for survey, geotechnical, construction management, sewer design, planning & property appraisal Data acquisition for stream flow gauging, water quality sampling, and radar rainfall data Consent Decree public engagement (Project Clear) Supplemental Environmental Projects (SEP) Program required by Consent Decree CCTV & Physical Inspection of 700,000 feet of sewers Results: provide design and construction support for projects throughout the District. Enhanced public communication. Repair of laterals and removal of septic tanks in low income areas. 4 4

45 4 5

46 4 6

47 Stormwater Projects & Anticipated Results Construct 7,300 feet of storm sewer and construct 8 bank stabilization projects Anticipate 30 work order repair projects on existing storm systems, averaging $9,000 per project Results: reduce flooding at 7 structure, 38 yard, and 5 street locations, and address erosion at 38 properties. 4 7

48 Grant #609 Bank Stabilization 4 8

49 Herbert Streambank Stabilization 4 9

50 Capital Program Projection variation from current rate cycle budget 2011 Uninflated Budget RC Budget Projections Change % Change FY 2013 $ 255,819,000 $216,549,000 $184,451,218 -$32,097, % 2014 $ 203,777,000 $241,968,000 $214,034,844 -$27,933, % 2015 $ 227,534,500 $245,267,000 $248,483,475 $3,216, % 2016 $ 197,607,750 $267,815,000 $266,691,000 -$1,124, % 4 Year Total $ 884,738,250 $971,599,000 $913,660,537 -$57,938, % 50

51 FY 2016 Capital Program Budget Review Q & A

52 Financial Trends and Rate Commission Report 52

53 Revenue Trend FY13-FY16 $600.0 M $500.0 M $400.0 M Bond revenue fluctuation tied to CIRP needs. $300.0 M $200.0 M User charge revenues increase gradually along with rates. $100.0 M $0.0 M FY2013 FY2014 FY2015* FY2016 Revenue Bonds $225.0 M $202.0 M $50.0 M $200.0 M User Charges $236.0 M $257.3 M $279.5 M $312.5 M Taxes $26.0 M $27.5 M $23.6 M $24.3 M All Other Revenue $21.3 M $27.2 M $24.9 M $22.3 M * Forecasted 53

54 Expense Trend FY13-FY16 $700.0 M $600.0 M Debt service expenses increase as use of bonds continue to support the CIRP. $500.0 M $400.0 M $300.0 M $200.0 M $100.0 M Pace of operating expense is slower than anticipated in rate case. $0.0 M FY2013 FY2014 FY2015* FY2016 Debt Service and Other $20.1 M $36.5 M $63.4 M $73.5 M Construction and Engineering $177.6 M $201.5 M $246.8 M $300.4 M Operating Expenses $170.2 M $183.4 M $197.3 M $210.0 M * Forecasted 54

55 Fund Balance Trend FY13-FY16 Total Fund Balance $450.0 M $400.0 M Inflow of bond proceeds $350.0 M $300.0 M $250.0 M $200.0 M Spend down of bonds for CIRP. $150.0 M $100.0 M $50.0 M $0.0 M FY2013 FY2014 FY2015 FY2016 Beginning Fund Balance $182.2 M $322.5 M $415.2 M $285.7 M Ending Fund Balance $322.5 M $415.2 M $285.7 M $260.9 M 55

56 Current Projection to Rate Report ($$s in thousands) Fiscal Years Current Projection Rate Report Variance Revenue: Service Charge Wastewater Revenue $ 1,089,355 $ 1,095,071 $ (5,716) Bonds 677, ,000 (217,999) Taxes and Other 136, ,310 (25,474) Total Revenue $ 1,903,192 $ 2,152,381 $ (249,189) Expense: Total Operating Expense $ 700,378 $ 716,128 $ (15,750) Debt Service (net of premiums) 193, ,779 (118,397) WW CIRP and Expense Projects 889, ,015 (81,383) Non WW CIRP Projects 35,246 12,314 22,932 Total Expense $ 1,818,638 $ 2,011,236 $ (192,598) Bad Debt Provision $ (3,979) $ (40,729) $ 36,750 Total FY13-FY16 WW CIRP Total FY13-FY16 Operating Expense $889, % Under $971,015 $700, % Under $716,128 Current Projection Rate Report $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 56

57 FY16 Next Steps 57

58 FY16 Budget Meeting Schedule * FY16 SBOP and Preliminary Budget Finance Committee Meeting Review (including CIRP) April 8, 2015; 9:00 a.m. Publication of Public Hearing Notice April 22, 2015 (The notice will be published in the St. Louis Post-Dispatch, St. Louis American, St. Louis Business Journal, and on the MSD Internet Site) FY16 Budget Follow-up Discussion Budget Introduction Public Hearing Budget Adoption Finance Committee Meeting May 5, 2015; 9:00 a.m. Board of Trustee Meeting May 14, 2015; 5:00 p.m. After Board of Trustee Meeting (Finding of Fact Committee) May 14, 2015; 6:00 p.m. Board of Trustee Meeting June 11, 2015; 5:00 p.m. * All meetings held at 2350 Market Street, Room

59 FY16 SBOP and Preliminary Budget Review Q & A 59