05/21/2014 Item #S10A Page 1

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1 MEETING DATE: May 21, 2014 GENERAL MANAGER: Glenn Pruim PREPARED BY: SUBJECT: Jeff Umbrasas, Administrative Services Manager DISTRICT SECRETARY: Gus Vina San Dieguito Water District Fiscal Year 2013/14 3 rd Quarter Budget Report RECOMMENDED ACTION: Board take the following actions: 1) Receive and file this report. 2) Approve requests for FY 2013/14 3 rd Quarter budget adjustments as noted in this report. STRATEGIC PLAN: This item is not applicable to the Strategic Plan. FISCAL CONSIDERATIONS: The information and 3 rd Quarter budget adjustments requested in this report will modify the District s FY 2013/14 budget as outlined in the Analysis section of this report. BACKGROUND: At the 3 rd Quarter of the fiscal year, the San Dieguito Water District (District) Board of Directors (Board) receives an update from staff on the status of fund balances, revenues, expenditures and Capital Improvement Program (CIP) projects as of March 31, The Board is also requested to consider proposed budget adjustments as deemed necessary by staff. The current FY 2013/14 budget is the first year of a two-year operating budget, which was originally approved by the Board on June 19, The District s fund balances, revenues, expenditures and CIP projects were subsequently adjusted during the First Quarter and Mid- Year Budget Reports, as well as other off-cycle adjustments previously approved by the Board during the fiscal year. ANALYSIS: Operating Fund (531): 3 rd Quarter operating expenditures were reported in the amount of $8,543,963, or 71.9% of the FY 2013/14 revised budget. Operating expenditures are trending at or below budget in all expenditure categories with the exception of Potable Water Purchases. At 75% of the year complete, Potable Water Purchases were reported in the amount of $3,970,460, or 84.8% of budget. Due to a lack of local rainfall to feed the District s local water supply at Lake Hodges, the District is currently importing most of its water from the San Diego 05/21/2014 Item #S10A Page 1

2 County Water Authority (SDCWA). Purchasing imported water from SDCWA is costlier than utilizing local water. Furthermore, potable water demand is up 2.9%, compared to the same time period last year. As a result, staff is projecting that the District s account for Imported Water Purchases will end the year approximately $1.2 million over-budget. This overage is offset slightly by the savings resulting from reduced local water utilization, in the amount of $100,000. Therefore, staff is proposing the following adjustment: - Increase appropriation for Imported Untreated Water Purchases by $1,100,000 This adjustment will increase the overall Operating Fund budget from $11,882,123 to $12,982,123. See Attachment A for further detail on the 3 rd Quarter status of the District s operating expenditures. Capital Replacement Fund (532): Staff is not proposing any 3 rd Quarter adjustments to the revised Capital Replacement Fund budget of $1,878,475. See Attachment B for further detail on the 3 rd Quarter status of the District s CIP Projects. Debt-Service Fund (534): At the 3 rd Quarter of the fiscal year, the District has expended $1,649,967, or 99.9% of its Debt Service Fund budget. These expenditures represent the entirety of scheduled principal and interest payments related to the District s long-term debt for the fiscal year. Staff is not proposing any 3 rd $1,651,553. Quarter adjustments to the Debt Service Fund budget of Fleet Replacement Fund (535): Through the 3 rd Quarter of the fiscal year, the District has expended and encumbered $179,431, or 55.5% of its Fleet Replacement Fund budget. This amount reflects the procurement of 2 of the 5 scheduled purchases in the fiscal year, an F-650 Service Truck and a Vacuum Trailer. The District is on track to commit funds for the purchase of the remaining 3 vehicles, an F-150 Service Truck, an F-450 Valve Truck and a GMC-6500 Service Truck, by the end of the fiscal year. Staff is not proposing any 3 rd budget of $323,332. Quarter adjustments to the revised Fleet Replacement Fund District Revenues (All Funds): At 75% of the year complete, the District has collected $11,660,303, or 78.6% of its revised projection of $14,836,528 in Operating Fund revenue. Operating Fund revenues are trending above revised projections primarily due to Potable Water Sales continuing to be stronger than anticipated as a result of unusually dry and warm winter weather. Staff is estimating that Potable Water Sales will end the year approximately $800,000 over projection as a result of increased demand. Therefore, staff is proposing the following adjustment: - Increase revenue projection for Potable Water Sales by $800,000 The adjustment will increase the overall Operating Fund revenue projection from $14,836,528 to $15,636,528. See Attachment A for further detail on the 3 rd Quarter status of the District s operating revenues. The District has also collected $275,749 in other revenues, including capacity fees, grant payments, investment earnings and contributions from other agencies, through 3 rd Quarter. Revised Projected Available Ending Fund Balance (All Funds): As a result of the 3 rd Quarter budget adjustments proposed in this report and prior off-cycle adjustments approved by the Board, the FY 2013/14 ending available fund balance is now projected to be $10,650,918. This is a net decrease of $278,000 from the Mid-Year Budget Report projection. 05/21/2014 Item #S10A Page 2

3 See Attachment C for further detail on the revised FY 2013/14 projected available ending fund balance. ENVIRONMENTAL CONSIDERATIONS: Per Section (c) (3) and of the CEQA Guidelines, the proposed fiscal action does not involve any commitment to any specific project having a significant physical impact on the environment. Therefore, the action is not a project and not subject to CEQA. ATTACHMENTS: 1) Attachment A San Dieguito Water District FY 2013/14 3 rd Quarter Detail of Operating Fund Revenues, Expenditures and Other Uses 2) Attachment B San Dieguito Water District FY 2013/14 3 rd Quarter Capital Improvement Program (CIP) Project Status Report 3) Attachment C San Dieguito Water District FY 2013/14 3 rd Quarter Revised "Schedule A" Fund Balance Summary 05/21/2014 Item #S10A Page 3

4 ATTACHMENT A San Dieguito Water District Fiscal Year 2013/14 3rd Quarter (through March 31, 2014) Detail of Operating Fund Revenues, Expenditures and Other Uses Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 FY 13/14 FY 13/14 FY 13/14 FY 13/14 Bud. Vs. Actual Original Off-Cycle Revised 3rd Quarter Difference Budget Adjustments Budget Actuals (Percentage) Adoption Date 6/19/2013 3/31/2014 (3rd Quarter) 3/31/2014 3rd Quarter OPERATING REVENUES 1 Property Taxes $ 725,000 $ - $ 725,000 $ 483, % 2 Potable Water Sales $ 8,616,000 $ 836,470 $ 9,452,470 $ 7,657, % 3 Potable Meter Service Charges $ 3,211,000 $ 1,069 $ 3,212,069 $ 2,398, % 4 Recycled Water Sales $ 456,000 $ 44,270 $ 500,270 $ 360, % 5 Recycled Meter Service Charges $ - $ 63,219 $ 63,219 $ 48, % 6 Interest & Property Earnings $ 100,000 $ - $ 100,000 $ 91, % 7 Development Support Charges $ 20,000 $ - $ 20,000 $ - 0.0% 8 Billing & Engineering Fees $ 681,750 $ 22,000 $ 703,750 $ 549, % 9 Other Revenue (includes Cost Recovery) $ 59,750 $ - $ 59,750 $ 71, % 10 TOTAL OPERATING REVENUES $ 13,869,500 $ 967,028 $ 14,836,528 $ 11,660, % OPERATING EXPENDITURES 11 Personnel Services $ (2,739,756) $ 50,652 $ (2,689,104) $ (1,871,899) 69.6% 12 Materials & Supplies $ (405,040) $ - $ (405,040) $ (219,481) 54.2% 13 Contracts & Services $ (512,015) $ (50,652) $ (562,667) $ (332,303) 59.1% 14 Potable Water Purchases (inc. Fixed Charges) $ (4,683,000) $ - $ (4,683,000) $ (3,970,460) 84.8% 15 Recycled Water Purchases $ (500,000) $ - $ (500,000) $ (340,762) 68.2% 16 Water Treatment $ (2,088,828) $ - $ (2,088,828) $ (1,112,326) 53.3% 17 Internal Cost Allocation $ (921,484) $ - $ (921,484) $ (695,393) 75.5% 18 Capital Outlay $ (32,000) $ - $ (32,000) $ (1,339) 4.2% 19 TOTAL OPERATING EXPENDITURES $ (11,882,123) $ - $ (11,882,123) $ (8,543,963) 71.9% TRANSFERS FROM OPERATING FUND TO OTHER FUNDS 20 Transfers to Debt Service Fund $ (1,651,553) $ - $ (1,651,553) $ (1,649,966) 99.9% 21 Transfers to Capital Replacement Fund $ (1,234,883) $ - $ (1,234,883) $ - 0.0% 22 Transfers to Fleet Replacement Fund $ (132,145) $ - $ (132,145) $ - 0.0% 23 TOTAL TRANSFERS $ (3,018,581) $ - $ (3,018,581) $ (1,649,966) 54.7% 24 SUB-TOTAL (CURRENT YEAR NET) (1,031,204) 967,028 (64,176) 1,466,374 N/A 05/21/2014 Item #S10A Page 4

5 ATTACHMENT B San Dieguito Water District Fiscal Year 2013/14 3rd Quarter (through March 31, 2014) Capital Improvement Program (CIP) Project Status Report Project Financial Information Project # Project Title Prior Year Prior Year Expenses Carry-Over To FY FY Off-Cycle FY Expenses Total Project Total Project Expenses Returned to Fund Balance Current Project Balance (A) (B) (C) (D) (E) (F) (G) (H) (K) (L) (M) (N) Closed Projects CW12P Water Infrastructure Improvements $ 782,936 $ (756,696) $ 26,240 $ - $ 4,990 $ (3,529) $ 787,926 $ (760,225) $ (27,701) $ - CW12S Water Rate Study Update $ 75,000 $ (63,500) $ 11,500 $ - $ - $ (5,579) $ 75,000 $ (69,079) $ (5,921) $ - CW13F Ashbury Street Water Main Replacement $ 113,904 $ (99,011) $ 14,893 $ - $ - $ - $ 113,904 $ (99,011) $ (14,893) $ - CW98B SCADA Automation Upgrade Program $ 750,000 $ (563,350) $ 186,650 $ - $ - $ (76,175) $ 750,000 $ (639,525) $ - $ 110,475 CW01A Transmission Line Valve Replacement $ 500,000 $ (90,375) $ 409,625 $ 100,000 $ - $ (293,641) $ 600,000 $ (384,016) $ - $ 215,984 CW10F Saxony Road Interconnect $ 265,000 $ - $ 265,000 $ - $ - $ - $ 265,000 $ - $ - $ 265,000 Active Projects CW12Q Recycled Water Rules & Regulations $ 40,000 $ - $ 40,000 $ - $ - $ - $ 40,000 $ - $ - $ 40,000 CW12R Utility Billing System Replacement $ 150,000 $ - $ 150,000 $ - $ - $ - $ 150,000 $ - $ - $ 150,000 CW13G Emergency Power Generator $ 100,056 $ (100,056) $ - $ - $ 32,000 $ - $ 132,056 $ (100,056) $ - $ 32,000 CW14A Joint Facilities Master Plan Projects $ 3,320,478 $ (956,147) $ 2,364,331 $ 1,300,000 $ - $ (212,862) $ 4,620,478 $ (1,169,009) $ - $ 3,451,469 CW14B Joint Facilities Capital Acquisitions $ 197,699 $ (143,405) $ 54,294 $ 190,000 $ - $ (100,189) $ 387,699 $ (243,594) $ - $ 144,105 CW14C Water Infrastructure Improvements $ 875,153 $ (99,154) $ 775,999 $ 200,000 $ - $ (4,471) $ 1,075,153 $ (103,625) $ - $ 971,528 CW14E Meter Replacement and Automation Program $ 732,182 $ (2,335) $ 729,847 $ 100,000 $ - $ (97,009) $ 832,182 $ (99,344) $ - $ 732,838 Grand Total $ 7,902,408 $ (2,874,029) $ 5,028,379 $ 1,890,000 $ 36,990 $ (793,455) $ 9,829,398 $ (3,667,484) $ (48,515) $ 6,113,398 FY 2013/14 Calculation Original FY 2013/14 : $ 1,890,000 FY 2013/14 Off-Cycle s: $ 36,990 Amount Returned to Fund Balance: $ (48,515) Revised FY 2013/14 : $ 1,878,475 05/21/2014 Item #S10A Page 5

6 ATTACHMENT C San Dieguito Water District Fiscal Year 2013/14 3rd Quarter Revised "Schedule A" Fund Balance Summary (Column 1) (2) (3) (4) (5) (6) (7) (8) (9) Beginning Interfund Interfund Interfund Current Adjusted Fund Revenue Approved Transfers Transfers Transfers Year Projected Fund Balance Projections Expenditures Capital Debt Service Fleet Summary Fund Balance FUND NAME # 7/1/2013 ( ) (+2+8) Operating 531 $ 1,816,048 $ 15,636,528 $ (12,982,123) $ (1,234,883) $ (1,651,553) $ (132,145) $ (364,176) $ 1,451,872 Rate Stabilization 531 $ 2,164,143 $ - $ - $ (246,565) $ - $ - $ (246,565) $ 1,917,578 Capital Replacement 532 $ 6,263,390 $ 75,000 $ (1,878,475) $ 1,481,448 $ - $ - $ (322,027) $ 5,941,362 Debt Service Fund 534 $ 1,040,197 $ - $ (1,651,553) $ - $ 1,651,553 $ - $ - $ 1,040,197 Fleet Replacement 535 $ 491,096 $ - $ (323,332) $ - $ - $ 132,145 $ (191,187) $ 299,909 TOTAL SDWD FUNDS $ 11,774,873 $ 15,711,528 $ (16,835,483) $ - $ - $ - $ (1,123,955) $ 10,650,918 * bold cells represent amounts revised as part of this report. 05/21/2014 Item #S10A Page 6