Fiscal Year 2004/05 Draft Budget Presentation April 14, 2004

Transcription

1 Fiscal Year 2004/05 Draft Budget Presentation April 14, 2004

2 Overview of Budget Process Phase I Plan & Organize Phase VI Adopt 04/05 Budget Midyear Review Phase II BUDGET CYCLE Phase V Revise 04/05 Budget Revise 03/04 Budget Phase III Draft 04/05 Budget Phase IV

3 Overview of Budget Process Key Elements to the Budget Process Strategic Plan 5 Year Capital Improvement Plan Engineering Survey Report

4 Overview of Mid Year Budget Review

5 Overview of Mid Year Budget Review 03/04 MID YEAR REVIEW PROCESS The Finance Department set expectations by setting a timeline for staff with deadlines for deliverables to the Finance Department. October / November - Finance introduced the staff to monthly budget vs. actual financial statements. December 23, 2003 First Pre-Budget staff workshop: Purpose to communicate process and expectations to the staff January Mid Year budget Interviews with Project/Program Managers.

6 Overview of Mid Year Budget Review 2 nd 6 months Projections 1 st 6 months Actual Financial Data 12 Month Projected Actual Examined Open Purchase Orders Analyzed Board Minutes For Approved Agreements Reviewed Contract Database

7 Overview of Mid Year Budget Review 03/04 MID YEAR REVIEW PROCESS Timeline (continued): February 19 Midyear budget review presentation to the Finance Committee. Early March With direction from the Finance Committee, the Finance Department conducted interviews with the project/program mangers relating to their 04/05 needs. Mid March Finance developed a prioritized 04/05 budget document for review by the General Manager and District staff.

8 Overview of Mid Year Budget Review 03/04 MID YEAR REVIEW PROCESS Timeline (continued): April 2 Present the 04/05 budget document to the Finance Committee. Early April Work with management to refine the 04/05 draft budget document. April 14 Present the 04/05 budget document to the Board.

9 04/05 Budget Discipline

10 04/05 BUDGET DISCIPLINE During Phase I of the process, the Finance Department developed and distributed an annual budget guide to assist staff in preparing for the Midyear Budget Review and the 04/05 budget process. The Finance Department conducted interviews with the individual project/program managers to obtain their 04/05 budget estimates. Finance compiled the budget estimates and calculated an assessment rate needed to fund District activities for fiscal 04/05.

11 04/05 BUDGET DISCIPLINE We compared the calculated assessment rate with prior year s assessment of $115 in order to evaluate the propriety of our 04/05 estimate. Finance subsequently met with the General Manager and the Managers of each department to review and revise initial budget estimates. We will present the items which were deferred from this year s budget at the end of the presentation of the District s expenditures.

12 04/05 Budget Presentation 03/04 Projected Actual 04/05 Proposed Budget - = Fluctuation Explanation of Significant Fluctuations

13 04/05 District Summary [A] [B] [C] [D] = [C]-[B] 2003/ /05 Change from Project/ 2003/04 Projected Proposed Projected Program # Description Budget Actual Budget to Proposed A 11B Replenishment Assessment $ 29,957,500 $ 29,430,631 $ 32,593,433 $ 3,162,802 LJVWTF Revenue/MWD Subsidy/OCWD $ 2,244,569 $ - $ 2,300,300 $ 2,300,300 Desalter Revenues/MWD Subsidy $ 1,947,000 $ 1,596,135 $ 1,596,135 $ (0) Other Revenues and Expenses $ 434,000 $ 693,111 $ 306,559 $ (386,552) Total Revenue $ 34,583,069 $ 31,719,877 $ 36,796,427 $ 5,076,550 Water Purchases $ 25,808,160 $ 21,759,488 $ 24,978,074 $ 3,218,586 Water Supply $ 3,073,576 $ 706,537 $ 3,092,866 $ 2,386,329 Robert W. Goldsworthy Desalter $ 1,178,181 $ 1,027,390 $ 953,447 $ (73,943) Montebello Forebay Recycled Water $ 477,169 $ 362,534 $ 359,104 $ (3,431) Groundwater Resource Planning $ 222,780 $ 279,454 $ 240,467 $ (38,987) Water Quality Improvement Program $ 452,872 $ 303,754 $ 283,416 $ (20,338) Geographic Information Systems (GIS) $ 196,337 $ 198,106 $ 161,643 $ (36,463) Groundwater Monitoring $ 571,450 $ 608,108 $ 574,180 $ (33,928) Hydrogeology Program $ 428,155 $ 387,068 $ 324,148 $ (62,920) Seawater Barrier Program $ 179,173 $ 131,889 $ 262,634 $ 130,746 Dominguez Gap Barrier Recycled Water $ 463,162 $ 266,345 $ 356,340 $ 89,995 Replenishment Operations $ 216,553 $ 157,693 $ 86,031 $ (71,663) Board of Directors $ 571,941 $ 682,725 $ 814,078 $ 131,353 General Manager $ 347,923 $ 505,254 $ 271,786 $ (233,468) 000 Finance & Administration $ 3,462,833 $ 3,514,455 $ 4,024,510 $ 510,054 Total Operating Expenditures $ 37,650,265 $ 30,890,800 $ 36,782,724 $ 5,891,924 Changes in Net Assets before CIP Exp. $ (3,067,196) $ 829,076 $ 13,703 $ (815,373) Total CIP Expenses $ 11,365,141 $ 4,281,876 $ 3,059,643 $ (1,222,233) Contribution to (Use of) Reserves $ (14,432,336) $ (3,452,799) $ (3,045,940) $ 406,859

14 Highlights: At an assessment rate of $ the District has a balanced budget with a positive change in net assets of $13,703. We will present the District s 5 year financial projections at the end of this presentation which will further explain the District s plan for long term replenishment assessment discipline. This RA does not include capital expenditures such as the Safe Drinking Water Program. Staff recommends reinstituting the in-lieu program Leo J. Vander Lans WTF scheduled to be on-line in July 2004.

15 Revenues

16 Revenues Replenishment Assessment Additional Pumping (Suspended In-Lieu) Goldsworthy Desalter Sales MWD Subsidy Desalter MWD Subsidy Water Supply Long Beach Lease of LJVWTF OCWD Portion of Recycled Water from LJVWTF Other Revenues (Expenses) Interest Income Bond Interest Expense Other (Property Tax & Misc) 2003/ /05 Change from 2003/04 Projected Proposed Projected Budget Actual Budget to Proposed $ 28,692,500 $ 29,430,631 $ 32,593,433 $ 3,162,802 $ 1,265,000 $ - $ - $ - $ 1,227,000 $ 973,065 $ 973,065 $ (0) $ 720,000 $ 623,070 $ 623,070 $ - $ 720,000 $ - $ 627,000 $ 627,000 $ 1,382,514 $ - $ 1,382,600 $ 1,382,600 $ 142,055 $ - $ 290,700 $ 290,700 Revenues Subtotal $ 34,149,069 $ 31,026,766 $ 36,489,868 $ 5,463,102 $ 450,000 $ 170,624 $ 483,098 $ 312,474 $ (350,000) $ - $ (511,539) $ (511,539) $ 334,000 $ 338,245 $ 335,000 $ (3,245) Total Other Revenues (Expenses) $ 434,000 $ 508,869 $ 306,559 $ (202,310) Contributions $ - $ 184,242 $ - $ (184,242) Total Revenue $ 34,583,069 $ 31,719,877 $ 36,796,427 $ 5,076,550

17 04/05 Revenue by Type (in thousands) LJVWTF $2,300 Desalter $1,596 Other $307 RA $33,210

18 Highlights The revenue estimates are based on a replenishment assessment of $ / acre foot. We plan on purchasing all imported spreading water in the first half of fiscal 04/05 to alleviate a fiscal impact to our customers based on MWD s increase in imported spreading water cost. This replenishment assessment does not provide for any increase in the District s reserves.

19 Highlights: Current cash flow estimates indicate that the District s reserve balance at the end of fiscal 03/04 will be approximately $3.5M. The District will be able to recapture about $2.25M for capital expenditures once we complete our planned debt financing. Based on our projections, the District will spend $1.4M between now and the end of the fiscal year. We will also be able to recapture these costs after our debt financing is completed.

20 Operating and Maintenance Expenditures (by project/program)

21 2003/ / /05 Expenditures Budget Projected Proposed Difference Water Purchases $ 25,808,160 $ 21,759,488 $ 24,978,074 $ 3,218,586 Water Supply $ 3,073,576 $ 706,537 $ 3,092,866 $ 2,386,329 Robert W. Goldsworthy Desalter $ 1,178,181 $ 1,027,390 $ 953,447 $ (73,943) Montebello Forebay Recycled Water $ 477,169 $ 362,534 $ 359,104 $ (3,431) Groundwater Resource Planning $ 222,780 $ 279,454 $ 240,467 $ (38,987) Water Quality Improvement Program $ 452,872 $ 303,754 $ 283,416 $ (20,338) Geographic Information Systems (GIS) $ 196,337 $ 198,106 $ 161,643 $ (36,463) Overview of Expenditures Groundwater Monitoring $ 571,450 $ 608,108 $ 574,180 $ (33,928) Hydrogeology Program $ 428,155 $ 387,068 $ 324,148 $ (62,920) Seawater Barrier Program $ 179,173 $ 131,889 $ 262,634 $ 130,746 Dominguez Gap Barrier Recycled Water $ 463,162 $ 266,345 $ 356,340 $ 89,995 Replenishment Operations $ 216,553 $ 157,693 $ 86,031 $ (71,663) Board of Directors $ 571,941 $ 682,725 $ 814,078 $ 131,353 General Manager $ 347,923 $ 505,254 $ 271,786 $ (233,468) Finance & Administration $ 3,462,833 $ 3,514,455 $ 4,024,510 $ 510,054 Total Operating Expenditures $ 37,650,265 $ 30,890,800 $ 36,782,724 $ 5,891,924

22 Expense Estimation Discipline When going through the 04/05 estimation process the Staff used the following ways to obtain their estimates: Historical Data One of the best ways to project future needs is to see what we have done in the past and adjust for current information. Long Term Plans Staff referred to the District s Strategic Plan and the draft of the 5-Year Capital Improvement Plan to provide direction for proper allocation of District resources.

23 Expense Estimation Discipline Other Financial Information We obtained and reviewed all of the following information in helping us ensure that the 04/05 budget estimates are accurate and complete. Existing Contracts Open Purchase Orders Salary and Benefit Information Cost / Benefit Studies Engineering Survey Report

24 Expense Estimation Discipline When estimating smaller items such as items in office supplies, repairs, utilities, etc., staff used the 03/04 projected actual amounts + 5% inflationary increase.

25 04/05 Expenditures by Type (in thousands) Projects/Programs, $3,245 [9%] Administration, $5,110 [14%] Water Purchases, $29,054 [77%]

26 Highlights When estimating smaller items such as items in office supplies, repairs, utilities, etc., staff used long term historical averages and prior year s budget when applicable. Capital expenditures are assumed to be funded by debt issuance in fiscal 04/05. Project and Program expenditures does not include projects relating to the safe drinking water program.

27 July - September 2004 October - December 2004 January - June ITEMS TOTAL TOTAL Operating and Maintenance Expense acre feet unit cost subtotal acre feet unit cost subtotal acre feet unit cost subtotal WATER (af) COST Spreading Imported 14,947 $270 $4,035,785 14,947 $270 $4,035,785 0 $275 $0 29,895 $8,071,569 Spreading Recycled (San Jose Creek Plant) 9,500 $14.52 $137,940 9,500 $14.52 $137,940 19,000 $14.52 $275,880 38,000 $551,760 Spreading Recycled (Whittier Narrows Plant) 2,500 $7.00 $17,500 2,500 $7.00 $17,500 5,000 $7.00 $35,000 10,000 $70,000 West Coast Barrier imported 3,031 $520 $1,576,120 3,031 $520 $1,576,172 6,062 $535 $3,243,277 12,124 $6,395,569 West Coast Barrier recycled 1,875 $430 $806,250 1,875 $430 $806,250 3,750 $430 $1,612,500 7,500 $3,225,000 Water Purchases Dominguez Gap Barrier imported 950 $520 $494, $520 $494,000 1,900 $535 $1,016,500 3,800 $2,004,500 Dominguez Gap Barrier recycled 950 $431 $409, $431 $409,450 1,900 $431 $818,900 3,800 $1,637,800 Alamitos Barrier imported 570 $423 $241, $423 $241,110 1,140 $448 $510,720 2,280 $992,940 Alamitos Barrier recycled 380 $267 $101, $267 $101, $267 $202,920 1,520 $405,840 In-Lieu Central Basin - $ $ $0-0 $726,000 In-Lieu West Coast Basin - $ $ $0-0 $607,500 CBMWD Water Service Charge - - $ 18, $ 18, $ 36,000 - $ 72,000 WBMWD Water Service & Capacity Reservation Fees - - $ 49, $ 49, $ 118,968 - $ 217,596 TOTAL 108,919 $24,978,074

28 Water Purchases Highlights We anticipate purchasing all of our imported spreading water during the first half of the fiscal year to avoid the increase in MWD water rates. Currently we are estimating 7,600 acre feet of imported and recycled water delivered to the Dominguez Gap Barrier. However, LADPW has estimated that the amount delivered to the barrier could be up to double that amount for 04/05.

29 Water Purchases Water Purchase Contingencies Dominguez Gap Barrier water costs could increase by $3 million due to new injection wells. Tier 2 water rates may also apply. Barrier water costs could increase by $600,000 if recycled water at Dominguez or Alamitos are delayed. Imported spreading water costs could increase by $100,000 if purchases are made after January 1, 2005.

30 Water Purchases Water Purchase Contingencies (cont.) The cost of water does not include any additional spreading water to make up recent lost storage. These potential costs are not included in the current budget and would need to come from reserves.

31 Cost of Replenishment Water (in thousands) Water Service Fees, $290 Alamitos Barrier, $1,399 In Lieu, $1,334 Imported Spreading, $8,072 Dominguez Gap Barrier, $3,642 West Coast Barrier, $9,621 Recycled Spreading, $622

32 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $2,730,877 $299,578 $2,530,025 $2,230,447 R&M / Materials / Equipment $6,000 $26,518 $95,360 $68,842 Program 01 Water Supply Office Expenses $214,252 $169,875 $238,504 $68,629 Subtotal $2,951,129 $495,971 $2,863,889 $2,367,918 Salaries & Benefits $122,447 $210,566 $228,977 $18,411 Total $3,073,576 $706,537 $3,092,866 $2,386,329

33 Highlights Professional Services - The major addition to the 04/05 budget is based on an agreement with the Long Beach Water Department to operate the Leo J. Vander Lans Water Treatment Facility. The District estimates this cost to be about $2,222,000. This cost may vary depending upon the unit cost of electricity. Repairs and Maintenance The increase is a result of the annual costs for UV lamps and membrane replacements. Program 01 Water Supply

34 Program 01 Water Supply Highlights Office Expense Increase is due to the annual CSDLAC residual disposal fee and connection fee. Salaries and Benefits The project is expected to be operating during the ensuing year which will require increased staff time.

35 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $300,000 $231,507 $203,227 ($28,280) R&M / Materials / Equipment $200,000 $169,259 $146,360 ($22,899) Program 02 Robert W. Goldsworthy Desalter Office Expenses $550,000 $532,521 $523,680 ($8,841) Subtotal $1,050,000 $933,287 $873,267 ($60,021) Salaries & Benefits $75,681 $94,103 $80,180 ($13,923) Total $1,178,181 $1,027,390 $953,447 ($73,943)

36 Highlights Professional Services Decrease is due to a reduction in technical consultants which was needed during the first year of operations. Materials and Equipment Decrease is due to the use of a more effective scale inhibitor. Salaries and Benefits Decrease is due to the staff reallocating their time to other projects Program 02 Robert W. Goldsworthy Desalter

37 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $349,500 $272,896 $229,750 ($43,146) R&M / Materials / Equipment $10,000 $9,091 $19,000 $9,909 Program 04 Montebello Forebay Office Expenses $6,104 $8,235 $11,850 $3,615 Subtotal $365,604 $290,222 $260,600 ($29,622) Salaries & Benefits $111,565 $72,312 $98,504 $26,191 Total $477,169 $362,534 $359,104 ($3,431)

38 Highlights Professional Services Decrease is due to foregoing assistance in obtaining increase in recycled water usage and the completion of the UCSB Tracer Study by June Materials/Equipment Increase due to upgrade and replacement of sampling equipment. Salaries & Benefits Change is due to an increase in regulatory monitoring. Program 04 Montebello Forebay

39 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2002/ /2004 Proposed (Decrease) Expenditure Category Actual Projected Actual Budget Over Prior Year Professional Services $58,000 $79,287 $87,000 $7,713 R&M / Materials / Equipment $0 $0 $0 $0 Program 05 Groundwater Resource Planning Office Expenses $2,000 $2,116 $4,750 $2,634 Subtotal $60,000 $81,403 $91,750 $10,347 Salaries & Benefits $160,042 $198,051 $148,717 ($49,334) Total $222,780 $279,454 $240,467 ($38,987)

40 Highlights Professional Services Increase is related to application for a grant from Proposition 50. Salaries & Benefits The decrease is a result of staff reallocating their time to other projects. Program 05 Groundwater Resource Planning

41 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $208,000 $158,609 $127,000 ($31,609) R&M / Materials / Equipment $0 $0 $0 $0 Program 06 Water Quality Master Plan Office Expenses $40,000 $47,989 $49,900 $1,911 Subtotal $248,000 $206,598 $176,900 ($29,698) Salaries & Benefits $204,872 $97,156 $106,516 $9,359 Total $452,872 $303,754 $283,416 ($20,338)

42 Highlights Professional Services Decrease is related to a reduction in chromium investigation costs. Program 06 Water Quality Master Plan

43 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $0 $11,146 $0 ($11,146) R&M / Materials / Equipment $1,500 $0 $6,000 $6,000 Program 10 Geographic Information Systems Office Expenses $25,800 $25,340 $44,800 $19,460 Subtotal $27,300 $36,486 $50,800 $14,314 Salaries & Benefits $169,037 $161,620 $110,843 ($50,777) Total $196,337 $198,106 $161,643 ($36,463)

44 Highlights Professional Services Reduction in professional services for assistance relating to the GIS database. Materials & Equipment previously unbudgeted repairs and maintenance for GIS system. Office Expenses Increase in license and maintenance fees for GIS software. Salaries & Benefits The decrease is a result of staff reallocating their time to other projects. Program 10 Geographic Information Systems

45 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $322,000 $294,854 $307,918 $13,064 R&M / Materials / Equipment $6,148 $29,265 $24,656 ($4,609) Program 11A Regional Groundwater Monitoring Office Expenses $27,420 $49,430 $30,550 ($18,880) Subtotal $355,568 $373,548 $363,124 ($10,424) Salaries & Benefits $215,882 $234,559 $211,056 ($23,503) Total $571,450 $608,108 $574,180 ($33,928)

46 Highlights Professional Services We are anticipating to increase spending for on-call well services. Materials and Equipment Equipment replacement cost decreased since replacement was done in prior year. Office Supplies Reduction is due to decreased state fees and permits for watersheds. Salaries & Benefits The decrease is a result of staff reallocating their time to other projects. Program 11A Regional Groundwater Monitoring

47 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $191,000 $184,772 $28,000 ($156,772) R&M / Materials / Equipment $15,000 $15,532 $17,500 $1,968 Program 11B Hydrogeology Program Office Expenses $41,609 $36,964 $38,019 $1,055 Subtotal $247,609 $237,268 $83,519 ($153,749) Salaries & Benefits $180,546 $149,800 $240,629 $90,829 Total $428,155 $387,068 $324,148 ($62,920)

48 Highlights Professional Services Decrease due to completion of the West Basin Inland Injection Study and reduction of zone sampling & aquifer testing. Salaries & Benefits Due to staff reallocating their time to this project to develop the Hydrogeologic Conceptual Study. Program 11B Hydrogeology Program

49 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $145,000 $125,000 $202,000 $77,000 R&M / Materials / Equipment $0 $0 $21,000 $21,000 Program 16 Seawater Barrier Improvement Office Expenses $1,000 $500 $400 ($100) Subtotal $146,000 $125,500 $223,400 $97,900 Salaries & Benefits $33,173 $6,389 $39,234 $32,846 Total $179,173 $131,889 $262,634 $130,746

50 Highlights Professional Services Increase is due to the West Coast Basin Barrier Project model with DWP. Material & Equipment Purchase of chloride data loggers for intrusion studies. Salaries & Benefits Increase is due to staff reallocating their time to this project to develop the WCBBP model. Program 16 Seawater Barrier Improvement

51 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $395,000 $146,080 $265,000 $118,920 R&M / Materials / Equipment $0 $18,052 $9,500 ($8,552) Program 18 Dominguez Gap Barrier Office Expenses $0 $2,899 $0 ($2,899) Subtotal $395,000 $167,031 $274,500 $107,469 Salaries & Benefits $68,162 $99,314 $81,840 ($17,474) Total $463,162 $266,345 $356,340 $89,995

52 Highlights Professional Services Increase due to groundwater quality monitoring as required by DHS. Repairs & Maintenance Decrease in repairs and maintenance expenditures of pumps. Program 18 Dominguez Gap Barrier

53 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $20,000 $10,740 $0 ($10,740) R&M / Materials / Equipment $51,000 $23,130 $1,000 ($22,130) Program 23 Replenishment Operations Office Expenses $10,500 $10,101 $10,300 $199 Subtotal $81,500 $43,971 $11,300 ($32,671) Salaries & Benefits $135,053 $113,722 $74,731 ($38,992) Total $216,553 $157,693 $86,031 ($71,663)

54 Highlights Professional Services Decrease due to the discontinuation of special recharge studies from the prior year. Repairs & Maintenance The District is not anticipating any major repairs as we had incurred in the prior year. Salaries & Benefits Decrease is due to staff reallocating their time to other projects. Program 23 Replenishment Operations

55 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $0 $0 $9,000 $9,000 R&M / Materials / Equipment $0 $0 $0 $0 Board of Directors Office Expenses $423,756 $473,049 $517,076 $44,027 Subtotal $423,756 $473,049 $526,076 $53,027 Salaries & Benefits $148,185 $209,676 $288,002 $78,326 Total $571,941 $682,725 $814,078 $131,353

56 Highlights Office Expense Increased by CPI from prior year due to projected increase in costs. Salaries & Benefits Increased benefit cost due to deferred compensation matching, institution of PARS retirement benefit for three directors and a general rise in medical insurance premiums. Board of Directors

57 [A] [B] [C] = [B]-[A] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $58,000 $34,715 $0 ($34,715) R&M / Materials / Equipment $1,217 $0 $0 $0 General Manager Office Expenses $26,827 $22,872 $19,100 ($3,771) Subtotal $86,044 $57,587 $19,100 ($38,486) Salaries & Benefits $261,879 $447,667 $252,686 ($194,982) Total $347,923 $505,254 $271,786 ($233,468)

58 Highlights Professional Services Decrease is due to the District not anticipating the renewal of an expired professional contract. Salaries & Benefits Decrease is due to the costs for a change in management from the prior year. General Manager

59 [A] [B] [C] [D] = [C]-[B] Operating and Maintenance Expense 2004/2005 Increase 2003/ /2004 Proposed (Decrease) Expenditure Category Budget Projected Actual Budget Over Prior Year Professional Services $1,345,071 $1,399,048 $1,349,373 ($49,675) R&M / Materials / Equipment $134,860 $120,000 $70,777 ($49,223) Administration Office Expenses $655,372 $677,761 $822,322 $144,561 Subtotal $2,135,303 $2,196,809 $2,242,473 $45,664 Salaries & Benefits $1,327,530 $1,317,646 $1,782,037 $464,390 Total $3,462,833 $3,514,455 $4,024,510 $510,054

60 Highlights Professional Services Decrease is due to anticipated reduction in litigation fees from the prior year. Materials & Equipment The District is not upgrading computer workstations in 04/05. Office Expense Increased by CPI for supplies, conferences, rents, leases and liability & worker s compensation insurance, Administration

61 Administration Highlights Salaries & Benefits Increase is due to additional staff, deferred compensation match, rise in medical insurance premiums and addition of temporary labor associated with document imaging.

62 After the staff submitted their initial budget requests, the Finance Department met with the General Manager and the department heads to review and revise (if necessary) initial budget estimates. Management has chosen to defer $1,106,120 from the 04/05 budget as follows:

63 (01) Water Supply deferred $366,040 relating to testing and membrane replacement (02) Goldsworthy Desalter deferral of $41,580 for the replacement of UV and RO membranes (04) Montebello Forebay deferral of costs relating to monitoring, special studies and assistance with recycled water issues equaling $172,500. (06) Water Quality Program deferral of 297,000 for monitoring, testing, investigations and memberships.

64 (11A) Groundwater Monitoring $30,000 for a piece of equipment was deferred to 05/06. (11B) Hydrogeology Program $74,000 of costs relating to zone sampling and consultation services was deferred. (18) Dominguez Gap Barrier deferred a groundwater quality monitoring program costing $50,000 to 05/06. (23) Replenishment Operations $75,000 deferred to 05/06 relating to miscellaneous wellhead treatment repairs and a portion of the West Coast Basin Barrier Project numerical model.

65 Capital Programs Costs

66 Project Description 2004/05 Proposed Budget Caltrans Pipeline $ 120,000 Increased Spreading at Dominguez Gap Spreading Grounds $ 60,300 Capital Program Costs Safe Drinking Water Program $ 2,000,000 Whittier Narrows Conservation Pool $ 120,000 WRD Building $ 4,250,000 Total Proposed CIP Projects for fiscal 04/05 $ 6,550,300

67 Highlights (01) Water Supply & (02) Robert W. Goldsworthy Desalter These projects were completed in fiscal 03/04. (23A) Replenishment Operations In fiscal 03/04 we had a $1.1 million capital expenditure for additional storage capacity behind the Whittier Narrows Conservation Pool. Otherwise, no other significant fluctuations. Directors will get a more detailed look at the capital projects during the CIP process. Capital Program Costs

68 5 YEAR PROJECTION

69 Scenario #1 Expenses Include Conjunctive Use Benefits Reserve Level RA Req'd (conj use) RA Plan Repl Assessment ($/AF) M 7.2M Reserve Level ($M) /03 03/04 04/05 05/06 06/07 07/08 08/09 Fiscal Year 0

70 Scenario #2 Expenses Include Conjunctive Use Benefits No Increase in RA Reserve Level 170 RA Req'd (conj use) RA Plan M 7.2M 8 Repl Assessment ($/AF) (4) (8) Reserve Level ($M) (12) /03 03/04 04/05 05/06 06/07 07/08 08/09 Fiscal Year (16)

71 Scenario #3 Expenses Does NOT Include Conjunctive Use Benefits Reserve Level RA Req'd (conj use) RA Plan Repl Assessment ($/AF) M 7.2M Reserve Level ($M) /03 03/04 04/05 05/06 06/07 07/08 08/09 Fiscal Year 0

72 What s Next?

73 What s Next? April 15 Finance Committee Meeting to finalize 04/05 draft budget April 21 Regular Board Meeting to present 04/05 budget as directed by the Finance Committee. May 3 Regular Board Meeting to set assessment rate Mid-June Adopt 04/05 Budget